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Trainer v. New Mexico Department of Corrections

United States District Court, D. New Mexico

May 2, 2019

SANDY TRAINER, on behalf of herself and all others similarly situated, Plaintiff,


          Jerry H. Ritter, U.S. Magistrate Judge.

         This matter comes before the Court on Defendant's Motion to set Aside Clerk's entry of Default and Supporting Memorandum Brief, [Doc. 8], filed December 20, 2018. Pursuant to the provisions of 28 U.S.C. Sections 636(b)(1)(B) and (b)(3) and Federal Rule of Civil Procedure 72(b), presiding District Judge Martha Vázquez referred Defendant's Motion to the undersigned Magistrate Judge to issue proposed findings and a recommended disposition. [See Doc. 24]. Having considered the parties' briefs and all pertinent authority, the Court recommends that Defendant's Motion be granted and that the Clerk's entry of default be set aside.

         I. BACKGROUND

         Sandy Trainer initiated this action against the State of New Mexico Corrections Department (“the Department”) via a Class Action Complaint, filed September 26, 2018. [See generally Doc. 1]. In her Complaint, Ms. Trainer alleges that she and other similarly situated women were discriminated against on the basis of their sex by being misclassified as independent contractors. [See id., p. 1]. Ms. Trainer alleges that her male counterparts transitioned from contractor status to full employee status while she and other similarly situated women “were kept at contractor status on account of their sex.” [Id., p. 5]. Ms. Trainer also alleges that she was “retaliated against for her report of a September 2015 assault by Andy Ray. . . . [by] being blacklisted from moving from contractor status to employee status.” [Id.]. On the basis of these facts, Ms. Trainer brings claims under Title VII and the New Mexico Human Rights Act. [Id., pp. 4-5].

         Summons were issued on September 27, 2018, and Ms. Trainer served the Department on October 3, 2018. [See Doc. 3]. The Department did not answer or otherwise response to Ms. Trainer's Complaint, so she filed an Application for Entry of Default under Federal Rule of Civil Procedure 55(a) on November 6, 2018. [Doc. 3]. The Clerk subsequently entered default on November 7, 2018. [Doc. 4].

         Roughly a month and a half later, on December 20, 2018, the Department entered an appearance, filed an Answer and jury demand, and filed the instant Motion to set aside the Clerk's entry of default. [See Docs. 5, 6, 7, 8]. The Department's explanation for its delay relates to the requirements for service under New Mexico law. [See Doc. 8, p. 3]. That is, under the New Mexico Rules of Civil Procedure, Ms. Trainer was required to serve both the Department and the New Mexico Attorney General. [See Id. (quoting Rule 1-004(H) NMRA)]. The Department admits that there is no such requirement under the Federal Rules, but nonetheless argues that its mistake was reasonable because, under those Rules, a plaintiff is required to either serve the chief executive officer of a state-created governmental organization or to effect service in accord with state law (requiring service on both the Attorney General and the Department). [See Id. (quoting Federal Rule of Civil Procedure 4(j)(2)]. Further complicating the matter, explains the Department, is the fact that this is not Ms. Trainer's only lawsuit against it. [See id., p. 1]. Rather, Ms. Trainer currently has a suit pending in the First Judicial District Court for the State of New Mexico against the Department and, as of the filing of the instant Motion, she had not served the Attorney General, meaning that service of process has not been accomplished in the state case. [Id., p. 3]. As such, because the Attorney General has not been served, counsel for the Department did not believe that it had been served in the federal case “until it was discovered that the Clerk's Entry of Default had been entered.” [Id.]. Given this confusion, the Department moves the Court to set aside the Clerk's entry of default. [See generally Doc. 8].

         Ms. Trainer's opposition to the Department's Motion is straightforward. [See generally Doc. 10]. Most basically, she argues that the Department has done nothing to shoulder its admittedly light burden to demonstrate “good cause” to set aside the default under Rule 55(c) because it has failed to demonstrate that it did not act culpably in failing to answer, and has not set forth sufficient facts to demonstrate it has a meritorious defense to Ms. Trainer's allegations. [Id., p. 1]. Thus, she argues that the Department's Motion should be denied. [Id.]. The Department's Reply brief counters that an unintentional or good faith mistake does not rise to the level of culpable conduct under Rule 55(c), that it has in fact set forth a meritorious defense through its Answer, and that Ms. Trainer has failed to demonstrate prejudice. [See generally Doc. 12');">12');">12');">12]. For the reasons that follow, the Court finds the Department's arguments to be more convincing at this stage of the proceedings.


