Opinion
20-cv-00703-HSG (RMI)
02-24-2022
SCOTT JOHNSON, Plaintiff, v. SHASTA CORPORATION, Defendant.
REPORT AND RECOMMENDATION Re: Dkt. No. 38
ROBERT M. ILLMAN UNITED STATES MAGISTRATE JUDGE
This matter was assigned to the undersigned on February 15, 2022 for the preparation of findings and a recommendation on a Motion for Entry of Default Judgment (dkt. 38) filed by Plaintiff Scott Johnson. Plaintiff seeks the entry of default judgment against Defendant Shasta Corporation (“Shasta”) with an award of state-law statutory damages in the amount of $16,000 (based on four distinct encounters pursuant to Unruh Civil Rights Act, Cal. Civ. Code § 52(a)), an order requiring Shasta to construct a wheelchair accessible parking space and a wheelchair accessible counter (pursuant to the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12188), attorneys' fees in the amount of $2,164, and $835 in costs. See Pl.'s Mot. (dkt. 38-1) at 17-24. As set forth in detail below, the undersigned recommends that the court deny Plaintiff's Motion.
On February 16, 2022, when the court scheduled a hearing on Plaintiff's Motion (dkt. 38) for February 24, 2022, Plaintiff was ordered to promptly serve notice of the same on Defendant (see dkt. 45). Plaintiff effected this service on February 22, 2022(dkt. 46). The undersigned conducted the aforementioned hearing on February 24, 2022, however, Defendant Shasta did not appear.
INTRODUCTION
Plaintiff filed the Complaint on January 30, 2020, alleging that Defendants (Serra Property LLC, Shasta Corporation, and Does 1-10) had violated his rights under the ADA and Unruh Civil Rights Act. See Compl. (dkt. 1) at 1-7. Plaintiff is a quadriplegic person who is unable to walk and uses a wheelchair for mobility, as well as a specially equipped van for transportation. Id. at 1. Defendant Serra Property LLC owns certain real property located at 61 Serra Way in Milpitas, California. Id. at 2. Defendant Shasta Corporation owns and operates a Subway sandwich restaurant located at the above-mentioned real property at 61 Serra Way #110 in Milpitas. Id. Plaintiff alleges that he visited this sandwich restaurant on four occasions in May and June of 2019 and found that the business did not provide an accessible parking spot or an accessible sales counter for a person with Plaintiff's disability as required by ADA Standards. Id. at 3-4. The lack of a suitable sales counter and an accessible parking spot constituted barriers that related to and impacted Plaintiff's disability, which in turn created alleged difficulty and discomfort for Plaintiff. Id. Plaintiff claims that he went to the restaurant “with the intention to avail himself of its goods, motivated in part to determine if the defendants comply with the disability access laws.” Id. at 3. Plaintiff also submits that these barriers are easily removed without much difficulty or expense. Id. at 4. Lastly, Plaintiff adds that he intends to return to the sandwich restaurant in question such as to consume its sandwiches and to determine compliance with the disability access laws “once it is represented to him that the [r]estaurant and its facilities are accessible . . . [and] [i]f the barriers are not removed, [] [P]laintiff will face unlawful and discriminatory barriers again.” Id.
On April 22, 2020, Plaintiff noticed the fact that he settled his ADA claim against Defendant Serra Property LLC. See Notice (dkt. 17) at 1. Specifically, Defendant Serra Property LLC “agreed to provide parking and transaction counters at the Subject Property to ensure compliance with the Americans with Disabilities Act Guidelines and Title 24 of the California Code of Regulations [] [and] Plaintiff and Serra also agreed to a monetary settlement of $9,500 [but Plaintiff notes that] Defendant Shasta Corporation [] has ignored this lawsuit, did not want to participate in negotiations and has not responded to Plaintiff's Complaint.” See Pl.'s Mot. for Settlement (dkt. 19) at 1-2. Thereafter, given the settlement, Plaintiff voluntarily dismissed Serra Property from this lawsuit with prejudice. See Pl.'s Notice (dkt. 31) at 1.
On August 24, 2020, Plaintiff moved for the entry of default as to Defendant Shasta (dkt. 33) serving notice of its request for entry of default on Purchandra Kotha at 61 Serra Way #110 in Milpitas, California (dkt. 33-3). On August 31, 2020, the Clerk of Court noticed the entry of default (dkt. 34), and in March of 2021, Plaintiff filed the now-pending Motion for Default Judgment (dkt. 38) through which he seeks “an order requiring defendant[] [to] provide [a] wheelchair accessible parking space and [a] wheelchair accessible sales counter . . . [and] a monetary award under the Unruh Civil Rights Act.” Id. at 17. However, Plaintiff's Motion fails to mention that earlier in the case (see Pl.'s Notice (dkt. 31) at 1), Plaintiff already secured the effectuation of the remedial measures (the modifications of the parking space and sales counter) from the now-dismissed Defendant Serra Property LLC - rendering those requests moot. As for the monetary award that Plaintiff seeks under the Unruh Act, as set forth in detail below, the undersigned recommends against entertaining supplemental jurisdiction over the Unruh claim because, as a high-frequency litigant, the undersigned finds that it would be improper to allow Plaintiff to use this court as an end-run around California's pleading requirements for Unruh claims brought under the circumstances of this case. Lastly, as to Plaintiff's request for attorneys' fees and costs, the undersigned recommends the denial of those requests because Plaintiff is not a prevailing party in the context of the now-pending motion because the motion is based on requests for remedial actions pursuant to the ADA that are moot, as well as being based on an Unruh claim over which the court should decline to exercise supplemental jurisdiction. Thus, the undersigned finds that Plaintiff is not entitled to attorneys' fees or costs.
