stating in the context of a motion for default judgment, “whether a factual allegation is well- pleaded arguably follows the familiar analysis used to evaluate motions to dismiss under Rule 12(b)(6)”
How later courts described this case
- stating in the context of a motion for default judgment, “whether a factual allegation is well- pleaded arguably follows the familiar analysis used to evaluate motions to dismiss under Rule 12(b)(6)”
- suggesting it would be unfair to make the plaintiffs wait for relief because of a defendant’s failure to heed the court
- finding sufficient causal connection was established where adverse treatment began within two months of filing of plaintiff’s EEOC complaint
Written by the judges who cited it.
The opinion
Case: 13-11035 Document: 00512887724 Page: 1 Date Filed: 01/02/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 13-11035 United States Court of Appeals
Fifth Circuit
FILED
EDDIE WOOTEN, January 2, 2015
Lyle W. Cayce
Plaintiff–Appellee Clerk
v.
MCDONALD TRANSIT ASSOCIATES, INCORPORATED,
Defendant–Appellant
Appeal from the United States District Court
for the Eastern District of Texas
Before SMITH, WIENER, and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
Plaintiff–Appellee Eddie Wooten filed suit against Defendant–Appellant
McDonald Transit Associates, Inc. under the Age Discrimination in
Employment Act (ADEA), 29 U.S.C. §§ 621–634, alleging discrimination and
retaliation. McDonald Transit never answered or defended the suit. The clerk
entered default against McDonald Transit, and, after holding a hearing on
damages in which Wooten provided live testimony, the district court entered
default judgment for Wooten. McDonald Transit filed a motion to set aside the
default judgment, which the district court denied. Wooten’s complaint
contained very few factual allegations, but his testimony at the damages
hearing provided evidence on the elements of his claim that were absent from
his pleadings. Accordingly, we confront the question we left open in
Case: 13-11035 Document: 00512887724 Page: 2 Date Filed: 01/02/2015
No. 13-11035
Nishimatsu Construction Co., Ltd. v. Houston National Bank, 515 F.2d 1200
(5th Cir. 1976), and conclude that evidence adduced at a default-judgment
“prove-up” hearing cannot cure a deficient complaint. We therefore vacate the
district court’s entry of default judgment and remand the case to the district
court.
I. BACKGROUND
On June 22, 2012, Wooten sued McDonald Transit in federal court,
alleging discrimination on the basis of his age and retaliation after he made a
claim of age discrimination. In his complaint, Wooten alleged that he was a
former employee of McDonald Transit, where he had worked from 1999 until
May 1, 2011. At the time he was fired, he worked as a Class B Mechanic. He
further alleged:
In October 2010, [Wooten] made a claim to the Equal Employment
Opportunity Commission for age discrimination. After the claim
was made and continuing until [his] employment ended,
[McDonald Transit], in violation of the ADEA, discriminated and
retaliated against [Wooten], and created a hostile work
environment, until such time that Plaintiff was constructively
discharged on or about May 1, 2011.
Wooten’s complaint contained no additional factual allegations.
The district clerk issued a summons the same day that Wooten filed his
complaint. On July 18, 2012, Wooten returned the summons with an affidavit
of service indicating that service had been executed on July 5 on McDonald
Transit’s president and registered agent, Robert T. Babbitt, by certified mail,
return receipt requested. But the return receipt indicated that process had in
fact been served on Brenda Roden, another McDonald Transit officer. After
McDonald Transit failed to appear, plead, or otherwise defend Wooten’s suit,
the district clerk entered default against McDonald Transit on October 30,
2012, and Wooten moved for a default judgment.
2
Case: 13-11035 Document: 00512887724 Page: 3 Date Filed: 01/02/2015
No. 13-11035
The district court held a hearing on the motion in December 2012, but
took issue with the fact that Roden, not Babbitt, had been served. The court
adjourned the hearing so that Wooten could attempt proper service on Babbitt
again. The district clerk issued new summons, and Wooten returned with a
new affidavit of service indicating service had been executed by personal
delivery on Babbitt on January 17, 2013. Again McDonald Transit failed to
appear, answer, or defend; again the district clerk entered default; and again
Wooten moved for a default judgment.
The district court held a hearing on whether to enter default judgment
on June 7. At that hearing, which the court expressly designated “a hearing
to prove up damages for a default judgment,” Wooten provided testimony that
elaborated on his factual allegations. He testified that he was born in January
1956, making him fifty-four years old at the time he made his claim to the
EEOC. He explained that during his tenure at McDonald Transit, he had been
promoted from the position of Class B Mechanic to the position of Shop
Foreman. He also described his retaliation claim in greater detail: he stated
that he was demoted from Shop Foreman, lowering his pay by $2 an hour. He
was given menial work, and his hours were changed. He was denied
opportunities for additional job-related certification. He stated that he “never
got [written] up, [and was] never reprimanded.” The district court entered a
default judgment that same day.
McDonald Transit filed a motion to set aside the default judgment on
June 18. In an affidavit accompanying the motion, Babbitt averred that he
was never served with process, that he had not learned of the suit naming
McDonald Transit as a defendant until June 11, and that he retained counsel
to challenge the default judgment soon afterward.
3
Case: 13-11035 Document: 00512887724 Page: 4 Date Filed: 01/02/2015
No. 13-11035
McDonald Transit challenged the suit on numerous grounds under
Federal Rules of Civil Procedure 55(c) and 60(b). In particular, McDonald
Transit invoked Rule 60(b)(1) (mistake, inadvertence, surprise, or excusable
neglect); (b)(3) (fraud, misrepresentation, or misconduct by an opposing party);
(b)(4) (the judgment is void); and (b)(6) (any other reason that justifies relief).
In asking the court to set aside the default judgment under Rule 60(b)(1),
McDonald Transit claimed it had a few defenses to Wooten’s suit—namely,
McDonald Transit was not Wooten’s employer; Wooten had failed to obtain a
right-to-sue letter before suing McDonald Transit; and Wooten had failed to
file suit within the required time from the issuance of a right to sue letter.
McDonald Transit also asserted that it was not properly served and therefore
had not willfully disregarded its duty to respond. In response, Wooten argued
that McDonald Transit had failed to offer any explanation for its default, failed
to produce sufficient evidence of a meritorious defense, and relied on Babbitt’s
uncorroborated and self-serving statements.
The district court denied McDonald Transit’s motion to set aside the
default judgment. Based on evidence of service of process to Babbitt and Roden
(who the court had learned was a vice president of McDonald Transit), the
court inferred that McDonald Transit had knowingly and intentionally failed
to answer or otherwise defend against the complaint. The court further
rejected McDonald Transit’s claim to raise meritorious defenses on the grounds
that the “record is far from conclusive” and these defenses were effectively
waived by failing to answer the complaint.
McDonald Transit timely appealed both the default judgment and the
order denying its motion to set aside the default judgment.
4
Case: 13-11035 Document: 00512887724 Page: 5 Date Filed: 01/02/2015
No. 13-11035
II. JURISDICTION AND STANDARD OF REVIEW
Wooten sued McDonald Transit for violations of federal law under the
ADEA; accordingly, the district court had subject-matter jurisdiction under 28
U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291.
