Opinion
CV 16-8463-RSWL-MRWx
07-27-2017
TWENTIETH CENTURY FOX FILM CORPORATION, Plaintiff, v. MATTHEW SAUNDRY and DOES 1-10, Defendants.
ORDER re: Plaintiff's Motion for Entry of Default Judgment [18]
Currently before the Court is Plaintiff Twentieth Century Fox Film Corporation's ("Plaintiff") Motion for Entry of Default Judgment ("Motion" or "Motion for Default Judgment") against Defendant Matthew Saundry ("Defendant"). ECF No. 18. Having reviewed all papers submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS Plaintiff's Motion [18].
I. BACKGROUND
A. Factual Background
Plaintiff is a corporation that produces and distributes motion pictures and television programs. Compl. ¶ 5, ECF No. 1. Plaintiff holds copyright registrations in twenty-four episodes from Season 1 of the popular television program, New Girl (the "Program"). Id. at ¶ 6, Ex. A; Pl.'s Mot. for Default J. ("Mot.") 2:15-17. Plaintiff has exclusive rights to reproduce, distribute, and/or license reproduction of the Program in video format, including DVDs. Compl. ¶ 6. Defendant is a resident of Melbourne, Florida who purportedly does business in this judicial district through his eBay seller "User ID," "mws5000." Id. at ¶ 10.
Defendant allegedly infringed Plaintiff's copyrights by copying, reproducing, distributing, and selling unauthorized copies of the Program; specifically, a DVD boxed set of New Girl Season 1 (the "DVDs"). See id. at ¶ 12; Decl. of Daniel Kim ("Kim Decl.") ¶ 4.
On May 4, 2016, an employee of IPCybercrime.com, LLC ("IPCybercrime"), an investigator of intellectual property crimes, purchased a copy of the DVDs on an eBay auction posted by user mws5000 and received it by mail on May 16, 2016. Declaration of Robert L. Holmes ("Holmes Decl.") ¶ 2; Mot. Ex. A. The employee paid Defendant via PayPal and sent payment to the email address "mattsaundry@gmail.com" Id.
Plaintiff reviewed the allegedly infringing DVDs and determined they were unauthorized copies of the Program based on their digital content and the fact that the quality and format of the DVD disc art was "inconsistent with and inferior to authorized versions" of the Program. Kim Decl. ¶ 4. Moreover, the DVDs had Plaintiff's logo, listed Plaintiff's location in Beverly Hills, California, and contained other identifying information. Mot. 3:12-16. The DVDs also had typographical errors on the package regarding Plaintiff's copyright notice. Id. B. Procedural Background
Plaintiff filed a Complaint against Defendant on November 14, 2016, alleging a claim for copyright infringement, 17 U.S.C. §§ 501, et seq. [1].
Defendant was personally served on December 3, 2016 in Melbourne, Florida. ECF No. 14. On February 2, 2017, the parties stipulated that Defendant would have until February 24, 2017 to Answer the Complaint. ECF No. 10. Defendant did not answer or otherwise respond to the Complaint by February 24, 2017. Pursuant to Plaintiff's request, the Clerk entered default as to Defendant on March 16, 2017 per Federal Rules of Civil Procedure 55(a). ECF No. 16. On May 5, 2017, Plaintiff filed the instant Motion for Default Judgment. ECF No. 18. Defendant did not file an Opposition by the June 6, 2017 deadline. Plaintiff seeks the following damages: statutory damages totaling $240,000 pursuant to 17 U.S.C. § 504(c); attorneys' fees totaling $8,400; and post-judgment interest calculated at the rate set forth in 28 U.S.C. § 1961(a). Mot. 2:3-9.
II. DISCUSSION
A. Legal Standard
The granting of default judgment is within the discretion of the district court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); see Fed. R. Civ. P. 55. Procedural and substantive requirements must be satisfied.
Procedurally, the requirements set forth in Federal Rules of Civil Procedure ("FRCP" or "Rule") 54(c) and 55(b), and Local Rule 55-1 must be met. See Vogel v. Rite Aid Corp., 992 F. Supp. 2d 998, 1006 (C.D. Cal 2014). Local Rule 55-1 provides: "When an application is made to the Court for a default judgment, the application shall be accompanied by a declaration in compliance with F.R.Civ.P. 55(b)(1) and/or (2) and include the following: (a) When and against what party the default was entered; (b) The identification of the pleading to which default was entered; (c) Whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator or other representative; (d) That the Service Members Civil Relief Act, 50 U.S.C. App. § 521, does not apply; and (e) That notice has been served on the defaulting party, if required by F.R.Civ.P. 55(b)(2)." L.R. 55-1.
