Williams v. Firequench, Inc.

Background

Shatoya Williams sued Firequench, Inc. d/b/a Firetronics, alleging that the company refused to consider her for a fire alarm technician position because she is a woman, in violation of federal, New York State, and New York City laws. Williams served Firequench through the New York Secretary of State on May 19, 2021. Firequench did not answer, respond, or appear.

The Clerk issued a certificate of default, and the Court entered a default judgment against Firequench as to liability. The Court referred damages to Magistrate Judge James L. Cott, who recommended an award of $142,421.45, plus pre-judgment interest on back pay and post-judgment interest on all amounts awarded. Before the objection period for that recommendation ended, Firequench appeared and moved to vacate, or undo, the default judgment.

Rule applied

The Court held that Federal Rule of Civil Procedure 55(c), rather than Rule 60(b), governed because the damages inquest recommendation had not yet been adopted as a final judgment. Rule 55(c) permits a court to set aside a default for “good cause.” Courts consider three factors: whether the default was willful, whether the defendant has a meritorious defense, and whether setting aside the default would prejudice the nondefaulting party. The Court stated that willfulness carries the most weight.

Willful default

The Court found that Williams properly served Firequench through the Secretary of State and that Firequench was responsible for keeping its address on file current. The Court also explained that actual receipt of the papers from the Secretary of State was not required to make service proper.

The Court nevertheless noted that failure to appear alone does not establish a willful default, because negligence—such as failing to update a corporate address—may not be enough. Here, however, the Court found that Firequench had made a false representation about how it learned of the lawsuit. Firequench’s owner, Desmond Burke, submitted a sworn statement saying that the company first learned of the case when it received the damages report from the Division of Labor Standards on August 31, 2022.

The Court found that account not credible. An envelope first submitted by Firequench had been cut off on the side and top. A later, fuller image showed a postage date of July 21, 2022—nearly a month before Magistrate Judge Cott issued the report on August 19, 2022. Firequench did not explain the date, why the Division of Labor Standards would have mailed the report, or why the agency would have sent it without an explanation. Firequench also did not provide the requested proof from the agency. The Court concluded that the account was more likely false and fabricated than true, found egregious bad faith, and determined that Firequench’s default was willful.

Meritorious defense

The Court also concluded that Firequench had not shown a meritorious defense. Firequench argued that Williams was not qualified because she lacked two years of alarm-technician experience. But the job posting described that experience as “preferred,” not necessary, and Williams’s résumé listed technical training involving fire alarm systems. The Court therefore found that the qualifications argument did not provide a complete defense to Williams’s discrimination claims. Firequench’s assertion that it hired a candidate with superior qualifications was also insufficient because it was not supported with enough facts and raised questions about whether the stated reason was a pretext for discrimination.

Prejudice

The Court found that reopening the case would also prejudice Williams. More than two years had passed since the alleged events, discovery had not begun because of Firequench’s nonappearance, and the case depended in part on identifying and questioning people involved in the hiring-related telephone conversations. The Court found Williams’s concern that witness memories would fade and evidence would be lost to be plausible.

Disposition

Judge Paul A. Engelmayer denied Firequench’s motion to vacate the default judgment. The Court stated that all three factors disfavored vacatur. The Clerk was directed to terminate the motion, and the Court reopened the parties’ deadline to object to Magistrate Judge Cott’s damages recommendation until one week after the decision.