Floorcoverings International, Ltd. v. Keding et al, Civil Action No. 1:22-cv-02545-LMM (N.D. Ga., Jan. 11, 2023)

Judge Leigh Martin May granted Plaintiff’s Motion to Strike Defendants’ Motion to Dismiss in a trade secret case in the Northern District. The Plaintiff, Floorcoverings International, Ltd., is an international franchisor of flooring products and window treatments businesses. The Defendants, two individuals and a related corporation, are former franchisees alleged to have continued using proprietary business systems and registered marks after the Franchise Agreement expired. Complaint, Civil Action No. 1:22-cv-02545-CAP, Dkt. 1 at 7 (N.D. Ga. June 24, 2022).

In the Order, the Court struck or denied the Defendants’ various procedural motions, including a Motion to Dismiss. The Court broadly agreed with Plaintiff’s argument that the corporate defendant’s motion to dismiss must fail because it was filed by an individual and not an attorney for the company.  In fact, the Court cited “two centuries” of law on the issue of corporate counsel and the Court’s own Local Rules for support. Order, Civil Action No. 1:22-cv-02545-LMM, Dkt. 34 at 6 (N.D. Ga. Jan. 11, 2023).

Nonetheless, the Court denied Plaintiff’s Motion for Entry of Default based on a liberally applied standard for good cause and a preference to decide the case on its merits. Plaintiff moved for default against the Individual Defendants for untimely responsive pleadings. Judge May analyzed the default under “the more forgiving Rule 55(c) standard,” which permits the Court to set aside an entry of default “for good cause.” Id. at 15. In finding good cause, the Court noted the Individual Defendants acted in good faith, did not intentionally miss responsive deadlines, and that the corporation had since cured the previous representation issues by retaining counsel.