22-659 U.S. v. Starling IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ____________________
August Term, 2022 Argued: May 3, 2023 Decided: August 4, 2023
No. 22-659 ____________________
UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
CRISTAL STARLING, Claimant-Appellant,
$8,040.00 UNITED STATES CURRENCY, Defendant.
____________________
Before: KEARSE, JACOBS, and MENASHI, Circuit Judges.
Police officers seized just over $8,000 in a search of Cristal Starling’s home
carried out as part of a drug trafficking investigation into her then-boyfriend,
K.B. The local police turned over the funds to the U.S. Drug Enforcement
Administration, which initiated an administrative forfeiture procedure to claim the funds as proceeds from drug sales. Acting pro se, Starling filed a claim to
the assets, forcing the government to terminate its administrative seizure and
open a judicial forfeiture proceeding in the U.S. District Court for the Western
District of New York. She failed to timely oppose the ensuing judicial
proceeding, and the clerk of court entered default against the funds.
Starling, still acting pro se, then sent several letters to the district court and
the U.S. Attorney’s Office seeking leave to file a belated claim to the seized
assets. The district court (Siragusa, J.) held that Starling had not shown
excusable neglect, denied her an extension of time to file a claim, and entered
final default judgment against the seized assets.
We hold that the district court erred in granting default judgment to the
government. Starling’s letters are properly viewed as seeking both to lift the
entry of default and to be granted leave to file an untimely claim to the assets.
So understood, Starling’s motion should have been assessed under the more
permissive good cause standard, as is any other motion to lift entry of default in
a civil suit.
2 We therefore VACATE the grant of the motion to strike and the entry of
default judgment, and REMAND for further proceedings consistent with this
opinion.
ROBERT E. JOHNSON (Seth M. Young, on the brief), Institute for Justice, Shaker Heights, OH, for Claimant- Appellant. MICHAEL A. ROTKER (Kenneth A. Polite, Jr., Assistant Attorney General, and Lisa H. Miller, Deputy Assistant Attorney General, on the brief), United States Department of Justice, Criminal Division, Washington, DC, for Plaintiff-Appellee. Grace M. Carducci, Assistant United States Attorney, for Trini E. Ross, United States Attorney for the Western District of New York, Buffalo, N.Y., for Plaintiff-Appellee.
DENNIS JACOBS, Circuit Judge:
Police officers seized just over $8,000 in a search of Cristal Starling’s home
carried out as part of a drug trafficking investigation into her then-boyfriend,
K.B.1 The local police turned over the funds to the U.S. Drug Enforcement
1 Because he was apparently acquitted of all charges and his state court records are sealed, see N.Y. Crim. Proc. Law § 160.50, his name is omitted from this opinion.
3 Administration, which initiated an administrative forfeiture procedure to claim
the funds as proceeds from drug sales. Acting pro se, Starling filed a claim to
the assets, forcing the government to terminate its administrative seizure and
open a judicial forfeiture proceeding in the U.S. District Court for the Western
District of New York.
As required, the government provided notice of the forfeiture proceeding
on its website and by mail sent directly to Starling. She claims to have missed
the notice, and after months went by without response to the judicial forfeiture
action, the U.S. Attorney’s Office for the Western District of New York moved for
entry of default against the seized currency. The clerk of court entered default.
Starling, still acting pro se, then sent several letters to the district court and
the U.S. Attorney’s Office seeking leave to file a belated claim to the seized
assets. The district court (Siragusa, J.) held that Starling had not shown
excusable neglect, denied her an extension of time to file a claim, and entered
default judgment against the seized assets.
On appeal, Starling argues principally that the district court erred by
assessing her letters under the strict “excusable neglect” standard set out under
Federal Rule of Civil Procedure 6, rather than the more permissive “good cause”
4 standard that typically applies when a party seeks to lift entry of default before
default judgment has been granted.