A district court must exercise its discretion in determining whether it
should enter a default judgment under Rule 55(b)(2). Mason v. Lister, 562 F.2d
343, 345 (5th Cir. 1977). We review the entry of a default judgment for abuse
of discretion. U.S. for the Use of M–CO Constr., Inc. v. Shipco Gen., Inc., 814
F.2d 1011, 1013 (5th Cir. 1987). Rule 55(c) provides that a district court “may
set aside an entry of default for good cause” and “may set aside a default
judgment under Rule 60(b).” We correspondingly review the district court’s
refusal to set aside a default judgment for abuse of discretion. Lacy v. Sitel
Corp., 227 F.3d 290, 291–92 (5th Cir. 2000); Shipco, 814 F.2d at 1013. “Any
factual determinations underlying that decision are reviewed for clear error.”
Lacy, 227 F.3d at 292.
Yet, we undertake this review with a grain of salt. “‘Because of the
seriousness of a default judgment, and although the standard of review is
abuse of discretion, even a slight abuse of discretion may justify reversal.’” In
re Chinese–Manufactured Drywall Prods. Liab. Litig., 742 F.3d 576, 594 (5th
Cir. 2014) (quoting Lacy, 227 F.3d at 292). Review of a default judgment puts
competing policy interests at play. On one hand, “[w]e have adopted a policy
in favor of resolving cases on their merits and against the use of default
judgments.” Id. On the other, this policy is “counterbalanced by considerations
of social goals, justice and expediency, a weighing process [that] lies largely
within the domain of the trial judge’s discretion.” Id. (alteration in original)
(quoting Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 (5th
Cir. 1999)) (internal quotation marks omitted).
5
Case: 13-11035 Document: 00512887724 Page: 6 Date Filed: 01/02/2015
No. 13-11035
III. DISCUSSION
On appeal, McDonald Transit raises two principal issues: (1) whether
the district court erred in entering a default judgment and (2) whether the
district court erred in denying McDonald Transit’s motion to set aside the
judgment. 1 Because we only need to answer the first question, we do not reach
the second.
“A default judgment is unassailable on the merits but only so far as it is
supported by well-pleaded allegations, assumed to be true.” Nishimatsu Constr.
Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (citing Thomson v.
Wooster, 114 U.S. 104, 113 (1885)). Put another way, “a defendant’s default does
not in itself warrant the court in entering a default judgment. There must be a
sufficient basis in the pleadings for the judgment entered.” Id. In sum, “[t]he
defendant is not held to admit facts that are not well-pleaded or to admit
conclusions of law. . . . On appeal, the defendant, although he may not challenge
the sufficiency of the evidence, is entitled to contest the sufficiency of the
complaint and its allegations to support the judgment.” Id. In addition, a court
“may conduct hearings . . . when, to enter or effectuate judgment,” it needs to,
inter alia, “establish the truth of any allegation by evidence . . . or . . . investigate
any other matter.” Fed. R. Civ. P. 55(b)(2)(C); see also 10A Charles A. Wright et
al., Federal Practice & Procedure § 2688 (3d ed. 1998) (“[W]hen it seems
advantageous, a court may conduct a hearing to determine whether to enter a
judgment by default. . . . [T]he court, in its discretion, may require some proof
of the facts that must be established in order to determine liability.”).
1 McDonald Transit purports to raise five issues in its Statement of Issues. Three of
those issues—having to do with the standard for meritorious defenses, the consideration of
other factors, and other grounds for relief under Rule 60(b)(6)—all relate to the principal
issue of whether the district court erred in declining to set aside the default judgment.
6
Case: 13-11035 Document: 00512887724 Page: 7 Date Filed: 01/02/2015
No. 13-11035
Neither party disputes that entry of default was appropriate. The
parties disagree about (1) the ADEA standard that governs Wooten’s claim; (2)
whether the district court can consider evidence presented at the hearing in
addition to the allegations in supporting default judgment; and (3) the
sufficiency of Wooten’s allegations.
A. ADEA Framework
McDonald Transit asserts that Wooten’s complaint insufficiently alleged
the essential elements of his prima facie retaliation claim under the ADEA—
in particular, membership in a protected class and qualification. Wooten
contests both elements.
The ADEA makes it unlawful “for an employer to discriminate against
any of his employees . . . because such individual . . . has opposed any practice
made unlawful by this section, or because such individual . . . has made a
charge, testified, assisted, or participated in any manner in an investigation,
proceeding, or litigation under this Act.” 29 U.S.C. § 623(d). The framework
for establishing a prima facie retaliation claim under the ADEA is
straightforward. A plaintiff “must show (1) that he engaged in a protected
activity, (2) that there was an adverse employment action, and (3) that a causal
link existed between the protected activity and the adverse employment
action.” Holtzclaw v. DSC Commc’ns Corp., 255 F.3d 254, 259 (5th Cir. 2001).
Holtzclaw unequivocally added a fourth element to the claim—a plaintiff who
sought re-employment under the ADEA must prove as a part of his prima facie
case that he was qualified for his position. Id. 2
2 The Holtzclaw court reasoned that because qualification for the job is a requirement
to make a prima facie discrimination claim under the ADEA, and because “[r]etaliation
claims are nothing more than a protection against discrimination,” “it would be illogical not
to require one here.” 255 F.3d at 259. Burlington Northern & Santa Fe Railway Co. v. White,
548 U.S. 53 (2006), casts doubt on this reasoning. In that Title VII retaliation case, the Court
examined the relationship of that statute’s discrimination and retaliation provisions. See
7
Case: 13-11035 Document: 00512887724 Page: 8 Date Filed: 01/02/2015
No. 13-11035
Contrary to McDonald Transit’s position, neither § 623(d) nor Holtzclaw
requires that Wooten prove he was a member of a class protected by the ADEA
discrimination provisions. Compare 29 U.S.C. § 631 (defining class of
individuals covered by age-discrimination provisions), with id. § 623(d)
(permitting retaliation provision to apply to “any” employee). Therefore, the
only elements that Wooten must sufficiently allege are (1) protected activity, (2)
adverse employment action, (3) causal link, and (4) qualification.
B. Assessing the Entry of Default Judgment Based on Allegations
and Testimony
We begin by determining whether Wooten’s complaint, either standing
alone or considered together with his testimony at the hearing, adequately
Burlington, 548 U.S. at 61–67. The Burlington Court found that the provisions featured
different language and responded to different purposes—namely, “[t]he substantive
[discrimination] provision seeks to prevent injury to individuals based on who they are, i.e.,
their status[, whereas t]he antiretaliation provision seeks to prevent harm to individuals
based on what they do, i.e., their conduct.” Id. at 63. It therefore concluded that the
discrimination and retaliation provisions were not “coterminous” and “reject[ed] the
standards applied in the Courts of Appeals that have treated the antiretaliation provision as
forbidding the same conduct prohibited by the antidiscrimination provision.” Id. at 67.