DISCUSSION
A. Legal Standards
After the entry of default against a party who “has failed to plead or otherwise defend, ” the court may enter a default judgment. See Fed. R. Civ. P. 55(a) & (b). The decision to grant or deny a motion for default judgment is discretionary. Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). In the motion for default judgment context, the general rule is that upon default the well-pleaded factual allegations of the complaint, except those relating to the amount of damages, will be taken as true. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Or, to put it another way, “a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” United States v. Cathcart, No. C 07- [*8] 4762 PJH (JCS), 2010 U.S. Dist. LEXIS 19998, 2010 WL 1048829, at *4 (N.D. Cal. Feb. 12, 2010). “[N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of North Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)). “[I]t follows from this that facts . . . not established by the pleadings of the prevailing party, or claims . . . [that are otherwise] not well-pleaded, are not binding and cannot support a [default] judgment.” Danning, 572 F.2d at 1388. Thus, a default does not establish conclusory allegations, nor does it excuse any defects in the plaintiffs' pleadings. See Mateo v. Universal Language Corp., No. 13-CV-2495, 2015 U.S. Dist. LEXIS 128638, 2015 WL 5655689, at *4, 6-7 (E.D.N.Y. Sept. 4, 2015) (finding defendant was not plaintiff's employer based on his testimony that contradicted allegations in the complaint), report and recommendation adopted, 2015 U.S. Dist. LEXIS 128377, 2015 WL 5664498 (Sept. 23, 2015).
By way of example, an allegation is not “well-pleaded” if is contradicted by other evidence put forth by the plaintiff. See e.g., Montblanc-Simplo GmbH v. Colibri Corp., 739 F.Supp.2d 143, 151 (E.D.N.Y. 2010) (“[O]nce plaintiffs provided an actual picture of the allegedly infringing pen that contradicted the allegations in the Complaint, those allegations would no longer be considered well-pleaded.”); see also Reginella Constr. Co. v. Travelers Cas. & Sur. Co. of Am., 971 F.Supp.2d 470, 475 (W.D. Pa. 2013) (“To be more specific, the Court may draw inferences only to the extent that they are supported by or are consistent with the well-pleaded factual allegations; [but] where the plaintiff's inferences would contradict the well-pleaded factual allegations, the Court cannot accept them.”). When determining whether allegations in a pleading are well-pleaded, in addition to considering the complaint itself, “the Court may consider documents that are referenced in the complaint, documents that the plaintiffs relied on in bringing suit . . . or matters of which judicial notice may be taken.” See In re Bank of Am. AIG Disclosure Sec. Litig., 980 F.Supp.2d 564, 570 (S.D.N.Y. 2013) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002)); see also Gray v. Wesco Aircraft Holdings, Inc., 454 F.Supp.3d 366, 383 (S.D.N.Y. 2020), aff'd, 847 Fed.Appx. 35 (2d Cir. 2021) (summary order). Thus, when an allegation in the complaint is contradicted by a Plaintiff's other filings in the case (as is the case here, see infra), the court need not accept the now-contradicted allegations in the complaint as true. See TufAmerica, Inc. v. Diamond, 968 F.Supp.2d 588, 592 (S.D.N.Y. 2013); see also In re Bristol-Myers Squibb Sec. Litig., 312 F.Supp.2d 549, 555 (S.D.N.Y. 2004) (“The court need not accept as true an allegation that is contradicted by the documents on which the complaint relies.”).
Given that foundation, when undertaking the analysis of a motion for default judgment, courts must first look into their jurisdiction over both the subject matter and the parties. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Furthermore, courts must also “assess the adequacy of service of process on the party against whom default is requested.” Penpower Tech. Ltd. v. S.P.C. Tech., 627 F.Supp.2d 1083, 1088 (N.D. Cal. 2008) (quotation omitted). Once a court determines that jurisdiction exists and that service of process was sufficient, the court may then consider the following factors when exercising its discretion to grant or deny a default judgment motion: (1) the possibility of prejudice to the plaintiff; (2) the merits of the substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Moreover, “a default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).
B. Analysis
As set forth below, the undersigned finds that a consideration of the seven discretionary factors, often referred to as the Eitel factors, overwhelmingly weigh against the entry of a default judgment under the circumstances. As a threshold matter, however, before addressing a request for entry of default judgment, the court must determine whether it has jurisdiction over the parties and the subject matter, as well as inquire into the adequacy of service. In re Tuli, 172 F.3d at 712.
