Conetta v. National Hair Care Centers, Inc.

182 F.R.D. 403, 1998 U.S. Dist. LEXIS 17694, 1998 WL 774611
CourtDistrict Court, D. Rhode Island
DecidedNovember 3, 1998
DocketCIV.A. No. 96-471-L
StatusPublished
Cited by10 cases

This text of 182 F.R.D. 403 (Conetta v. National Hair Care Centers, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Conetta v. National Hair Care Centers, Inc., 182 F.R.D. 403, 1998 U.S. Dist. LEXIS 17694, 1998 WL 774611 (D.R.I. 1998).

Opinion

DECISION AND ORDER

LAGUEUX, Chief Judge.

Diane M. Conetta and Peter Conetta appear before this Court in an attempt to preserve $301,000 in default judgments that they have been awarded against National ■ Hair Care Centers, Inc. (“NHCC”). Magistrate Judge Robert Lovegreen decided to vacate the judgments in April 1998, and the Conet-tas ask this Court to reexamine the issue.

The facts of the case are amply outlined in Judge Lovegreen’s April 22,' 1998 opinion. Briefly, Diane Conetta worked for NHCC as a manager of a hair salon in a Wal-Mart store. During her 11 months on the job, she was the oldest employee at this location, and she alleges age and gender discrimination as a result of harassment by her supervisor Robert Puto.

The Conettas filed their complaint August 16, 1996 and an amended complaint On December 6, 1996. On December 9, 1996, service of process was made upon CT Corporation in Providence, which was the agent for service of process for NHCC. The return of service does not indicate whether the complaint served was the original or amended complaint. Based on the date, it appears to have been the amended version.

In that amended complaint, Diane Conetta alleged claims under Title VII, 42 U.S.C. § 2000e et seq.; under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.; under the Rhode Island Fair Employment Practices Act, R.I.G.L. § 28-5-1 et seq.; and under the Rhode Island Civil Rights Act of 1990, § 42-112-1 et seq. Additionally, she alleged state law claims for assault, negligent infliction of emotional distress, failure to supervise and respondeat superior. Peter Con-etta claimed loss of consortium.

No response was received, and on January 14, 1997, a default was entered against NHCC by the Clerk of Court. Robert Puto was never served with process. On February 11, 1997, the Conettas filed-a motion for entry of judgment by default as to NHCC. On May 14, 1997, Judge Lovegreen held a hearing at which the Conettas and a psychiatrist testified. Judge Lovegreen entered judgment for Diane Conetta in the amount of [405]*405$151,000 in compensatory damages and $100,000 in punitive damages and for Peter Conetta in the amount of $50,000. To enforce the judgments, the Conettas filed a second suit on January 5, 1998 against NHCC and Regis Corporation, an entity that purchased NHCC’s assets and still owes $2.5 million to NHCC.

NHCC made its first appearance in this case on February 9, 1998 when it filed this motion to vacate the default judgments. On April 13,1998, Judge Lovegreen held a hearing, and in an April 22, 1998 opinion, he granted NHCC’s motion. As would be expected, the Conettas objected to that decision. They appealed to this Court, which held a hearing on July 15, 1998 and took the matter under advisement.

Two issues face this Court. First, what standard of review should be used when a district court reviews a magistrate judge’s decision on a motion to vacate default judgment. Second, whether NHCC has met its burden and should have the default judgments vacated. This Court is satisfied that such a decision is reviewed de novo. However, the Court cannot decide the second issue without hearing live testimonial evidence. Affidavits are inadequate for a case that turns so completely on the credibility of NHCC’s president Wayne Riffle. Riffle’s explanations are troublesome, as Judge Love-green observed, and it is unclear on this cold record whether he willfully defaulted and whether he exercised good faith. Direct testimony and cross-examination will settle the issue.

For the reasons outlined below, this Court does not rule on the merits. A hearing will be scheduled on the issue of willful default.

I. Standard, of Review

The first issue before this Court is to determine what standard should be used by a district court in reviewing a magistrate judge’s decision to vacate a default judgment. NHCC urges the “clearly erroneous or contrary to law” standard from 28 U.S.C. § 636(b)(1)(A). The Conettas argue for de novo review as provided in 28 U.S.C. § 636(b)(1)(C).

The list of eight matters in 28 U.S.C. § 636(b)(1)(A) imposes a limitation on magistrate judges, restricting them from finally deciding the issues listed there. However, that list does not similarly limit the district court to a “clearly erroneous” standard for every issue not mentioned there. Although the First Circuit has not ruled directly, it has suggested an approach to this issue when it instructed district courts to use the de novo standard when dealing with a criminal defendant’s motion to vacate a conviction. See Gioiosa v. United States, 684 F.2d 176, 178 (1st Cir.1982).

In deciding what standard of review should apply on a specific motion, a district court should look to FRCP 72 and to the motion itself. Dispositive motions — those that extinguish a claim or defense of a party — should be reviewed de novo under FRCP 72(b). A magistrate judge’s decision on a nondisposi-tive motion should be reviewed to determine if it is clearly erroneous or contrary to law under FRCP 72(a). The First Circuit suggests this process in Unauthorized Practice of Law Committee v. Gordon, 979 F.2d 11, 12-13 (1st Cir.1992). The Unauthorized Practice panel eventually decided that it lacked jurisdiction to decide the ease, but it noted that district courts have split on whether a motion to remand was dispositive or nondispositive. See id., at 13. This Court followed this logic both in Plante v. Fleet Nat’l Bank, 978 F.Supp. 59, 64-65 (D.R.I. 1997) (Rule 11 sanction motion reviewed de novo), and in Delta Dental of Rhode Island v. Blue Cross & Blue Shield of Rhode Island, 942 F.Supp. 740, 743-46 (D.R.I.1996) (motion to remand reviewed under clearly erroneous standard).

NHCC’s counsel makes a thoughtful, law-yerly argument that a motion to vacate a default judgment cannot be dispositive. NHCC styles the logic in this fashion: If the magistrate judge decides to vacate, then the parties begin discovery and go to trial. If the magistrate judge refuses, then it was the default judgment, not the decision to deny vacation, that extinguished the case.

It is the second piece that loses its shape in the heat and humidity of analysis. A motion to vacate a default judgment is dispositive because a judge who denies the motion ends the ease. The defendant must pay the judgment or appeal. There is no [406]

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Bluebook (online)
182 F.R.D. 403, 1998 U.S. Dist. LEXIS 17694, 1998 WL 774611, Counsel Stack Legal Research, https://law.counselstack.com/opinion/conetta-v-national-hair-care-centers-inc-rid-1998.