United States District Court, D. New Jersey
CLARK DEMETRO, Union County, New Jersey, and CLARK & SONS CONSTRUCTION, LLC, Union County, New Jersey, Plaintiffs,
NATIONAL ASSOCIATION OF BUNCO INVESTIGATIONS, Baltimore County, Maryland, and ROBERT POCHEK, individual capacity, Middlesex County, New Jersey, and TOWNSHIP OF WOODBRIDGE, NEW JERSEY, and JOHN DOE, Defendants.
KEVIN MCNULTY, U.S.D.J.
plaintiffs, Clark Demetro ("Demetro") and Clark
& Sons Construction, LLC ("Clark & Sons")
brought this action against Defendants National Association
of Bunco Investigators ("NABI"),  Robert Pochek,
and the Township of Woodbridge, NJ, based on allegedly
defamatory statements and violations of Demetro's rights
under the constitutions and laws of the United States and New
Jersey. Plaintiffs' amended complaint (ECF no. 21,
referred to herein as the "Complaint" and cited as
"AC") asserts claims of (1) common law defamation
and false light (Counts 1, 3, and 4); (2) commercial
disparagement (Count 2); (3) violations of 42 U.S.C. §
1983 and the New Jersey Civil Rights Act ("NJCRA"),
N.J. Stat. Ann. § 10:6-1 etseq. (Count 5); (4)
violation of the New Jersey Law Against Discrimination
("NJLAD"), N.J. Stat. Ann. § 10:5-12(f) based
on discrimination in a place of public accommodation (Count
6); and (5) civil conspiracy under 42 U.S.C. § 1985 and
the NJLAD (Count 7).
before the Court is NABI's motion (1) to vacate entry of
default pursuant to Fed.R.Civ.P. 55(c); (2) to dismiss the
amended complaint for lack of personal jurisdiction, pursuant
to Fed.R.Civ.P. 12(b)(2); and (3) to dismiss the AC for
failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6).
(ECF no. 47)
Factual Background 
allegations of the Complaint are taken as true for purposes
of this motion. Plaintiff Clark Demetro is a New Jersey
citizen residing in Union County. (AC p. 2) Plaintiff Clark
& Sons Construction, LLC, is a New Jersey limited
liability company owned by Demetro. (Id.) Defendant
NABI is a 501(c)(3) organization, incorporated in Maryland.
(Id.) Defendant Robert Pochek ("Pochek")
is a New Jersey citizen, a member of NABI, and is a police
officer in the Township of Woodbridge, New Jersey.
(Id. at 3)
to the Complaint, NABI is an organization primarily composed
of law enforcement personnel "who work in concert to
operate as a 'Gypsy Task Force.*" (AC, Facts Common
to All Counts, ¶ 6) The term "Gypsy" is a
derogatory epithet used to describe Romani, a distinct ethnic
population of Asian origin. (Id. ¶¶ 1, 5)
Historically, Romani individuals "have suffered
discrimination based on assumed connection between
criminality and their race/national origin."
(Id. ¶ 1) NABI refers to Romani as
"Gypsies." (Id. ¶ 3)
recruits law enforcement officers to join, regular membership
is open only to law enforcement personnel. NABI encourages
its regular membership to share information on
"Gypsies" to "better enable its law
enforcement members to identify, target, capture and
prosecute 'Gypsies' but in reality to advance its
agenda of illegally profiling and targeting persons of Romani
descent." (Id. ¶¶ 10, 13, 15)
NABI's law enforcement members share their information on
"Gypsy 'criminals'" by submitting postings
on Gypsies to the NABI website as well as other, more
traditional means." (Id. ¶ 16) NABI's
methods of distributing the information include training
seminars, a bimonthly bulletin, a weekly intelligence log,
and a database of suspects, "substantially all of whom
are 'Gypsies' or persons of Romani etiinicity."
(Id. ¶ 18) The shared information often
includes confidential personal identifiers such as social
security numbers or FBI identification numbers. (Id.
relevant to the claims in this action is the
"'Gypsy' Gallery" on NABI's website.
(Id. ¶¶ 26-29) The Gallery includes color
photos of individuals with their names, social security
numbers and FBI numbers, dates of birth, last known address
or location, and an "[i]nformative paragraph describing
(through the 'colored' language of the submitter and
NABI) the crimes the individual has [allegedly]
committed." (Id. ¶ 27) (parentheticals in
original) This information is provided by NABI's law
enforcement members, who are encouraged by NABI to
"share data obtained in the course of the performance of
their official State sanctioned activities."
