Doe v. Baram

Background

Jane Doe sued Jonathan Baram and Warren & Baram Management LLC (WBM) under the federal sex-trafficking statute, 18 U.S.C. §§ 1591 and following, and state laws. According to the complaint, Baram and WBM participated in trafficking Doe, who was 17 at the time, for the purpose of her sexual assault by Peter Nygard in 2007. The opinion states that WBM was a New York-registered limited liability company that represented models and actors, and that Baram was its president and sole owner.

WBM was served with the complaint through Baram. During a February 2021 conference, the court warned Baram that he could represent himself but that WBM had to be represented by a lawyer or risk default. The court later ordered WBM to retain counsel by April 12, 2021. No lawyer appeared for WBM, and the Clerk entered default. After another hearing at which no lawyer appeared for WBM, the court entered default judgment against it on May 19, 2021. Doe later dismissed her claims against Baram without prejudice, leaving WBM as the only defendant.

WBM obtained counsel in January 2023 and moved in February 2023 to set aside the default judgment. WBM argued that its failure to obtain counsel was not willful because Baram had contacted lawyers who would not take the case, that WBM had defenses to Doe’s allegations, and that setting aside the default would not prejudice Doe. WBM also argued that equitable considerations and the amount of money sought supported relief. Doe opposed the motion, arguing that WBM’s default was deliberate and that WBM had offered only conclusory denials rather than evidence supporting a defense.

Legal standard

Federal Rule of Civil Procedure 55(c) allows a court to set aside an entry of default for “good cause.” Because a default judgment had been entered, the court applied the more demanding standard associated with Rule 60(b). The court considered three factors: whether the default was willful, whether the defendant had a meritorious defense, and whether setting aside the default would prejudice the opposing party. The court also considered equitable factors, such as whether the default resulted from a good-faith mistake or would produce a harsh or unfair result.

A meritorious defense requires facts that would constitute a complete defense if proven at trial. The court explained that a defendant need not prove the defense conclusively at this stage, but must provide more than unsupported denials or promises to produce evidence later.

Court’s analysis

Willfulness. The court found that WBM’s default was willful. Baram and WBM were repeatedly warned that WBM needed a lawyer, and WBM had ample time to obtain one. Before the default judgment was entered, neither WBM nor Baram told the court that they were trying to retain counsel, requested additional time, or otherwise opposed the default. The court also relied on Baram’s statements that the default had been “volunteered” and that he had “let Warren & Baram go [into default].” The court stated that even if WBM could not afford a lawyer, it had not brought that issue to the court’s attention before the motion to set aside the judgment.

Meritorious defense. The court rejected WBM’s argument that the complaint contained no allegations against it. Because the complaint referred to Baram and WBM collectively as “Defendants,” the court treated allegations attributed to “Defendants” as applying to WBM as well. The court also rejected WBM’s factual denials because WBM offered no supporting evidence and only promised that evidence would be presented later. The court therefore found that WBM had not shown a meritorious defense.

Prejudice. The court stated that the findings of willfulness and lack of a meritorious defense were enough to resolve the motion without considering prejudice. It nevertheless considered the issue. WBM criticized Doe’s motives but did not directly show that setting aside the default would not prejudice her. The court therefore found that WBM had not met its burden on this factor.

Equitable arguments. The court rejected WBM’s argument that Baram’s self-represented status and the amount of money at issue justified relief. A corporation cannot represent itself in federal court, and Baram could not represent WBM. The court had repeatedly told him that WBM needed a lawyer. The court also found that WBM provided no adequate support for its assertion that the potential monetary judgment would be harsh or unfair.

Rule 60(b). The court ruled that WBM’s separate argument under Rule 60(b) was premature. Rule 60(b) applies to final judgments, and the court explained that no final judgment existed because damages still had to be determined in proceedings before a magistrate judge. Thus, Rule 60(b) did not apply to WBM’s motion.

Disposition

Judge Edgardo Ramos denied WBM’s motion to vacate default judgment. The Clerk was directed to terminate the motion. The opinion does not state the final amount of damages, and it explains that damages proceedings remained outstanding.