In Dassault Systemes, SA v. Childress (No. 10-1987), the Sixth Circuit analyzed the factors for setting aside a default judgment under Rule 55(c). Though the pro se defendant made any number of filings, he never filed an answer. Rather than move for a default under Rule 55(a), the plaintiff moved directly for default judgment. The district court granted the default judgment, but did not decide the amount of damages until after the defendant moved to set the default aside. Therefore, the first question addressed by the Sixth Circuit panel was what standard to apply: the strict standard under Rule 60(b) for setting aside a judgment, or the more lenient Rule 55(c) standard for setting aside a default. The panel decided the default judgment should be treated like a mere default under Rule 55(c) because it was not final (as it did not decide the amount of damages). This opinion, following cases from the First and Second circuits, quietly overrules the Court’s previous decision on this subject in INVST Fin. Group, Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391 (6th Cir. 1987). A panel cannot overrule a previous panel’s decision, so the Court justifies this result by arguing that INVST is itself inconsistent with earlier decisions that discuss the need for damages hearings.
The Sixth Circuit panel then made the most of the “less deferential” abuse of discretion standard of review that applies to a district court’s refusal to set aside a default under Rule 55(c). Judge Moore’s opinion takes pains to explain that while the defendant’s actions may have looked intentional and calculated, it was likely that the plaintiff “as a pro se litigant, was merely attempting to navigate the none-too-intuitive labyrinth of procedural rules.” The plaintiff claimed prejudice from the defendant’s delays, including the spoiling of data on hard drives, continued copyright and trademark violations, and increased legal fees. But the court explained that such prejudice could not be considered — “the relevant inquiry concerns the future prejudice that will result from reopening the judgment, not prejudice that has already resulted from the defendant’s conduct.” Finally, the court emphasized that “even conclusory assertions may be sufficient to establish the ‘hint of a suggestion’ needed to present a meritorious defense” for the Rule 55(c) analysis. The panel therefore reversed on the basis that the defendant had demonstrated “good cause” for refusing to file an answer even after he was ordered to do so.
The panel acknowledged the district court’s justified exasperation with a pro se litigants that make lengthy filings and refuse to comply with orders. But this opinion appears to lower the bar for the evidence that is required to show “good cause” to set aside a default under Rule 55(c), even where the default is the result of apparently deliberate dilatory conduct.