Courts should also consider the following factors in determining whether to grant a motion for default judgment: "(1) the possibility of prejudice to plaintiff, (2) the merits of plaintiff's 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 the material facts, (6) whether defendant's default was the product of excusable neglect, and (7) the strong public policy favoring decisions on the merits." Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
If the court determines that the defendant is in default, "'the factual allegations of the complaint, other than those relating to damages, are taken as true.'" Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)). Additionally, "[w]hen entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties." In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
If the Court determines that the allegations in the complaint are sufficient to establish liability, the plaintiff must provide proof of all damages sought in the complaint, and the Court must determine the "amount and character" of the relief that should be awarded. Vogel, 992 F. Supp. 2d at 1005-06 (citations omitted). "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
1. Jurisdiction and Service of Process are Proper
In considering whether to enter default judgment against Defendant, the Court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d at 712.
The Court has subject matter jurisdiction over this copyright infringement action, as district courts have original jurisdiction of any civil action "arising under any Act of Congress relating to . . . copyrights." 28 U.S.C. § 1338(a).
Personal jurisdiction is also met. Defendant, a Florida citizen, may be subject to specific jurisdiction in California. The Ninth Circuit employs a three-part test to determine whether a court has specific jurisdiction over a defendant: (1) the non-resident defendant purposefully directs his activities at the forum state or performs some act in which he purposefully avails himself of the privilege of /// /// /// conducting activities in the forum; (2) the claim arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction comports with fair play and substantial justice. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227-28 (9th Cir. 2011).
To determine whether a defendant has purposefully directed itself at the forum, courts use the three-part "effects" test set forth by the Supreme Court in Calder v. Jones, 465 U.S. 783 (1984). To satisfy the Calder test, the defendant must have: (1) committed an intentional act; (2) that is expressly aimed at the forum state; (3) causing harm that defendant understands is likely to be felt in the forum state. Dole Food v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).
Specific jurisdiction is satisfied. First, Defendant "purposefully directed" his activities at California through the intentional act of copying and distributing the allegedly infringing DVDs; expressly aiming the sales at California consumers through a California corporation like eBay and shipping products to California consumers; and causing harm likely to be suffered by Plaintiff, an entertainment-based corporation with its principal place of business in Los Angeles, California. Defendant was likely aware that Plaintiff would suffer harm in California, as he affixed his DVDs with Plaintiff's location in "Beverly Hills, California." Holmes Decl. Ex. B.
Second, the copyright infringement claim arises out of Defendant's business with California, as he sells eBay products and ships them to California consumers. Holmes Decl. ¶ 3. Third, the exercise of jurisdiction is reasonable because the evidence, in the form of DVDs, is portable as evidenced by the relative ease with which Defendant mailed them to California. Further, the forum state may have an interest in adjudicating copyright infringement actions given its panoply of entertainment-based corporations and residents.
Although a one-time eBay sale may not necessarily be dispositive of specific jurisdiction, it is unclear how many other eBay sales Defendant made of the allegedly infringing DVDs. See Boschetto v. Hansing, 539 F.3d 1011, 1019 (9th Cir. 2008)(explaining that while eBay can be used to support personal jurisdiction over a defendant if said defendant used eBay to establish regular business with a remote forum, a one-time eBay transaction "does not have any dispositive effect on jurisdiction.") Nevertheless, Plaintiff has at least "ma[d]e a prima facie showing of jurisdictional facts" to support an inference of specific jurisdiction. Dole, 303 F.3d at 1108.
Service of process is also satisfied because Defendant was personally served with the Summons and Complaint on December 3, 2016 [14] in accordance with Federal Rules of Civil Procedure 4(e)(2)(A). Decl. of Annie S. Wang ("Wang Decl.") ¶ 3. /// ///
2. Procedural Requirements
Plaintiff has met the procedural requirements for default judgment pursuant to Federal Rules of Civil Procedure 55 and Central District Local Rule 55-1. Under Rule 55(a), the Clerk properly entered default against Defendant on March 16, 2017 [16]. Plaintiff moved pursuant to Rule 55(b) for entry of default judgment on May 5, 2017 [18].