1. Subject Matter and Personal Jurisdiction
As to personal jurisdiction, Defendant Shasta Corporation operates a business that is domiciled in Santa Clara County, California - which is in this district - as demonstrated by certain public records relied upon by Plaintiff. See Pl.'s Mot. (dkt.) 38-1, Exh. 5 (dkt. 38-7) at 2-5; see also Compl. (dkt. 1) at 2. Accordingly, the undersigned finds that the court may exercise personal jurisdiction over Defendant Shasta Corporation because a district court unquestionably has personal jurisdiction over a resident defendant. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011) (the analysis of a court's ability to exercise personal jurisdiction begins with the fact or assumption that the defendant is a non-resident - “particularly in cases involving single or occasional acts occurring or having their impact within the forum State.”); see also Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (same).
Subject matter jurisdiction presents a more complicated picture in this case. Plaintiff's claims are premised on two sources of law. As to the first - the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101, et seq.) - the court must exercise federal question subject matter jurisdiction as to this claim under 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States). As to the second claim - California's Unruh Civil Rights Act (Cal Civ. Code § 51 et seq.) - the court may choose to exercise supplemental jurisdiction over a state law claim if that claim is “so related to [the other] claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” See 28 U.S.C. § 1367(a); see also Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (“With respect to supplemental jurisdiction in particular, a federal court has subject-matter jurisdiction over specified state-law claims, which it may (or may not) choose to exercise.”). As discussed in detail below, in cases such as this, a federal court can, and indeed should, decline to exercise its supplemental jurisdiction over this type of Unruh claim because of the extraordinary situation created by the unique confluence of California rules involved here, which has led to systematic changes regarding the courts where such cases are filed, and which presents “‘exceptional circumstances' that authorize consideration, on a case-by-case basis, of whether the ‘principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine' warrant declining supplemental jurisdiction.” Arroyo v. Rosas, No. 19-55974, 2021 U.S. App. LEXIS 36510, at *4 (9th Cir. Dec. 10, 2021) (quoting City of Chicago v. International Coll. of Surgeons, 522 U.S. 156, 172-73 (1997).
While the propositions for which Arroyo is cited herein are all valid and applicable to this case, the undersigned will note that, in Arroyo, the appellate court reversed and remanded a district court's decision to decline supplemental jurisdiction on an Unruh claim because the district court had already fully adjudicated that claim by summary judgment - thus, the Arroyo court found, since there was no work left to be done other than entering judgment on the case, that the considerations of “judicial economy, convenience, comity, and fairness at that point all overwhelmingly favored retaining jurisdiction and entering the foreordained judgment on the Unruh Act claim.” Id. at *5, *32-34. Given that Plaintiff's Unruh claim has not been fully adjudicated in this case - as explained below, the interests in judicial economy, convenience, comity, and fairness all overwhelmingly favor declining jurisdiction.
The prohibitions of California's Unruh Act, inter alia, include the proscription of denials of “the full and equal accommodations, advantages, facilities, privileges, or services in [any] business establishment[]” based on “disability.” See Cal. Civ. Code § 51(b). The Unruh Act also provides that “[a] violation of the right of any individual under the federal Americans with Disabilities Act of 1990 . . . shall also constitute a violation of this section.” See id. § 51(f). As is the case with the ADA, a “person aggrieved” by a violation of the Unruh Act may bring a civil action seeking “preventive relief, including . . . a permanent or temporary injunction.” Id. § 52(c)(3). However, unlike under the ADA, the private civil remedy for Unruh Act violations also allows injured persons to recover “actual damages, ” as well as “any amount that may be determined by a jury . . . up to a maximum of three times the amount of actual damage but in no case less than four thousand dollars.” Id. § 52(a) (emphasis added); see also id. § 55.56(a). The upshot of this is that, “[b]ecause, as noted, every violation of the ADA in California is automatically a violation of the Unruh Act, the net practical consequence is to create a state law cause of action that permits, for California-based ADA claims, a damages remedy that is not available under the ADA.” Arroyo, 2021 U.S. App. LEXIS 36510, at *7.
In 2012, the California Legislature enacted certain provisions meant to address what was perceived to be the systematic abuse of the Unruh Act by “a very small number of plaintiffs' attorneys.” See id. at *7 (citing Act of Sept. 19, 2012, ch. 383, § 24, 2012 Cal. Stat. 3843, 3871). As was explained in the uncodified section of the amending statute that explained its purpose, certain attorneys were abusing the Unruh Act by demanding “quick money settlement[s]” from California business owners “without seeking and obtaining actual repair or correction of the alleged violations on the site, ” and those “‘pay me now or pay me more [later]' demands” had the coercive effect of being “used to scare businesses into paying quick settlements that only financially enrich[ed] the attorney and claimant and d[id] not promote accessibility either for the claimant or the disability community as a whole.” Arroyo, 2021 U.S. App. LEXIS 36510, at *7-8 (quoting id.). Thus, the California Legislature modified the Civil Code, regarding construction-related accessibility claims, such that under the Unruh Act and related state statutes, up-front requests for money in pre-litigation demand letters sent by attorneys to business owners would be prohibited. Id. (citing Cal. Civ. Code § 55.31(b)). Additionally, heightened pleading requirements, applicable only to such claims, were also implemented. See Cal. Civ. Proc. Code § 425.50(a) (2013). Under the newly-implemented special pleading rules, a complaint must include: (1) an “explanation of the specific access barrier or barriers the individual encountered”; (2) the “way in which the barrier denied the individual full and equal use or access, or [the way] in which it deterred the individual, on each particular occasion”; and (3) the “date or dates of each particular occasion on which the claimant encountered the specific access barrier, or on which he or she was deterred.” Id. Furthermore, any complaint alleging a construction-related accessibility claim needs to be verified by the plaintiff. See id. at § 425.50(b).
