United States District Court, D. Colorado
MICKEY THRASHER and KIMBERLY CYR, on behalf of themselves and all others similarly situated, Plaintiffs,
ROCKY MOUNTAIN AUTO BROKERS, INC., Defendant.
A. BRIMMER, Chief United States District Judge
matter is before the Court on Defendant’s Motion to Set
Aside Entry of Default and to Dismiss for Lack of Subject
Matter Jurisdiction [Docket No. 15] filed on November 2,
2018. Plaintiffs’ Response to Defendant’s Motion
to Set Aside Clerk’s Entry of Default and to Dismiss
for Lack of Subject Matter Jurisdiction [Docket No. 16] was
filed on November 21, 2018. On December 6, 2018, defendant
filed Defendant’s Reply in Support of Motion to Set
Aside Entry of Default and to Dismiss for Lack of Subject
Matter Jurisdiction [Docket No. 19].
September 13, 2018, plaintiffs filed a class action complaint
asserting one claim under the Electronic Fund Transfer Act
(“EFTA”), 15 U.S.C. § 1693. Docket No. 1 at
1, ¶ 1. Plaintiffs allege that, on separate dates in
2017, they purchased vehicles on credit from
defendant’s automobile dealership. Id. at 3-4,
¶¶ 16-17; id. at 5, ¶¶ 27-28.
Plaintiffs claim that defendant conditioned the extension of
credit on plaintiffs’ consent to automatic electronic
fund transfer (“EFT”) payments, which violated
the EFTA. Id. at 4, ¶ 19; at 5, ¶ 30; at
10, ¶ 61.
affidavit of service states that Rocky Rodriguez was served
with the complaint and summons on September 27, 2018. Docket
No. 5 at 2. The affidavit lists Rodriguez as the owner of
defendant. Id. Defendant did not file an answer by
the applicable deadline. On October 26, 2018, plaintiffs
moved for a clerk’s entry of default under Rule 55.
Docket No. 6. The clerk entered default on October 29, 2018.
Docket No. 7.
received a copy of plaintiffs’ motion for entry of
default on October 31, 2018 [Docket No. 15 at 3, ¶ 10]
and filed this motion on November 2, 2018. Docket No. 15.
Court may set aside an entry of default for good cause.
See Fed. R. Civ. P. 55(c). “The 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.
to effectuate proper service, thus preventing the exercise of
personal jurisdiction over a party, constitutes good cause to
set aside an entry of default. See Two Moms and
a Toy, LLC v. Int’l Playthings, LLC, No.
10-cv-02271-PAB-BNB, 2012 WL 4355555 (D. Colo. Sept. 24,
2012) (setting aside entry of default for failure to
effectuate service); see also Kriston v. Peroulis,
No. 09-cv-00909-MSK-MEH, 2010 WL 11553397, at *2 (D. Colo.
Oct. 28, 2010) (“[P]rocedural deficiencies such as
inadequate service, lack of subject matter jurisdiction, or
lack of personal jurisdiction constitute good cause allowing
an entry of default to be set aside.”); see also
Insituform Techs., Inc. v. AMerik Supplies, Inc., 588
F.Supp.2d 1349, 1352 (N.D.Ga. 2008) (“W here service of
process is insufficient, the entry of default is void and
must be set aside.”).
Rule 4(h), a corporate defendant must be served either
“by delivering a copy of the summons and of the
complaint to an officer, a managing or general agent, or any
other agent authorized by appointment or by law to receive
service of process, ” Fed.R.Civ.P. 4(h)(1)(B), or by
“following state law for serving a summons in an action
brought in courts of general jurisdiction in the state where
the district court is located or where service is
made.” Fed.R.Civ.P. 4(h)(1)(A); Fed.R.Civ.P. 4(e)(1).
Colorado law provides that a corporate defendant may be
served by delivering a copy of the summons to the
corporation’s registered agent or that agent’s
secretary or, if no such person can be found in the state,
service may be made upon “any person serving as a
shareholder, member, partner, or other person having an
ownership or similar interest in, or any director, agent, or
principal employee of such entity, who can be found in this
state.” C.R.C.P. 4(e)(4)(G). The plaintiff has the
burden of establishing the validity of the service of
process. Fed. Deposit Ins. Corp. v. Oaklawn
Apartments, 959 F.2d 170, 174 (10th Cir. 1992).
affidavit of service indicated that service was effected upon
“Rocky Rodriguez as owner.” Docket No. 5 at 2.
Defendant argues Rodriguez is not the owner of the
corporation and, even if he was, this does not render him
capable of accepting service for the company under federal or
state procedural rules. Docket No. 15 at 7. Plaintiffs
contend that defendant held out Rodriguez as having authority
to act for the business because its website listed Rodriguez
as the company’s “General Manager.” Docket
No. 16-4 at 2. Further, plaintiffs point to Rodriguez’s
Facebook profile, where Rodriguez states he is the general
manager of the defendant corporation. Docket No. 16-6 at 2.
They argue that defendant held out Rodriguez as its general
manager and, in doing so, it “clothed [him] in apparent
authority to accept service” for defendant, making
service proper. Docket No. 16 at 7.
apparent authority can suffice to show authorization to
accept service under Rule 4 is an unsettled question.”
Chatman v. Condell Med. Center, 2002 WL 737051, at
*3 (N.D. Ill. Apr. 22, 2002). See Select Creations, Inc.
v. Paliafito Am. Inc., 830 F.Supp. 1223, 1238 (E.D. Wis.
1993) (“[I]t is relatively certain that apparent
authority is insufficient for the service or acceptance of
process.”); see also Annuity Plan of the Intern.
Union of Operating Engineers Local No. 649 v. DEM/EX Group,
Inc. , 2008 WL 4491951, at *2 (C.D. Ill. Oct. 2, 2008)
(“The doctrine of apparent authority, however, has no
applicability to the issue of service of process.”);
but see Trotter v. Tredick, 2013 WL 6633001, at *4
(D. Mont. Dec. 17, 2013) (considering whether office manager
had apparent authority to accept service for company).
Tenth Circuit has not determined whether apparent authority
applies in the service of process context. Regardless,
plaintiffs have not demonstrated Rodriguez had apparent
authority to accept service on behalf of defendant.
Rodriguez’s Facebook page cannot establish apparent
authority, which “must be established by an act of the
principal.” Pytlik v. Professional Res. Ltd.,
887 F.2d 1371, 1376 (10th Cir. 1989). And plaintiffs have not
established why defendant’s website, listing Rodriguez
as the general manager, without more, is sufficient to
demonstrate apparent authority. A general manager is not one
of the individuals enumerated in Rule 4(h) who may accept
service, and listing Rodriguez as such does not cloak him in
apparent authority to accept service on behalf of defendant.
have provided no evidence to demonstrate Rodriguez is a
proper recipient of process under Fed. R. Civ P. 4.
Inversora Murten, S.A. v. Energoprojekt Holding Co.,
2009 WL 179463, at *3 (D. Colo. Jan. 22, 2009) (“The
Plaintiff’s failure to show that this person was one of
those permitted to receive process under Fed.R.Civ.P.
4(h)(1)(B) prevents the Plaintiff from carrying its burden of
proving that its service was proper.”). Therefore, the
Court is unable to tell from the record whether defendant was
properly served and whether it has personal jurisdiction over
defendant. See ...