Greist v. LendUS

Background

The case is a collective action under the Fair Labor Standards Act. Defendant CrossCountry Mortgage, LLC moved under Federal Rule of Civil Procedure 55(c) to set aside an entry of default entered against it on April 14, 2025. The court decided the fully briefed motion without a hearing and denied it.

Legal standard

The court explained that an entry of default may be set aside for “good cause.” It considered whether CrossCountry engaged in culpable conduct leading to the default, whether CrossCountry had a potentially meritorious defense, and whether setting aside the default would prejudice the plaintiffs. The court stated that any one of these factors may support denying relief.

Court’s analysis

The court found that CrossCountry’s conduct was deliberate and designed to manipulate the legal process and take advantage of the plaintiffs. CrossCountry had defended the action until it agreed to extend its deadline to answer the operative complaint to March 28, 2025. It then failed to answer, appeared at an April 24, 2025 case management conference, and acknowledged that a motion to set aside the default would be needed. CrossCountry did not file that motion until July 1, 2025, more than two months later.

The court also found that CrossCountry stopped defending the case at a critical point. It did not file a substantive response to the plaintiffs’ motions for equitable tolling and conditional certification of the collective, even after the court set a new response deadline. The court rejected CrossCountry’s explanation that it had no substantive information to add because the plaintiffs asserted claims against it under a successor-in-interest theory. The court noted that CrossCountry’s tolling agreement with the plaintiffs was relevant to the motions.

The court concluded that the timing of CrossCountry’s motion showed culpable conduct and that this finding alone was sufficient to deny the motion. It nevertheless considered prejudice. The court found that the plaintiffs had been deprived of the benefits of the tolling agreement because CrossCountry remained in default when the plaintiffs sought to invoke it. As a result, the plaintiffs could not pursue claims outside the applicable limitations period that the agreement would have expanded. The court also found that setting aside the default would create a greater opportunity for fraud or collusion.

Although CrossCountry argued that it had meritorious defenses, the court concluded that the circumstances were sufficiently serious to deny relief.

Disposition

Judge Araceli Martinez-Olguin ordered that CrossCountry’s motion to set aside the default be DENIED.