Then, in 2015, the Legislature imposed further procedural requirements relating to construction-related accessibility claims in order to address what it believed was continued abuse by “high-frequency” litigants. Arroyo, 2021 U.S. App. LEXIS 36510, at *9 (citing Cal. Civ. Proc. Code § 425.55(a)(2), (b)). In its codified findings supporting these new requirements, the Legislature noted its concern with the fact that “54 percent[] of all construction-related accessibility complaints filed between 2012 and 2014 were filed by two law firms . . . [and] [f]orty-six percent of all complaints were filed by a total of 14 parties.” Id. (citing id. § 425.55(a)(2)). Given that these cases were frequently directed at “small businesses on the basis of boilerplate complaints” in pursuance of “quick cash settlements rather than correction of the accessibility violation, ” the new pleading requirements provided that any “construction-related accessibility claim” (other than one alleging physical injury or property damage) that is filed by a plaintiff who is a “high-frequency litigant” must disclose: (1) that the plaintiff is a high-frequency litigant; (2) how many complaints the plaintiff has filed in the prior 12 months; (3) the reason the plaintiff was in “the geographic area of the defendant's business”; and (4) why the plaintiff “desired to access the defendant's business.” Id. at *9-10 (citing Cal Civ. Proc. Code § 425.50(a)(4)(A)). The Legislature defined a “high-frequency litigant” as someone who has filed 10 or more complaints alleging a construction-related accessibility violation within the 12-month period immediately preceding the filing of the current complaint alleging a construction-related accessibility violation. See id. § 425.55(b)(1). In addition, the Legislature imposed a $1,000 additional filing fee (that is, in addition to the ordinary civil filing fees) for each new case filed by a high-frequency litigant. See Cal. Gov't Code § 70616.5.
The result of these legislative modifications was a flood of ADA-based Unruh claims in California's federal Courts. See Arroyo, 2021 U.S. App. LEXIS 36510, at *10-11 (“Given the substantive overlap between the ADA and the Unruh Act-as noted earlier, every violation of the ADA in California is automatically a violation of the Unruh Act-the significant expense and burden of California's newly imposed rules for “construction-related accessibility claim[s]” can be avoided by pairing the Unruh Act claim with a parallel federal ADA claim and then filing the suit in federal court. It is therefore unsurprising that the record shows that the number of ADA cases filed in the U.S. District Court for the Central District of California jumped from 419 (3 percent of all civil actions filed) in 2013 to 2, 720 (18 percent of civil cases) in 2018. Indeed, the trend continued in fiscal year 2019, when the number of ADA cases in the Central District increased to 3, 374 (nearly 22 percent of civil cases)”).
On a number of occasions, the Supreme Court has described the provisions of 28 U.S.C. § 1367(c) as a “codification” of the principles of “‘economy, convenience, fairness, and comity'” that underlie its earlier jurisprudence concerning pendent jurisdiction. See e.g., Int'l Coll. of Surgeons, 522 U.S. at 172-73 (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 357 (1988)); see also United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (“It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff's right. Its justification lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims, even though bound to apply state law to them. Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law.”). Therefore, as mentioned above, district courts may decline to exercise jurisdiction over supplemental state law claims “[d]epending on a host of factors” including “the circumstances of the particular case, that nature of the state law claims, the character of the governing state law, and the relationship between the state and federal claims.” Int'l Coll. of Surgeons, 522 U.S. at 173. Indeed, Section 1367(c) “reflects the understanding that, when deciding whether to exercise supplemental jurisdiction, ‘a federal court should consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity.'” Int'l Coll. of Surgeons, 522 U.S. at 173 (quoting Cohill, 484 U.S. at 350) (emphasis added).
In general the Court of Appeals for the Ninth Circuit does not require an “explanation for a district court's reasons [for declining supplemental jurisdiction] when the district court acts under” 28 U.S.C. §§ 1367(c)(1)-(3) (see e.g., San Pedro Hotel Co. v. City of Los Angeles, 159 F.3d 470, 478 (9th Cir. 1998)), but does require an explanation when a district court invokes § 1367(c)(4) as to “why the circumstances of the case are exceptional in addition to inquiring whether the balance of the Gibbs values provide compelling reasons for declining jurisdiction in such circumstances.” See e.g., Executive Software N. Am. Inc. v. U.S. Dist. Court for the Cent. Dist. of Cal., 24 F.3d 1545, 1558 (9th Cir. 1994); see also Arroyo, 2021 U.S. App. LEXIS 36510, at *18-19 (“First, the district court must articulate why the circumstances of the case are exceptional within the meaning of § 1367(c)(4) . . . [and] [s]econd, in determining whether there are compelling reasons for declining jurisdiction in a given case, the court should consider what best serves the principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine articulated in Gibbs.”) (internal quotations and citations omitted).