Plaintiff has also established the Local Rule 55-1 requirements. Per the Motion, the Clerk entered default against Defendant on March 16, 2017 as to the entire Complaint, ecf no. 16; Defendant is neither a minor, nor an incompetent person nor in the military service or otherwise exempted under the Soldier's and Sailor's Civil Relief Act of 1940, the predecessor to the Servicemembers Civil Relief Act; and Defendant was served with the Motion for Default Judgment on May 5, 2017. Wang Decl. ¶¶ 5, 7, 9; Stip. to Extend Time to Resp. to Compl. 2:3-5, ECF No. 10.
3. Eitel Factors
Plaintiff has sufficiently set forth the seven Eitel factors: "(1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's 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 the material facts; (6) whether the default was due to excusable neglect; and (7) the strong public policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits." 782 F.2d at 1471-72.
a. Risk of Prejudice to Plaintiff
The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered. Vogel, 992 F. Supp. 2d at 1007.
This factor weighs in favor of granting default judgment. Plaintiff gave Defendant ample opportunity to participate in this litigation by extending the deadline to Answer so that the parties could meaningfully negotiate settlement options. Wang Decl. ¶ 4; Wang Decl. re Stip ¶¶ 5-7, ECF No. 11. Nevertheless, Defendant has failed to participate in the litigation and, without default judgment, Plaintiff would be unable to halt Defendant's infringement or recoup damages for harm suffered. IO Grp., Inc. v. Jordon, 708 F. Supp. 2d 989, 997 (N.D. Cal. 2010)
b. Sufficiency of the Complaint and Likelihood of Success on the Merits
The second and third Eitel factors consider the merits of the plaintiff's substantive claims and the sufficiency of the complaint. "Under an [Eitel] analysis, [these factors] are often analyzed together." Dr. JKL Ltd. v. HPC IT Educ. Ctr., 749 F. Supp.2d 1038, 1048 (N.D. Cal. 2010). Plaintiff has asserted a meritorious claim for willful copyright infringement.
To plead a viable copyright infringement claim pursuant to 17 U.S.C. § 501, Plaintiff must establish "(1) ownership of a valid copyright, and (2) copying of the constituent elements of the work that are original." Feist Publ'ns., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Absent direct evidence of copying, the second prong is satisfied by showing that "the infringer had access to the work and that the two works are substantially similar." Shaw v. Lindheim, 919 F.2d 1353, 1356 (9th Cir. 1990).
Plaintiff owns a valid copyright in the twenty-four episodes of the Program's first season. The copyright registration numbers for each episode were issued between October 6, 2011 and June 13, 2012. Wang Decl. Ex. C. Plaintiff attaches copies of the copyright registrations and printout forms from the Copyright Office's website. Wang Decl. ¶ 9, Ex. C. Considering this, and the fact that the certificate of registration was made within five years after the Program's first publication, the first prong is satisfied. 17 U.S.C. § 410(c).
In the Wang Declaration, Plaintiff requests judicial notice of copies of its copyright registrations in all twenty-four episodes of New Girl. Wang Decl. Ex. C. Because judicial notice is appropriate for copyright registration documents, the Court GRANTS Plaintiff's request for judicial notice. Idema v. Dreamworks, Inc., 90 F. App'x 496, 498 (9th Cir. 2003)
Defendant also likely copied the Program. Plaintiff's work was likely widely disseminated, as the Program is a popular television show. Warner Bros Home Entm't Inc. v. Jacek, No. CV 13-04065 DMG (Jcx), 2013 WL 12134186, at *3 (C.D. Cal. Dec. 20, 2013). What's more, both works are substantially similar, as Plaintiff alleges the DVDs are "copies" of all twenty-four copyrighted episodes. Mot. 7:13-15; see Warner Bros. Home Entm't, Inc. v. Campbell, No. CV 13-00876 BRO (Anx), 2013 WL 12120082, at *2 (C.D. Cal. Aug. 1, 2013)(complaint sufficient where defendant sold counterfeit DVDs of television show). Only minor, typographical errors on the packaging differentiate the pirated DVDs and original copies. Thus, the Complaint sufficiently pleads a copyright infringement claim and entry of default judgment is favored.
c. The Sum of Money at Stake
"Under the [fourth] Eitel factor, the court must consider the amount of money at stake in relation to the seriousness of Defendant's conduct." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1176 (C.D. Cal. 2002). The Court will review declarations, calculations, and other damages documentation to determine whether the sum of money at stake is appropriate. HICA Educ. Loan Corp. v. Warne, No. 11-CV-04287-LHK, 2012 WL 1156402, at *3 (N.D. Cal. Apr. 6, 2012).
Plaintiff requests $240,000 in statutory damages pursuant to 17 U.S.C. § 504(c); $8,400 in attorneys' fees; and post-judgment interest pursuant to 28 U.S.C. § 1961(a). Mot. 2:3-9.
