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Fazeli v. Dallas MTV, LLC

United States District Court, N.D. Texas, Dallas Division

April 21, 2017

PEYMAN FAZELI, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
DALLAS MTV, LLC f/k/a MANAGEMENT TEAM VALET, LLC d/b/a RP VALET, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE, UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff's Motion for Entry of Default Judgment (Doc. 25), Defendant Reza Saleh's Motion to Dismiss Under Rules 12(b)(5) and 12(b)(6) (Doc. 28), and Plaintiff's Motion for Leave to File Second Amended Complaint (Doc. 44). For the following reasons, the Court SETS ASIDE the clerk's entry of default against Saleh, DENIES Plaintiff's Motion for Default Judgment and Saleh's Motion to Dismiss, and GRANTS Plaintiff's Motion for Leave.

         I. BACKGROUND

         On March 17, 2016, Plaintiff filed suit against 13 Defendants, both corporate and individual, under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq., for unpaid tip credit and overtime compensation. See Doc. 1, Compl. On June 15, 2017, Plaintiff filed his Motion to Extend Time for Service and to Serve Via Substituted Service of Process. Doc. 6. The Court granted in part and denied in part that Motion. Doc. 7, Order. Specifically, the Court granted an additional 30 days to serve all Defendants and substitute service on the corporate Defendants. Id. But the Court denied Plaintiff's request for substitute service on the individual Defendants. Id.

         On July, 18, 2017, Plaintiff, yet to have served a single Defendant, filed his second Motion to Extend Time for Service and to Serve Via Substituted Service of Process (Doc. 8). Once more, the Court granted in part and denied in part his request. See Doc. 9, Order. This time, the Court granted Plaintiff until August 18, 2016, an additional 30 days, to serve Defendants. Id. But the Court again denied Plaintiff's request for substitute service, this time as to all Defendants because Plaintiff sought to serve them through the Texas Secretary of State or publication in a newspaper. Id.

         Plaintiff served five of the 13 Defendants, including Saleh, [1] by the Court's August 18 deadline. Doc. 23, Order to Show Cause. On October 21, 2016, Plaintiff requested and the clerk issued an entry of default against Saleh and Defendant Dallas MTV, LLC. See Docs. 21, Request for Clerk's Entry of Default; 22, Clerk's Entry of Default.

         On November 28, 2016, some eight months after Plaintiff filed his suit, the Court issued an Order to Show Cause (Doc. 23) directing Plaintiff, no later than December 6, 2016, to: (1) serve those Defendants who had not been served; (2) request entry of default on the three Defendants other than Saleh and Dallas MTV who had been served or otherwise explain why he had not requested entry of default; and (3) move for default judgment against Saleh and Dallas MTV or otherwise explain why he had not. In response, Plaintiff voluntarily dismissed his claims against the unserved Defendants and moved for default judgment against Saleh and Dallas MTV, but took no action as to the three remaining Defendants who had been served. Docs. 24, Notice of Voluntary Dismissal of Certain Defs.; Doc. 25, Pl.'s Mot. Entry Def. J. Accordingly, the Court dismissed Plaintiff's claims against those three. Doc. 26, Order.

         Neither Saleh nor Dallas MTV responded to Plaintiff's Motion for Entry of Default Judgment. But each moved to dismiss Plaintiff's respective claims against them in early January, some four-and-a-half months after they were purportedly served and a month after Plaintiff moved for default judgment. Docs. 27, Dallas MTV's Mot. Dismiss; 28, Saleh's Mot. Dismiss. Plaintiff, in turn, voluntarily dismissed his claims against Dallas MTV. Doc. 33, Notice of Dismissal.

         After the foregoing procedural twists and turns, Saleh is the only Defendant remaining in the case. Plaintiff has responded to his Motion to Dismiss. Doc. 42, Pl.'s Resp. to Def.'s Mot. Dismiss & Alternative Mot. for Leave [hereinafter Pl.'s Resp.]. And as referenced, Saleh failed to respond to Plaintiff's Motion for Entry of Default Judgment. Accordingly, both Motions at issue are ripe for the Court's review.

         II. SETTING ASIDE DEFAULT

         A. Legal Standard

         As mentioned above, Saleh filed a Motion to Dismiss after default was entered against him. He failed, however, to move to set aside the clerk's entry of default. That said, “[w]hen a defendant files a pleading subsequent to an entry of default, a court may construe it as a motion to set aside the default. Moreover, a court may set aside an entry of default sua sponte.” Flores v. Koster, No. 3:11-cv-0726-M-BH, 2012 WL 6928017, at *1 (N.D. Tex. Dec. 28, 2012) (internal citations omitted).

         Under Federal Rule of Civil Procedure 55(c), a court “may set aside an entry of default for good cause.” Fed.R.Civ.P. 55(c). Good cause “is not susceptible of a precise definition, and no fixed, rigid standard can anticipate all of the situations that may occasion the failure of a party to answer a complaint timely.” In re Dierschke, 975 F.2d 181, 183 (5th Cir. 1992). That is why the “good cause” standard is liberally construed. Effjohn Int'l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 563 (5th Cir. 2003).

         To determine whether a defendant has shown good cause for a Rule 55(c) motion, a court should consider the following factors: (1) whether the default was willful; (2) whether the plaintiff would be prejudiced; and (3) whether the defendant presents a meritorious defense. Dierschke, 975 F.2d at 184. The court need not consider all of these factors. CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60, 64 (5th Cir. 1992). What's more, “[t]hese factors are nonexclusive; another factor often considered by courts is whether the party acted promptly to correct the default.” Flores, 2012 WL 6928017, at *2 (citing Effjohn, 346 F.3d at 563). Ultimately, “‘[t]he decision to set aside a default decree lies within the sound discretion of the district court.'” Id. (quoting United States v. One Parcel of Real Prop., 763 F.2d 181, 183 (5th Cir.1985)).

         The Court favors resolving actions on the merits and therefore will resolve any doubts in favor of Saleh. See Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000) (observing that “federal courts should not be agnostic with respect to the entry of default judgments which are ‘generally disfavored in the law'”) (internal citation omitted); Gen. Tel. Corp. v. Gen. Tel. Answering Serv., 277 F.2d 919, 921 (5th Cir. 1960) (“where there are no intervening equities any doubt should, as a general proposition, be resolved in favor of the movant to the end of securing a trial upon the merits”).

         B. ...


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