In light of these authorities - for the reasons stated below - the undersigned recommends against exercising supplemental jurisdiction over Plaintiff's Unruh claim. Because California's heightened pleading standards and increased filing fees likely do not apply in federal court, high-frequency litigants (such as the Plaintiff in this case) can engage in forum-shopping to circumvent the restrictions that California has imposed on Unruh Act claims alleging construction-related accessibility claims simply by hiding behind § 1367(a)'s grant of supplemental jurisdiction and filing their Unruh Act claims in federal court while combining an Unruh Act monetary claim with an ADA claim for injunctive relief - as is the case here. Consequently, the number of construction-related accessibility claims filed in the Northern District has skyrocketed. According to CM/ECF this Plaintiff has filed at least 47 such cases in this court in the last two months alone, and more than 2500 such cases in this court since 2015.
See Arroyo, 2021 U.S. App. LEXIS 36510, at *10 (“The parties here assume that the heightened pleading requirements also do not apply in federal court, and they have not cited to us any district court decision that has applied them in federal court. We will therefore assume, without deciding, that this additional premise is correct.”).
Through the enactment of the above-described restrictions on the filing of construction-related accessibility claims, California has expressed a clear and unequivocal desire to limit the financial burdens California's businesses may face under claims for statutory damages pursuant to the Unruh Act. Plaintiff has effectively evaded those restrictions, and he has effectively sought and found a forum in which he can continue to claim state-law Unruh damages in a manner that is inconsistent with the California's requirements while effectively frustrating California's efforts to achieve its legislative aims. The undersigned finds that this situation, combined with the consequential and extraordinary burdens with which this court has become saddled, presents both the “exceptional circumstances” and the “compelling reasons” that justify the exercise of discretion to decline to exercise supplemental jurisdiction over Plaintiff's Unruh Act claim pursuant to § 1367(c)(4). As a high-frequency litigant, the undersigned finds that it would be improper and inequitable to allow Plaintiff to use the federal courts to effect an end-run around California's pleading requirements; and, thus, comity demands the dismissal of his Unruh claim.
It should also not go without mention that, other than avoiding state-imposed pleading requirements, Plaintiff gains nothing else by being in federal court since his only remedy under the ADA is injunctive relief, which is also available under the Unruh Act. See Pl.'s Mot. (dkt. 38-1) at 17 (seeking only injunctive relief under the ADA and money damages under the Unruh Act). In circumstances such as this, it is axiomatic that federal courts should avoid needlessly determining issues of state law (as described in Gibbs) and, furthermore, it is also well established that federal courts should, generally speaking, discourage forum shopping. Given that the California legislature has specifically enacted special provisions that are specifically directed that that “limited group of plaintiffs” and their counsel, the undersigned finds that it is incumbent on the federal courts to respect and honor California's concerns and endeavors as manifested in its modified legislative framework. See Cal. Civ. Proc. Code § 425.55(a)(2), (3). Such is the essence of comity.
See e.g., Atl. Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 65-66 (2013) (“Because [28 U.S.C.) § 1404(a) should not create or multiply opportunities for forum shopping, [] we will not apply the Van Dusen rule when a transfer stems from enforcement of a forum-selection clause: The court in the contractually selected venue should not apply the law of the transferor venue to which the parties waived their right.”); Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 415-16 (2010) (“We must acknowledge the reality that keeping the federal-court door open to class actions that cannot proceed in state court will produce forum shopping. That is unacceptable when it comes as the consequence of judge-made rules created to fill supposed ‘gaps' in positive federal law.”); Rumsfeld v. Padilla, 542 U.S. 426, 446-47 (2004) (“The proviso that district courts may issue the writ [of habeas corpus] only ‘within their respective jurisdictions' forms an important corollary to the immediate custodian rule in challenges to present physical custody under § 2241 . . . This rule, derived from the terms of the habeas statute, serves the important purpose of preventing forum shopping by habeas petitioners. Without it, a prisoner could name a high-level supervisory official as respondent and then sue that person wherever he is amenable to long-arm jurisdiction. The result would be rampant forum shopping . . .”); Southland Corp. v. Keating, 465 U.S. 1, 15 (1984) (interpreting Federal Arbitration Act to apply to claims brought in state courts in order to discourage forum shopping); and, Hanna v. Plumer, 380 U.S. 460, 468 (1965) (“The ‘outcome-determination' test [of Erie R.R. v. Tompkins, 304 U.S. 64, 74-75 (1938)] therefore cannot be read without reference to the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.”).
