Constance Jones v. James Trading Company Limited ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 8 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CONSTANCE JONES, No. 21-55896
Plaintiff-Appellee, D.C. No.
2:19-cv-02674-MWF-JEM
v.
JAMES TRADING COMPANY LIMITED; MEMORANDUM *
et al.,
Defendants-Appellants,
and
DOES, 1 through 50, inclusive,
Defendant.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Submitted June 6, 2023**
Pasadena, California
Before: WALLACE and OWENS, Circuit Judges, and FITZWATER,*** District
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Sidney A. Fitzwater, United States District Judge for
Judge.
James Trading Company, Ltd., James Industry Group Co., Ltd., Every
Industry, LLC, and Li Shuang Qi appeal from the district court’s denial of their
motion to set aside a $7.95 million default judgment against them and in favor of
Constance Jones in her action alleging, inter alia, wrongful termination and breach
of contract. We will reverse a district court’s order denying a motion to set aside a
default judgment only upon a “clear showing of abuse of discretion,” Pena v.
Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985), and we review
factual findings underlying these orders (including computation of damages) for
clear error, NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 617 (9th Cir. 2016). We
have jurisdiction under 28 U.S.C. § 1291, and we affirm.
The district court has discretion to deny a motion to vacate its default
judgment if “(1) the plaintiff would be prejudiced if the judgment is set aside, (2)
defendant has no meritorious defense, or (3) the defendant’s culpable conduct led
to the default.” In re Hammer, 940 F.2d 524, 525–26 (9th Cir. 1991). Because the
test is disjunctive, a denial of a motion to vacate a default judgment will be
affirmed on the basis of any of the factors alone. Id.; see also Meadows v.
Dominican Republic, 817 F.2d 517, 521 (9th Cir. 1987) (citing Pena, 770 F.2d at
814).
the Northern District of Texas, sitting by designation.
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The district court did not abuse its discretion in denying the motion to set
aside its default judgment when it held that defendants’ culpable conduct led to the
default. “[A] defendant’s conduct is culpable if he has received actual or
constructive notice of the filing of the action and intentionally failed to answer.”
TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001) (quoting
Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988)).
“Intentionally” means “something more like . . . ‘willful, deliberate, or evidence of
bad faith.’” Id. at 697 (quoting Am. All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61
(2d Cir. 1996)). The district court did not clearly err when it found that
defendants’ receipt of the ultimate default judgment was evidence that they had
been receiving previous filings in the case and were simply waiting to see how the
district court would rule on the motion for default judgment before obtaining
substitute counsel or responding to the filings. Nor did the district court clearly err
when it implicitly rejected defendants’ claims that they believed an attorney they
retained was representing their interests in the case, despite not being able to
contact the attorney for over eight months. These factual findings support the
district court’s culpable conduct finding, such that its refusal to vacate its default
judgment was not an abuse of discretion.
The district court did not clearly err in imposing $7.95 million in damages.
Evidence of damages in support of a request for default judgment may come in the
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form of declarations specifying how damages were computed. See NewGen, 840
F.3d at 617 (affirming imposition of damages in default judgment where the
district court relied on a declaration from the plaintiff that provided an estimate of
defendant company’s net profits and a “detailed account of how he calculated each
figure” in the damages request). A prove-up hearing to determine damages may be
held but is not required. See Fed. R. Civ. P. 55(b)(2) (“The court may conduct
hearings . . . when, to enter or effectuate judgment, it needs to . . . determine the
amount of damages.”). Plaintiff and her counsel submitted two declarations with
supporting exhibits substantiating their calculations of damages, attorney’s fees,
and costs. These calculations, including for emotional distress damages and
plaintiff’s share of defendant company’s profits, were necessarily based on
estimates due to defendants’ own culpable conduct and failure to participate in the
discovery process. See NewGen, 840 F.3d at 617 (rejecting defaulting defendant’s
claim that evidence underlying damages calculations was “unreliable” because the
defaulting defendant itself was “in the best position to have the accurate records
required to refute [plaintiff’s] estimates”). Plaintiff was not required to submit
medical evidence to support her claim for emotional distress damages. See
Johnson v. Hale, 940 F.2d 1192, 1193 (9th Cir. 1991) (citing Phiffer v. Proud
Parrot Motor Hotel, Inc., 648 F.2d 548, 552–53 (9th Cir. 1980)).
AFFIRMED.
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