RageOn Wins Motion to Set Aside Atari's Default Judgment

BACKGROUND

This case involves IP infringement claims brought by Atari against RageOn, for RageOn’s alleged facilitation of sales of infringing Atari merch on RageOn.com. We’ve written about this case twice previously:

• Court denies RageOn’s ex parte application to set aside default judgment

• Court denies RageOn’s ex parte application to release levied funds

Now, the Court considers RageOn’s regularly scheduled motion to set aside the default judgment (i.e., not on an emergency, ex parte basis)

JUDGE GRANTS RAGEON’S MOTION TO SET ASIDE DEFAULT JUDGMENT

After reviewing new evidence that showed RageOn’s CEO had tried his best to keep apprised of the case, the Court decided that RageOn did not intentionally fail to respond to Atari’s complaint. Instead, the Court concluded that RageOn’s first attorney “did not merely commit malpractice.” More than that:

She told her client that she was going to timely file a response, failed to do so, failed to inform her client that she missed the deadline, failed to take any actions to rectify the situation, evaded questions about her various failures, assured her client that all deadlines were being met, and failed to inform her client that other additional deadlines were being missed and that it should hire other counsel to further defend the case.

In other words, the Court that concludes that RageOn did not know that their lawyer had totally “abdicated her duties as counsel.”

As to whether RageOn has a meritorious defense, the Court essentially says that there are a bunch of fact questions that go to the merits, that shouldn’t be resolved at this stage of the case. The Court also was not persuaded that Atari would be prejudiced by having the judgment set aside because Atari hadn’t produced any evidence that RageOn would dissipate the levied funds such that there wouldn’t be enough money for a similar, future judgment. Finally, the Court didn’t think there was too long of a delay between the time Atari received the default judgment and the motion to set it aside. The Court observed that “although a more prudent client may have hired new counsel sooner and would not have assumed the case was resolved because it did not hear anything for a few months” RageOn still didn’t wait an unreasonable time to bring its motion.

NEXT STEPS

From here, with the default set aside and writ of execution quashed, the case will proceed as normal and RageOn will have to file its responsive pleading by September 15, 2020.