Nevertheless, because Burlington addressed Title VII rather than the ADEA, it did not
“unequivocally overrule” Holtzclaw, and we remain bound to apply that case. See Technical
Automation Servs. Corp. v. Liberty Surplus Ins. Corp., 673 F.3d 399, 405 (5th Cir. 2012)
(internal quotation marks omitted); cf. United States v. Short, 181 F.3d 620, 624 (5th Cir.
1999) (“[T]his panel is bound by the precedent of previous panels absent an intervening
Supreme Court case explicitly or implicitly overruling that prior precedent . . . .” (emphasis
added)).
We observe that our Court has not consistently required plaintiffs to prove
qualification under Holtzclaw after Burlington. See, e.g., Munoz v. Seton Healthcare, Inc.,
557 F. App’x 314, 321 (5th Cir. 2014) (per curiam) (citing Holtzclaw for the elements of a
prima facie case of retaliation under the ADEA but omitting the qualification element); Pree
v. Farmers Ins. Exch., 552 F. App’x 385, 388 (5th Cir. 2014) (per curiam) (same); Miller v.
Metro Ford Auto. Sales, Inc., 519 F. App’x 850, 851–52 (5th Cir. 2013) (per curiam) (same).
Moreover, even before Burlington, a panel of our Court “decline[d] to extend the Holtzclaw
requirements” to a case involving wrongful discharge, though that case was before us on
appeal from judgment as a matter of law and there “ha[d] been no determination that [the
plaintiff] . . . was not qualified.” EEOC v. Dunbar Diagnostic Servs. Inc., 92 F. App’x 83, 84–
85 (5th Cir. 2004) (per curiam). We need not decide whether Holtzclaw remains viable,
however, because—as explained below—we hold that Wooten’s complaint is not “well-
pleaded” even if he were not required to allege qualification as part of his prima facie case.
8
Case: 13-11035 Document: 00512887724 Page: 9 Date Filed: 01/02/2015
No. 13-11035
states a claim upon which default judgment could properly be entered. We
conclude that Wooten’s complaint is impermissibly bare, but if viewed in
combination with his live testimony, it provides a sufficient basis to support
the default judgment against McDonald Transit. Correspondingly, we must
address the question on which we reserved judgment in Nishimatsu: May
fatally defective pleadings be corrected by proof taken at a default-judgment
hearing? 515 F.2d at 1206 n.5. We answer this matter of first impression in
the negative and therefore conclude that the district court erred in entering
default judgment on Wooten’s deficient complaint.
1. Wooten’s Prima Facie Case
Despite announcing that a default judgment must be “supported by well-
pleaded allegations” and must have “a sufficient basis in the pleadings,” the
Nishimatsu court did not elaborate on these requirements. See 515 F.2d at
1206. Nothing in the record or the parties’ briefs discusses how to determine
what is “well-pleaded” or “sufficient,” and we have found no guidance in our
own cases. The Second Circuit has said that “so long as the facts as painted by
the complaint ‘might [. . .] have been the case’ they may not now be successfully
controverted [following entry of default].” Trans World Airlines, Inc. v.
Hughes, 449 F.2d 51, 64 (2d Cir. 1971) (first alteration in original), rev’d on
other grounds sub nom. Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S.
363 (1973). In comparison, the Ninth Circuit has held that factual allegations
are not well-pleaded when they “parrot the language” of the statute creating
liability. DirecTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007).
Moreover, whether a factual allegation is well-pleaded arguably follows
the familiar analysis used to evaluate motions to dismiss under Rule 12(b)(6).
In that context, the Supreme Court has reiterated that “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements,” are
9
Case: 13-11035 Document: 00512887724 Page: 10 Date Filed: 01/02/2015
No. 13-11035
not sufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)). See generally 2 James Wm. Moore et al.,
Moore’s Federal Practice § 8.04[1][e]–[f] (3d ed. 2014).
Wooten’s complaint contains the following factual allegations.
(1) Wooten is a former employee of McDonald Transit. (2) Wooten was
employed by McDonald Transit from 1999 until May 1, 2011. At the time he
was fired, Wooten was a Class B mechanic earning $19.50 per hour, plus
benefits. (3) In October 2010, Wooten filed an age-discrimination claim with
the EEOC, after which McDonald Transit “discriminated and retaliated
against [Wooten], and created a hostile work environment, until such time that
[Wooten] was constructively discharged on or about May 1, 2011.”
(4) McDonald Transit’s unlawful conduct has caused Wooten harm, including
damages in the form of lost wages and benefits, mental anguish, and non-
economic damages.
We hold that Wooten’s complaint, standing alone, fails to meet either the
Rule 12(b)(6) “plausibility” standard or the broadly similar standards
announced by the Second and Ninth Circuits. His few factual allegations are
inextricably bound up with legal conclusions (e.g., “discriminated and
retaliated” and “created a hostile work environment” leading to “constructive[]
discharge”). Read in its entirety, the complaint merely “parrot[s] the language”
of the ADEA, Hoa Huynh, 503 F.3d at 854, and comprises a “[t]hreadbare
recital[] of the elements of a cause of action, supported by mere conclusory
statements,” Iqbal, 556 U.S. at 678. Indeed, given the lack of detail in the
complaint, we cannot even speculate as to whether the facts “might [. . .] have
been the case,” Hughes, 449 F.2d at 64 (alteration in original). Furthermore,
the complaint makes—at best—only an indirect, inferential allegation of a
10
Case: 13-11035 Document: 00512887724 Page: 11 Date Filed: 01/02/2015
No. 13-11035
causal link and fails to address altogether the qualification element required
by Holtzclaw.
In view of the above, we conclude that Wooten’s complaint is not “well-
pleaded” for default-judgment purposes. 3 However, we also conclude that
Wooten’s live testimony provides sufficient evidence of each of the elements of
his ADEA cause of action to support the entry of default. We discuss each
pertinent element in turn. 4
a. Adverse Employment Action
In his testimony, Wooten described a variety of concrete actions (changes
in hours, reduced responsibilities, demotion, preclusion from job-related
certification) that together might amount to an adverse employment action. To
establish that he suffered an adverse employment action, Wooten must show
that “a reasonable employee would have found the challenged action materially
adverse, which in this context means it well might have dissuaded a reasonable
worker from making or supporting a charge of discrimination.” Burlington N.
3 The dissent agrees with this assessment but predicts that district courts now will
“almost certainly refuse” to grant default judgments based on petitions “that are anything
short of absolute perfection.” Post at 26. It is, we hope, clear from the preceding discussion
that the pleading standard for a default judgment is far less onerous than the dissent
suggests. And we trust our colleagues in the district courts to distinguish the extraordinarily
deficient pleadings, like Wooten’s complaint, from the sorts of “close call[s]” the dissent
describes in its hypothetical. Post at 28. To the extent that the dissent anticipates strategic
behavior by courts and litigants, post at 28–29, its points are well-taken. As explained in
Part III(B)(2), infra, our default-judgment jurisprudence is animated by the interplay
between competing interests, including fairness, expediency, justice, and finality. Our
approach differs from the dissent’s in the balance it strikes between these interests. We
believe, however, that our position is more consistent with the text and the purposes of the
Federal Rules of Civil Procedure, as well as with our default-judgment precedents and those
of our sister circuits. See infra Part III(B)(2).
