Background
World Wide Exhibits, Inc. appealed the district court’s denial of its motion to set aside a default judgment. The district court had granted default judgment for the Board of Trustees of the Teamsters Local 631 Security Fund for Southern Nevada and the Board of Trustees of the Teamsters Convention Industry Training Fund. The Plaintiffs claimed that World Wide failed to make records available for audit in violation of Section twenty-nine U.S.C. one thousand one hundred forty-five and obligations under the parties’ Collective Bargaining Agreement.
The court’s reasoning
The court reviewed the denial under Federal Rule of Civil Procedure sixty point B one for abuse of discretion. The review entails a two-step test to determine if the trial court identified the correct legal rule and if its application was illogical, implausible, or without support in the record. The court found ample support that World Wide engaged in culpable conduct that led to the default, citing its failure to respond to audit requests and demand letters. The court also affirmed the denial based on the absence of a meritorious defense because World Wide did not raise those defenses in its motion to set aside the default judgment. The court noted that appellate courts will not consider arguments raised for the first time on appeal.
The first step of our abuse of discretion test is to determine de novo whether the trial court identified the correct legal rule to apply to the relief requested.
United States v. Aguilar, 782 F.3d 1101, 1105 (9th Cir. 2015)
What it means going forward
The decision reinforces that parties seeking to set aside a default judgment must act in good faith and must preserve all defenses in their initial motion to avoid waiver on appeal.
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