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Media Alerts - Wooten v. McDonald Transit Associates, Inc. - Fifth Circuit
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January 6, 2015
  Wooten v. McDonald Transit Associates, Inc. - Fifth Circuit
Headline: Fifth Circuit Bolsters Protections for Defaulting Defendants.

Area of Law: Federal Rules of Civil Procedure; Age Discrimination in Employment Act.

Issue Presented: Whether evidence adduced at a default-judgment "prove-up" hearing can cure a deficient complaint.

Brief Summary: Wooten filed suit against McDonald Transit Associates, Inc. (McDonald) under the Age Discrimination in Employment Act (ADEA) alleging discrimination and retaliation. McDonald never answered or defended the suit. The U.S. District Court for the Northern District of Texas entered default against McDonald, and, after holding a hearing on damages at which Wooten provided live testimony that elaborated on his allegations, the district court entered default judgment for Wooten. McDonald later filed a motion to set aside the default judgment, which the district court denied. McDonald appealed to the U.S. Court of Appeals for the Fifth Circuit, which held that evidence adduced at a default-judgment "prove-up" hearing cannot cure a deficient complaint. The Fifth Circuit vacated the judgment and remanded with instructions to dismiss the complaint with leave to amend.

Extended Summary: Wooten filed suit against McDonald Transit Associates, Inc. (McDonald) under the Age Discrimination in Employment Act (ADEA) alleging discrimination and retaliation. Wooten's complaint alleged the following facts: Wooten worked for McDonald from 1999 to 2011 as a Class B Mechanic; he made a claim to the Equal Employment Opportunity Commission (EEOC) for age discrimination; after the claim was made McDonald, in violation of the ADEA, retaliated against Wooten and created a hostile work environment, until such time that Plaintiff was constructively discharged; and the unlawful conduct caused Wooten harm, including damages in the form of lost wages and benefits, mental anguish, and non-economic damages. McDonald never answered or defended the suit.

The U.S. District Court for the Northern District of Texas held a hearing, which the court expressly designated "a hearing to prove up damages for a default judgment." Wooten elaborated on his factual allegations. He testified that he was fifty-four years old at the time he made his claim to the EEOC; he explained that during his tenure he had been promoted from the position of Class B Mechanic to the position of Shop Foreman; he 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 was never reprimanded. The district court entered default judgment for Wooten. McDonald later filed a motion to set aside the default judgment, which the district court denied.

McDonald appealed to the U.S. Court of Appeals for the Fifth Circuit. McDonald asserted that Wooten's complaint insufficiently alleged the essential elements of his prima facie claim under the ADEA. The Fifth Circuit concluded that Wooten's complaint was impermissibly bare, but if viewed in combination with his live testimony, it provided a sufficient basis to support the default judgment. Therefore, the Fifth Circuit had to address the question on which they reserved judgment in Nishimatsu Construction Co., Ltd. v. Houston National Bank (5th Cir. 1976): May defective pleadings be corrected by proof taken at a default-judgment hearing?

The Fifth Circuit held, based on the Federal Rules of Civil Procedure, precedent, and policy and practical considerations, that evidence adduced at a default-judgment "prove-up" hearing cannot cure a deficient complaint. Rather, a district court in these circumstances has three options: (1) dismiss the complaint sua sponte without prejudice, allowing the plaintiff to amend and refile, (2) grant leave to amend the complaint to include the facts presented at the hearing, or (3) treat the hearing evidence as constituting a de facto amendment to the complaint and then allow the defendant to answer the complaint as amended.

Therefore, while the Fifth Circuit did not condone McDonald's conduct in the district court, the district court abused its discretion in entering default judgment against McDonald. The Fifth Circuit vacated the judgment and remanded with instructions to dismiss the complaint with leave to amend.

Judge Wiener wrote a dissent stating that the holding will eviscerate the role of default judgment. When district courts are asked to grant default judgments based on pleadings that are anything short of absolute perfection, they will almost certainly refuse to do so without first affording the recalcitrant defendants yet another bite at the apple.

For the full opinion, please see:
http://www.ca5.uscourts.gov/op...ub/13/13-11035-CV0.pdf.

Panel: Circuit Judges Smith, Wiener, and Prado

Argument Date: 6/3/2014

Date of Issued Opinion: 1/2/2015

Docket Number: No. 13-11035

Decided: Vacated and remanded

Case Alert Author: Kirsty Davis

Counsel: Joseph Craig Johnston, Johnston & Miller, for Plaintiff-Appellee Wooten; David B. Dowell, Cantey Hanger, L.L.P., for Defendant-Appellant McDonald Transit Associates, Inc.

Author of Opinion: Judge Prado (Dissent by Judge Wiener)

Case Alert Circuit Supervisor: Aaron-Andrew P. Bruhl

    Posted By: Aaron Bruhl @ 01/06/2015 11:24 AM     5th Circuit  

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