United States District Court, D. Colorado
JESSE R. GRAY, JONATHAN VEATCH, and DANIELLE COCHRAN, individuals on behalf of themselves and all others similarly situated, Plaintiffs,
KNIGHT SECURITY AND PATROL, INC., a Colorado corporation, and RYAN M. KNIGHT, an individual, Defendants.
A. BRIMMER United States District Judge
matter is before the Court on the Motion to Set Aside Entry
of Default [Docket No. 30] filed by defendants Knight
Security and Patrol, Inc. (“Knight Security”) and
Ryan Knight. In their motion, defendants requests that the
Court vacate the Entry of Default [Docket No. 27] entered by
the Clerk of the Court on February 23, 2017.
December 15, 2016, plaintiffs filed a complaint asserting
claims against defendants for violations of the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. §§
201 et seq., the Colorado Minimum Wage Order
(“CMWO”), 7 Colo. Code Regs. §1103-1, and
for unjust enrichment. Docket No. 1. Plaintiffs filed an
amended complaint on January 23, 2017. Docket No. 13.
initially requested entry of default on February 1, 2017.
Docket Nos. 14, 16. The Clerk of the Court did not enter
default because plaintiffs failed to comply with Fed.R.Civ.P.
55 and failed to supply sufficient information with respect
to service of the amended complaint. Docket Nos. 15, 17. On
February 1, 2017, plaintiffs moved to withdraw their amended
complaint. Docket No. 18. The Court granted plaintiffs'
motion on February 9, 2017. Docket No. 21. On February 21,
2017, plaintiffs renewed their motion for entry of default
pursuant to Rule 55(a) of the Federal Rules of Civil
Procedure because of defendants' failure to respond or
otherwise defend the case. Docket No. 26. In support of
default, plaintiffs alleged that defendants were served with
the complaint on January 10, 2017. See Docket No.
26-2 at 1, ¶ 2. The Clerk entered default against
defendants Knight Security and Ryan Knight on February 23,
2017. Docket No. 27.
their motion to vacate the entry of default, defendants argue
that, while they were properly served with the summons on
January 10, 2017, they mistakenly believed that service was
not proper. Docket No. 30 at 3-6. In support, they submit two
declarations from defendant Ryan Knight. Docket Nos. 30-1,
33-1. In the declaration attached to the motion, Mr. Knight
states that, on January 10, 2017, a process server handed him
the summons and complaint for both himself and Knight
Security. Docket No. 30-1 at 1-2, ¶ 2. At the time, Mr.
Knight noticed that the “proofs of service on the
second page of the two summons . . . were blank.”
Id. He asked the process server to complete and sign
the proofs of service, but the process server stated that
“he doesn't do that” and left. Id.
Mr. Knight states that, after receiving the summons, he
“contacted a friend . . . who is a lawyer in Louisiana
and told him what had happened.” Id. at 2,
¶ 3. According to Mr. Knight, his friend informed him
that he and Knight Security “didn't need to respond
because the proofs of service weren't completed and
signed.” Id. Mr. Knight's wife called
plaintiffs' counsel on January 31, 2017 and left a
[Ryan Knight] received some documentation for a civil suit
for unfair labor. Unfortunately, whoever served just left it
at one of our offices. Nothing was completed, nothing was
signed by any kind of server, it was not noted to be signed
Ryan Knight or [unintelligible]. It does say that we have to
file within 21 days but there is no date. So if you could
please give us a call at 504-722-2339, and let us know
because it does say that it has to be sent to your office
which is why I'm calling. So we just wanna make sure what
are the dates, and if we need to redo this all over again
because it was not properly served, and it was not received
by Ryan Knight himself, nor signed or sent to us. It was
given to a employee at an office. So please give us a call
back to let us know what we need to do with this. I would
really appreciate it. Thank you.
Docket No. 26-2 at 1-2, ¶ 5. Mr. Knight states that he
retained counsel on March 15, 2017 and was advised to file
the instant motion. Docket No. 30-1 at 2, ¶ 6.
their reply, defendants submit a second declaration from Mr.
Knight. Docket No. 33-1. In the second declaration, Mr.
Knight states that his attorney friend “is a family
member who has been a member of the Louisiana bar for 30
years.” Mr. Knight states that, “[w]hen I told
her that the proofs of service on the summons had not been
completed and executed . . . my attorney family member
did tell me that service of process was not
valid.” Docket No. 33-1 at 1-2, ¶ 2 (emphasis in
original). Mr. Knight states that he did not consult a
Colorado attorney and acknowledges that, “[b]ased on my
representation to my attorney family member about the proofs
of service, she gave me wrong advice about when and whether
to file a response to the complaint.” Id. In
support of his reply, Mr. Knight also discusses his
experience in serving process and states that his experience
led him to believe that he was not properly served.
Id. at 2-3, ¶¶ 3-4.
addition to claiming that they relied upon bad advice and Mr.