Therefore, these are the “exceptional circumstances” and “compelling reasons” that support the undersigned's recommendation for declining to exercise supplemental jurisdiction over Plaintiff's Unruh Act claim under 28 U.S.C. § 1367(c)(4). It should also not go without mention that, in the context of the currently-pending Motion for Default Judgment (dkt. 38-1), Plaintiff's Unruh Act claim substantially predominates over the ADA claim, for purposes of 28 U.S.C. § 1367(c)(2), for several reasons: first, the injunctive relief that Plaintiff's Motion for some reason still seeks under the ADA (see Pl.'s Mot (dkt. 38-1) at 17) is moot because Plaintiff has already secured that relief from the now-dismissed Defendant Serra Property LLC (which is Defendant's Shasta Corporation's landlord) (see Pl.'s Mot. for Settlement (dkt. 19) at 1-2) (noting that Defendant Serra Property LLC has already “agreed to provide parking and transaction counters at the Subject Property to ensure compliance with the Americans with Disabilities Act Guidelines and Title 24 of the California Code of Regulations [] [and] Plaintiff and Serra also agreed to a monetary settlement of $9,500.”); second, all that remains among the remedies sought by Plaintiff's Motion for Default Judgment (see dkt. 38-1 at 17-25) are $16,000 worth of state-law statutory damages under the Unruh Act, $2,164.00 in attorney's fees, and $835 in costs. This predomination is striking since Plaintiff's request for injunctive relief under the ADA has been rendered moot by his settlement with Defendant Serra Property LLC, however, even if that were not the case, his state law claim would still be considered as predominating his ADA claim. See e.g., Reyes v. Flourshings Plus, Inc., CV 19-261 JM (EVG), 2019 U.S. Dist. LEXIS 74495, 2019 WL 1958284, at *2, *3 (S.D. Cal. May 2, 2019) (“The monetary damages Plaintiff seeks under the Unruh Act, [Disabled Persons Act], and California common law substantially predominate over his request for injunctive relief under the ADA . . . [and] Plaintiff's prior litigation of lawsuits in this district further supports that he primarily seeks monetary rather than injunctive relief. Most often, [Plaintiff] settles and/or voluntarily dismisses his cases with prejudice before or shortly after an answer is filed.”).
The undersigned will also note that declining supplemental jurisdiction under these circumstances will not operate to deprive Plaintiff of any remedies, nor does it allow the ADA claim for injunctive relief to go unaddressed. As mentioned, Plaintiff has already secured his ADA relief by settling with Defendant Serra Property LLC, and if any inconvenience is created by the decision to decline to exercise supplemental jurisdiction, those are problems created by Plaintiff's filing of this action in federal court rather than in a state court. If Plaintiff had brought this suit in state court, there would have been only one suit pending and he would have been eligible to receive every form of relief his federal action seeks: an injunction, money damages, and attorney's fees. By declining to exercise supplemental jurisdiction over the state-law claim, this court is simply recognizing that California has an overriding interest in interpreting and enforcing its own laws and procedural rules without federal courts serving as a convenient method for the circumvention of those laws and procedures for the aforementioned types of high-frequency litigants. Or, to put it another way, in declining to exercise supplemental jurisdiction, the court would merely be respecting the balance that Congress struck when it enacted the ADA and provided a private right of action for injunctive relief and attorneys' fees, while deciding to not allow for the recovery of statutory damages; meanwhile, the court would also serve the interests of comity by respecting California's effort to curb the above-discussed abuses of the Unruh Act by high-frequency litigants. Therefore, in deference to California's substantial interest in discouraging unverified disability discrimination claims that also seek to avoid the increased filing fees and other pleading requirements discussed above, the undersigned RECOMMENDS that the court decline Plaintiff's request for the court to exercise supplemental jurisdiction over his Unruh Act claim.
2. Adequacy of Service of Process
Service appears to have been adequate to perfect the district court's authority to exercise personal jurisdiction over Defendant Shasta. Federal Rule of Civil Procedure 4(e)(1) allows for service of an individual within the judicial district in a manner that “follow[s] state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” See also Fed. R. Civ. P. 4(h)(1)(A) (authorizing service of process on corporations, partnerships, and associations “in the manner prescribed by Rule 4(e)(1) for serving an individual”). Under California law, a summons may be served by personal service “to the person designated as agent for service of process as provided by . . . the Corporations Code.” Cal. Code Civ. Proc. § 416.10(a). As described below, Plaintiff appears to have satisfied this provision by effecting personal service on Defendant Shasta's registered agent for service of process.
Plaintiff's Motion states that “[h]ere, personal service was effectuated in the proof of service filed at Docket Entry 20.” See Pl.'s Mot. (dkt. 38-1) at 10. On February 5, 2020, Plaintiff appears to have first effected substituted service (pursuant Cal. Civ. Proc. §415.20(a)) by leaving a copy of the summons, proof of service, complaint, and certain other documents, with a person appearing to be in charge of Defendant Shasta's sandwich restaurant business (Chris Kalidindi) rather than Defendant Shasta's agent for service of process (Purnachandra Kotha) and thereafter by mailing copies of the documents to the person to be served at the 61 Serra Way #110 address in Milpitas, California. See Executed Summons (dkt. 12) at 1-4. The following month, Plaintiff moved for the entry of default (dkt. 14) which was declined by the Clerk of Court (dkt. 15) due to the Clerk's inability to verify information pertaining to Defendant Shasta's registered agent. Then, on May 21, 2020, Plaintiff effected personal service of the Complaint, the Summons, and various other case-related documents on Defendant Shasta's registered agent (Purnachandra Kotha) at 1:52 pm. See Executed Summons (dkt. 20) at 1-3. The Clerk of Court once again declined to enter a default (see dkt. 28) as to Defendant Shasta because service had been effected at the address for the Subway sandwich restaurant rather than a corporate address for Defendant Shasta. Plaintiff then moved again for the entry of default and filed a document indicating that Defendant Shasta Corporation (and its agent for service, Purnachandra Kotha) were registered at the same address as the Subway sandwich restaurant - namely, 61 Serra Way # 110, Milpitas, California 95035. See Pl.'s Mot. for Entry of Default (dkt. 32). Thereafter, the Clerk of Court noticed the entry of default on August 31, 2020. Accordingly, it appears that service was adequate to perfect the district court's authority to exercise personal jurisdiction over Defendant Shasta.
