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Gemalto S.A. v. CPI Card Group Inc.

United States District Court, D. Colorado

January 20, 2016

GEMALTO S.A., Plaintiff,
v.
CPI CARD GROUP INC., Defendant.

OPINION AND ORDER

RAYMOND P MOORE, UNITED STATES DISTRICT JUDGE.

Pending before the Court is Defendant CPI Card Group Inc.’s (“defendant”) motion to set aside the entry of default (“the set aside motion”) (ECF No. 31). Plaintiff Gemalto S.A. (“plaintiff”) has filed a response in opposition to the set aside motion (ECF No. 34), and defendant has replied (ECF No. 40). Plaintiff has also filed a motion for leave to file a sur-reply (ECF No. 41). Relatedly, plaintiff has filed a motion to strike defendant’s answer to the complaint (“the motion to strike”) (ECF No. 32). Defendant has filed a response to the motion to strike (ECF No. 33), and plaintiff has filed a reply (ECF No. 37).

For the reasons discussed herein, the set aside motion is GRANTED, the motion to strike is DENIED, and the motion for leave to file a sur-reply is DENIED.

I. Background

On October 13, 2015, in the U.S. District Court for the Western District of Texas (“the Texas Court”), plaintiff filed a Complaint (“the Complaint”) for patent infringement against defendant. (ECF No. 1-35 at 2.) Thereafter, without submitting an answer to the Complaint, defendant filed a combined motion to dismiss for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2) (“Rule 12(b)”), and, in the alternative, a motion to transfer to the District of Colorado (“the combined motion”). (ECF No. 1-14.) Following further briefing on the combined motion, on December 16, 2015, the Texas Court entered an Order granting the combined motion, in part, and denying the combined motion, in part. (ECF No. 1-34.) Specifically, the Texas Court granted the combined motion to the extent that plaintiff’s patent infringement action was transferred to this District, but denied the combined motion “[i]n all other respects.” (Id. at 11.)

As a result, the action was transferred to this Court and filed on December 21, 2015. Following the filing of a string of notices of appearance by attorneys for defendant on December 30, 2015 (ECF Nos. 9-11, 13-14), nothing occurred in this case until January 5, 2016, when plaintiff filed a motion for entry of default against defendant (“the default motion”) (ECF No. 20). Therein, plaintiff asserted that, in light of the Texas Court denying the combined motion with respect to its Rule 12(b) component, the time to file an answer to the complaint expired on December 30, 2015, pursuant to Fed.R.Civ.P. 12(a)(4) (“Rule 12(a)”).[1] (Id. at 2.) On the same day, defendant filed an opposition to the default motion (ECF No. 23), arguing that a responsive pleading in this case was not due until January 11, 2016-21 days after the Complaint was docketed with this Court, (id. at 1-2.) Defendant also asserted that plaintiff had not conferred with it, pursuant to D.C.Colo.L.Civ.R. 7.1, prior to filing the default motion. (Id. at 2-3.) Following plaintiff’s reply (ECF No. 24), the Clerk of Court entered default against defendant on January 6, 2016, (ECF Nos. 26, 27).

One day later, defendant filed its answer to the Complaint, as well as counterclaims against plaintiff. (ECF No. 28.) On the next day, January 8, 2016, defendant filed the instant motion to set aside. (ECF No. 31.) At or near the same time, plaintiff filed the instant motion to strike. (ECF No. 32.) Since then, the parties have filed various responses and replies to the two motions pending before the Court. (ECF Nos. 33, 34, 37, 40.)

II. Legal Standard

A court may set aside an entry of default for good cause. Fed.R.Civ.P. 55(c). The principal factors in determining whether a defendant has met the good cause standard are: (1) whether the default was the result of culpable conduct of the defendant; (2) whether the plaintiff would be prejudiced by setting aside the default; and (3) whether the defendant presents a meritorious defense. Pinson v. Equifax Credit Info. Services, Inc., 316 F. App’x 744, 750 (10th Cir. 2009); Hunt v. Ford Motor Co., 65 F.3d 178, 1995 WL 523646, at *3 (10th Cir. 1995) (unpublished). However, a court need not consider each of these factors, and may consider other factors. Guttman v. Silverberg, 167 F. App’x 1, 4 (10th Cir. 2005).

The good cause required for setting aside an entry of default under Fed.R.Civ.P. 55(c) (“Rule 55(c)”) “poses a lesser standard for the defaulting party than the excusable neglect which must be shown for relief from judgment under Fed.R.Civ.P. 60(b).” Dennis Garberg & Associates., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 775 n.6 (10th Cir. 1997). The preferred disposition of any case is upon its merits and not through default. Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970). Setting aside a default entry is addressed to the sound discretion of a district court. Nikwei v. Ross Sch. of Aviation, Inc., 822 F.2d 939, 941 (10th Cir. 1987).

III. Discussion

A. Motion to Set Aside the Entry of Default

The first consideration is the culpable conduct, if any, of defendant. Conduct is considered culpable if a party defaults willfully or has no excuse for the default. Hunt, 1995 WL 523646, at * 3. An example of culpable conduct is having actual notice of a complaint and failing to respond to it without evidence of good cause or an excuse for the failure. Id. at *3-4. Here, there is no such example of culpable conduct. Instead, the record reflects that defendant’s attorneys made a mistake in calculating when an answer should have been filed.

The root of defendant’s mistake was the transfer order from the Texas Court. Therein, as well as ordering that this case be transferred, the Texas Court also denied, “[i]n all other respects, ” the combined motion. (ECF No. 1-34 at 11.) The result of denying the combined motion in all other respects was that defendant’s request for dismissal under Rule 12(b)(2) was denied. This, in turn, triggered the 14-day filing deadline, under Rule 12(a)(4)(A), for a responsive pleading to the Complaint. Perhaps unaware of this provision, and/or perhaps more focused on measuring the responsive-pleading deadline from the date of filing the Complaint in this Court, defendant’s attorneys believed that an answer was not due until January 11, 2016. (See ECF No. 23 at 1-2.) While this may not have been attentive lawyering, the fact that this belief was wrong is not reason, standing alone, to bypass the merits of this case, given that the case has just begun and there is no evidence that the belief was anything other than genuine. (See ECF No. 23 at 1-2 (insisting that the answer deadline was January 11, 2016)); Hunt, 1995 WL 523646, at *3 (requiring conduct to be willful). To the extent that plaintiff argues that defendant’s conduct was willful for not ...


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