Billy v. Ashland Oil Inc.

102 F.R.D. 230, 39 Fed. R. Serv. 2d 542, 1984 U.S. Dist. LEXIS 15934
District Court, W.D. Pennsylvania·Decided June 13, 1984·No. Civ. A. No. 84-30·Published·Cited by 19 cases

Opinion

OPINION

COHILL, District Judge.

Presently before us is the Motion of Defendant, Ashland Oil, Inc. (“Ashland”) to set aside a default judgment entered pursuant to Fed.R.Civ.P. 55(b).

Plaintiff is a Pennsylvania resident and was an employee of Volkswagen of America, Inc. (“Volkswagen”), in New Stanton, Pa. Defendant Ashland is a Kentucky corporation with its principal place of business in Ohio. Plaintiff alleges in his Complaint that while he was employed at Volkswagen, he was exposed to ULV 862, a chemical composed of the cardiotoxin xylene. As a result, Plaintiff alleges that he sustained various cardiovascular disorders, and seeks damages from Ashland for the alleged defective manufacture of ULV 862 and the alleged failure to give proper instructions regarding proper use of the chemical and its potential hazards.

On January 6,1984, Plaintiff filed a Complaint, and a Summons was issued. On January 19, 1984, Plaintiff sent a copy of the Summons and Complaint, together with [232]*232two copies of a notice and acknowledgement, to Defendant’s Columbus, Ohio plant by regular mail, pursuant to Fed.R.Civ.P. 4(c)(2)(C)(ii). Defendant received the Summons and Complaint, but wrote to its outside counsel by letter of January 26, 1984,

As we discussed yesterday, service has not been accepted in the subject action. It is our policy not to accept any service attempted under Rule 4(c)(2)(C)(ii) F.R. C.P. As soon as personal service is perfected on our registered agent, I will immediately notify you. Until that has been accomplished, please do nothing in the case.

(Letter from Charles D. Weaver, Attorney for Ashland, to James R. Miller, Esq., Motion to Set Aside Default, Ex. A). Defendant did not return the enclosed Notice and Acknowledgement form.

On February 24, 1984, Plaintiff again mailed the Summons and Complaint to Defendant, this time by certified mail. Notice and Acknowledgement forms were again enclosed. See Defendant’s Reply Brief, Ex. A; Notice and Acknowledgement form signed by counsel for Plaintiff, dated February 24, 1984. Defendant also received this mailing, and an authorized agent for the company signed the postal service certified mail receipt. Plaintiff’s counsel filed this receipt with the Court on March 22, 1984, together with an affidavit stating that service had been made on February 27, 1984 by certified mail, return receipt requested.

On March 28, 1984, Plaintiff filed an Application for Default. The affidavit of Plaintiff’s counsel stated that 1) service had been attempted by regular mail pursuant to Fed.R.Civ.P. 4(c)(2)(C)(ii); 2) no return of the notice and acknowledgement had been received and; 3) service had then been made on February 27, 1984 pursuant to Rule 4(e) of the Federal Rules of Civil Procedure and Rule 2079(c)(3) of the Pennsylvania Rules of Civil Procedure, to which no answer or responsive pleading had been filed. (Affidavit of John W. Gibson in Support of Application for Default, dated March 27, 1984).

On March 28, 1984, a Default was entered against Defendant by the Clerk of Court. On April 2, 1984, a Default Judgment was entered by this Court, pursuant to Fed.R.Civ.P. 55(b).

Rules 55(c) and 60(b) of the Federal Rules of Civil Procedure govern our consideration of Defendant’s Motion. Rule 55(c) provides that, “[f]or good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).” Rule 60(b) provides, in pertinent part, that a court may relieve a party from a final judgment for certain reasons, including “1) mistake, inadvertance, surprise, or excusable neglect” or for “6) any other reason justifying relief from the operation of the judgment.”

The Court of Appeals for the Third Circuit has held that three factors are relevant to the Court’s exercise of discretion under Rules 55(c) and 60(b): 1) whether the plaintiff will be prejudiced; 2) whether the defendant has asserted a meritorious defense to the claims; and 3) whether the culpable conduct on the part of the defendant led to the default. See Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656 (3d Cir.1982); see also Livingston Powdered Metal, Inc., v. NLRB, 669 F.2d 113, 136 (3d Cir.1982). In passing on default judgments, courts give Rule 60(b) a liberal construction. Defaults are not favored, and any doubts should be resolved in favor of setting aside a default judgment and obtaining a decision on the merits. See Feliciano, supra, at 656; Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir.1982).

Defendant argues that the default judgment should be opened because 1) it was not required to accept service under Fed.R. Civ.P. 4(c)(2)(C)(ii), and 2) Plaintiff’s second attempt at service by certified mail was improper under Rule 4(c)(2)(C)(ii) which requires Plaintiff to proceed with personal service under Rule 4(c)(2)(A) or (B). Thus, Defendant argues that if there was any neglect on its part, the neglect was excusable because of its reliance on the clear wording of Rule 4(c)(2)(C)(ii).

[233]*233Second, Defendant argues that it has a meritorious defense in that “Ashland Oil, Inc., has investigated this matter and has failed to uncover any information indicating that it sold U.L.V. 862 to Plaintiffs employer.” (Defendant’s Reply Brief, at 3). Additionally, Defendant claims that it will rely on a defense that xylene did not cause Plaintiff’s injuries. Id. Finally, Defendant argues that Plaintiff has not been prejudiced since only a matter of weeks had passed since Defendant’s Answer was due. (Defendant’s Brief in Support, at 6).

In opposition, Plaintiff argues that 1) service was proper; 2) Defendant does not have a meritorious defense; 3) Defendant’s decision not to answer was strategic and did not constitute excusable neglect; and 4) prejudice resulted from the failure to answer because one of Plaintiff’s attorneys, with special expertise, died on March 20, 1984.

For the reasons stated below, and despite our disapproval of Defendant’s conduct, we will order the Default Judgment to be opened.

DISCUSSION

Our discussion will concentrate on the issue of service under Rule 4(c)(2)(C)(ii), since this was the focus of both parties’ arguments.

The first attempted service, by regular mail, was clearly made under Fed.R.Civ.P. 4(c) (2) (C)(ii). When this attempt failed, counsel for Plaintiff tried to effect service under Fed.R.Civ.P.

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Billy v. Ashland Oil Inc., 102 F.R.D. 230, 39 Fed. R. Serv. 2d 542, 1984 U.S. Dist. LEXIS 15934 (W.D. Pa. 1984).

102 F.R.D. 230 (Billy v. Ashland Oil Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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