3. The Eitel Factors
i. Possibility of Prejudice
Under the first Eitel factor, the court examines whether a plaintiff will be prejudiced if the request for entry of default judgment is denied. Eitel, 782 F.2d at 1471. A plaintiff who is denied a default judgment and is subsequently left without any other recourse for recovery has a basis for establishing prejudice. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Here, Plaintiff's Motion only offers a boilerplate statement to the effect that “[w]hen a defendant has failed to appear and defend the claims, a plaintiff will be without recourse and suffer prejudice unless default judgment is entered.” See Pl.'s Mot. (dkt. 38-1) at 11. However, the undersigned disagrees. As mentioned above, Plaintiff has already settled with Defendant Serra Property LLC, as a result of which Plaintiff has already secured the ADA relief it sought - namely, remedial repairs in the nature of an accessible parking spot, an ADA compliant sales counter at Defendant's sandwich restaurant, as well as a monetary settlement of $9,500.00. See Order Granting Motion for Good Faith Settlement Determination (dkt. 27) at 1. The only relief that Plaintiff still seeks are statutory damages under the Unruh Act, as well as attorneys' fees and costs. For the reasons stated above, Plaintiff has already received his remedy under the ADA, thereby rendering his request for injunctive relief moot, and because the undersigned has recommended against entertaining supplemental jurisdiction for Plaintiff's Unruh claim, there is no basis on which to conclude that Plaintiff is a prevailing party with any entitlement to attorneys' fees and costs (as discussed infra). Therefore, denying Plaintiff's motion for default judgment would not be attended with any possibility of prejudice whatsoever, and this factor weighs against granting Plaintiff's motion for default judgment.
ii. Merits of the Claims & Sufficiency of the Complaint
The second and third Eitel factors address the sufficiency of Plaintiff's Complaint and the probability of success on the merits of the underlying claims. Plaintiff goes through the elements of his claims as set forth in the Complaint, and generally concludes that he “has sufficiently stated [] meritorious claim[s] in a sufficient complaint under both the American[s] with Disabilities Act and the Unruh Civil Rights Act.” Pl.'s Mot. (dkt. 38-1) at 11. However, what Plaintiff fails to mention, as stated above, is the low probability of success on the merits of his ADA claim as his request for injunctive relief under the ADA is now moot. See Order Granting Motion for Settlement (dkt. 27) at 1 (“Serra agrees to provide parking and transaction counters at the relevant Property in compliance with the Americans with Disabilities Act [] Accessibility Guidelines and Title 24 of the California Code of Regulations, and a monetary settlement in the amount of $9,500.00 to Plaintiff Scott Johnson [].”). Plaintiff's only other claim, brought under the Unruh Act, is the subject of the undersigned's recommendation against exercising supplemental jurisdiction. Accordingly, there is nothing left to adjudicate. His single federal claim is moot, and his only other claim is the subject of a recommended dismissal.
While it is true that upon default, all factual allegations in the complaint are taken as true, except those relating to damages (see TeleVideo Sys., Inc., 826 F.2d at 917-18 (citing Geddes v. United Financial Group, 599 F.2d 557, 560 (9th Cir. 1977)), the allegations in the Complaint (to the effect that the sales counter and parking space are not ADA-complaint) as repeated in the Motion for Default Judgment (dkt. 38-1 at 17), are contradicted by fact of the settlement with Defendant Serra Property LLC. This turn of events necessarily means that the now-contradicted allegations in the Complaint are not “well pleaded” and the court does not need to accept them as true based on the authorities cited above. For these reasons, while the Complaint was (at least as to the ADA claim) sufficient when it was first filed, it cannot now be said that the merits of Plaintiff's ADA claim counsel in favor of entering a default judgment against Defendant Shasta because, as stated, the ADA claim is now moot. The Unruh claim will fare no better because the undersigned has recommended that the court decline to exercise supplemental jurisdiction over that claim. Accordingly, because one claim is moot and the other is due to be dismissed, these factors also weigh against the entry of default judgment.
