Lesnik v.Eisenmann SE

Background

Gregor Lesnik and Stjepan Papes filed three amended motions seeking default judgment against defendants who had not appeared: ISM Vuzem d.o.o.; ISM Vuzem USA, Inc.; Vuzem USA, Inc.; Robert Vuzem; Ivan Vuzem; HRID-MONT d.o.o.; Gregurec Ltd; LB Metal d.o.o.; Mos Servis, d.o.o.; Magna, d.o.o.; and We-Kr d.o.o. The motions concerned claims under the Fair Labor Standards Act, the False Claims Act, and the Trafficking Victims Protection Reauthorization Act.

The complaint alleged that Lesnik and Papes were recruited internationally, brought to the United States on B-1 visas, and assigned to construction work at various locations, including a Tesla manufacturing plant in Fremont, California. It further alleged that they were paid below minimum wage, required to work extreme hours, and subjected to threats and poor living conditions. These allegations were not decided in this order.

Legal standard

Under Federal Rule of Civil Procedure 55, a court may enter default judgment after the clerk has entered a defendant’s default. The decision is discretionary, and courts may consider the factors identified in Eitel v. McCool, including possible prejudice, the merits and sufficiency of the claims, the amount at stake, the possibility of factual disputes, whether the default resulted from excusable neglect, and the preference for decisions on the merits. A court also must determine that it has jurisdiction over the subject matter and the parties before entering judgment. A judgment entered without personal jurisdiction is void.

Ruling

The court found that the plaintiffs had adequately addressed subject-matter jurisdiction. Because each motion involved federal statutory claims, the court was satisfied that federal-question jurisdiction existed under 28 U.S.C. § 1331.

The court nevertheless held that the plaintiffs had not adequately established personal jurisdiction over each nonresident defendant. Although the motions appeared to rely on specific personal jurisdiction, they did not cite or apply the Ninth Circuit’s three-part test, which asks whether the defendant purposefully engaged with the forum, whether the claims arise from or relate to those activities, and whether exercising jurisdiction would be reasonable. The plaintiffs also had not provided sufficient allegations supporting general personal jurisdiction over each nonresident defendant.

The court separately identified service-of-process deficiencies. For Magna d.o.o., the plaintiffs had not stated that the documents sent by registered mail were written in or accompanied by a Slovenian translation, as Slovenia’s requirements for postal service under the Hague Service Convention required. For We-Kr d.o.o., the court stated that Croatia had objected to postal and personal service under the Convention and required the plaintiffs to clarify the method and legal basis for service.

Because the plaintiffs had not established personal jurisdiction, the court expressly did not reach the merits of the default-judgment motions or damages. It denied without prejudice all three amended motions for default judgment. The court allowed the plaintiffs 60 days to file renewed motions curing the identified deficiencies and warned that failure to do so would result in the motions being denied with prejudice.

Requests for judicial notice

The court granted the plaintiffs’ request for judicial notice of Federal Rule of Civil Procedure 4 and the Hague Service Convention. It denied the request as to the other submitted materials, including the materials identified as Exhibits C through E and Exhibits F through M. The court stated that Exhibits C through E were inadequately labeled, appeared not to contain the claimed Croatian reservations, and included untranslated Slovenian and Croatian laws. It did not rely on Exhibits F through M because it did not reach the merits of the trafficking claims or damages.