1

2

3 UNITED STATES DISTRICT COURT

4 DISTRICT OF NEVADA

5 * * *

6 RB PRODUCTS, INC., Case No. 3:19-cv-00105-MMD-WGC

7 Plaintiff, ORDER v. 8 RYZE CAPITAL, LLC, et al., 9 Defendants. 10 11 I. SUMMARY 12 Plaintiff RB Products, Inc. alleges that Ryze Capital Partners, LLC (“Ryze”), Ryze 13 employee Michael Brown (“Brown”), and other defendants utilized confidential information 14 that Plaintiff provided them under a joint venture agreement, but later excluded Plaintiff 15 from the venture. (ECF No. 44.) Before the Court is Brown’s Motion to Set Aside Clerk’s 16 Entry of Default and Request to Deem Answer Filed (“Motion”).1 (ECF No. 33.) For the 17 reasons explained below, the Court will grant the Motion and accept Brown’s late-filed 18 Answer. 19 II. BACKGROUND 20 A defendant who signs a waiver-of-service form must respond to the complaint 21 within 60 days from the date the form was sent within the United States. Fed. R. Civ. P. 22 4(d)(3). On February 22, 2019, Plaintiff’s counsel sent Brown’s counsel an amended 23 waiver-of-service form2 that incorrectly described February 20, 2019 as the form’s sent 24

25 1 The Court has reviewed Plaintiff’s response (ECF No. 43) and Brown’s reply (ECF No. 45). 26

2The case was originally filed in the unofficial southern division (2:19-cv-308), but it 27 was later transferred to the unofficial northern division in Reno (3:19-cv-105). (ECF No. 1 date. (ECF No. 18; ECF No. 43-4.) In March 2019, the parties attempted to negotiate a 2 settlement, but they were unsuccessful. (ECF No. 45-1 at 3.) On March 28, 2019, Brown’s 3 counsel at the time, Lisa Fuller, sent Plaintiff’s counsel the waiver form wherein Brown 4 crossed out the sent date and—instead of inserting the correct date—wrote “March 27, 5 2019” aside it. (ECF No. 18.) Brown claims that he conditioned his waiver of service on 6 additional time to respond to allow him enough time to find and retain new counsel 7 because Ms. Fuller could no longer represent him. (ECF No. 33-2 at 2; ECF No. 45 at 7.) 8 Plaintiff’s counsel rejected the revised date and requested that Brown sign the form without 9 modification (ECF No. 43-6 at 7-8). 10 Ryze retained Latham & Watkins LLP (“Latham”) as its counsel. (ECF No. 45-1 at 11 3.) On April 6, 2019, Brown learned that Latham could not represent him due to a conflict 12 of interest related to the fact that Brown is now an outside consultant and not an employee 13 of Ryze. (Id.) On April 22, 2019, Brown retained new counsel. (Id. at 4; ECF 33-2 at 2.) 14 Brown had until the end of April 23, 2019 to respond to the Complaint,3 but Plaintiff 15 filed a motion for entry of default that same day (ECF No. 30). On April 24, 2019, the Clerk 16 of Court entered default. (ECF No. 32.) On April 26, 2019, Brown filed this Motion, 17 attaching as an exhibit his Answer to the Complaint. (ECF No. 33; ECF No. 33-1). 18 III. BROWN’S MOTION TO SET ASIDE ENTRY OF DEFAULT 19 Rule 55(c) of the Federal Rules of Civil Procedure provides that “[t]he court may 20 set aside an entry of default for good cause . . . .” Fed. R. Civ. P. 55(c). In determining 21 whether good cause exists, a court must consider the three following “Falk factors”: “‘(1) 22 whether the plaintiff will be prejudiced, (2) whether the defendant has a meritorious 23 defense, and (3) whether culpable conduct of the defendant led to the default.’” Brandt v. 24 Am. Bankers Ins. Co. of Fla.,

(9th Cir. 2011) (quoting Falk v. Allen, 25

(9th Cir. 1984)). The court may refuse to set aside the default if it holds 26 3Based on the waiver-form sent date of February 20, 2019, the docket had 27 incorrectly set April 21, 2019, as the deadline for Brown to answer. (ECF No. 18.) But, as 1 any one of the three factors is true. U.S. v. Signed Personal Check No. 730 of Yubran S. 2 Mesle,

(9th Cir. 2010). 3 “‘[J]udgment by default is a drastic step appropriate only in extreme circumstances; 4 a case should, whenever possible, be decided on the merits.’” Mesle,

5 (quoting Falk,

) (alternation in original). The Falk factors are more liberally 6 applied in the context of a clerk’s entry of default than in the default judgment context. 7 Mesle,

n.1 (quoting Cracco v. Vitran Exp., Inc.,

(7th 8 Cir. 2009)); see also Haw. Carpenter’s Trust v. Stone,

, 513 (9th Cir. 1986). 9 “‘The court’s discretion is especially broad where . . . it is entry of default that is being set 10 aside, rather than a default judgment.’” O’Connor v. State of Nev.,

(9th 11 Cir. 1994) (quotation and citation omitted)). 12 Here, the first and third Falk factors tip in favor of setting aside the Clerk’s entry of 13 default. First, Plaintiff does not allege that setting aside the clerk’s entry of default will 14 prejudice it in any way. Nor does the Court find any prejudice because Brown filed this 15 Motion two days after the Clerk entered default. Such a brief delay so early in the 16 proceedings could not have resulted in prejudice. 17 Second, Brown’s tardiness was neither culpable nor the result of bad faith. “A 18 defendant’s conduct is culpable if he has received actual or constructive notice of the filing 19 of the action and intentionally failed to answer.” TCI Group Life Ins. Plan v. Knoebber, 244

(9th Cir. 2001) (emphasis in original). In order for a failure to answer to be 21 intentional, “the movant must have acted with bad faith.” Mesle,

. Rather 22 than “playing delay games” as Plaintiff alleges (ECF No. 43 at 5), Brown worked diligently 23 to obtain new counsel when he realized only a few weeks before his Answer was due that 24 Latham would not represent him.4 (ECF No. 45 at 7.) Additionally, Brown filed this Motion 25 only two days after the Clerk entered default (ECF No. 33.), further demonstrating that he 26 4Alternatively, Brown explains that his tardiness was not culpable because he 27 conditioned his waiver of service on an extension to May 27, 2019, to file his Answer. (ECF 1 did not intend to use his tardiness “to take advantage of [Plaintiff], interfere with judicial 2 decision making, or otherwise manipulate the legal process.” TCI Group, 244 F.3d at 697- 3 98; see also Mesle,

(setting aside an entry of default where movant 4 responded to the lawsuit as soon as he received notice of the entry of default); Chrome 5 Hearts, LLC v. Boutique Talulah, No. 2:12-CV-00280-MMD,

, at *3 (D. 6 Nev. Sept. 28, 2012) (setting aside entry of default where defendant filed its motion to set 7 aside one day after entry of default). Brown’s conduct was therefore not culpable. 8 In sum, the Court exercises its discretion to set aside the Clerk’s entry of default 9 under the circumstances presented here. Indeed, refusing to set aside the default would 10 be contrary to the Ninth Circuit’s long held policy in favor of deciding cases on the merits 11 whenever possible. Mesle,

(quoting Falk,

). 12 IV. BROWN’S REQUEST TO DEEM HIS LATE ANSWER FILED 13 Federal Rule of Civil Procedure 6(b)(1)(B) provides that the Court may, for good 14 cause, extend the time "on motion made after the time has expired if the party failed to act 15 because of excusable neglect.” Pioneer Investment Services Co. v. Brunswick Associates 16 Limited Partnership sets forth a four-part balancing test for considering whether there has 17 been “excusable neglect”: (1) the danger of prejudice to the non-moving party; (2) the 18 length of the delay and its potential impact on judicial proceedings; (3) the reason for the 19 delay, including whether it was within the reasonable control of the movant; and (4) 20 whether the movant acted in good faith. 507 US. 380, 395 (1993). While Pioneer involved 21 the Federal Rule of Bankruptcy Procedure 9006(b)(1), the Court made clear that the test 22 would also apply to Fed. R. Civ. P. 6(b)(1)(B). Id. at 391-92, 395. The weighing of Pioneer’s 23 equitable factors is within the discretion of the district court. Pincay v. Andrews,

(9th Cir. 2004). 25 The Court finds that Brown’s late Answer is the result of excusable neglect. Brown 26 promptly filed the Motion with his Answer only three days after his Answer was due. (ECF 27 1 || No. 33.) There is no indication that the short delay has either prejudiced Plaintiff or 2 || impacted the judicial proceedings. Furthermore, the delay was not Brown’s fault—in the 3 || few weeks leading up to the Answer deadline, Brown had to find new counsel who had to 4 || quickly familiarize themselves with this case. (ECF No. 45 at 7; ECF No. 45-1 at 2-3.) 5 || Finally, Brown acted in good faith because, after he learned on April 6, 2019 that Latham 6 || would not represent him, he promptly sought and retained counsel on April 22, 2019. (ECF 7 || No. 45-1 at 3.). The Court will accept Brown’s late-filed Answer. (ECF No. 33-1.) 8 | V. CONCLUSION 9 The Court notes that the parties made several arguments and cited to several cases 10 || not discussed above. The Court has reviewed these arguments and cases and determines 11 || that they do not warrant discussion as they do not affect the outcome of the Motion. 12 It is ordered that Defendant Brown’s Motion to Set Aside Clerk’s Entry of Default 13 || and Request to Deem Answer Filed (ECF No. 33) is granted. The Clerk is directed to set 14 || aside the entry of default against Brown (ECF No. 32). Brown will be permitted to file his 15 || Answer. (ECF No. 33-1.) 16 17 DATED THIS 4"" day of November 2019. 18 / Cle 19 IRANDA M. DU 50 CHIEF UNITED STATES DISTRICT JUDGE

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