Otter Products, LLC v. Meadows Jones

Background

The Clerk entered a certificate of default against Megan Meadows Jones on October 24, 2022. After Otter Products, LLC asked for a default judgment and permanent injunction, the Court issued an order requiring Jones to explain why that relief should not be entered. Jones filed a response on February 14, 2023. The Court treated that response as both opposition to Otter Products’ motion and a cross-motion under Federal Rule of Civil Procedure 55(c) to vacate, or set aside, the entry of default.

Legal standard

Under Rule 55(c), a court may set aside an entry of default for good cause. The Court considered whether Jones’s failure to respond had been willful, whether setting aside the default would prejudice Otter Products, and whether Jones had presented a potentially meritorious defense. The Court also considered whether keeping the default would produce a harsh or unfair result. Because defaults are generally disfavored, doubts are resolved in favor of the party facing default.

Court’s analysis

The Court found good cause to vacate the entry of default. It found that Jones acted quickly after receiving notice of the order-to-show-cause papers, filing her response within one month. The Court also found that Otter Products had not established prejudice that would prevent the default from being vacated, and noted that Otter Products had not opposed Jones’s cross-motion.

The Court further found that Jones had raised defenses that could prove meritorious. Jones stated that her ex-husband had purchased phone cases from a local auction house, where they were marketed as Amazon returns and had an “LP inventory label.” She also stated that the cases appeared authentic and that she did not intend to sell counterfeit products. The Court concluded that a reasonable jury could reach a conclusion favorable to Jones, even though it could also find that her conduct showed willful blindness or reckless disregard.

Disposition

The Court denied Otter Products’ motion for default judgment without prejudice and granted Jones’s cross-motion to vacate the Clerk’s entry of default. The Clerk was directed to vacate the certificate of default. Jones was ordered to answer or otherwise respond to the complaint no later than April 3, 2023, and was warned that failing to respond could result in a default judgment. The Court also referred her to the Pro Se Intake Unit for procedural assistance and resources concerning possible pro bono counsel.