(Id. ¶ 29)
Demetro is ethnically Romani, and "by virtue of his
physical appearance and surname, is readily identified as
Romani by other Romani, the police, and NABI."
(Id. ¶¶ 45-46) Starting as early as 2002,
and through 2014, NABI, "by and through its law
enforcement members, " has posted on its website
confidential information about Demetro, such as his social
security number and FBI identification number, together with
a photograph of Demetro. The website has "[f]alsely
labeled Demetro as a 'Gypsy' criminal, who uses his
construction business to commit fraud and who has a
propensity to assault police officers and women."
(Id. ¶ 48)
Complaint specifically identifies three different statements
about Demetro that NABI has shared with its members between
2002 and 2014. First, around April 12, 2002, NABI published
on its website, and e-mailed to its regular membership, a
statement that "Demetro has an extensive record for
assaulting police and resisting arrest when police are called
to domestic situations involving him." (AC, Count 4,
¶¶ 1-9) Second, around March 30, 2012, NABI
published on its website a statement that "Demetro is
involved in several scams involving Auto body work and
Psychic readings." (Id., Count 3, ¶¶
1-9) Third, around May 22, 2014, NABI published information
provided by Defendant Robert Pochek that Demetro "uses
his home improvement company, Clark & Son Construction,
to scam victims into paying for work that is never
performed." (Id., Count 1, ¶¶ 1-9)
alleges that "Police officers, primarily in the State of
New Jersey, have targeted Demetro based on the false
perception, taught by NABI, that 'Gypsies' are
inherently criminal." (Id., Facts Common to All
Counts, ¶ 49) As a result, Demetro has been charged with
around 26 crimes since 1998. All but three of those criminal
proceedings "terminated in Demetro's favor."
(Id. ¶ 79)
October 21, 2014, the plaintiffs filed their original
complaint in this action. (ECF no. 1) On November 4, 2014,
the original complaint was served on Pochek at the Woodbridge
Police Department. (ECF no. 3) On December 26, 2014,
Plaintiffs served the original complaint on Keith Striffolino
("Striffolino"), a member of NABI's board of
directors, through Kathy Hassan ("Hassan"), a clerk
at the Bayonne Police Department, where Striffolino works as
a Detective. (ECF no. 6) On January 22, 2015, the Clerk of
Court entered default against NABI. (ECF no. 8)
November 24, 2015, Plaintiffs filed an amended complaint.
(ECF no. 21} On January 12, 2016, Plaintiffs served the
amended complaint on Striffolino, who at that time was still
a member of NABI's board of directors. (ECF no. 29) On
March 17, 2016, the Clerk of Court entered default as to NABI
for failure to plead or otherwise defend. (ECF no. 30)
December 9, 2016, counsel for NABI entered notices of
appearance. (ECF nos. 43, 44, 46) On January 6, 2017, NABI
filed its motion to vacate the entry of default and to
dismiss all claims for lack of personal jurisdiction and
failure to state a claim. (ECF no. 47) That motion is now
before the Court.
DISCUSSION AND ANALYSIS
Rule 55(c) Motion to Vacate Default
Standard Under Fed.R.Civ.P. 55(c), a district court
"may set aside an entry of default for good cause."
The decision whether to vacate a default judgment is left
"to the sound discretion of the trial court."
Tozer v. Charles A. Krause Milling Co., 189 F.2d
242, 245 (3d Cir.1951). In exercising this discretion, a
court must consider (1) "whether the plaintiff will be
prejudiced, " (2) "whether the defendant has a
meritorious defense, " and (3) "whether the default
was the result of the defendant's culpable conduct."
Budget Blinds, Inc. v. White, 536 F.3d 244, 256-57
(3d Cir. 2008) (quoting United States v. $55, 518.05 in
U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)). In
essence, the factors to be considered in determining whether
to vacate the entry of default are the same as those to be
considered with respect to a default judgment; the
parties' positions are simply flipped.
parly moves to set aside a default, any doubts as to whether
the default should be vacated "should be resolved in
favor of setting aside the default and reaching a decision on
the merits." Gross v. Stereo Component Sys.
Inc., 700 F.2d 120, 122 (3d Cir. 1983). "Less
substantial grounds may be adequate for setting aside a
default than would be required for opening a judgment."
Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656
(3d Cir. 1982).
NABI's Motion to Vacate Default
that the evaluation of these three factors weighs in favor of
granting NABI's motion to vacate the Clerk's entry of
Factor 1 - Prejudice to the Plaintiff
is found where "a plaintiffs ability to pursue the claim
has been hindered by, for example, loss of available
evidence, increased potential for fraud or collusion, or
substantial reliance upon the judgment." Nationwide
Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc.,
175 F.App'x 519, 523-24 (3d Cir. 2006) (citing
Feliciano v. Reliant Tooling Co., 691 F.2d 653, 657
(3d Cir. 1982)). Mere delay in the adjudication of a claim
does not by itself establish prejudice. See
Feliciano, 691 F.2d at 656-57 ("Delay in realizing
satisfaction on a claim rarely serves to establish die degree
of prejudice sufficient to prevent the opening a default
judgment entered at an early stage of die proceeding.").
there is no discernible prejudice to the Plaintiffs that
would result from setting aside the default. The parties
identify nothing of significance that has occurred in the
interim. Plaintiffs state in conclusory fashion that for
nearly two years they have "relied on the entry of the
default judgment against NABI in making strategic decisions
regarding discovery, witnesses, [and] evidence in support of
its claims against NABI." (PI. Opp. 3-4) There is no
indication, however, that evidence has been lost or witnesses
have become unavailable. Similarly, the contention that
"the Plaintiffs have incurred costs in obtaining the
defaults in this matter and in developing this matter for
trial while relying on the previously entered default, "
[id.), is insufficient. Mere delay is not a
sufficient basis for finding prejudice; obtaining a
clerk's entry of default is a fairly simple and routine
process; and if the cost of obtaining entry of default
counted as prejudice, then no default could be vacated.
Further, as NABI notes (Def. Reply 4), Plaintiffs have not
taken the next step of seeking an actual default judgment
I find that this factor weighs in favor of vacating the entry
Factor 2 - Meritorious Defense
determining whether to vacate the entry of default, a court
must determine whether the "allegations of
defendant's answer, if established at trial, would
constitute a complete defense to the action." $55,
518.05 in U.S. Currency, 728 F.2d at 195. The defendant
need not prove that he will prevail at trial, but merely
demonstrate that he has a defense which is meritorious on its
face. Id. Here, NABI presents facially meritorious
NABI argues that Plaintiffs' defamation and false light
claims (Counts 1, 3, and 4) are barred by the applicable
statute of limitations. Specifically, NABI contends that
Plaintiffs' defamation claims are untimely under N.J.
Stat. Ann. § 2A:14-3. As to Counts 3 and 4 at least,
that defense is meritorious on its face and justifies
dismissal. See Section III.C.2, infra.
NABI presents defenses on the merits. NABI contends, for
example, that the allegedly defamatory statements were true,
which of course is a complete defense to defamation. NABI
also pleads more specific defenses to individual counts. Some
are upheld in relation to NABI's motion to dismiss;
others may have to await factual development. See
Section III.C, infra, passim.
or not NABI will ultimately prevail, it has presented
facially meritorious defenses. Accordingly, I find that this
factor weighs in favor of setting aside the entry of default.
Factor 3 - Culpability
I consider whether the default was the result of NABI's
culpable conduct. $55, 518.05 in U.S. Currency, 728
F.2d at 195. Culpable conduct means "more than mere
negligence, " and connotes willfulness, bad faith, and
intentionally avoidance of compliance with court procedures,
or "reckless disregard for repeated communications from
plaintiffs and the court." Hritz v. Woma Corp.,
732 F.2d 1178, 1182-83 (3d Cir. 1984). The failure to respond
to a claim, especially where it is the result of
miscommunication or ignorance, rather than bad faith or
defense gamesmanship, will generally not be considered
culpable conduct. Malibu Media, LLC v. Waller, No.
15CV03002WHWCLW, 2016 WL 184422, at *4 (D.N.J. Jan. 15, 2016)
(citing Wingate Inns Intern,, Inc. v. P.G.S., LLC,
2011 WL 256327, at *4 (D.N.J. Jan. 26, 2011)).
to NABI, it never answered Plaintiffs' original or
amended complaints because it was never properly served with
either. (Def. Br. 3-4) That is so, says NABI, because
"Ms. Hassan has never been NABI's registered agent
and has never been authorized to accept service of process on
behalf of NABI, " and Detective Striffolino has never
"been NABI's registered agent." (Id.)