4 We omit discussion of whether Wooten engaged in a protected activity because
McDonald Transit does not raise that issue on appeal and therefore has abandoned the claim.
See Yohey v. Collins, 985 F.2d 222, 224–25 (5th Cir. 1993). Nevertheless, we conclude that
Wooten’s complaint and testimony adequately describe the discrimination charge he filed with
the EEOC—a protected activity under the ADEA. See 29 U.S.C. § 623(d).
11
Case: 13-11035 Document: 00512887724 Page: 12 Date Filed: 01/02/2015
No. 13-11035
& Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2006) (citation and internal
quotation marks omitted). Wooten’s undisputed testimony could support a
finding that these actions were materially adverse.
b. Causal Link
McDonald Transit contends that nothing in the complaint nor in
Wooten’s testimony shows a causal link between the October 2010 claim and
the subsequent alleged adverse employment action. Wooten argues that
merely showing a tight sequence of events—as his hearing testimony does—
can be enough to make a prima facie showing of a causal link.
In Clark County School District v. Breeden, 532 U.S. 268 (2001), the
Supreme Court made clear that a narrow band of retaliation claims can
establish causation by the “very close” temporal proximity alone. Id. at 273;
accord Strong v. Univ. Healthcare Sys., L.L.C., 482 F.3d 802, 808 (5th Cir.
2007). Breeden cites cases in which courts found a three- or four-month lapse
in time insufficiently close to establish a causal link where the proof was based
on temporal proximity alone. 532 U.S. at 273–74. Here, though, the delay
between filing and adverse treatment is far shorter. Wooten claims that the
adverse treatment he received lasted for about six months. Since there was
only a seven-and-a-half-month window between the date Wooten filed his
EEOC claim and the date he resigned, the adverse treatment must have begun
within two months of his filing. Therefore, Breeden suggests that Wooten’s
testimony establishes a sufficient causal connection to support the default
judgment.
c. Qualification
Finally, Wooten’s testimony evinces that he was qualified for his job at
the time of the adverse employment action. Although Holtzclaw made
qualification for the job an additional requirement, it did not explain how to
12
Case: 13-11035 Document: 00512887724 Page: 13 Date Filed: 01/02/2015
No. 13-11035
evaluate that requirement. See 255 F.3d at 260. Nevertheless, a review of our
ADEA jurisprudence indicates that “qualified” has a broadly colloquial
meaning in this context; it refers to objective job qualifications (e.g., training,
experience, and physical capacity), not “essential functions” or any other term
of art associated with the term’s counterpart in the Americans with Disabilities
Act.
Bienkowski v. American Airlines, Inc., 851 F.2d 1503 (5th Cir. 1988),
appears to be our sole case expressly defining “qualification” for ADEA
purposes. 5 In Bienkowski, we rejected the proposition that an employee is not
“qualified” under the ADEA if his supervisors are dissatisfied with his work
(i.e., if the employee does not “me[e]t his employer’s legitimate expectations”).
851 F.2d at 1505. Instead, we concluded that “a plaintiff challenging his
termination or demotion [under the ADEA] can ordinarily establish a prima
facie case of age discrimination by showing that he continued to possess the
necessary qualifications for his job at the time of the adverse action.” Id. at
1506. We then explained: “By this we mean that plaintiff had not suffered
physical disability or loss of a necessary professional license or some other
occurrence that rendered him unfit for the position for which he was hired.”
Id. at 1506 n.3.
The cases in this circuit following Bienkowski have accordingly focused on
objective job qualifications when assessing the “qualified” element of ADEA
discrimination and retaliation claims. See, e.g., Berquist v. Wash. Mut. Bank,
500 F.3d 344, 349-50 (5th Cir. 2007) (concluding that the plaintiff had made out
5Although Bienkowski predates Holtzclaw and centers on a claim for discrimination
rather than retaliation, its analysis of qualification is specific to the ADEA context. See
Bienkowski, 851 F.2d at 1505–06. Further, in its explanation of the qualification ruling, the
Holtzclaw court cited an ADEA discrimination case, Price v. Marathon Cheese Corp., 119 F.3d
330 (5th Cir. 1997), suggesting that the term has the same meaning in both discrimination
and retaliation claims. See Holtzclaw, 255 F.3d at 260 & n.2.
13
Case: 13-11035 Document: 00512887724 Page: 14 Date Filed: 01/02/2015
No. 13-11035
a prima facie case of ADEA discrimination by showing that he “possessed the
same job qualifications when [his employer] terminated him as when [it]
assigned him to [his last] position,” as evidenced by the employee meeting “the
objective criteria listed in a job posting” and holding a similar job title for two
years); Fullen v. Galveston Indep. Sch. Dist., 564 F. Supp. 2d 719, 730–31, 732–
34 (S.D. Tex. 2008) (reasoning that the plaintiff could not establish a prima facie
case of ADEA retaliation because “he was not objectively qualified to continue
serving” in his position due to his failure to complete required training); cf.
Tratree v. BP N. Am. Pipelines, Inc., 277 F. App’x 390, 395 (5th Cir. 2008) (per
curiam) (determining that the plaintiff had failed to state a claim for failure to
promote under the ADEA because “by his own admissions he had not completed
the on-the-job training necessary to become eligible” for the position he sought,
thereby precluding a showing of qualification).
Likewise, this Court has found a relatively spare ADEA complaint
sufficient to survive a Rule 12(b)(6) motion to dismiss when it contains factual
allegations evidencing the plaintiff’s experience, promotions, and
commendations. See Leal v. McHugh, 731 F.3d 405, 413 (5th Cir. 2013). In
Leal, we held that the federal-employee plaintiffs’ ADEA-discrimination claims
could withstand a motion to dismiss despite their barebones complaint. Id.
The complaint never explicitly asserted that the plaintiffs were “qualified” for
the positions they sought. First Amended Complaint at 1–2, Leal v. McHugh,
No. 2:11-cv-00249 (S.D. Tex. Dec. 20, 2011), ECF No. 11. But it indicated that
one plaintiff had over twenty years of experience in similar positions and was
recognized as “the most productive employee” in his division, while the other
plaintiff had earned a promotion and had received top ratings on nearly every
performance evaluation for nineteen years. Leal, 731 F.3d at 408.
Acknowledging that the complaint contained “few facts,” we nonetheless held
14
Case: 13-11035 Document: 00512887724 Page: 15 Date Filed: 01/02/2015
No. 13-11035
that the plaintiffs successfully alleged qualification and that “the[ir]
admittedly bare allegations sufficiently state[d] a plausible claim for age
discrimination to survive a motion to dismiss.” Id. at 413.
