Bio Management Northwest Inc v. Washington Bio Services

• Court: District Court, W.D. Washington
• Decided: September 28, 2020
• Docket: 2:20-cv-00670
• Status: Unknown

Opinion

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5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 10 BIO MANAGEMENT NORTHWEST CASE NO. C20-670 MJP INC. et al., 11 ORDER GRANTING MOTION TO Plaintiffs, VACATE DEFAULT 12 v. 13 WASHINGTON BIO SERVICES et al., 14 Defendants. 15

16 This matter comes before the Court on Defendants’ Motion to Vacate the Order of 17 Default. (Dkt. No. 18.) Having read the Motion, the Response (Dkt. No. 22), the Reply (Dkt. 18 No. 23), and having reviewed the related record, the Court GRANTS the Motion and VACATES 19 the Order of Default (Dkt. No. 14). 20 Plaintiffs filed this matter on May 4, 2020, alleging that Defendants Michael Lerner and 21 Washington Bio Services willfully appropriated Plaintiff’s trademarked business symbol. (See 22 Dkt. No. 1.) On June 11, 2020, Plaintiffs’ motion for alternative service was granted and 23 Plaintiffs were ordered to serve the Summons and Complaint on Defendants by USPS first class 24 1 and registered mail. (Dkt. No. 12.) Defendant Michael Lerner contends that due to Washington 2 Governor Jay Inslee’s Stay Home Stay Healthy Order and decreased business due to Covid-19, 3 he was not regularly checking his corporate mailbox and was thus unaware of this lawsuit until 4 July 9, 2020. (Dkt. No. 18 at 4.) The Court granted Plaintiffs’ Motion for Default on July 14,

5 2020. (Dkt. No. 14.) Defendants’ counsel entered an appearance in this matter on July 16, 2020. 6 (Dkt. No. 15.) 7 Rule 55(c) of the Federal Rules of Civil Procedure permits the court to “set aside an entry 8 of default for good cause.” Fed.R.Civ.P. 55(c). To determine whether a party has shown good 9 cause, the court must examine “(1) whether [the party seeking to set aside the default] engaged in 10 culpable conduct that led to the default; (2) whether [it] had [no] meritorious defense; [and] (3) 11 whether reopening the default judgment would prejudice any other party.” United States v. 12 Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir.2010) 13 (quoting Franchise Holding II v. Huntington Rests. Grp., Inc., 375 F.3d 922, 925–26 (9th Ci 14 r.2004)) (quotation marks omitted); Falk v. Allen, 739 F.2d 461, 463 (9th Ci r.1984) (adopting

15 the three factor test for the first time in the Ninth Circuit). The Falk factors are to be considered 16 conjunctively. See TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). 17 When performing this analysis, the court must remember that “judgment by default is a drastic 18 step appropriate only in extreme circumstances; a case should, whenever possible, be decided on 19 the merits.” Id. at 1091 (quoting Falk, 739 F.2d at 463) (quotation marks omitted). 20 These factors favor setting aside default in this case. First, Plaintiffs’ suggestion of 21 culpable conduct is unconvincing. Plaintiffs allege that because Mr. Lerner admits he did not 22 retrieve his office mail, he failed to meet his responsibilities as an agent for Washington Bio 23 Services, Inc. (Dkt. No. 22 at 7.) The Court finds that Defendant’s three-week delay in checking

24 1 his office mail is not evidence of culpability in this case, especially in light of the complications 2 caused by the global pandemic. Further, Plaintiffs have failed to demonstrate that Defendants 3 acted intentionally in not responding to this lawsuit, and intentional conduct is required for a 4 finding of culpability sufficient to deny a motion to set aside default. See TCI Group Life Ins.

5 Plan v. Knoebber, 244 F.3d 691, 698 (9th Cir. 2001). 6 Defendants have also asserted allegations, that if true, constitute a meritorious defense for 7 purposes of this motion. Defendants challenge whether Plaintiffs’ symbol is entitled to 8 protection, arguing that the trademarked shield and biohazard symbols are merely descriptive 9 terms. (Dkt. No. 23 at 4); Surgicenters of Am., Inc. v. Med. Dental Surgeries, Co., 601 F.2d 10 1011, 1018 (9th Cir. 1979). Further, Defendants allege that Aaron Lerner, Defendant Michael 11 Lerner’s father, represented that he was the owner of the marking. (Dkt. No. 23 at 4.) See 12 Americana Trading Inc. v. Russ Berrie & Co., 966 F.2d 1284, 1287 (9th Cir. 1992) (weighing 13 the intent of the defendant in determining the likelihood of confusion in a claim of unfair 14 competition). While these arguments may not ultimately be successful, they are sufficient at this

15 point in the proceedings to satisfy the meritorious defense prong under Falk, 739 F.2d at 463. 16 The Court is also not persuaded that Plaintiffs will suffer any prejudice by allowing 17 Defendants to appear and defend this action. This case is still in the early stages of litigation, and 18 Defendants avow that they will answer the complaint immediately if their present Motion is 19 granted. Finally, and most importantly, the Court follows the Ninth Circuit’s prescription that 20 “[c]ases should be decided upon their merits whenever reasonably possible.” Falk, 739 F.2d at 21 463; see also Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). Therefore, 22 the Court will vacate the entry of default and allow Defendants to proceed in this action. 23

24 1 The clerk is ordered to provide copies of this order to all counsel. 2 Dated September 28, 2020.

A 3 4 Marsha J. Pechman 5 United States Senior District Judge

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