We vacate the default judgment. The district court read Starling’s pro se
letters too narrowly as a motion to file an untimely claim, ignoring Starling’s
request to lift the entry of default. Viewed properly as a motion seeking both
forms of relief, we hold that the good cause standard applies and is satisfied.
I
After K.B. allegedly sold drugs to undercover officers as part of a state
investigation into cocaine and fentanyl trafficking, police executed a warrant to
search Starling’s apartment on West Main Street in Rochester, New York. There
they seized “$7,500 United States Currency from the top dresser drawer of the
master bedroom, [and] $540 United States Currency from the pants pocket of a
pair of women’s jeans that were laying on the floor in the hallway adjacent to the
master bedroom.” J.A. 7. Also found with the cash were two digital scales, ten
strips of Suboxone (a prescription agonist/antagonist drug used to treat opioid
addiction), and mail addressed to K.B. Substantial quantities of drugs were
allegedly found at a different residence the government believed was connected
to K.B., but not in Starling’s West Main Street residence. K.B. was arrested and
5 charged with state drug possession offenses, and local authorities turned over
the seized funds to the U.S. Drug Enforcement Administration (DEA) to begin an
administrative forfeiture proceeding.
Starling, acting pro se, filed a remission petition and an administrative
claim against the seized funds pursuant to the DEA’s internal procedures. By
operation of law, see 18 U.S.C. § 983(a)(2)(A), (3)(A), Starling’s claim terminated
the DEA’s administrative forfeiture proceedings and required the government to
initiate a judicial forfeiture action in the appropriate federal district court—in this
case, the U.S. District Court for the Western District of New York.
The U.S. Attorney’s Office for the Western District of New York filed a
complaint against the seized funds in April 2021, alleging that they were
proceeds of K.B.’s drug trafficking. The complaint acknowledged that Starling
was interested in the seizure and had earlier filed a claim with the DEA.
Consistent with its obligations under Supplemental Rule G to the Federal Rules
of Civil Procedure, which governs civil forfeiture actions, the government
provided notice of the action by posting on the government’s forfeiture website
for 30 days. It also sent, by Federal Express, a notice and copy of the complaint
6 to Starling in June 2021. 2 The notice required Starling to file a claim to the assets
by July 16, 2021 (32 days after the notice was sent). Starling later explained that
she did not receive the FedEx mailing because she “was vacationing in Las
Vegas” at the time, J.A. 58, although it is uncontested that the documents were
successfully delivered to the West Main Street apartment.
In August, having heard nothing from Starling and no challenge to the
forfeiture proceeding, the government moved for, and was granted, an entry of
default. It moved for default judgment ten days later.
Roughly three months later, and before the government’s motion for
default judgment had been granted, Starling sent the first of four undated letters
to the U.S. Attorney’s Office and the district court. Still acting pro se, Starling
stated that the West Main Street apartment was her residence and that she was
seeking return of the seized funds because K.B. had been acquitted. Id. at 40.
At this point, the government apparently contacted Starling and offered to settle
2 The government need not provide formal service of process in a civil forfeiture proceeding; it must only give notice “to any person who reasonably appears to be a potential claimant on the facts known to the government,” and it may do so by any “means reasonably calculated to reach the potential claimant.” Supp. R. G(4)(b)(i), (iii)(A).
7 the forfeiture action by splitting the funds, half to Starling and half for itself.
Starling rejected the offer in a second letter, received by the district court a few
days later, which declared that she “would like to move forward with court
proceedings to have all of the funds returned to [her] promptly.” Id. at 41.
The government moved to strike her letters as an untimely claim to the
assets, arguing that because she was “given direct notice of this action on June
14, 2021, Starling’s claim was due on July 16, 2021.” Id. at 44 (emphasis
omitted). Starling responded that her untimely claim should be allowed by the
district court because she (i) had challenged the prior administrative proceeding,
and (ii) “contacted and followed the advice of the district attorney presiding over
the case that resulted in these monies being confiscated.” Id. at 48. The
government responded with affidavits from the two assistant district attorneys
who handled K.B.’s prosecution; one asserted that he had never communicated
with Starling, but the other, Eleanor Biggers, made the (non-disprovable)
assertion that she “d[id] not recall ever communicating with” Starling. Id. at 49–
56. Starling replied by offering a description and documents evidencing two
conversations she allegedly had with Biggers concerning cars that were also
seized in the search (but ultimately returned to Starling).
