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ACCU-WEATHER, INC. v. REUTERS LTD.

December 3, 1991

ACCU-WEATHER, INC., PLAINTIFF,
v.
REUTERS LIMITED, AND REUTERS INFORMATION SERVICES, INC., DEFENDANTS.



The opinion of the court was delivered by: McCLURE, District Judge.

MEMORANDUM

BACKGROUND

Plaintiff Accu-Weather, Inc. ("Accu-Weather") entered a default against defendants Reuters Limited and Reuters Information Services, Inc. (hereafter jointly "Reuters") on September 6, 1991 pursuant to Fed.R.Civ.P. 55(a).*fn1 Four days after the default was entered, defendants filed a motion (record document no. 22) to have it set aside. Fed.R.Civ.P. 55(c).*fn2

DISCUSSION

In deciding whether to set aside an entry of default, the district court must consider four factors and make explicit findings as to each. The factors are: (1) whether lifting the default will prejudice the plaintiff; (2) whether the defendant has a prima facie meritorious defense; (3) whether the defaulting defendant's conduct is excusable or culpable; and (4) the effectiveness of alternative sanctions. Emcasco Insurance Co. v. Sambrick, 834 F.2d 71, 73-74 (3d Cir. 1987). The Third Circuit does not favor defaults. If there is any doubt as to whether the default should be set aside, the court should err on the side of setting aside the default and reaching the merits of the case. Zawadski de Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir. 1987).

Prejudice to the plaintiff

Prejudice exists if circumstances have changed since entry of the default such that plaintiff's ability to litigate its claim is now impaired in some material way or if relevant evidence has become lost or unavailable. International Brotherhood of Electrical Workers v. Skaggs, 130 F.R.D. 526, 529 (D.Del. 1990), citing Emcasco, supra, 834 F.2d at 73. Detriment in the sense that plaintiff will be required to establish the merit of its claims does not constitute prejudice in this context. Nash v. Signore, 90 F.R.D. 93, 95 (E.D.Pa. 1981).

In this case, Accu-Weather will not be prejudiced if the default is set aside. There is no contention on plaintiff's part that evidence has been lost or has become unavailable, or that something has occurred since entry of the default which will hinder plaintiff's ability to litigate this case. Plaintiff's contention that granting the motion will "severely prejudice Accu-Weather's right to prepare for trial, by requiring Accu-Weather either to engage immediately in `shot gun' discovery (by guessing at what issues Defendants might raise in an actual answer)"*fn3 is without merit. The type of harm which plaintiff seeks to call "prejudice" is not the sort of harm which the courts consider prejudicial in this context. Moreover, plaintiff's contention is without merit. The discovery deadline has been extended. (See: record document no. 29, filed October 9, 1991). Additionally, although the August hearing on plaintiff's motion for a preliminary injunction did not explore fully the merits of the case, it certainly gave plaintiff some idea as to the defenses defendants intend to raise, such that it is not completely "in the dark" on this issue, as it would have the court believe. Plaintiff also knew from the pleadings, briefs, etc. in the declaratory judgment action filed by Reuters in the United States District Court for the Eastern District of Pennsylvania*fn4 what defendants' position is on the issues of this case. Further, defendants filed a proposed answer with their reply brief (record document no. 28, filed October 3, 1991). Finally, plaintiff's argument on this issue is directly contrary to its assertion on page four of its brief that it has

  used the default mechanicism [sic] to squarely
  frame the positions of the parties and to effect
  the judicial economy desirable in cases of this
  nature. All the contract documents are before the
  Court. No parol evidence is needed. What more can
  Defendants say?

If defendants cannot possibly have any defense to raise with which plaintiff is not already familiar, how then can plaintiff's conduct of discovery be hindered by the absence of an answer. We find such blatantly inconsistent and unfounded arguments insulting to the court. Moreover, plaintiff appears to labor under the misapprehension that the court should allow the default to stand because it will not put plaintiff to the "unnecessary bother" of trying this case.

Meritorious defense

A meritorious defense is one which, if proven at trial, will bar plaintiff's recovery. Emcasco, supra, 834 F.2d at 74. The defendant is not required to prove beyond the shadow of a doubt that it will win at trial, but merely to show that it has a defense to the action which at least has merit on its face. Emcasco, supra, 834 F.2d at 74.

Accu-Weather seeks to enforce a contract to supply Reuters with weather information for its global news service and data base. Accu-Weather contends that a contract signed on July 5, 1983 has been extended by various addenda and is in effect until "at least" July 1, 1998. Reuters takes the position that there are no currently enforceable extensions of the 1983 agreement in effect and that it legally terminated its contractual relationship with Accu-Weather effective July 1, 1991. Accu-Weather seeks a court order compelling Reuters to continue purchasing weather information and services from it through the 1998 contract termination date, as well as monetary damages allegedly caused by Reuters' refusal to utilize its services on or after approximately July 1, 1991.

In addition to denying plaintiff's claims that there is a contract currently in effect, defendants raise three affirmative defenses: (1) failure to state a claim upon which relief can be granted; (2) laches; and (3) the existence of an adequate remedy at law. (These defenses are pled in defendants' proposed answer, ...


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