In fact, "[t]o date, neither [NABI Executive Director
Peter] Robinson nor NABI's registered agent authorized to
accept service of process on behalf of NABI ha[s] been served
with plaintiffs' Summonses and/or Complaints,
(Id. at 4) NABI says it "learned about this
lawsuit and entries of default through information provided
to its Executive Director, Mr. Robinson, by co-defendant
Robert Pochek, a member of NABI." (Id.)
as Plaintiffs note (PI. Opp. 1-2), service of process upon a
director of a corporation in New Jersey is effective,
irrespective of whether the corporation specifically
designated that person to accept service. Fed.R.Civ.P.
4(h)(1) governs service of process upon corporations. Rule
4(h)(1) incorporates Rule 4(e)(1), which allows service
"following state law for serving a summons in an action
brought in courts of general jurisdiction in the state where
the district court is located or where service is made."
Fed.R.Civ.P. 4(e)(1). Process was delivered within this
State, and New Jersey State Court Rule 4:4-4(a)(6) provides
in relevant part that service may be made "[u]pon a
corporation, by serving a copy of the summons and complaint
in the manner prescribed by paragraph (a)(1) of this rule on
any officer, director, trustee or managing or
general agent. . . ." Id. (emphasis added).
the efficacy of Demetro's service of the original and
amended complaints upon NABI turns on whether each service
attempt complied with New Jersey State Court Rule
4:4-4(a)(1), which provides for service
by delivering a copy of the summons and complaint to the
individual personally, or by leaving a copy thereof at the
individual's dwelling place or usual place of abode with
a competent member of the household of the age of 14 or over
then residing therein, or by delivering a copy thereof to a
person authorized by appointment or by law to receive service
of process on the individual's behalf.
NABI raises doubts as to whether service of the original
complaint on December 26, 2014, complied with the
requirements of New Jersey State Court Rule 4:4-4(a)(1). The
process server purported to serve Detective Striffolino.
Striffolino, in turn, is a director of NABI, so valid service
on him would be service on NABI.
the process server did, however, was deliver the complaint to
Hassan, intending that it reach Striffolino. Woodbridge
Police Department is Striffolino's place of employment,
not his dwelling place or usual place of abode. The affidavit
of service states that the process server "[l]eft a copy
with a person authorized to accept service . . . ." (ECF
no. 6) NABI does not challenge Hassan's authorization to
receive service of process for Striffolino; it only
argues that she is not authorized to receive service of
process for NABI, which is not plaintiffs claim.
(See Def. Br. 3) I will assume for purposes of
argument that the original complaint was properly served,
through Hassan, on NABI's director Keith Striffolino, who
is authorized by New Jersey State Court Rule 4:4-4(a)(6) to
receive process on NABI's behalf.
possible route to a finding of proper service is through Rob
Pochek, NABI's codefendant. Although Pochek was not
specifically identified in his capacity in the organization,
he was served, and is alleged to be a Board member. (AC
¶ 21 & Ex. 11) See 4A Charles Alan Wright
8b Arthur R. Miller, Federal Practice & Procedure
§ 1102 (4th ed.) (citing Chan v. Soc'y
Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994)
(Service of process on the president and sole shareholder of
a corporation was effective service on die corporation, even
though the president was himself a defendant named in the
complaint, and affidavit of service did not refer to his
argues for purposes of this motion to vacate default that,
even if it erred, it acted in good faith. Its Executive
Director, "Peter Robinson, who is not a lawyer, was
acting under the good faith belief that NABI was not
previously served with plaintiffs' pleadings." (Def.
Reply 4; see also Robinson Aff., ECF no. 48-2,
¶ 18) Plaintiffs offer a different perspective, arguing
that given the fact that both Striffolino, a director, and
Pochek, a trustee, "were served with copies of the
complaint, " and Pochek "not only was served, but
is named as a Defendant, and has defended this action in his
personal capacity . . . NABI cannot deny knowledge of the
complaint or the pending action and could have answered die
Complaint earlier." (PL Opp. 2)
if it meant to contest service, could have done so-not just
ignored the Complaint, of which it surely must have had
actual notice. (It admits learning of this action from
Pochek. (Def. Br. ...