Harrington v. Equity Asset & Property Management, Inc. ( 2020 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 BLAINE G. HARRINGTON III, Case No.: 3:18-cv-00216-GPC-NLS 11 Plaintiff, ORDER GRANTING PLAINTIFF’S 12 v. MOTION FOR THIRD DEFAULT JUDGMENT 13 EQUITY ASSET & PROPERTY MANAGEMENT, INC. d/b/a EQUITY 14 [ECF No. 27] RESIDENCE, LLC, 15 Defendant. 16 17 Before the Court is the motion for Third Default Judgment filed by Plaintiff Blaine 18 G. Harrington III. ECF No. 27. Defendant Equity Asset & Property Management, Inc. 19 d/b/a Equity Residences LLC has not answered Plaintiff’s complaint or otherwise 20 appeared in this matter. For the reasons discussed below the Court GRANTS 21 Harrington’s motion. 22 PROCEDURAL BACKGROUND 23 On January 30, 2018, Harrington filed his Complaint in this Court. ECF No. 1. 24 According to the Return of Service filed on February 8, 2018, the summons and 25 complaint were served on “Jason Smith as Manager” at Equity’s address of 1220 26 Rosecrans Street, #822, San Diego, CA, 92016 (“Rosecrans Street address”). ECF No. 4. 27 1 On March 13, 2018, Harrington moved for entry of default against Equity, contending 2 that Equity was served but did not answer or respond to the Complaint within the allowed 3 time to do so. ECF No. 5. On March 14, 2018, the Clerk entered a default against 4 Equity. ECF No. 6. On August 14, 2018, Harrington moved for a default judgment 5 against Equity. ECF No. 9. On October 15, 2018, the Court denied Harrington’s first 6 motion for default judgment, citing a number of deficiencies in Harrington’s service of 7 the summons and complaint on Equity. ECF No. 12. 8 Harrington served the summons and complaint again on Jason Smith at the 9 Rosecrans Street address on November 28, 2018. ECF No. 21-3 ¶ 3. That same day, 10 Harrington also mailed the summons, complaint, motion for default, motion for final 11 default, and the order denying final default to the same Rosecrans Street address. Id. On 12 January 4, 2019, Harrington requested an entry of default against Equity. ECF No. 18. 13 The Clerk entered a default three days later. ECF No. 19. On August 21, 2019, 14 Harrington filed its second motion for default judgment against Equity. ECF No. 21. On 15 October 24, 2019, the Court denied Harrington’s motion with leave to amend within the 16 next 30 days. ECF No. 26. On November 25, 2019, Plaintiff filed a motion for third 17 default judgment. ECF No. 27. 18 FACTUAL BACKGROUND 19 According to the Complaint, Harrington is a “travel/location photographer” based 20 in Denver, Colorado. ECF No. 1 ¶ 2. In 2011, Harrington created the photograph that 21 gives rise to this litigation. Id. ¶ 10. This photograph depicts a beach scene with ocean 22 water, sand, and palm trees and is entitled “20110427_florida_4138.jpg” (“Copyrighted 23 Work”). Id. ¶ 10. A person appears to be laying on the beach in the photo. Id. 24 Harrington registered the photograph with the Register of Copyrights on August 29, 25 2011. Id. ¶ 11. 26 27 1 Equity is a luxury real estate investment company. Id. ¶ 3. In its motion for third 2 default judgment, Harrington alleges that Equity is a Nevada company with its main 3 office in San Diego, California. ECF No. 27-1 at 15. Harrington asserts that Equity 4 copied the Copyrighted Work without Harrington’s permission, and then distributed it on 5 the internet to promote Equity’s business. ECF No. 1 ¶¶ 15, 16. 6 DISCUSSION 7 “When a party against whom a judgment for affirmative relief is sought has failed 8 to plead or otherwise defend . . . the clerk must enter the party’s default.” Fed. R. Civ. P. 9 55(a). After default is properly entered, a party seeking relief other than for a sum certain 10 must apply to the Court for a default judgment. Fed. R. Civ. P. 55(b). “[D]efault 11 judgments are ordinarily disfavored.” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 12 1986). “The decision to grant or deny default judgment is within the discretion of the 13 district court.” Xifin, Inc. v. Sunshine Pathways, LLC, No. 16-CV-01218-GPC-DHB, 14 2016 WL 5930313, at *2 (S.D. Cal. Oct. 12, 2016) (citing Eitel, 782 F.2d at 1471). “In 15 determining whether a Plaintiff is entitled to default judgment, the Court must first assess 16 the adequacy of service of process on the party against whom default is requested.” 17 Hupp v. San Diego Cty. Dist. Atty., No. 12-CV-492-IEG RBB, 2012 WL 2887229, at *4 18 (S.D. Cal. July 12, 2012) (citation and quotation marks omitted). 19 In the order denying Plaintiff’s second motion for default judgment, the Court held 20 that the existing record was insufficient to exercise personal jurisdiction – both general 21 and specific personal jurisdiction – over Equity. ECF No. 26. 22 I. Jurisdiction 23 When a party against whom a judgment for affirmative relief is sought has failed to 24 plead or otherwise defend, the Court may enter a judgment of default upon application by 25 the plaintiff and after an entry of default. See Fed. R. Civ. P. 55(b)(2). Before assessing 26 the merits of a default judgment, however, a court must confirm that it has subject matter 27 1 jurisdiction over the case and personal jurisdiction over the parties. See In re Tuli, 172 2 F.3d 707, 712 (9th Cir. 1999). Because Plaintiff is asserting a violation of the Copyright 3 Act, 17 U.S.C. § 501, the Court has federal question jurisdiction over that claim by virtue 4 of 28 U.S.C. §§ 1331, 1338(a). Accordingly, the Court has subject matter jurisdiction 5 over the case. Next, the Court turns to the issue of personal jurisdiction. 