Pinknews Media Group LTD. v. Here Publishing Inc.

Background

Pinknews Media Group LTD., described in the complaint as an international LGBT+ media company, sued Here Publishing Inc. doing business as Pride Media, Oreva Capital Corp., Adam Levin, and Does 1-S0. Pinknews alleged that Here Publishing breached an advertising agreement. The complaint also asserted other claims, including fraud, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and conversion.

The clerk entered certificates of default against Here Publishing, Oreva, and Levin on November 8, 2019, after they failed to appear. Pinknews then sought a default judgment. After Pinknews submitted papers supporting that request, counsel for the defendants appeared, and the defendants moved to vacate the entries of default. They also moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(5), arguing lack of jurisdiction and insufficient service or process.

Motion to Vacate the Default

Under Rule 55(c), a court may set aside an entry of default for “good cause.” The court weighs three factors: whether the default was willful, whether the defendant has a potentially complete defense, and whether setting aside the default would prejudice the opposing party.

The court found that the default was willful. It rejected Levin’s account that he did not learn about the case until late March or early April 2020 and that staff miscommunication and the COVID-19 pandemic caused additional delay. The court relied in part on emails between Levin and Pinknews’s counsel in June 2019 and concluded that the defendants had deliberately disregarded the litigation.

The court nevertheless found that the defendants had presented meritorious defenses. It explained that this standard does not require the defendants to show that they would likely win. They had to identify defenses that, if proven, could completely defeat the claims. The court accepted as potentially valid the defendants’ arguments that the fraud and negligent-misrepresentation claims were based on statements about future conduct, that several claims duplicated the breach-of-contract claim, and that Pinknews might not have performed its own contractual obligations or might face contractual limits on damages.

The court also found insufficient prejudice to Pinknews. Pinknews did not argue that the delay caused loss of evidence or made discovery more difficult. Its concerns about alleged false statements and the defendants’ accounts did not justify the severe result of leaving the default in place.

Motion to Dismiss

The court denied the defendants’ motion to dismiss without prejudice to renewal. The opinion does not decide the defendants’ jurisdiction or service arguments on the merits. It directed the defendants to file any required pre-motion letters by April 20, 2021, if they wished to renew their request to dismiss the complaint.

Disposition

Judge Analisa Torres granted the motion to vacate the entry of default and denied the motion to dismiss without prejudice to renewal. The clerk was directed to terminate the motion at ECF No. 35.