8 The district court interpreted Starling’s first and second letters as a claim to
the defendant assets in the judicial forfeiture proceedings, and the third and
fourth letters as an opposition and surreply to the government’s motion to strike.
It took note of this Court’s holding in United States v. Cambio Exacto, S.A., that
“[i]n order to contest a governmental forfeiture action, claimants must have both
standing under the statute or statutes governing their claims and standing under
Article III of the Constitution.” Id. at 71 (quoting 166 F.3d 522, 526 (2d Cir.
1999)). Reasoning that this “[s]tatutory standing relates to a claimant’s ability to
demonstrate compliance with the statutory and procedural requirements
imposed by Congress,” the court held that Starling lacked statutory standing to
oppose the forfeiture because she had failed to file a timely claim as required by
Supplemental Rule G to the Federal Rules of Civil Procedure. Id. at 71–74, 76.
The district court also considered whether Starling should be permitted to
file a claim against the funds nunc pro tunc. It considered this question in terms
of “excusable neglect” and, applying this standard, it rejected the excuses
Starling offered for her untimely claim, including that she (i) did not receive the
FedEx notice, (ii) did not understand that she needed to separately challenge the
judicial proceeding after challenging the administrative one, and (iii) had been
9 informed by ADA Biggers that she could not challenge the forfeiture until the
criminal case completed. The advice that Starling attributes to Biggers is a
generally accurate statement of the law in New York state proceedings, where a
forfeiture connected to a drug prosecution is stayed until the associated criminal
case is completed. See N.Y. C.P.L.R. § 1311(1)(b) (“An action under this
paragraph shall be stayed during the pendency of a criminal action which is
related to it.”). Assuming the conversation Starling alleges indeed took place,
and given the fact that state—not federal—law enforcement officers initially
seized the funds, the apparent confusion is understandable.
Having rejected as untimely the only claim filed against the defendant
assets, the district court entered default judgment in favor of the United States.
Starling now appeals. She argues principally that the district court erred by
assessing her letters under the excusable neglect standard, rather than under the
more permissive good cause standard.
II
Under Rule 55, default judgment begins with a motion by a party
demonstrating that the non-movant has “failed to plead or otherwise defend.”
Fed. R. Civ. P. 55(a). Once that motion is granted, the clerk of court enters a
10 default. Id. After default has been entered, the movant must apply for the
entry of default judgment—a final adjudication of the claims—which process may
entail factfinding or hearings by the district court to establish remedies or
quantum. Fed. R. Civ. P. 55(b); see also, e.g., Meehan v. Snow, 652 F.2d 274, 276
(2d Cir. 1981) (per curiam).
Rule 55 sets out alternative standards that a defaulting party must satisfy
in order to resist this process. If the missing party appears when the clerk of
court has entered default but before final judgment has been entered, the district
court “may set aside” the entry of default “for good cause.” Fed. R. Civ. P. 55(c).
But if final judgment has already been entered, the delinquent party must attack
the judgment under the exacting standards of Rule 60(b) by showing, among
other things, excusable neglect. Id.; see Fed. R. Civ. P. 60(b)(1). Entry of
default therefore operates as a final warning before the absent party suffers the
hard consequences of a judgment.
Because Starling submitted her letters to the court before final judgment
was entered, she asks that her challenge be construed, like any other to an entry
of default, under the permissive “good cause” standard.
