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Re: Allgood Entertainment, Inc., Et. Al. v. Gridiron Video

February 6, 2012

RE: ALLGOOD ENTERTAINMENT, INC., ET. AL.
v.
GRIDIRON VIDEO, ET AL.,



The opinion of the court was delivered by: Michael A. Hammer United States Magistrate Judge

Honorable Michael A. Hammer Martin Luther King, Jr. Federal United States Magistrate Judge Building & U.S. Courthouse 50 Walnut Street, Newark, NJ 07101

LETTER ORDER

Dear Litigants:

Presently before the Court is Plaintiffs' motion for default judgment [ECF No. 46]. The Honorable Jose L. Linares, United States District Judge, referred the motion to the Undersigned for Report and Recommendation. For the reasons set forth below, the Court vacates the entry of default, terminates the motion for default judgment, requires the defendants to answer or otherwise respond to the Complaint on or before March 12, 2012, and requires the corporate defendants to obtain counsel on or before March 12, 2012. The Court also schedules a telephone status conference for February 24, 2012, at 11:30 a.m., which plaintiff will initiate.

Brief Factual Background

Plaintiffs AllGood Entertainment, Inc. and AllGood Sports, Inc. (collectively, "AllGood") are New Jersey companies. In late 2005 or early 2006, Patrick Allocco, their Chief Executive Officer, decided that the plaintiffs should enter the professional sports market. (Compl. ¶¶ 3--4, 20--21, May 19, 2009, ECF No. 1.) AllGood began working with defendants Tim Brown, Locker 81 Inc., Lawrence Falk, and the Blackstone Group. (See, e.g., Am. Compl. ¶¶ 22, 24, 48--49.) Defendants Brown and Falk are Texas residents, and Locker 81 is a Texas company. (Id. ¶¶ 6--8.) In 2006, Allocco held a meeting with Brown and Falk in Dallas, Texas, where the parties allegedly conceived of "Gridiron Video," a DVD set of instructional videos starring notable professional football players. (Id. ¶¶ 30--32.) Thereafter, Falk, Brown, and Blackstone allegedly schemed to undermine investment in AllGood and misled AllGood in an effort to continue the "Gridiron Video" project without AllGood. (See, e.g., id. ¶¶ 14--15, 56, 65, 67, 72.)

Procedural Background

On May 19, 2009, AllGood filed a Complaint against Falk, Brown, Locker 81, Blackstone, and "Gridiron Video, Inc." (Compl. ¶¶ 5--9.) As to the last defendant, the Complaint states that "defendant Gridiron was and is a corporation duly organized and existing under the laws of the State of Texas [need address]." (Compl. ¶ 5 (bracketed text in original).) Blackstone was later dismissed pursuant to a stipulation. (See Order, Apr. 20, 2010, ECF No. 27.)

Defendant Falk and Brown are not lawyers, and have defended themselves pro se throughout the case. Similarly, the defendant companies have not been represented by counsel in this litigation.

In an application filed July 28, 2009, defendant Falk requested an extension to answer, move, or otherwise reply to the Complaint. (Falk Extension Appl., filed July 28, 2009, ECF No. 5.) Falk represented that service of process had been effected but that he "[i]n no way desire[d] to waive any jurisdictional issues the court may consider." (Id.) In a cover letter and attached certification, Falk further stated that he "d[id] not believe I am subject to New Jersey jurisdiction." (Falk Letter, filed July 28, 2009, ECF No. 5; Falk Certif. ¶ 4, filed July 28, 2009, ECF No. 5.) In an application filed August 3, 2009, defendant Brown requested the same extension to answer, move, or otherwise reply. (Brown Extension Appl., filed Aug. 3, 2009, ECF No. 6.) Brown used the same language as Falk to state that he did not waive any jurisdictional issues. (Id.)

On August 12, 2009, Falk made a "special appearance" objecting to personal jurisdiction and included a supporting affidavit. (Falk Special Appearance, Aug. 12, 2009, ECF No. 10; Falk Aff., dated Aug. 11, 2009, ECF No. 10.) In the alternative, Falk requested that the Court transfer the case to Texas. (Falk Special Appearance at 2.) On August 18, 2009, Brown also made a special appearance objecting to personal jurisdiction with a supporting affidavit and requested the same alternative relief. (Brown Special Appearance, Aug. 18, 2009, ECF No. 12; Brown Aff., dated Aug. 14, 2009, ECF No. 13.)

On October 1, 2009, the case was reassigned to a different district court judge. (Order Reassigning Case, Oct. 1, 2009, ECF No. 21.) On March 15, 2010, the case was reassigned for a second time to another district court judge. (Order Reassigning Case, Mar. 15, 2010, ECF No. 25.) On October 5, 2010, the case was reassigned for a third time to another district court judge. (Order Reassigning Case, Oct. 5, 2010, ECF No. 28.)

On October 14, 2010, the Court issued a notice of call for dismissal pursuant to Local Civil Rule 41.1. (Call for Dismissal, Oct. 14, 2010, ECF No. 29.) In response, AllGood filed a certification and affidavit to demonstrate good cause why this matter should not be dismissed. (Bordetsky Certif., Oct. 22, 2010, ECF No. 30; Allocco Aff., Oct. 22, 2010, ECF No. 31.) AllGood represented that Falk and Brown did not properly appear, answer, or move to dismiss. (Bordetsky Certif. ¶ 6, Oct. 22, 2010.) Specifically, Allgood's local counsel made the following assertion: the unadmitted partner of AllGood's pro hac vice counsel had called the chambers of the then-assigned district court judge and was told by a law clerk that the Court did not consider the letters of Falk and Brown to be motions and that no opposition was necessary or required. (Id. ¶ 7.) The law clerk further allegedly stated that the documents were not answers. (Id.)

Furthermore, the local counsel asserted that he had called the Clerk of the Court who confirmed the same. (Id. ¶ 8.) AllGood also stated that there had been numerous but unsuccessful settlement discussions with Falk, "who purported to speak on behalf of the other Defendants." (Id. ¶ 9) These discussions and preoccupation with other litigation were the bases for AllGood's delay. (Allocco Aff. ¶¶ 3--5; see also Bordetsky Certif. ¶¶ 9--10, Oct. 22, 2010.) Finally, AllGood stated that it was preparing to move for default against the remaining defendants. (Bordetsky Certif. ¶ 12, Oct. 22, 2010.)

Following AllGood's submission, Falk filed letters dated October 29, 2010, and November 16, 2010. In an October 29, 2010 letter copied to the Court, Falk referred AllGood's counsel to his special appearance concerning jurisdictional issues. (Falk Letter, dated Oct. 29, 2010, ECF No. 34.) In a letter dated November 16, 2010, Falk made certain factual assertions, but stated that the "letter should in no way be considered an answer." (Falk Letter, dated Nov. 16, 2010, ECF No. 39.)

On November 18, 2010, the Court issued an order directing AllGood to move for entry of default by a certain date. (Order, Nov. 18, 2010, ECF No. 35.) On November 24, 2010, AllGood moved for default judgment. (Mots. for Default J., Nov. 24, 2010, ECF Nos. 36--38.) On February 3, 2011, the Court denied AllGood's motion for failing to first obtain an entry of default from the Clerk of the Court. (Order, Feb. 3, 2011, ECF No. 41.) On June 23, 2011, AllGood requested an entry of default from the Clerk of the Court (Request for Entry of ...


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