The Copyright Act permits a copyright owner to recover "statutory damages for all infringements involved in the action . . . in a sum of not less than $750 or more than $30,000 as the court considers just." 17 U.S.C. § 504(c)(1). Plaintiff seeks $10,000 for each of the twenty-four copyright infringements. The Complaint sufficiently pleads that Defendant willfully infringed the Program by selling DVDs whose cover art was "inconsistent with and inferior to authorized versions of these products." Kim Decl. ¶ 6. In similar cases involving pirated television shows or movies where plaintiffs have sought $25,000 per infringement, which is arguably on the higher side of section 504(c)(1) requests, courts have reduced the damages sought per copyright as necessary. See, e.g., Jacek, 2013 WL 12134186, at *3 (collecting default judgment cases where Central District courts awarded $1,500 to $3,000 per infringement where plaintiffs initially sought $25,000 per infringement). As discussed in infra Part II.B.4.b, the requested $240,000 does not outpace the egregiousness and willfulness of Defendant's conduct, considering that he had a small business operation and tendered pirated DVDs through eBay. Thus, this factor weighs towards granting this Motion.
d. The Possibility of a Dispute Concerning the Material Facts
The fifth Eitel factor examines the likelihood of a dispute between the parties regarding the material facts in the case. A defendant is "deemed to have admitted all well-pleaded factual allegations" in the Complaint upon entry of default. DirecTV, Inc. v. Hoa Huynh, 503 F.3d 847, 851 (9th Cir. 2007).
This factor weighs towards granting default judgment. The possibility of a dispute is low, as the Complaint aptly demonstrated that the Program and the DVDs are substantially similar, and the allegedly infringing DVDs were sent from the eBay UserID and email address associated with Defendant. Holmes Decl. ¶ 2, Ex. A, Ex. B, at 34. Due to Defendant's lack of response after default was entered against him, he has failed to dispute any material facts. He is unlikely to do so considering his disregard for the extra time already granted for him to respond and his seeming abandonment of settlement negotiations. See Wang Decl. to Stip. ¶¶ 5-7.
e. The Possibility of Excusable Neglect
Excusable neglect takes into account factors like "prejudice . . . , the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." J.L. v. Moreno Valley Unified Sch. Dist., No. CV 09-1978 ODW (PJWx), 2010 WL 1708839, at *1 (C.D. Cal. Apr. 20, 2010)(internal quotation marks and citations omitted).
Excusable neglect is negligible, as Defendant received the Summons, Complaint, and instant Motion, stipulated for an extension of time to respond to the Complaint, and was even in preliminary settlement discussions with Plaintiff. ECF Nos. 10, 11, 14. In spite of repeated notice of the Action, Defendant made no effort to further participate after early February 2017. Thus, this factor weighs in favor of Plaintiff.
f. Policy Favoring a Decision on the Merits
The Ninth Circuit has stated that "[c]ases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, "this preference, standing alone, is not dispositive." PepsiCo, 238 F. Supp. 2d at 1177. The copyright infringement claim cannot be adjudicated, as Defendant failed to Answer or appear in the action. While this factor may weigh against entering default judgment, the Court nonetheless will grant the Motion in light of the remaining factors.
In total, the Eitel factors weigh towards granting default judgment.
4. Character and Amount of Plaintiff's Recovery
Plaintiff requests $240,000 total statutory damages, with $10,000 for each of the twenty-four instances of copyright infringement; a permanent injunction to stop Defendant from infringing the Program; attorneys' fees totaling $8,400, and post-judgment interest pursuant to 28 U.S.C. § 1961(a). Mot. 2:3-9. The Court takes up the validity of each request in turn.
a. Permanent Injunction
Plaintiff asks the Court to enjoin Defendant from reproducing, distributing, shipping, or selling unauthorized copies of the Program in any format. Compl. Prayer for Relief ¶ 1a. Pursuant to section 502 of the Copyright Act, courts may grant permanent injunctive relief, where reasonably appropriate, to prevent copyright infringement. 17 U.S.C. § 502(a). To receive a permanent injunction, Plaintiff must show "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction." Ebay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
The permanent injunction factors weigh in Plaintiff's favor. First, Plaintiff has suffered an irreparable injury, as Defendant infringes its copyrights by continuing to distribute DVDs featuring unauthorized copies of the Program. Compl. ¶¶ 3, 10. Second, monetary damages alone will not remedy the injury as Defendant's refusal to appear in the litigation does not assure the Court that Defendant will stop his infringing activity. Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1096, 1103 (N.D. Cal. 2003). Third, the balance of hardships tip in Plaintiff's favor because if the Court grants a permanent injunction, it should cause very little harm to Defendant as infringing is not permitted by the Copyright Act; however, if he intends to continue infringing, then it will provide adequate protection of Plaintiff's rights in its copyrighted works. See Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135-36 (9th Cir. 1986). Fourth, this district has seen an expansion of cases with defendants trafficking in the pirated movie and television DVD industry, and a permanent injunction would serve the public interest by deterring these individuals. See, e.g., Jacek, 2013 WL 12134186. Thus, the Court grants Plaintiff's request for a permanent injunction.