11 The government reads the Rules differently. Under Supplemental Rule
G(5)(a), a party given direct notice of a forfeiture complaint must contest the
complaint by filing a claim to the assets before the deadline specified in the direct
notice. Supp. R. G(5)(a). Because Starling failed to file a claim within the 32
days specified in the notice, the government argues, she is subject to Federal Rule
6’s general principle that “[w]hen an act may or must be done within a specified
time,” and “the time has expired,” the court may extend the deadline only “if the
party failed to act because of excusable neglect.” Fed. R. Civ. P. 6(b)(1). (It
does not appear that the government holds itself to the scrupulous punctuality
that it demands of a pro se litigant. 3)
3 Supplemental Rule G requires that the government fix the deadline for filing a responsive claim “at least 35 days after the notice is sent.” Supp. R. G(4)(b)(ii)(B) (emphasis added). The government’s notice of the forfeiture action was signed on June 11, 2021, J.A. 34, but by its own contention was not sent until three days later, on June 14, 2021, id. at 37. If the government’s dates are accurate, then it was wrong to set any deadline for a responsive filing earlier than July 19, 2021, and the notice sent to Starling failed to comply with Supplemental Rule G by setting a deadline of July 16, 2021. This innocuous mistake merits indulgence, especially when it appears to have had no impact on Starling’s default. Still, it raises an eyebrow that the government demands that Starling’s claim be stricken for lack of “[s]trict compliance with [the rules].” Br. of United States at 19–20 (quoting United States v. Amiel, 995 F.2d 367, 371 (2d Cir. 1993)) (second alteration in original).
12 III
The question in this appeal is whether the district court was required to
use the “good cause” standard generally applicable to default under Federal
Rule of Civil Procedure 55(c), or to enforce, under Federal Rule 6’s “excusable
neglect” standard, the strict requirements of the forfeiture-specific Supplemental
Rule G.
A
Ascertaining the appropriate standard by which to assess Starling’s letters
depends first on identifying the relief her letters sought. At the time Starling
wrote to the district court and the U.S. Attorney’s Office, she was acting pro se.
Parties have a right to self-representation, and “[i]mplicit” in this right “is an
obligation on the part of the court to make reasonable allowances to protect pro
se litigants from inadvertent forfeiture of important rights because of their lack of
legal training.” Traguth v. Zuck, 710 F.2d 90, 95 (2d Cir. 1983). “While the
right ‘does not exempt a party from compliance with relevant rules of procedural
and substantive law,’ it should not be impaired by harsh application of technical
rules.” Id. (quoting Birl v. Estelle, 660 F.2d 592, 593 (5th Cir. 1981)). District
courts are therefore “directed to read pro se papers liberally.” Id. Because a
13 default judgment may lead a pro se party’s entire case to founder on mistake or
ignorance, a court’s discretion to grant default judgment is “circumscribed” as “a
reflection of our oft-stated preference for resolving disputes on the merits.”
Enron Oil Corp. v. Daikuhara, 10 F.3d 90, 95 (2d Cir. 1993). To protect a pro se
litigant’s rights, therefore, we may be called upon to reverse a district court’s
entry of default judgment, a decision ordinarily “left to the sound discretion of a
district court,” even in cases where the abuse of discretion “was not glaring.”
Id.
Starling initially challenged the civil forfeiture proceeding by two letters
she submitted to the U.S. Attorney’s Office and the district court. The first
stated that she was “writing to notify the courts that the defendant of the case
stemming from the warrant execution, [K.B.], was recently acquitted of all
charges,” and that she had “been advised to contact this office to have a motion
filed on the docket to have [her] money be released and returned to [her].” J.A.
40. Her second letter stated that, rather than accept a settlement, she “would
like to move forward with court proceedings to have all of the funds returned to
[her] promptly,” that “this money being taken” had “caused a hardship for
[her]” as “a single woman raising a medically fragile child with no outside
14 support,” and that she believed that “due to all charges being thrown out and
legal proceedings ceased, any property confiscated during the legal process
should be returned to its rightful owner.” Id. at 41.
