## Facts

- Glen Tate and other seamen employed on the M/V Winstar sued Riverboat Services, Inc. (Riverboat) in the Northern District of Indiana for unpaid overtime wages allegedly guaranteed by federal maritime law for work exceeding 40 hours per week.
- Related wage actions involving some of the same parties and claims had been filed in multiple courts, creating overlapping proceedings.
- At least two plaintiffs had twice voluntarily dismissed similar actions under Federal Rule of Civil Procedure 41(a)(1), potentially triggering the two-dismissal rule and claim preclusion.
- Plaintiffs filed this action on June 27, 2003, and Riverboat was served on July 9, 2003.
- Riverboat did not file a timely answer or otherwise respond.
- Plaintiffs moved for entry of default on August 7, 2003.
- On September 2, 2003, plaintiffs sought a clerk-entered judgment for $1,187,215.50.
- On September 11, 2003, the clerk entered default and a default judgment under Rules 54(c) and 55(b)(1) in an amount slightly exceeding $1.18 million.
- Riverboat’s counsel learned of the default judgment on September 16, 2003 while reviewing court records.
- On October 29, 2003 (about six weeks after learning of the judgment), Riverboat moved to vacate the entry of default and default judgment under Rules 55(c) and 60(b), conceding negligence but attributing the missed response to confusion caused by the multiple overlapping suits.
- Plaintiffs opposed vacatur and filed a motion asking the court to take judicial notice of dockets and filings in related proceedings.

## Issues

1. Whether Riverboat was entitled to relief from the clerk’s entry of default and default judgment under Rules 55(c) and 60(b) based on (a) a sufficient reason for the default, (b) prompt action after learning of the judgment, and (c) a meritorious defense.
2. Whether, and to what extent, the court should take judicial notice of dockets and filings from related cases when deciding the motion to vacate.

## Decision

- The court granted Riverboat’s motion and set aside the entry of default and the default judgment.
- The court found the failure to answer was negligent, but the record supported that it resulted from confusion tied to multiple related actions rather than intentional disregard or bad faith.
- The court concluded Riverboat acted sufficiently quickly by moving for relief roughly six weeks after counsel discovered the default judgment.
- The court held Riverboat presented potentially meritorious defenses, including claim-preclusion arguments based on Rule 41(a)(1)’s two-dismissal rule as to at least two plaintiffs, as well as additional defenses that could reduce or defeat recovery (including timeliness-related defenses).
- The court addressed plaintiffs’ request for judicial notice to the extent it concerned court records, but the requested notice did not justify leaving the default judgment in place.

## Legal Principles

- A court may set aside an entry of default and a default judgment under Rules 55(c) and 60(b) when the moving party shows: (1) a good reason for the default (often framed as excusable neglect), (2) quick action to correct it after learning of it, and (3) a meritorious defense.
- “Meritorious defense” at this stage requires a showing that, if proven, the defense could change the outcome; the defendant need not prove the defense in full on a motion to vacate.
- Negligence can qualify as excusable neglect when circumstances show confusion or inadvertence rather than willful noncompliance, especially when there is no showing of bad faith.
- In evaluating whether to set aside a default judgment, courts consider prejudice to the plaintiff; delay and loss of a default-based recovery, without more, is generally not the type of prejudice that warrants keeping a default judgment.
- Courts favor resolving disputes on the merits, and default judgments are generally disfavored where the defendant promptly appears and shows plausible defenses.
- A court may take judicial notice of the existence and procedural status of filings in other cases, while treating noticed materials with care and not using them as a substitute for proof on disputed factual questions.

## Conclusion

In Tate v. Riverboat Services, the court vacated a clerk-entered default and a $1.18 million default judgment in a seamen’s overtime wage suit because Riverboat’s failure to answer was negligent but excusable in light of confusion from overlapping related litigation, Riverboat moved within a reasonable time after learning of the judgment, and Riverboat identified defenses—including claim preclusion based on Rule 41(a)(1)’s two-dismissal rule and other timing-related defenses—that warranted litigating the dispute on the merits.


Tate v. Riverboat Services, Inc., 305 F. Supp. 916 (2004)