Vega v. Regent Hospitality Linen Services, LLC

Background

The court reviewed the parties’ submissions concerning the Clerk of Court’s entry of default against Regent Hospitality Linen Services, LLC. Plaintiff Rosario Vega had filed a motion for default judgment. The court considered whether there was “good cause” under Federal Rule of Civil Procedure 55(c) to set aside the entry of default.

Court’s Analysis

The court applied the Second Circuit’s three-factor test: (1) whether the default was willful, (2) whether the defendant had a potentially meritorious defense, and (3) whether setting aside the default would prejudice the non-defaulting party.

First, the court found no indication that the defendant’s default was willful. Even accepting Vega’s argument that service through the New York Secretary of State was proper, the defendant’s apparent failure to update or correct its address with the Secretary of State did not, by itself, establish intentional default. The defendant’s prompt appearance after Vega filed the default-judgment motion also supported the conclusion that it intended to defend the case.

Second, the court found little likelihood of prejudice from the short delay. The court concluded that the delay was unlikely to cause loss of evidence, make discovery more difficult, or create a greater opportunity for fraud or collusion. Vega’s general statement that the delayed appearance caused unnecessary delays did not establish prejudice.

Third, the court found that the defendant met the low standard for showing a potentially meritorious defense. Vega conceded that the defendant might be entitled to dismissal of his claims under New York Labor Law Section 191 concerning delayed wages, based on a Second Department decision. The court did not decide whether that defense would ultimately succeed; it held only that the defendant did not need to prove the defense conclusively at this stage.

Disposition

The court set aside the Certificate of Default against the defendant under Rule 55(c). Because the default was set aside, the court denied Vega’s motion for default judgment as moot. It also adjourned the hearing scheduled for July 29, 2024 without setting a new date, ordered the defendant to respond to the complaint by July 24, 2024, and directed the Clerk of Court to close Docket Number 17. The order did not decide the merits of Vega’s delayed-wage claims or the defendant’s potential defense.