Highdata Software v. Kothandan

• Court: District Court, D. New Hampshire
• Decided: March 29, 2001
• Docket: CV-00-409-B
• Status: Published

Opinion

Highdata Software v. Kothandan CV-00-409-B 03/29/01 P

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Highdata Software Corp.

v. Civil No. 00-409-B Opinion N o . 2001DNH066 Thulasidass Kothandan

O R D E R

Thulasidass Kothandan has filed a motion to remove default

judgment. Highdata Software Corp. has filed an objection.

Kothandan has declined to file a reply memorandum or otherwise

dispute the facts alleged in Highdata’s objection.

I.

The following facts appear to be undisputed:

1. Highdata served Kothandan with the complaint on October

1 6 , 2000.

2. Three days later, Attorney Steven Goldwyn contacted

Highdata’s counsel and informed him that he would be representing

Kothandan. 3. Kothandan never filed a motion seeking additional time

in which to answer or otherwise respond to the complaint.

4. Kothandan failed to answer or otherwise respond within

the time limits required by Federal Rule of Civil Procedure

12(a)(1)(A).

5. The Clerk of Court entered a default against Kothandan

on November 1 3 , 2000. The notice required Highdata to file a

motion for default judgment on or before December 1 3 , 2000.

6. Highdata’s counsel informed Kothandan’s counsel of the

fact that a default had been entered against Kothandan on

November 1 5 , 2000. At the same time, Highdata’s counsel agreed

not to oppose a motion to remove the default “so long as the

motion was filed promptly.”

7. Kothandan did not file a motion to remove the default.

8. Between November 1 5 , 2000 and December 1 2 , 2000,

Kothandan’s counsel failed to return several telephone calls from

Highdata’s counsel. On December 1 2 , 2000, Highdata’s counsel

informed Kothandan’s counsel that Highdata would oppose any

effort to remove the default and would seek to have a default

judgment imposed because Kothandan had failed to promptly file a

motion to remove the default.

-2- 9. Highdata filed its motion for default judgment on

December 1 2 , 2000. The Magistrate Judge granted the motion the

next day. A default judgment was then entered for $50,000 in

liquidated damages and prospective injunctive relief barring

Kothandan from violating a noncompetition and nondisclosure

agreement. The judgment also awarded Highdata costs and

attorney’s fees.

1 0 . Kothandan filed a motion to remove the default judgment

and an answer on December 2 6 , 2000. On December 2 7 , 2000, the

court informed Kothandan that his motion failed to comply with

several local rules. As a result, the court gave him until

January 8 , 2001 in which to file a document curing the local

rules violations. Kothandan failed to comply with this order,

and the court struck his motion on January 1 0 , 2001.

1 1 . Kothandan filed a second motion to remove default

judgment on February 1 3 , 2001.

II.

I vacate the default judgment because the motion for default

judgment was granted by the Magistrate Judge and a Magistrate

-3- Judge lacks the authority to make a final determination of

damages and injunctive relief. See Conetta v . Nat’l Hair Care

Ctrs., Inc., 236 F.3d 6 7 , 72-73 (1st Cir. 2001) (vacating default

judgment because a Magistrate Judge lacks statutory authority to

make a final determination of damages after an entry of default).

While I must vacate the default judgment, it does not

necessarily follow that I also must remove the default and allow

Kothandan’s late answer. Federal Rule of Civil Procedure 55

provides that a default may only be struck “[f]or good cause

shown.” Fed. R. Civ. P. 55(c). The First Circuit recently has

stated that “[t]he good cause standard under Rule 55(c) is open-

ended, but among the important familiar considerations are these:

the extent of the defendant’s fault, prejudice to the plaintiff,

whether a meritorious defense exists to the lawsuit, the stakes,

and the timing of the motion.” Conetta, 236 F.3d at 7 5 .

The factors that bear on the issue of whether the default

should be stricken in this case weigh heavily in favor of

allowing the default to stand. First, Kothandan has failed to

cite any legitimate reason for his failure to either file a

-4- timely response to the complaint or seek additional time from the

court in which to respond.

Second, Kothandan failed to take any action to have the

default removed for more than a month after he was notified of

its existence. Nor has Kothandan provided any explanation for

his failure to seek to have the default lifted sooner.

Third, it would be unfair to Highdata to lift the default.

Highdata alleged in its complaint that Kothandan is violating a

noncompetition and nondisclosure agreement by seeking work from

Highdata’s competitors exploiting its trade secrets. Any

significant violation of an enforceable noncompetition and

nondisclosure agreement causes irreparable harm to the party

seeking to promptly enforce the agreement. See Ticor Title Ins.

Co. v . Cohen, 173 F.3d 6 3 , 69-72 (2d Cir. 1999). By refusing to

file a timely response to the complaint and failing to take

prompt action to have the default removed, Kothandan has caused

Highdata unfair prejudice in its effort to promptly enforce the

noncompetition and nondisclosure agreement.

Finally, Kothandan has failed to sufficiently support his

claim that he has a good defense to the complaint. Kothandan has

-5- failed to explain the nature of his defense in detail and he has

offered no evidence to support his conclusory assertion that he

has a viable defense. As the First Circuit has observed in the

context of a Rule 60(b) motion to set aside a default judgment, a

movant must offer more than an “unsubstantiated boast” to support

a claim that he has a meritorious defense. Teamsters,

Chauffeurs, Warehousemen and Helpers Union, Local N o . 59 v .

Superline Transp. Co., Inc., 953 F.2d 1 7 , 21 (1st Cir. 1992).

Accordingly I vacate the default judgment but decline to

strike the default. Instead, I refer the case to the Magistrate

Judge for a report and recommendation concerning damages and

injunctive relief.

SO ORDERED.

Paul Barbadoro Chief Judge

March 2 9 , 2001

cc: Matthew A . Caffrey, Esq. Steven C . Goldwyn, Esq.

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