Knight's limited knowledge about serving process in
failing to respond to plaintiffs' summons, defendants
argue that vacating the default in this case would not result
in any prejudice to plaintiffs and that defendants have
meritorious defenses to plaintiffs' claims. Docket No. 30
Court may set aside an entry of default for good cause.
See Fed. R. Civ. P. 55(c). This good cause standard
is a less demanding standard than the excusable neglect
standard which must be shown for relief from judgment under
Fed.R.Civ.P. 60(b). Dennis Garberg & Assocs., Inc. v.
Pack-Tech Int'l Corp., 115 F.3d 767, 775 n.6 (10th
Cir. 1997). In determining whether to vacate the Clerk's
entry of default, the Court may consider the following
factors: (1) whether the defendants' culpable conduct led
to the default; (2) whether the plaintiffs will be prejudiced
by setting aside the entry of default; and (3) whether the
defendants have a meritorious defense. See Hunt v. Ford
Motor Co., 1995 WL 523646, at *3 (10th Cir. Aug. 29,
1995) (citing In re Dierschke, 975 F.2d 181, 183
(5th Cir. 1992)). The Court need not consider each one of
these factors and may consider other factors in its
discretion. Id. Guiding the Court's analysis is
the time-honored principle that “[t]he preferred
disposition of any case is upon its merits and not by default
judgment.” Gomes v. Williams, 420 F.2d 1364,
1366 (10th Cir. 1970); see also Katzson Bros., Inc. v.
E.P.A., 839 F.2d 1396, 1399 (10th Cir. 1988) (noting
that “default judgments are not favored by
courts”). It is, however, within the Court's
discretion to balance the judicial preference against default
judgments with considerations of social goals, justice, and
expediency. Gomes, 420 F.2d at 1366.
respect to the first factor, the parties dispute the facts
surrounding defendants' failure to answer. According to
plaintiffs, “Ryan Knight is a lying liar, who
lies” and has attempted to avoid service in this matter
in bad faith. Docket No. 31 at 1-3. Because defendants have
conceded that they were properly served, the relevant
question is whether defendants' failure to answer was
willful. See Hunt, 1995 WL 523646, at *3
(“Generally a [party]'s conduct is considered
culpable if he has defaulted willfully or has no excuse for
the default”) (citing United States v. Timbers
Preserve, Routt Cty., Colo., 999 F.2d 452, 454 (10th
Cir. 1993), abrogated on other grounds by Degen v. United
States, 517 U.S. 820, 825 (1996)). Mr. Knight, on behalf
of himself and Knight Security, states that defendants relied
upon the advice of a Louisiana attorney when they failed to
answer the complaint. Docket No. 30-1 at 2, ¶ 3.
Plaintiffs argue that Mr. Knight's explanation is
implausible because he never mentioned a lawyer to several
long-time employees and the advice he received would have
been improper even under Louisiana law. Docket No. 31 at 5-7.
Knight's declarations contain inconsistencies that
undermine his credibility. In his first declaration, Mr.
Knight claims that the attorney he talked to is a male:
“I contacted a friend of mine who is a lawyer in
Louisiana and told him what had happened.” Docket No.
30-1 at 2, ¶ 3. In his second declaration, Mr. Knig ht
claims that the attorney is a female: “My attorney
friend does indeed ‘exist.' She is a family member
who has been a member of the Louisiana bar for 30
years.” Docket No. 33-1 at 1-2, ¶ 2. Mr.
Knight's inconsistences regarding the attorney's
gender render his claim of consulting with an attorney
unbelievable. The Court finds that defendants have failed to
show good cause based on the claim of attorney advice and
also finds that defendants fail to show good cause based on
Mr. Knight's previous experience as a process server,
given that Mr. Knight does not claim to have relied on that
factor in not responding to the complaint.
the default was the result of the defendant's culpable
conduct, the district court may refuse to set aside the
default on that basis alone.” Hunt, 1995 WL
523646 at *3 (citations omitted). While the Court finds that
Mr. Knight's culpable conduct led to defendants'
default in this matter, the Court considers whether the other
factors demonstrate good cause for setting aside the default
in this case. See Crutcher v. Coleman, 205 F.R.D.
581, 584 (D. Kan. 2001).
respect to the second factor, the Court finds no prejudice to
plaintiffs in setting aside the entry of default because
defendants moved to vacate the entry of default within a
month of the Clerk's entry of default. See Apex
Mobility Transportation, LLC v. First Transit Inc., No.
14-cv-02645-REB-MEH, 2015 WL 59553, at *3 (D. Colo. Jan. 2,
2015) (“[T]he Court finds no prejudice to Plaintiffs in
setting aside the entry of default because Defendant moved to
vacate the entry of default within two weeks of the
Clerk's entry of default.”). While plaintiffs argue
that they will be prejudiced because defendants may destroy
evidence in this case if the default is vacated, Docket No.
31 at 11, they offer no evidence that defendants have
destroyed evidence in this or other proceedings and request
that the Court infer such a risk based on allegations related
to Mr. Knight's character. Given that it is still early
in the case, the Court finds that plaintiffs will suffer no
prejudice if the entry of default is ...