The district court deemed these letters to be an untimely motion to file “a
claim on the defendant currency.” Id. at 67. This was true enough—the letters
plainly communicate a claim to the seized funds. But they also communicate a
desire to “move forward with court proceedings to have all of the funds
returned.” Id. at 41. This is the plea of any tardy litigant trying to lift entry of
default: She was ready to litigate and wanted to win. The district court was
required to heed that message. See Traguth, 710 F.2d at 94–95. Even if Starling
had not clearly expressed a desire to press on with the litigation, the letters
cannot be read as limited to a motion for leave to file an untimely claim. Once
the entry of default was on the docket, final default judgment could be granted
no matter what claims she sought to file. Construing the letter solely as a
motion for late filing of her claim—without also viewing it as a motion to lift the
default—means reading it as a motion for which no relief could be granted.
This was error. See Meehan, 652 F.2d at 276.
15 B
Starling’s letters are therefore properly viewed as a dual motion, seeking
both to lift the entry of default—ordinarily governed by the “good cause”
standard of Rule 55(c)—and to file a claim against the seized funds—ordinarily
governed by the “excusable neglect” standard of Rule 6. Supplemental Rule G
does not specify which standard should prevail, and it is a question of first
impression for this Court.
As the Sixth Circuit recognized when faced with the same question, there
are “materially different standards in determining whether to excuse
noncompliance or to adhere strictly to the rules.” United States v. $22,050.00
U.S. Currency, 595 F.3d 318, 322 (6th Cir. 2010). On one hand, courts addressing
“motions to set aside default under Rule 55(c) are extremely forgiving to the
defaulting party and favor a policy of resolving cases on the merits instead of on
the basis of procedural missteps.” Id.; see also, e.g., Meehan, 652 F.2d at 277
(“While courts are entitled to enforce compliance with the time limits of the
Rules by various means, the extreme sanction of a default judgment must remain
a weapon of last, rather than first, resort.”). In contrast, “cases discussing
motions to strike claims under Supplemental Rule G favor strict adherence to the
16 rules and generally do not excuse even technical non-compliance with the rules.”
$22,050.00 U.S. Currency, 595 F.3d at 322; see also, e.g., United States v. Vazquez-
Alvarez, 760 F.3d 193, 197 (2d Cir. 2014) (per curiam) (requiring strict adherence
to the procedural order dictated by Rule G).
The government asserts that Rule 6’s excusable neglect standard must
apply because the rule “sets out procedural prerequisites and substantive
standards for granting an extension of time depending on when the request [for
an extension] was made.” Br. of the United States at 32. To consider untimely
claims under the permissive good cause standard would, in its view, “attach no
consequence to a litigant’s failure to request additional time in a timely manner.”
Id. at 34. This is mistaken.
The text of Supplemental Rule G suggests that good cause is the
appropriate standard. The rule sets deadlines for when a claim to the defendant
assets “must be filed . . . [u]nless the court for good cause sets a different time.”
Supp. R. G(5)(a)(ii) (emphasis added). It gives no indication that a harsher
standard should govern a later motion. And applying the standard to
defaulting claimants would mirror the government’s burden when it seeks an
extension of time to convert an administrative forfeiture proceeding into a
17 judicial one. See 18 U.S.C. § 983(a)(3)(A) (“[A] court . . . may extend the period
for filing a complaint for good cause shown or upon agreement of the parties.”).
The government’s argument misapprehends how Rule 6 and Rule 55
operate in the case of default. By definition, default may be entered only when
a defendant has “failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Of
course, a party cannot have failed to plead or defend when the deadline for
pleading or defending has not yet passed. It cannot be that a single missed
deadline is enough to displace the good cause standard of Rule 55 with the
excusable neglect standard of Rule 6; if it were, there would never be a party able
to lift default under the lenient standard. This is not what the Rules, or our
cases, contemplate. See, e.g., Meehan, 652 F.2d at 275–77 (district court erred by
failing to apply Rule 55(c) standard when defendant had missed the deadline to
file an answer by ten days). The government’s argument to the contrary is
defective. 4
4The government understands a denial of Starling’s motion to flow naturally from this Court’s rule, set out in Cambio Exacto, that “[t]o establish statutory standing, a claimant asserting rights in property that has been seized and that is the subject of a forfeiture action in rem must file a verified claim within [the required number of] days after process has been executed, unless the
18 The Federal Rules of Civil Procedure are not supplanted unless they are in
conflict with a provision of the supplemental rules. Amiel, 995 F.2d at 371.
Nothing about Supplemental Rule G conflicts with the typical rule—set out in
Rule 55—that good cause applies when a party seeks to lift an entry of default.
And for the reasons explained above, the timeliness vel non of a claim cannot be
sufficient, standing alone, to displace Rule 55.
Like the Sixth Circuit, we do not perceive “anything functionally different
about civil forfeiture cases that compels us to treat untimely response in these
court grants an extension.” 166 F.3d at 526 (citing Supplemental Rules for Certain Admiralty and Maritime Claims, Rule C(6)). But this was no obstacle to Starling’s motion. Even in Cambio Exacto we recognized that an untimely plaintiff lacks statutory standing “unless the court grants an extension,” and our cases have made clear that a nunc pro tunc filing is possible. Id. (emphasis added); see also, e.g., United States v. $417,143.48 U.S. Currency, 682 F. App’x 17, 19 (2d Cir. 2017) (summary order) (illustrating that claimants who lack statutory standing could be granted leave to file claims nunc pro tunc). What we have described as “statutory standing” operates as an obstacle only to dispositive motions which follow from establishing the initial claim. For example, a party must first establish that he is a claimant to the seized assets before he can move to dismiss the forfeiture action. See Vazquez-Alvarez, 760 F.3d at 197. We note that “statutory standing” does not implicate our jurisdiction, but the term is a “misleading” shorthand for asking “whether [a litigant] has a cause of action under the [relevant] statute.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 & n.4 (2014)
19 cases differently than untimely responses in all other civil cases.” $22,050.00
U.S. Currency, 595 F.3d at 323. To the contrary, civil forfeiture procedure
magnifies the importance of deciding such cases on the merits rather than by
default. Civil forfeiture can “enable the government to seize . . . property
without any predeprivation judicial process and to obtain forfeiture of the
property even when the owner is personally innocent.” Leonard v. Texas, 580
U.S. 1178, 1179 (2017) (statement of Thomas, J., respecting denial of certiorari).
As was made clear in this case, the lax notice requirements allow the government
to start the clock toward default judgment with perfunctory measures, such as
ordinary mail, and by posting on a government forfeiture website that the
citizenry has no reason to know of. See Supp. R. G(4). And because the typical
forfeiture case concerns cash and goods with consequence to the deprived party
but which rarely justify hiring a lawyer, a huge number of civil forfeiture cases
are fought by claimants acting pro se. See Louis S. Rulli, Prosecuting Civil Asset
Forfeiture on Contingency Fees: Looking for Profit in All the Wrong Places, 72
Ala. L. Rev. 531, 535 (2021) (observing that “civil forfeiture laws do not provide a
right to counsel for the poor” and that “the government’s seizure of modest
amounts of cash and vehicles often make it economically infeasible to hire a
20 lawyer”). All this is driven by incentive: The authorities can pocket what they
can seize by forfeit. 5 Id. at 534, 546–48 (“Between 2001 and 2014, deposits in the
U.S. Department of Justice and Treasury forfeiture accounts totaled almost $29
billion.”).
Each of these reasons alone would be enough to compel trial courts to
consider untimely claims with particular indulgence. We therefore hold that
when, as in this case, a claimant with Article III standing seeks to file an untimely
claim against seized assets after default has been entered but before default
judgment has been granted, district courts should apply the “good cause”
standard.
