United States District Court, S.D. Ohio, Western Division
LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 141, Plaintiff,
GAYSTON CORP., Defendant.
DECISION AND ENTRY OVERRULING AS MOOT DEFENDANT'S
MOTION TO SET ASIDE CLERK'S ENTRY OF DEFAULT (DOC. #10);
SUSTAINING DEFENDANT'S AMENDED MOTION TO SET ASIDE
CLERK'S ENTRY OF DEFAULT (DOC. #15); VACATING CLERK'S
ENTRY OF DEFAULT (DOC. #8)
H. RICE UNITED STATES DISTRICT JUDGE.
Laborer's International Union of North America, Local 141
("Local 141" or "Plaintiff"), filed suit
against Gayston Corporation ("Gayston" or
"Defendant"), alleging: (1) breach of labor
agreement; (2) conversion of union deductions from
employees' paychecks; and (3) breach of fiduciary duty
pursuant to Ohio Rev. Code § 4113.15. This matter is
currently before the Court on Defendant's Amended Motion
to Set Aside Clerk's Entry of Default, Doc. #15. For the
reasons set forth below, that motion is SUSTAINED, and the
Clerk's Entry of Default, Doc. #8, is VACATED.
Defendant's initial Motion to Set Aside Clerk's Entry
of Default, Doc. #10, is OVERRULED AS MOOT.
Background and Procedural History
is a corporation and employer incorporated under the laws of
the State of Ohio. Local 141 is a labor organization
affiliated with the Laborers' International Union of
North America. The parties are each bound to a collective
bargaining agreement. This Court's jurisdiction is based
on Section 301 of the Labor Management Relations Act, 29
U.S.C. § 185. On February 21, 2017, Local 141 filed the
instant suit, alleging that Gayston failed to withhold union
deductions from the employees' wages, and/or withheld
union deductions from the employees' wages but failed to
remit them to Local 141. Doc. #1.
was served the Summons and Complaint via certified mail on
February 24, 2017. Doc. #4. On March 6, 2017, Casey Cain,
Gayston's Director of Human Resources, filed a pleading
purporting to be an Answer. Doc. #5. It is clearly
established that a corporation cannot appear in federal court
except through a licensed attorney. Rowland v. California
Men's Colony, 506 U.S. 194, 201-202 (1993);
Doherty v. American Motors Corp., 728 F.2d 334, 340
(6th Cir. 1 984). Accordingly, Ms. Cain's purported
Answer was ineffective. On April 6, 2017, the Court issued an
Order requiring Gayston to secure counsel to enter an
appearance within twenty-one days. Doc. #6. Gayston did not
receive a copy of that Order. Doc. #15-1, PageID#294; Doc.
#15-2, PageID#301; Doc. #15-3, PageID#308.
Gayston failed to comply with the Court's Order, Local
141 filed an Application for Clerk's Entry of Default.
Doc. #7. The Clerk filed an Entry of Default on May 1, 2017.
Doc. #8. Local 141, however, did not file a Motion
for Default Judgment.
24, 2017, counsel for Gayston entered an appearance and filed
an Answer, Doc. #9, and a Motion to Set Aside Clerk's
Entry of Default, Doc. #10. Local 141 opposed the motion.
Doc. #13. Gayston then sought, and was given, leave to
supplement its Motion to Set Aside Clerk's Entry of
Default. Doc. #14. On August 1, 2017, Gayston filed an
Amended Motion to Set Aside Clerk's Entry of Default.
Doc. #15. The Amended Motion includes Declarations of: (1)
Casey Cain; (2) Andrew Sheldrick, Gayston's Chief
Operations Officer; and (3) Adam Stone, Gayston's Chief
Executive Officer. Local 141 has not filed anything further.
defendant fails to "plead or otherwise defend, " as
required by the Federal Rules of Civil Procedure, the clerk
must enter default. Fed.R.Civ.P. 55(a). Pursuant to Rule
55(c), the defendant may later petition the Court to set
aside the entry of default. Because the law favors trials on
the merits over procedural missteps, federal courts tend to
be "extremely forgiving" in ruling on motions to
set aside entries of default. United States v. $22,
050.00 United States Currency, 595 F.3d 318, 322 (6th
Cir. 2010). A stricter standard of review is applied when the
Court is asked to set aside a default judgment. O.J.
Distrib., Inc. v. Hornell Brewing Co., Inc., 340 F.3d
345, 353 (6th Cir. 2003). An entry of default, however, may
be set aside for good cause shown. Fed.R.Civ.P. 55(c).
to be considered in determining whether good cause exists
include: (1) the defendant's willfulness; (2) whether the
defendant has a meritorious defense; and (3) whether the
plaintiff will be prejudiced. $22, 050.00 United States
Currency, 595 F.3d at 324. The Court turns first to the
question of Gayston's culpability.
first factor a court must consider is whether Gayston's
default was willful. In Shepard Claims Service, Inc. v.
William Darrah & Associates, 796 F.2d 190 (6th Cir.
1986), the Sixth Circuit held that "[t]o be treated as
culpable, the conduct of a defendant must display either an
intent to thwart judicial proceedings or a reckless disregard
for the effect of its conduct on those proceedings."
Id. at 194. Negligence is not enough; the
defendant's conduct must be willful. $22, 050.00
United States Currency, 595 F.3d at 327.
failure to move or plead was not willful. Casey Cain filed a
timely Answer to the Complaint. Doc. #5. In her Declaration,
she stated that she then called the Clerk of Court to ask if
Gayston needed to do anything else at that time. Doc. #15-1,
PageID #293. At the conclusion of that call, she mistakenly
believed that Gayston would need an attorney only if the case
proceeded to trial. Id. In addition, throughout this
time, Ms. Cain was attempting to work with counsel for Local