SARA LIOI, District Judge.
Before the Court is the motion of defendants Elite Security Consultants LLC ("ESC") and Timothy Boyle ("Boyle") (collectively, "defendants")
On July 17, 2019, plaintiff Heidi Roby and nine others ("plaintiffs") commenced this action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA"), seeking to recover, inter alia, back overtime pay. (Doc. No. 1.) On October 22, 2019, the Court issued an order for plaintiffs to show cause by October 30, 2019 why the case should not be dismissed for want of prosecution. (See Doc. No. 13.)
On October 23, 2019, without first seeking an entry of default by the Clerk as required by Fed. R. Civ. P. 55(a), plaintiffs filed a motion for default judgment under Rule 55(b).
On November 15, 2019, an attorney appeared for ESC and Boyle. The instant motion to set aside the default was filed on November 19, 2019. Having been fully briefed, it is ripe for determination.
Fed. R. Civ. P. 55(c) provides that "[t]he court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b)." The rule distinguishes between an entry of default and a judgment of default.
To set aside an entry of default, there must only be "good cause." Three equitable factors are considered in determining whether good cause has been shown: "(1) whether culpable conduct of the defendant led to the default, (2) whether the defendant has a meritorious defense, and (3) whether the plaintiff will be prejudiced." Burrell v. Henderson, 434 F.3d 826, 831-32 (6th Cir. 2006)
Defendants here seek equitable relief under Rule 55 from the entry of default against each of them, as well as leave under Fed. R. Civ. P. 6 to file untimely responses to plaintiffs' complaint. (Mot. at 107-09.) Although Boyle now acknowledges that service was signed for on September 11, 2019 by a former employee, he attests in a sworn affidavit that the employee, who left the company on September 20, 2019, never provided him with copies of the summonses and complaint or told him about the lawsuit. (Doc. No. 25-2, Affidavit of Timothy Boyle ["Boyle Aff."], ¶¶ 4-5.)
"To 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." Shepard Claims Serv., Inc. v. Wm. Darrah & Assocs., 796 F.2d 190, 194 (6th Cir. 1986). Plaintiffs do not allege that this standard was met or that Boyle himself was somehow responsible for the signing employee's failure to report service of the lawsuit to him. Therefore, this Court finds no culpable conduct on the part of ESC and/or Boyle.
The second element to be considered is prejudice to the plaintiffs if the default is set aside. "[D]elay alone is not a sufficient basis for establishing prejudice." INVST Fin. Grp., Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 398 (6th Cir. 1987) (citations omitted). "To establish prejudice, the plaintiff must show that the delay will result in the loss of evidence, increased difficulties in discovery, or greater opportunities for fraud and collusion." Berthelsen v. Kane, 907 F.2d 617, 621 (6th Cir. 1990) (citing INVST Fin. Grp., 815 F.2d at 398). Plaintiffs do not argue that they will be prejudiced in any way, and the Court perceives no prejudice. This case was filed barely five (5) months ago and no defendant has yet filed a responsive pleading.
Finally, the Court considers the third element—meritorious defense. "In determining whether a defaulted defendant has a meritorious defense, likelihood of success is not the measure. Rather, if any defense relied upon states a defense good at law, then a meritorious defense has been advanced." United Coin Meter Co. v. Seaboard Coastline RR, 705 F.2d 839, 845 (6th Cir. 1983) (internal citations and quotation marks omitted). Here, the proposed answer lists several affirmative defenses, including certain statutory bars and exemptions, which meet this standard of a "meritorious defense."
The Sixth Circuit favors addressing claims "on the merits" and "[a]ny doubt should be resolved in favor of the petition to set aside[.]" United Coin, 705 F.2d at 846 (citation and quotation marks omitted).
Defendants Elite Security Consultants LLC and Timothy Boyle have shown good cause for setting aside the clerk's entry of default against them. Therefore, the motion to set aside (Doc. No. 25) is granted and the default entered on November 4, 2019 (Doc. No. 19) is hereby set aside. Further, plaintiffs' motion for default judgment (Doc. No. 14) is denied.
Defendants Elite Security Consultants LLC and Timothy Boyle are directed to separately file, on or before January 6, 2020, the answer that was attached to the motion to set aside.