A strongly-worded lawsuit filed against Comme des Garçons this fall appeared as though it would make its way through court in a swift – and frankly, uneventful – manner when CdG failed to respond to the case that former HR employee Jenifer Mejia lodged against it in October, prompting the court to enter a default judgment in the plaintiff’s favor. In the complaint that she filed in October, Mejia alleged that the Rei Kawakubo-founded company routinely violated various federal and state laws by failing to observe minimum wage increases and refusing to provide employees with legally-mandated medical leave, among other things, and then firing her for flagging such issues.
After CdG failed to respond to the complaint in a timely manner, a New York federal court entered a default judgment against the famed fashion company in mid-December. However, the default judgment has proven to be short lived. Last month, CdG sought to vacate the judgment on the basis that its “failure to respond [to Mejia’s case] was not willful.” The company asserted in its January 15 motion that it was not aware of the filing until after the default judgment was entered because its “corporate address had changed and had not yet been updated with the Secretary of State.”
Addressing the merit of Mejia’s case, including allegations that the company fired her in retaliation for engaging in a protected activity (i.e., alerting the company of its failure to comply with various labor and wage laws) in violation of the Fair Labor Standards Act, the False Claims Act, New York State Labor Law, and the California Labor Code, CdG asserted in its motion to vacate that it “had a legitimate business reason to terminate Mejia’s employment,” namely, her failure “to meet CdG’s expectations of a Human Resource Generalist, and because she breached the trust of CdG, by engaging in inappropriate and inflammatory banter with a staff member.”
As for Mejia’s claims that CdG hired her with the expectation that she fulfill various “important HR duties in February 2019, only to terminate her five months later because she attempted to do so,” the company characterizes such allegations as “illogical.”
Fast forward to this month, and the court says that CdG should get its day in court. In an order dated February 10, Judge John Cronan of the U.S. District Court for the Southern District of New York determined that the fashion company had successfully established that there is “good cause” to vacate the previously-issued entry of default, noting that a “default judgment is the most severe sanction which the court may apply.”
According to Judge Cronan’s order Second Circuit case law dictates a three-part test for determining whether there is “good cause,” namely, “whether the default was willful; whether setting aside the default would prejudice the adversary; and whether a meritorious defense is presented.” The judge found that all three elements have been met here, as “the court has not been presented with evidence or other information to support a finding that [CdG’s] failure to timely respond to the complaint was willful,” noting that the record “suggests that [CdG] appeared in this case somewhat promptly after learning of the action.”
As it turns out, CdG became aware of the lawsuit “because Bloomberg Law ran an article about the filing, and [the company] has been addressing the public relations fallout.” As such, the judge held that CdG’s actions do not appear to be “‘egregious or deliberate’ to support a showing of willfulness.”
Second, “There is no information, presented by [Mejia] or otherwise, to indicate that [CdG’s] delay caused [her] prejudice, such as any ‘loss of evidence,’ ‘increased difficulties of discovery,’ or ‘opportunity for fraud and collusion’ resulting from [its] delay,” the judge held, siding with CdG on the second prong, as well. And finally, the court was persuaded that CdG has a meritorious defense to Mejia’s substantive claims, pointing to the brand’s motion to vacate, in which it argues that Mejia “was fired as a result of inappropriate communications and failing to meet the company’s expectations.”
With the foregoing in mind, the court granted CdG’s motion to vacate the certificate of default, and the company must now file its answer to Mejia’s complaint.
*The case is Mejia v. Comme des Garçons, Ltd., 1:20-cv-09057 (SDNY).