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