Here, Wooten testified about his twelve years of experience at McDonald
Transit, his promotion to the position of Shop Foreman, and his positive—or at
least neutral—work evaluations while in that position. There is no evidence
that he “suffered physical disability or loss of a necessary professional license
or some other occurrence that rendered him unfit for the position for which he
was hired,” Bienkowski, 851 F.2d at 1506 n.3. To the contrary, his tenure,
promotion, and clean performance record support the inference that he had the
training and physical capacity required for the position he held. See Leal, 731
F.3d at 413. As a result, Wooten’s testimony adequately establishes his
qualification within the meaning of the ADEA.
Having determined that Wooten’s testimony at the default-judgment
prove-up hearing—and not his complaint, standing alone—presents a prima
facie case of retaliation under the ADEA, we are now squarely presented with
the question of whether such testimony can cure fatally deficient pleadings for
the purpose of entering a default judgment.
2. The Effect of Hearing Testimony on a Deficient Complaint
Since reserving judgment in Nishimatsu on the “possibility that
otherwise fatal defects in the pleadings might be corrected by proof taken by
the court at a [default-judgment prove-up] hearing,” 515 F.2d at 1206 n.5, this
Court has not subsequently confronted this issue. Upon consideration of the
text of the Federal Rules, our precedents and those of our sister circuits, and
the policies underlying our default-judgment jurisprudence, we hold that a
defective complaint cannot be redeemed by evidence presented at a prove-up
15
Case: 13-11035 Document: 00512887724 Page: 16 Date Filed: 01/02/2015
No. 13-11035
hearing and therefore cannot support a default judgment absent amendment
of the pleadings.
We begin with the text of the rule governing default-judgment hearings—
Federal Rule of Civil Procedure 55. Rule 55(b)(2) authorizes a court considering
an application for default judgment to “conduct hearings . . . when, to enter or
effectuate judgment,” it needs to, inter alia, “establish the truth of any allegation
by evidence . . . or . . . investigate any other matter.” Despite this expansive
language, neither this circuit nor any other has squarely held that such a
hearing would be appropriate to adduce facts necessary to state a claim that
were absent from the pleading on which judgment was sought. Indeed, one
would expect that if the text of the rule could be so construed, one of the courts
of appeals would have endorsed this construction—and our Court in Nishimatsu
would have had little reason to expressly avoid the question. 6
As a matter of semantics, moreover, the text of the hearing provision
presupposes valid allegations in the complaint. After all, to “establish the
truth of any allegation,” there must be an existing allegation to assess. And a
court’s authority to “investigate any other matter” in a default-judgment
hearing is circumscribed by the stated purpose of the hearing—“to enter or
effectuate judgment.” As there can be no judgment absent competent
pleadings, Nishimatsu, 515 F.2d at 1206, it strains the text of the rule to
suppose that this investigatory power encompasses the adduction of facts
necessary to render the pleadings competent in the first place. 7
6 The Advisory Committee Notes for the 1987, 2007, and 2009 amendments to Rule 55
indicate that the rule has not undergone any substantive changes that bear on our
observation. See Fed. R. Civ. P. 55 advisory committee’s notes.
7 As noted above, Wright and Miller observe that “the court, in its discretion, may
require some proof of the facts that must be established in order to determine liability.” 10A
Wright et al., supra, § 2688. We do not read Wright and Miller to suggest that such a request
for proof of facts on liability would authorize the entry of default on facially deficient pleadings.
Not only do they emphasize elsewhere the importance of well-pleaded facts or allegations to
16
Case: 13-11035 Document: 00512887724 Page: 17 Date Filed: 01/02/2015
No. 13-11035
We next observe that while none of our sister circuits have addressed the
precise issue before us, our precedents agree on the basic proposition that a
default judgment must be founded on adequate pleadings. For example, in a
case presenting facts broadly similar to those we confront today, the Ninth
Circuit held that evidence presented at a default-judgment prove-up hearing
could not cure a deficient complaint, at least where the defaulting party “had
no opportunity to conduct discovery, and the court . . . indicated that [the
hearing] was limited to the issue of damages.” Alan Neuman Prods., Inc. v.
Albright, 862 F.2d 1388, 1393 (9th Cir. 1988). This case provides limited
guidance, as the opinion was conditioned in part on the RICO context in which
it arose. 8 Nevertheless, to the extent that the Ninth Circuit’s ruling rests on
the fundamental premise that the pleadings underlying a default judgment
must state a cause of action, it finds ample support in the courts of appeal. See
City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 n.23 (2d Cir.
2011) (“Most of our sister circuits appear to have held expressly that a district
the entry of default, id., but a contrary reading would conflict with the text of Rule 55 for the
reasons just explained. Moreover, none of the cases they cite in support of this proposition
present the unique facts we confront today—a complaint that fails to state a claim but is
supplemented by testimony at a default-judgment prove-up hearing. See id. n.8.
The dissent posits that because “all well-pleaded factual allegations must be taken as
true” upon the defendant’s default, the word “allegation” in Rule 55(b)(2)(C) must “refer[] to
something broader than ‘well-pleaded factual allegation.’” Post at 26 n.3. From this premise,
the dissent concludes that “a Rule 55(b)(2) hearing may be conducted to establish the truth of
factually deficient allegations.” Id. However, this reading elides the distinction between
evidence that “establishes the truth of an[] allegation,” Fed. R. Civ. P. 55(b)(2)(C), and evidence
that makes out a competent allegation in the first place. See infra p. 22.
8 See Alan Neuman Prods., 862 F.2d at 1392 (“The allegations of predicate acts in the
complaint concerning those elements of RICO are entirely general . . . . This is a fatal defect
under [Rule] 9(b), which requires that circumstances constituting fraud be stated with
particularity.”); id. at 1393 (“We believe that pleading requirements should be enforced
strictly when default judgments are sought under RICO. Not only is the monetary penalty
for failure to answer greatly enhanced by the provisions for treble damages, but a defendant’s
reputation may be stigmatized.” (citation omitted)).
17
Case: 13-11035 Document: 00512887724 Page: 18 Date Filed: 01/02/2015
No. 13-11035
court may not enter a default judgment unless the plaintiff’s complaint states
a valid facial claim for relief.”). 9
Finally, we note that the rule we adopt today serves the policies
animating our default-judgment jurisprudence and avoids prudential obstacles
inherent in the contrary rule Wooten’s position assumes. As our cases make
plain, default judgments raise fundamental concerns of fairness—both to the
plaintiff, who is entitled to judgment when the defendant fails to heed the
commands of the judicial system, and to the defendant, who is entitled not to be
held liable on claims that are procedurally or substantively infirm. Indeed, it is
this delicate balance that informs our general policy disfavoring default
judgments. See, e.g., Harper Macleod Solicitors v. Keaty & Keaty, 260 F.3d 389,
393 (5th Cir. 2001) (“Federal courts generally disfavor default judgments,
preferring to resolve disputes according to their merits.” (citing, inter alia,
Lindsey v. Prive Corp., 161 F.3d 886, 892 (5th Cir. 1998)); Sun Bank of Ocala v.
Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989) (per curiam)
9 In support, the Second Circuit cites Conetta v. National Hair Care Centers, Inc., 236
F.3d 67, 75–76 (1st Cir. 2001); Ryan v. Homecomings Financial Network, 253 F.3d 778, 780
(4th Cir. 2001); Nishimatsu, 515 F.2d at 1206; General Conference Corp. of Seventh–Day
Adventists v. McGill, 617 F.3d 402, 407 (6th Cir. 2010); Black v. Lane, 22 F.3d 1395, 1399
(7th Cir. 1994); Marshall v. Baggett, 616 F.3d 849, 852 (8th Cir. 2010); Hoa Huynh, 503 F.3d
at 854; Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010); and Cotton v. Massachusetts
Mutual Life Insurance Co., 402 F.3d 1267, 1278 (11th Cir. 2005).
We find the Second Circuit’s survey persuasive. We note only that Conetta and Black
at least implicitly acknowledge the potential relevance of evidence from a prove-up hearing
to a challenge to the legal sufficiency of a complaint. See Conetta, 236 F.3d at 76 (rejecting
the appellant’s argument that the appellee’s complaint, while facially alleging all elements
of the cause of action, was impermissibly vague on one element because the appellee gave
testimony on the facts underlying this element before a magistrate judge at the hearing on
the appellee’s motion for default judgment); Black, 22 F.3d at 1400 (concluding that the
appellant’s complaint sufficiently pleaded a retaliation claim for purposes of a default
judgment, in part because “the plaintiff . . . attempt[ed] to set forth the facts supporting his
claims in an evidentiary proceeding before the district court on damages”). That said, neither
case involved fatally deficient pleadings, so they do not directly conflict with the other cases
listed in Mickalis—or, for that matter, with the approach we endorse today.
18
Case: 13-11035 Document: 00512887724 Page: 19 Date Filed: 01/02/2015
No. 13-11035
(“The Federal Rules of Civil Procedure are designed for the just, speedy, and
inexpensive disposition of cases on their merits, not for the termination of
litigation by procedural maneuver. Default judgments are a drastic remedy, not
favored by the Federal Rules and resorted to by courts only in extreme
situations.” (footnote omitted)). At the same time, this policy “is
counterbalanced by considerations of social goals, justice and expediency.”
Rogers, 167 F.3d at 936 (internal quotation marks omitted). A rule permitting
a party to cure facially deficient pleadings through evidence introduced at a
damages hearing would disturb the careful compromise our cases have struck
between fairness, finality, and justice.
As explained above, it is well settled that default judgments must be
based on competent pleadings. Recognizing an exception to this established
rule in cases where necessary facts omitted from the complaint emerge for the
first time at a damages hearing would inject uncertainty into this body of law
and unfairly disadvantage defaulting defendants.
To illustrate why this is the case, it is helpful to conceptualize the
acceptance of supplemental evidence as a de facto amendment to the
complaint. This Court has long recognized that an amended complaint
supersedes the original complaint and deprives it of all legal effect unless the
former expressly refers to or adopts the latter. King v. Dogan, 31 F.3d 344, 346
(5th Cir. 1994) (per curiam); Boelens v. Redman Homes, Inc., 759 F.2d 504, 508
(5th Cir. 1985). Correspondingly, “district courts routinely set aside entries of
defaults when plaintiffs file amended complaints.” Freilich v. Green Energy
Res., Inc., 297 F.R.D. 277, 283 (W.D. Tex. 2014) (citing cases). This approach
is consistent both with the basic idea that default judgment may be entered
only on an existing, valid complaint and with the general principles of notice
19
Case: 13-11035 Document: 00512887724 Page: 20 Date Filed: 01/02/2015
No. 13-11035
and fairness enshrined in the Federal Rules governing pleadings and final
judgments.
For example, it is widely accepted that “when [a] complaint is amended
[the] defendant should be entitled to amend the answer to meet the contents
of the new complaint.” 6 Wright et al., supra, § 1476. Similarly, Federal Rule
of Civil Procedure 5(a)(2) provides that “[n]o service is required on a party who
is in default for failing to appear[, b]ut a pleading that asserts a new claim for
relief against such a party must be served on that party under Rule 4.” And
Rule 54(c) declares that “[a] default judgment must not differ in kind from, or
exceed in amount, what is demanded in the pleadings.” The purpose of these
rules is to ensure that defendants have notice of the contours of all claims upon
which they may be held liable, and can therefore decide on the basis of the
pleadings whether to defend the action. See Varnes v. Local 91, Glass Bottle
Blowers Ass’n of U.S. & Can., 674 F.2d 1365, 1368 (11th Cir. 1982) (“Rule 4,
and Rule 5(a) as it applies to parties in default for failure to appear, reflect a
policy that a defendant should receive notice of all claims for relief upon which
a court may enter judgment against him.”); 10 Wright et al., supra, § 2663
(“The theory of [Rule 54(c)] is that the defending party should be able to decide
on the basis of the relief requested in the original pleading whether to expend
the time, effort, and money necessary to defend the action.”).
Allowing de facto amendment of an inadequate complaint through
testimony taken at a hearing on damages, without notice to the defendant and
a concomitant opportunity to respond, would needlessly conflict with these rules
and the policies they serve. Cf. Silge v. Merz, 510 F.3d 157, 161–62 (2d Cir.
2007) (explaining the purposes of Rule 54(c) and observing that the notice of
the plaintiff’s request for damages beyond those sought in the original
complaint was delivered after the entry of default and “may therefore have
20
Case: 13-11035 Document: 00512887724 Page: 21 Date Filed: 01/02/2015
No. 13-11035
seemed to come too late in the day for defendants to undo the consequences of
their prior decision to default”); Varnes, 674 F.2d at 1368–69, 1370–71 (holding
that improper service of an amended complaint required that the default
judgment rendered thereon be vacated under Rule 5(a)(2) and denying the
plaintiff’s request for default on the original complaint because “she should not
be able to engraft necessary portions of the amended complaint onto the
original complaint to perfect the original complaint . . . for the sole purpose of
legitimating a clerk’s default”). 10
Moreover, this approach would present practical problems that will not
burden the regime we endorse today. First, treating testimony at a prove-up
hearing as curative of inadequate pleadings would give trial judges
impermissible latitude to assist individual parties through the conduct of such
hearings. On one hand, a judge sympathetic to a plaintiff’s claim—or frustrated
with a defendant’s nonfeasance—could enter default judgment on the plaintiff’s
facially deficient pleadings, intending to accept testimony at the damages
hearing that would fill the gaps in the plaintiff’s prima facie case. The default
judgment would then be immune from attack on the sufficiency of the pleadings,
depriving the defendant of a critical—and longstanding—avenue of relief. On
the other hand, a judge skeptical of a plaintiff’s claim—or sympathetic to a
defendant’s plight—could dismiss the deficient complaint sua sponte or decline
to enter default judgment rather than hold a hearing that would enable the
10The dissent takes issue with our analogy to Rule 5, asserting that “defendants who
have defaulted simply are not situated similarly to their nondefaulting counterparts.” Post
at 27. But this argument proceeds from two problematic assumptions: first, that a defendant
who defaults on a facially deficient complaint has forgone a meaningful “opportunity to
respond” to the plaintiff’s claim for relief; and second, that evidence presented at a prove-up
hearing “merely makes whole an existing claim” rather than stating a new claim for relief.
