Opinion
Case No. 2:08-cv-1162.
June 7, 2011
OPINION AND ORDER
After this Court entered the defendant's default for failure to answer the complaint in a timely fashion, defendant Aeon Group, LLC moved to set aside the default. In an Opinion and Order filed on September 1, 2010, the Court, after conducting an extensive review of the issue, conditionally denied the motion, finding that two of the three relevant factors — the reason for the delay in answering, and the prejudice to the plaintiff — favored setting aside the default, but that Aeon had not presented any evidentiary support for its claim that it has a meritorious defense in this case. See Shaw v. Aeon Group, LLC, 2010 WL 3489388 (S.D. Ohio September 1, 2010). The Court's order provided, however, that Aeon could file "an amended motion to vacate, setting forth the facts and evidence that would establish a meritorious defense." Id. at *5. Failing that, the Court announced its intention to grant a default judgment on liability and schedule a hearing on damages. Id.
After several extensions of the date for filing the amended motion, Aeon filed that motion on December 1, 2010. The motion was accompanied by a lengthy affidavit signed by Shirin Javid, Aeon's president and CEO. In her affidavit, Ms. Javid acknowledges that plaintiffs were hired to perform certain work, or portions of work, which Aeon was doing for the Defense Finance and Accounting Services, and that at some point DFAS stopped paying Aeon. That matter is now in litigation. Ms. Javid states that plaintiffs were told that because Aeon was not getting paid for this work, it would not be able to pay them. Aeon asserts in the motion that these facts, along with facts evident from the face of the complaint, show that it has meritorious defenses, including the fact that plaintiffs may be exempt employees under the Fair Labor Standards Act and the Ohio Minimum Fair Wage Standards Act, and that various contract defenses exist, such as frustration of purpose, waiver, and promissory estoppel.
Plaintiffs' response to the amended motion was due on or about December 24, 2010. On December 21, 2010, the parties filed a joint motion to extend the response time to January 11, 2011. The stated reason for the extension was that the parties were seriously negotiating a settlement. The Court granted the requested extension. However, the Court has not been notified that the parties have settled the case, nor have plaintiffs filed a response to the amended motion.
It is not necessary to re-analyze the issue in great depth here. In the prior Opinion and Order, the Court set out the three-factor test used to evaluate a motion to set aside a default as articulated in Waifersong, Inc. v. Classic Music Vending, 976 F.2d 290 (6th Cir. 1992) and, after discussing the first two factors (reason for the delay and prejudice to the plaintiff), found they both favored setting aside the default. As to the third factor, the Court noted that
The final factor the court must consider is whether the defendant has a meritorious defense to the plaintiffs' complaint. A meritorious defense is "simply one that would be a viable legal defense if there is any possibility that the facts will ultimately support the defendant's version of events." DeFrank v. Roth, No. 1:98CV1597, 1998 U.S. Dist. LEXIS 23307 (N.D.Ohio Oct. 2, 1998); see also, United Coin Meter [v. Seaboard Coastline R.R.], 705 F.2d [839] at 845 [(6th Cir. 1983)] ("if any defense relied upon states a defense good at law, then a meritorious defense has been advanced"). The likelihood of defendant's success is not considered in determining whether defendant has a meritorious defense. United Coin Meter, 705 F.2d at 845; see also In re Park Nursing Ctr., Inc. v. Creditors Comm. of Park Nursing Ctr., Inc., 766 F.2d 261, 264 (6th Cir. 1985) (the test is not whether defendant will win at trial but "rather whether the facts alleged by the defendant would constitute a meritorious defense if true").Shaw v. Aeon Group, LLC, 2010 WL 3489388, *3.
Here, it is clear that, at least as to the statutory claims brought under the FSLA and the OMWFSA, there is a viable issue about whether the plaintiffs are exempt employees. On the contract claim, there is at least a colorable argument that the parties understood that if Aeon were not paid for the plaintiffs' work by the DFAS, the plaintiffs might not get paid, and there are some facts suggesting that they continued to work with that understanding, which may mitigate, if not eliminate, their damage claims. Especially in the absence of any competing arguments from plaintiffs, the Court finds that the third factor either supports Aeon's motion, or that it does not outweigh the other two factors in determining if the motion should be granted. For these reasons, the amended motion to set aside default (#23) is GRANTED and the default which was entered on November 4, 2009 is VACATED. Defendant shall file its answer within fourteen days. The Magistrate Judge is directed to schedule an initial pretrial conference as promptly as possible.
IT IS SO ORDERED.