5In eighteenth-century France, many imposts—the most hated being the gabelle and the octroi—were collected by tax farmers who kept a share of what they could take, to fantastic personal benefit. Eugene N. White, From Privatized to Government-Administered Tax Collection: Tax Farming in Eighteenth- Century France, 57 Econ. Hist. Rev. 636, 645–48 (2004); Yves Durand, Finance et mécénat: Les Fermiers généraux au XVIIIe siècle 14–16, 61–65, 190–91 (1976). The abuse of the fermiers généraux was a spark that lit the French Revolution. See Jean Clinquart, Les services extérieurs de la Ferme générale à la fin de l’Ancien Régime 239–44 (1995) (describing the ventilation of popular anger toward the Ferme in the summer of 1789); Durand, supra, 195–99 (“[L]es cahiers de doléances pour les Etats [généraux] de 1789 contiennent de très nombreuses allusions aux financiers et à la Ferme. . . . On enregistre partout la condamnation du système d’impôts, de la Ferme et des fermiers généraux.”).
21 IV
Applying the good cause standard, we conclude that the district court
should have lifted the entry of default and permitted Starling to file her claim to
the assets. The district court assessed Starling’s motion under the excusable
neglect standard, which considers “the danger of prejudice to the nonmovant,
the length of the delay and its impact on proceedings, the reason for the delay
including whether it was within the reasonable control of the movant, and
whether the movant acted in good faith.” J.A. 73 (quoting United States v.
$541,395.06 U.S. Currency, No. 10-CV-6555, 2012 WL 3614294, at *3 (W.D.N.Y.
Aug. 21, 2012)). In contrast, the good cause standard considers three factors: (i)
the willfulness of the defaulting party, (ii) prejudice to the non-movant, and (iii)
whether the defaulting party has a meritorious defense. Meehan, 652 F.2d at
277. While excusable neglect penalizes negligent parties for failing to prosecute
their cases, the good cause standard attaches consequences only to bad faith or
tactical violations of court orders. See, e.g., Action S.A. v. Marc Rich & Co., Inc.,
951 F.2d 504, 507 (2d Cir. 1991) (default would not be vacated where movant
“admit[ted] he deliberately chose not to appear in the action”).
22 The good cause factors overwhelmingly favor Starling. Willfulness in the
default judgment context looks to “egregious or deliberate conduct,” and even
“grossly negligent” actions do not necessarily qualify. Am. All. Ins. Co., Ltd. v.
Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) (“We see no reason to expand this
Court’s willfulness standard to include careless or negligent errors in the default
judgment context.”). The government does not suggest Starling was acting in
bad faith; at worst, she was negligent in prosecuting her claim, having relied on
advice from a state prosecutor—sound as to New York forfeiture law—that she
could not make a claim until K.B. was acquitted. As to prejudice, the
government has made no effort to show its interests would be harmed by having
to defend a forfeiture suit against a claimant it knew of from the beginning. See
Meehan, 652 F.2d at 277 (good cause satisfied where, among other things, “[t]he
appellees neither claimed nor proved prejudice”); United States v. $103,387.27
U.S. Currency, 863 F.2d 555, 562 (7th Cir. 1988) (“[W]here the putative claimants
have placed the court and the government on notice of their interest in the
property and their intent to contest the forfeiture, courts will grant extensions of
time, recognizing both the good-faith effort put forth and the lack of prejudice to
the government under such circumstances.”).
23 As to the existence of a meritorious defense, Starling was never charged
with a crime, let alone convicted. She should have the opportunity to show that
she was an innocent owner. See 18 U.S.C. § 983(d)(1) (“An innocent owner’s
interest in property shall not be forfeited under any civil forfeiture statute.”); see
also United States v. $185,336.07 U.S. Currency, 731 F.3d 189, 197–98 (2d Cir.
2013) (reversing forfeiture judgment because of “the weakness of the
government’s case” to establish that all of the defendant funds were connected to
drug sales).
Because each factor weighs in Starling’s favor, we hold that she has
demonstrated the good cause necessary to lift entry of default and file a belated
claim to the defendant assets.
CONCLUSION
For these reasons we VACATE the grant of the motion to strike and the
entry of default judgment, and REMAND for further proceedings consistent
with this opinion.