A defective complaint, by definition, does not provide a defendant with the notice that the
Federal Rules of Civil Procedure contemplate, and therefore fails to state a cognizable claim
that can be “ma[de] whole.”
21
Case: 13-11035 Document: 00512887724 Page: 22 Date Filed: 01/02/2015
No. 13-11035
plaintiff to shore up the pleadings. Either way, such discretion would both
disserve the policies underlying default judgments and undermine fundamental
fairness.
Second, and relatedly, permitting prove-up testimony to effectively
amend a complaint would unfairly give plaintiffs a second bite at the default-
judgment apple, without providing countervailing safeguards for defendants.
In the Rule 55(b) hearing context, there is a critical difference between
evidence that “establish[es] the truth of an[] allegation” and evidence that
makes out an allegation in the first instance. To take a simple example: In a
negligence suit arising out of a car accident, the plaintiff’s pleadings assert that
the defendant drove through a stale red light and collided with the plaintiff’s
car. After the defendant defaults, the court holds a damages hearing. During
the hearing, the court takes testimony to “establish the truth” of the well-
pleaded factual allegation that the traffic light was red, and the plaintiff testifies
that the light was in fact green. The court may now decline to enter default
judgment because there is no proof of one of the facts necessary to assess
liability. See, e.g., Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir.
1981) (“[A] district court has discretion under Rule 55(b)(2) once a default is
determined to require proof of necessary facts and need not agree that the
alleged facts constitute a valid cause of action . . . .” (citing 10A Wright et al.,
supra, § 2688)). If, however, the plaintiff’s pleadings allege only that the
defendant drove “negligently,” testimony at the damages hearing that the
defendant drove through a stale red light would not “establish the truth of an[]
allegation”—“negligence” is a bare conclusion of law that the defendant does not
admit by his default, Nishimatsu, 515 F.2d at 1206—but rather would make a
novel factual allegation. Accordingly, reading this testimony into the original
22
Case: 13-11035 Document: 00512887724 Page: 23 Date Filed: 01/02/2015
No. 13-11035
pleading would let the plaintiff amend the complaint without affording the
defendant an opportunity to respond. 11
This approach would also undermine our policy of enabling defendants
intelligently to weigh the costs of default against the costs of defending an
action. For instance, a defendant named in an ostensibly frivolous complaint
may opt to default rather than incur the costs of defending the suit, only for
the trial court to elicit testimony in a prove-up hearing that would make the
claim plausible. Armed with this information, the defendant may well have
elected to defend the claim; but if the testimony is impliedly incorporated into
the original complaint, then the defendant cannot revisit his earlier decision.
Nor, for that matter, can the defendant avail himself of the procedural
protections associated with amendments to pleadings and variances between
pleadings and default judgments. 12
In sum, the Federal Rules, our precedents and those of our sister circuits,
and policy and practical considerations lead us to the conclusion that a fatally
deficient complaint cannot be cured by testimony at a prove-up hearing. Rather,
a district court in these circumstances has three options. It may (1) dismiss the
complaint sua sponte under Rule 12(b)(6) without prejudice, allowing the
plaintiff to amend and refile; 13 (2) grant leave to amend the complaint to include
the facts presented at the hearing; or (3) treat the hearing evidence as
11 Contrary to the dissent’s contention, post at 26, the defendant is not given a second
or third “bite at the apple.” He is given a first bite at the only meaningful apple—an
opportunity intelligently to respond to the plaintiff’s competent claim for relief.
12 We note also that the approach we endorse incentivizes careful pleading. This is
yet another policy interest that we weigh in the default-judgment balance—and that the
dissent reasonably may assign a different value. See supra note 3.
13 Our cases recognize that a district court has authority to dismiss a complaint sua
sponte under Rule 12(b)(6) for failing to state a claim upon which relief can be granted.
Shawnee Int’l, N.V. v. Hondo Drilling Co., 742 F.2d 234, 236 (5th Cir. 1984). The court need
only use a “fair” procedure, entailing both notice and an opportunity to respond. Carroll v.
Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006).
23
Case: 13-11035 Document: 00512887724 Page: 24 Date Filed: 01/02/2015
No. 13-11035
constituting a de facto amendment to the complaint and then allow the
defendant to answer the complaint as amended. By requiring or inferring
amendment, all three approaches “open up” the default and entitle the
defendant to another opportunity to answer. 14
Turning to the facts before us, we hold that the district court abused its
discretion in entering default judgment against McDonald Transit. As
explained above, Wooten’s barebones pleadings were inadequate to support a
default judgment. Although Wooten’s testimony at the prove-up hearing, if
included in the original complaint, would likely have satisfied our pleading
standards, it cannot properly be considered part of the pleadings. Accordingly,
the district court should have dismissed the complaint sua sponte before
entering a judgment of default or, upon receiving Wooten’s testimony at the
hearing, either granted leave to amend the complaint or treated the complaint
as functionally amended. In any event, McDonald Transit should have been
served with an amended complaint containing Wooten’s “plausible” factual
allegations, and should have received a corresponding opportunity to answer (or
properly default), before judgment. We do not condone McDonald Transit’s
conduct in the district court, 15 but we cannot uphold the entry of default
14 In response to the dissent’s concerns regarding the “practical consequence” of our
decision, post at 28, we emphasize that our ruling today does not require district courts to
engage in a sua sponte Rule 12(b)(6) analysis in every default-judgment case. Rather, as
explained in Part III(B)(1), supra, a district court must simply ensure that the underlying
complaint contains sufficient well-pleaded factual allegations to support the entry of
judgment, using as guideposts Iqbal’s Rule 12(b)(6) “plausibility” standard and the similar
default-judgment-pleading standards announced by our sister circuits. Further, although
our decision rests on the facts now before us, we stress that a district court need not—and,
in the interest of judicial economy, should not—hold a prove-up hearing when the complaint
is facially deficient under the standards just enunciated. In these circumstances, the best
course is to dismiss the complaint without prejudice or grant leave to amend.
15 We express no view on the district court’s finding that McDonald Transit’s default
was willful. We only observe that although the result in this case may seem surprising in
light of the defendant’s repeated defaults, we are tasked with charting a course that is
24
Case: 13-11035 Document: 00512887724 Page: 25 Date Filed: 01/02/2015
No. 13-11035
judgment on pleadings that are infirm or are subject to de facto amendment
without the notice to the defendant that is ordinarily required. 16
IV. CONCLUSION
For the foregoing reasons, we VACATE the district court’s entry of
default judgment and REMAND with instructions to dismiss the complaint
with leave to amend.
consistent with the Federal Rules of Civil Procedure and relevant case law, regardless of its
effect in individual cases.
16 Because we hold that the district court erred in entering default judgment for
Wooten, we do not reach the issue of whether the district court properly denied McDonald
Transit’s motion to set aside the default judgment.
25
Case: 13-11035 Document: 00512887724 Page: 26 Date Filed: 01/02/2015
No. 13-11035
JACQUES L. WIENER, Circuit Judge, dissenting.
Despite my deep respect for the panel majority, I am convinced that its
opinion sends the wrong message to the district courts of this circuit and, more
troubling, that it will eviscerate the role of default judgments in the efficient
administration of civil litigation. I have long accepted that the noble
experiment with notice pleading has been relegated to the trash bin of history,
as recently illustrated by the Supreme Court’s opinions in Twombly 1 and
Iqbal. 2 I also accept that Wooten’s threadbare complaint is factually deficient
in the extreme. Nevertheless, when hereafter asked to grant default
judgments based on petitions that are anything short of absolute perfection,
our district courts will almost certainly refuse to do so without first affording
the recalcitrant defendants yet another bite at the apple (here, a third bite!).
Despite our disfavoring default judgments, they do serve an important purpose
in the prompt and efficient administration of civil litigation. Yet today’s
majority ruling will unnecessarily prolong that process and likely eliminate
the positive role played in it by default judgments. This is why I am compelled
to dissent.
I note first that, despite stating that “a fatally deficient complaint cannot
be cured by [such] testimony,” the majority opinion does allow the plaintiff to
supplement his complaint with evidence introduced at a Rule 55(b)(2) prove-
up hearing. Indeed, the text of Rule 55(b)(2) and our own precedent in
Nishimatsu leaves open this avenue for curing a deficient complaint. 3 Where
1 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
2 Ashcroft v. Iqbal, 556 U.S. 662 (2009).
3 The majority opinion declares that “the text of the hearing provision presupposes
valid allegations in the complaint,” and deals with subsection (b)(2)(C) by pointing out that
“to ‘establish the truth of any allegation,’ there must be an existing allegation to assess.” Yet,
if a defendant defaults, all well-pleaded factual allegations must be taken as true. See
Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). True,
factual allegations regarding damages must still be proven. See U.S. for the Use of M-CO
26
Case: 13-11035 Document: 00512887724 Page: 27 Date Filed: 01/02/2015
No. 13-11035
the majority and I differ is in what should follow the prove-up hearing. The
majority would have the district court grant the defaulting defendant yet
another opportunity to answer and seek Rule 12(b)(6) or summary judgment
relief; I would affirm the court’s grant of the default judgment.
The majority bases its holding primarily on policy considerations,
analogizing to Federal Rule of Civil Procedure 5(a)(2), which requires the
defendant to receive notice if the plaintiff’s pleadings add a “new claim for
relief.” 4 The majority warns that, unless we extend this rule to follow Rule
55(b)(2) hearings, we will (1) give the plaintiff the right to “amend the
complaint without affording the defendant an opportunity to respond,” and (2)
“undermine our policy of enabling defendants intelligently to weigh the costs
of default against the costs of defending an action.”
But defendants who have defaulted simply are not situated similarly to
their nondefaulting counterparts. A defaulting defendant has, in fact, already
had an opportunity to respond (in this case, two opportunities). Moreover, a
complaint supplemented by facts revealed at a Rule 55(b)(2) hearing does not
add “a new claim for relief” 5—it merely makes whole an existing claim, albeit
a deficient one.
At first glance, holding a defendant to its initial default may appear to
be unfair. But, doing so is a consequence of the defendant’s own inaction.
Furthermore, we serve “our policy of enabling defendants intelligently to weigh
the costs of default” so long as we give them a clear rule to follow. If defendants
Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). But subsections
(b)(2)(A) and (b)(2)(B) of Rule 55 provide the basis for hearings to adduce evidence of
damages. Thus, subsection (b)(2)(C) serves no purpose unless “allegation” refers to
something broader than “well-pleaded factual allegation.” If that is the case, then a Rule
55(b)(2) hearing may be conducted to establish the truth of factually deficient allegations,
including those in Wooten’s complaint.
4 FED. R. CIV. P. 5(a)(2).
5 FED. R. CIV. P. 5(a)(2).
27
Case: 13-11035 Document: 00512887724 Page: 28 Date Filed: 01/02/2015
No. 13-11035
know that they will be bound by the facts proven at a Rule 55(b)(2) hearing,
they can weigh that factor when making their initial decision whether or not
to default.
Giving me even greater concern is the practical consequence of the
majority’s decision. It requires our district courts to rule, sua sponte and
without briefing, on the sufficiency of plaintiffs’ complaints, all the while giving
those courts every incentive to err on the side of insufficiency. Consider a
hypothetical in which the viability of the plaintiff’s complaint is a close call,
and a Rule 12(b)(6) motion would likely be contested vigorously but for the
defendant’s default. After the district court has held a Rule 55(b)(2) hearing,
the majority would then have it make a ruling sua sponte as to whether the
complaint was deficient in the first place. I cannot believe that a district court
would ever hold the complaint sufficient and enter default judgment on it: If
the court should do so at that point, the defendant would lose nothing by
entering the case, essentially to litigate its Rule 12(b)(6) case via a Rule 60(b)
motion. The majority thus provides yet another safety net for the previously
defaulting defendant, who would also enjoy a generous standard of review in
its effort to convince us on appeal that the district court erred in holding the
original complaint sufficient. 6
On one hand, a district court that enters a default judgment on a
complaint that’s sufficiency is truly a close call would face a significant
probability of reversal. If, on the other hand, the district court should require
amendment and notice to the defaulting defendant, the plaintiff might not even
6 “Because of the seriousness of a default judgment, and although the standard of
review is abuse of discretion, even a slight abuse of discretion may justify reversal.” In re
Chinese Manufactured Drywall Prods. Liab. Litig., 742 F.3d 576, 594 (5th Cir. 2014) (quoting
Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000)) (internal quotation marks omitted).
28
Case: 13-11035 Document: 00512887724 Page: 29 Date Filed: 01/02/2015
No. 13-11035
have the right to appeal. 7 Thus, when faced with a marginal complaint, a
district court will likely opt to err on the side of requiring amendment (either
actual or de facto) and providing the defendant in default a new opportunity to
respond.
This result is inordinately lopsided and, even worse, favors the wearer of
the black hat over the wearer of the white hat. Our default judgment
jurisprudence carefully balances our preference for judgments on the merits
with “considerations of social goals, justice and expediency.” 8 We do not honor
this balance, much less retain it, by allowing the defaulting defendant to lie
behind the log until after a Rule 55(b)(2) hearing, then have the option to jump
into the fray and litigate the merits as though his default had never occurred.
Under today’s decision, the defendant may comfortably sit back while the
plaintiff goes to the trouble, time, and expense of a Rule 55(b)(2) hearing,
leaving the district court to grapple with legal issues that are truly the
defendant’s own duty to raise and support. I see this as grossly unfair to the
innocent plaintiff and a waste of judicial resources. Far better and fairer, in
my view, to hold the defaulting party to his default. These are the reasons why
I must respectfully dissent.
7 The plaintiff’s only avenue for appeal may be by the district court’s discretion via 28
U.S.C. § 1292(b).
8 Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 (5th Cir. 1999) (quoting
Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir. 1990)).
29