b. Statutory Damages
17 U.S.C. § 504 provides, in relevant part: "an infringer of copyright is liable for either - (1) the copyright owner's actual damages and any additional profits of the infringer . . . or (2) statutory damages." 17 U.S.C. § 504(a). A "copyright owner may elect . . . to recover . . . an award of statutory damages . . . in a sum of not less than $750 or more than $30,000 as the court considers just." 17 U.S.C. § 504(c)(1). "In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000." 17 U.S.C. § 504(c)(2). In exercising its discretion, "the court can consider such factors as: "(1) the expenses saved and the profits reaped; (2) the revenues lost by the plaintiff; (3) the value of the copyright; (4) the deterrent effect on others besides the defendant; (5) whether the defendant's conduct was innocent or willful; (6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for discouraging the defendant." Columbia Pics. Film Prod. Asia Ltd. v. Uth, CIV S-06-1054 FCD DAD, 2007 WL 36283, at *3 (E.D. Cal. Jan. 4, 2007).
Plaintiff's proposed statutory damages of $10,000 for twenty-four infringements, totaling $240,000, is a reasonable request. Although the Court lacks evidence of Defendant's profits reaped—as he failed to appear in the Action—or Plaintiff's lost profits, the Complaint adequately pleads that Defendant's conduct was willful to justify the $10,000 per infringement. Compl. ¶¶ 3, 12-14. For instance, Plaintiff began settlement discussions with Defendant, even allowing him an extension to respond to the Complaint. Wang Decl. re Stip. ¶¶ 5, 6. But Defendant did not respond to the Complaint even after these negotiations and after providing incomplete preliminary records. Id. at ¶ 7. Although Defendant is only an individual infringer, several facts suggest that he was operating more of a sophisticated business than the average individual infringer. Specifically, he has set up a Paypal account to receive payments, and he has solicited his consumers to leave positive feedback on his eBay account, as it is "crucial to [his] business." Mot. Ex. B, at 35. While the Court lacks evidence as to how many infringing DVDs were sold or at what price, the Court recognizes that Plaintiff did not have the opportunity to conduct full discovery regarding damages due to Defendant's default. Considering the degree of Defendant's willfulness, $10,000 is a more modest sum to request per infringement than, say, $25,000. Thus, the Court does not disturb Plaintiff's request for $240,000 statutory damages, with $10,000 per each copyright infringement.
c. Attorneys' Fees & Post-Judgment Interest
The Court, in its discretion, may award costs and reasonable attorneys' fees to the prevailing party, pursuant to section 505 of the Copyright Act. 17 U.S.C. § 505. Central District Local Rule 55-3 provides a schedule of attorneys' fees applicable to a default judgment in the event that an applicable statute provides for the recovery of attorneys' fees; as previously mentioned, 17 U.S.C. § 505 of the Copyright Act allows for attorneys' fees. For judgments over $100,000, like the $240,000 the Court has awarded in statutory damages, the total is "$5,600 plus 2% of the amount over $100,000;" that is, $8,400.
Lastly, the Court grants Plaintiff's request for post-judgment interest at the statutory rate specified by 28 U.S.C. § 1961(a) on the total judgment amount of $248,400.
III. CONCLUSION
Based on the foregoing, the Court GRANTS Plaintiff's Motion for Default Judgment [18] against Defendant for the sole claim of copyright infringement. The Court awards $248,400 in damages: $240,000 in statutory damages under 17 U.S.C. § 504(c) and $8,400 in attorneys' fees pursuant to 17 U.S.C. § 505 and Local Rule 55-3. The Court also awards prejudgment interest on the total $248,400 award at the applicable rate from 28 U.S.C. § 1961(a). Lastly, the Court enjoins Defendant from further infringement of Plaintiff's copyrights.
IT IS SO ORDERED.
DATED: July 27, 2017
s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge