G&G Closed Circuit Events, LLC v. Shahzad

Background

G&G Closed Circuit Events, LLC sued Samina Shahzad and AKS Grocery Corp., doing business as AKS Halal. G&G brought claims under the Communications Act of 1934 and the Cable Television Consumer Protection and Competition Act of 1992. G&G alleged that it had exclusive nationwide commercial distribution rights for a boxing event and that the defendants unlawfully intercepted and published the event at their commercial establishment.

The complaint was filed on September 11, 2020. The defendants were served in November 2020 but did not answer or otherwise respond by their deadlines. The Clerk’s Office entered certificates of default against both defendants on January 5, 2021. G&G then moved for a default judgment, which is a judgment requested because a defendant failed to respond.

The defendants’ counsel appeared on February 16, 2021. The defendants opposed the default-judgment motion and asked the court to vacate, or set aside, the certificates of default.

Legal Standard

Federal Rule of Civil Procedure 55(c) allows a court to set aside an entry of default for “good cause.” The court considered three factors: whether the default was willful, whether setting it aside would prejudice the opposing party, and whether the defendants had presented a potentially meritorious defense. A potentially meritorious defense need not be conclusively proven at this stage; the defendants needed to provide evidence of facts that could constitute a complete defense if proven at trial.

Court’s Analysis

The court found that the defendants’ failure to respond was not willful. A declaration from Kashif Shahzad, Shahzad’s son and AKS’s manager, stated that the defendants’ unfamiliarity with the United States legal system, misplaced reliance on an unretained attorney acquaintance, and the death of Shahzad’s friend in January 2021 contributed to the missed deadline. The court found no reason to question those statements and concluded that the conduct was not egregious.

The court also found that setting aside the defaults would not sufficiently prejudice G&G. G&G had not argued that the delay caused loss of evidence, made discovery more difficult, or created a greater opportunity for fraud or collusion. The court further noted that G&G had waited almost three years after the alleged conduct before filing suit, so the additional delay caused by the missed response deadlines was unlikely to prejudice G&G.

Finally, the court found that the defendants had presented potentially meritorious defenses. Their opposition argued that G&G’s claims were time-barred, that the Communications Act did not cover the alleged conduct, and that disputed facts could provide a defense. The defendants also submitted Kashif Shahzad’s sworn declaration in support of those arguments.

Disposition

Judge John P. Cronan concluded that all three factors supported a finding of good cause. The defendants’ request to vacate default was granted, and G&G’s motion for a default judgment was denied. The Clerk was directed to vacate the entries of default and terminate the pending motion. The court directed the parties to submit a joint letter and proposed case-management plan and required the defendants to answer the complaint or submit a required pre-motion letter concerning a possible motion under Rule 12 by April 2, 2021.

The opinion does not decide whether G&G will ultimately prevail on its Communications Act or cable-law claims. It resolves only the default and default-judgment motions.