iii. The Sum of Money at Stake
The fourth Eitel factor “balances the amount of money at stake in relation to the seriousness of the [d]efendant's conduct.” Landstar Ranger, Inc. v. Parth Enterprises, Inc., 725 F.Supp.2d 916, 921 (C.D. Cal. 2010) (internal citations omitted) (quoting PepsiCo, Inc., 238 F.Supp.2d at 1176). “This requires that the court assess whether the recovery sought is proportional to the harm caused by defendant's conduct.” Id. This portion of Plaintiff's Motion misstates the amount of money at stake as such: “[h]ere, the plaintiff only seeks a total of $4,000.00 in damages plus fees and costs.” See Pl.'s Mot. (dkt. 38-1) at 15. However, elsewhere in the same document, Plaintiff states that he “has submitted evidence of four distinct encounters . . . and is, therefore seeking a single statutory penalty for a total of $16,000.” See id. at 17. In either case - whether Plaintiff wishes to recover $4,000 or $16,000 - those figures are tethered to his Unruh claim which the undersigned has recommended dismissing. For the reasons stated above, there is no amount of money at stake (or conduct by a Defendant that should be weighed against the sum of money sought) because Plaintiff's ADA claim only sought injunctive relief which was rendered moot by the above-mentioned settlement and because his Unruh claim is due to be dismissed. Accordingly, while this factor often weighs against default judgment when the amount in controversy is too large or unreasonable in relation to the Defendant's conduct, on this occasion, given that there remains nothing at all in controversy (either in terms of money or a Defendant's conduct), the undersigned finds that this factor should also weigh against entry of default judgment.
iv. Possibility of Dispute Concerning Material Facts
The fifth Eitel factor considers the possibility of disputes as to any material facts in the case. Eitel, 782 F.2d at 1471-72. As to this factor, Plaintiff submits that “[w]here there is a properly pled and supported complaint and the defendant has failed to oppose the motion, there is no factual dispute exists (sic) that would preclude the entry of default judgment and this factors (sic) favors the entry of default judgment.” Pl.'s Mot. (dkt. 38-1) at 16. However, as stated above, Plaintiff filed two claims - one of which is now moot and the other is due to be dismissed; and, while the absence of a possibility of dispute concerning material facts might ordinarily weigh in favor of entry of a default judgment, the undersigned finds that such is not the case here because (even if Defendant Shasta had appeared to answer the Complaint at this point) there still would be no real possibility of dispute concerning any material facts given the mootness of the federal claim and the fact that the state-law claim is due to be dismissed. Therefore, this factor also weighs against the entry of default judgment.
v. Whether Default was Due to Excusable Neglect
The excusable neglect factor under Eitel supports default judgment when “the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the lawsuit.” See Wecosign, Inc. v. IFG Holdings, 845 F.Supp.2d 1072, 1082 (C.D. Cal. 2012). Following the personal service of the Complaint on Defendant's registered agent for service, it appears that Defendant became aware of the lawsuit. Due to the absence of any indicia of excusable neglect, this factor might ordinarily weigh in favor of entry of a default judgment; however, it would be an empty gesture and a hollow and useless exercise to enter a default judgment as to a mooted federal claim while dismissing the only other claim in the case as recommended above. Nevertheless, for academic purposes, it can be said that this one factor appears to weigh in favor of granting Plaintiff's motion.
vi. Policy for Deciding on the Merits
The Federal Rules strongly favor a decision on the merits whenever possible, Eitel, 782 F.2d at 1472, and so this factor by definition most frequently weighs against granting default judgment, however, courts have held that this factor, by itself, is not dispositive. See, e.g., Craigslist, Inc. v. Naturemarket, Inc., 694 F.Supp.2d 1039, 1061 (N.D. Cal. 2010); Hernandez v. Martinez, 2014 WL 3962647, at *9 (N.D. Cal. Aug. 13, 2014).
4. Attorneys' Fees and Costs
As to his ADA claim, Plaintiff seeks to recover $2,164.00 attorneys' fees and $835 in costs pursuant to 42 U.S.C. § 12205 (“In any action or administrative proceeding commenced pursuant to this chapter, the court or agency, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee, including litigation expenses, and costs, and the United States shall be liable for the foregoing the same as a private individual.”) (emphasis added). See Pl.'s Mot. (dkt. 38-1) at 17-24. Plaintiff's attorneys' fee request is also tethered to his Unruh claim in that the request also cites to Cal Civ. Code. 52(a) (permitting the award of “any attorney's fees that may be determined by the court”). However, for the reasons stated herein, as to his ADA claim in the context of this Motion, Plaintiff is not “the prevailing party, ” and his Unruh claim is the subject of the undersigned's recommended dismissal; accordingly, the undersigned also RECOMMENDS that Plaintiff's request for attorneys' fees and costs be DENIED.
CONCLUSION
For the foregoing reasons, having found that virtually all of the discretionary factors to be considered weigh in favor of denying the request for default judgment under the present circumstances, the undersigned RECOMMENDS that Plaintiffs Motion (dkt. 38) be DENIED.
Any party may file objections to this Report and Recommendation with the district court within fourteen (14) days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B) & (C); Fed.R.Civ.P. 72(b); Civil LR. 72-3. Failure to file objections within the specified time may waive the right to appeal the district court's order.
IT IS SO ORDERED.