         “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) (citing Meeker v. Rizley, 324 F.2d 269 (10th Cir. 1963)). “The default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights.” In re Rains, 946 F.2d 731, 732-733 (10th Cir. 1991) (quoted authority omitted). Thus, “this judicial preference is counterbalanced by considerations of social goals, justice and expediency[, ] a weighing process which lies largely within the domain of the trial judge's discretion.” Gomes, 420 F.2d at 1366 (footnotes omitted).

         “Under Rule 55(c), good cause is required to be shown for the court to set aside an entry of default.” Hunt v. Ford Motor Co., 8');">65 F.3d 178, *3 (10th Cir. 1995) (unpublished) (citing Fed.R.Civ.P. 55(c)). “[T]he good cause required by Fed.R.Civ.P. 55(c) for setting aside an entry of default 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 & Assocs., Inc. v. Pack-Tech Int'l Corp., 115 F.3d 767, 775 n.6 (10th Cir. 1997). As such, “entries of default are often set aside. The requisite ‘good cause' … is not ‘good cause' for the defendant's mistake, but rather ‘good cause' justifying the court's decision to set the default aside.” Quintana v. Arbogast, CV 08-112');">12');">12');">127 BB/LFG, 2010 WL 11626764, at *3 (D.N.M. 2010) (quoted authority omitted).

         “In deciding whether to set aside an entry of default, courts may consider, among other things, whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented.” Watkins v. Donnelly, 551 Fed.Appx. 953, 958 (10th Cir. 2014) (unpublished) (quoting Pinson v. Equifax Credit Info. Servs., 316 Fed.Appx. 744, 750 (10th Cir. 2009) (unpublished)). “These factors are not ‘talismanic' and the court may consider other factors.” Hunt, 65 F.3d at *3 (quoting In re Dierschke, 81');">975 F.2d 181, 184 (5th Cir. 1992)). For example, “[o]ne of the other factors that courts have considered is whether the dispute involves a substantial amount of money.” Roberson v. Farkas, CV 09-0795 JCH/WDS, 2011 WL 13117113, at *4 (D.N.M. 2011). “Another factor supporting setting aside the default are Defendants' efforts to cure the default.” Clawson v. Southwest Cardiology Associates, P.A., CV 99-0379 MV/RLP, 2000 WL 36739788, at *4 (D.N.M. 2000). “Ultimately, the factors a court considers should be liberally applied in favor of setting aside the entry of default to allow a determination on the merits.” Niederstadt v. Eldridge, CV 16-0255 SMV/CG, 2016 WL 9777152, at *3 (D.N.M. 2016). “However, the court need not consider all the factors. If 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, 65 F.3d at *3.

         “Generally, a defendant's conduct is considered culpable if he has defaulted willfully or has no excuse for the default.” Id. (citations omitted). Mere negligence will not suffice. Watkins, 551 Fed.Appx. at 958. Nor will “an honest mistake” or “inadvertent mistakes.” See E.E.O.C. v. Bell Gas, Inc., CV 02-1090 WJ/DJS, 2003 WL 27385375 at *2 (D.N.M. 2003); see also Clawson, 2000 WL 36739788, at *4. Moreover, “[d]efault is discouraged where counsel's inadvertence, rather than defendant's bad faith, has cause the late filing of an Answer.” Chavez v. Dennis, CV 05-0186 MCA/ACT, 2006 WL 8444274, at *2 (D.N.M. 2006). That said, a defendant's conduct is culpable if it fails to answer or otherwise respond to the complaint after receiving actual notice of the complaint. Hunt, 65 F.3d at *4. A defendant's conduct in failing to answer is also culpable where it “was an informed choice based on the advice of counsel.” Cadigan & Park, P.C. v. Abbasid, Inc., CV 10-0694 WJ, 2010 WL 11527156, at *3 (D.N.M. 2010). Likewise, the defendant's sophistication and experience as a litigant matters. Id.

         In assessing prejudice, the Tenth Circuit has indicated that there is none where the defaulting party subsequently files a responsive pleading and participates in the lawsuit. See U.S. v. Rice, 898');">295 Fed.Appx. 898, 901 (10th Cir. 2008) (unpublished); see also Niederstadt, 2016 WL 9777152, at *3. Thus, “[t]he fact that a plaintiff will have to litigate an action on the merits rather than proceed by default does not constitute prejudice.” Chavez, 2006 WL 8444274, at *3 (quoted authority omitted).

         Finally, the defaulting party must demonstrate a meritorious defense to the action. SeeGomes, 420 F.2d at 1366. “In an attempt to determine the meritorious nature of a defense, the trial court must have before it more than mere allegations that a defense exists.” Id. “Bald allegation[s]” without the support of underlying facts, will not sustain the burden of the defaulting party.” Id. However, “[i]t does not take much to establish the existence of a meritorious defense sufficient to set aside a default - only the alleging of sufficient facts that, ...

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