Tate v. Riverboat Services, Inc.

Brief Fact Summary.

A default judgment was issued to Tate after filing suit against Riverboat Services, Inc. (Riverboat) in federal court for unpaid overtime guaranteed by federal maritime law.

Synopsis of Rule of Law.

A district court is permitted to vacate a default judgment if the defendant can show that there was a good reason for the default, it acted quickly to correct the default, and the defense was with merit.

Facts.

Tate sued Riverboat Services, Inc. (Riverboat) in federal court for unpaid overtime guaranteed by federal maritime law. Several plaintiffs filed the same claims in different courts, and two plaintiffs voluntarily dismissed. In the initial action with Tate, Riverboat failed to file an answer. Tate secured a default judgment for $1 million. Riverboat moved to vacate the default judgment after admitting that it failed to file an answer.

Issue.

Whether a district court is permitted to vacate a default judgment if the defendant can show that there was a good reason for the default, it acted quickly to correct the default, and the defense was with merit.

Held.

Yes. The motion to vacate the default is granted. The defendant has shown no bad faith in filing an answer because their claim of negligence shows that the defendants were confused about the number of additional claims in different courts. Secondly, Riverboat and its attorneys have no history of avoiding deadlines. Lastly, Riverboat has shown that two plaintiff’s claims are barred by res judicata. Thus, Riverboat has shown cause for the default, acted quickly to resolve the default, and a meritorious defense.

Discussion.

FRCP 60(b) permits a district court to vacate a default judgment if the defendant can show that there was a good reason for the default, it acted quickly to correct the default, and the defense was with merit.