6 II. Personal Jurisdiction 7 “When entry of judgment is sought against a party who has failed to plead or 8 otherwise defend, a district court has an affirmative duty to look into its jurisdiction over 9 both the subject matter and the parties. A judgment entered without personal jurisdiction 10 over the parties is void.” Id. The Court may dismiss an action sua sponte for lack of 11 personal jurisdiction in order “[t]o avoid entering a default judgment that can later be 12 successfully attacked as void.” Id. Even when the Court has jurisdiction to enter 13 judgment, the decision whether to enter default judgment is within the Court’s discretion. 14 See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). 15 A. General Personal Jurisdiction 16 Plaintiff corrected his initial characterization of Equity as a California corporation 17 in the Complaint, see ECF No. 1 ¶ 9, now admitting that Equity is a Nevada company 18 with its main office in San Diego, California. ECF No. 27-1 at 10 n.1. In his third 19 motion for default judgment, Plaintiff argues that Equity has its principal place of 20 business in San Diego, California and is therefore subject to this Court’s exercise of 21 general personal jurisdiction. In support of this, Plaintiff alleges that Equity has its main 22 office in California, employees in California, a California phone number with a San 23 Diego area code listed on its website, and a California address listed on its Statement of 24 Information filed with the California Secretary of State. ECF No. 27-1 at 13. Plaintiff 25 additionally alleges that Equity is registered with the State of California Bureau of Real 26 Estate. Id. 27 1 “With respect to a corporation, the place of incorporation and principal place of 2 business are paradigm bases for general jurisdiction.” Daimler AG v. Bauman, 571 U.S. 3 117, 137 (2014) (citations omitted). “Daimler ma[de] clear the demanding nature of the 4 standard for general jurisdiction over a corporation,” and that courts are prohibited from 5 exercising general jurisdiction solely on the basis of a corporation’s “substantial, 6 continuous, and systematic course of business” in a state. Martinez v. Aero Caribbean, 7 764 F.3d 1062, 1070 (9th Cir. 2014) (citing Daimler, 571 U.S. at 139). In other words, 8 “[g]eneral jurisdiction does not exist simply because of the magnitude of the defendant’s 9 in-state contacts.” Wright & Miller, 4 Fed. Prac. & Proc. Civ. § 1067.5 (4th ed.) 10 (citations omitted). “General jurisdiction instead calls for an appraisal of a corporation's 11 activities in their entirety, nationwide and worldwide.” Daimler, 571 U.S. at 139 n.20. If 12 the magnitude of a corporation’s business activities in the forum state substantially 13 exceeds the magnitude of the corporation’s activities in other places, general jurisdiction 14 may be appropriate in the forum state. See id. When there has been no evidentiary 15 hearing, a plaintiff need only make out a prima facie showing of jurisdictional facts. See 16 Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010); 17 Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). “It is 18 only if the court takes evidence on the issue or rules on the personal jurisdiction question 19 in the context of a trial that a heightened, preponderance of the evidence standard 20 applies.” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005). Absent such a showing, 21 however, general jurisdiction will be improper. See, e.g., Martinez, 764 F.3d at 22 1070 (finding general jurisdiction lacking where corporation was not licensed to do 23 business in California and had no office, staff, or physical presence in California, and 24 therefore its California contacts were minor compared to its other worldwide contacts). 25 In its prior order denying Plaintiff’s motion for second default judgment, the Court 26 noted the need for a comparative analysis. ECF No. 26 at 5. In his motion for third 27 1 default judgment, Harrington does not provide a comparative analysis but alleges that 2 Equity’s principal place of business is in San Diego, California and “does not appear to 3 be operating from anywhere else but California.” ECF 27-1 at 13. 4 Plaintiff has not cited cases that define the requirements for a “principal place of 5 business” in the context of general personal jurisdiction. At least in the context of 6 diversity of citizenship, the Supreme Court has referred to the corporation’s “principal 7 place of business” as its “nerve center, usually its main headquarters,” where “a 8 corporation’s officers direct, control, and coordinate the corporation’s activities.” Hertz 9 Corp. v. Friend, 559 U.S. 77, 92–93 (2010). 10 In Delphix, the Ninth Circuit permitted the exercise of general jurisdiction over 11 Embarcadero, a Delaware corporation, despite Embarcadero’s claims that it had moved 12 its principal place of business from California to Texas. Delphix Corp. v. Embarcadero 13 Techs., Inc., 749 F. App’x 502, 506 (9th Cir. 2018). The Ninth Circuit found that the 14 plaintiff had presented sufficiently extensive evidence showing that Embarcadero’s 15 headquarters were still in California. Specifically, the plaintiff cited the following facts 16 to demonstrate that Embarcadero’s principal place of business remained in 17 California: (1) Embarcadero continued to promote itself on social media as having a 18 principal place of business in California; (2) Embarcadero had denied that its principal 19 place of business was in Texas in an answer to a complaint filed in the Eastern District of 20 Texas; (3) Embarcadero continued to represent that it has a California address to the 21 Trademark Office; (4) Embarcadero had failed to substantiate in its pleadings and 22 discovery responses that most of its employees were located in Texas at the time that the 23 lawsuit was filed; and (5) Embarcadero relied on California law and its California-based 24 offices in its contracts and policies addressed to consumers. See Delphix Corp. v. 25 Embarcadero Techs., Inc., 2016 WL 4474631, at *6 (N.D. Cal. Aug. 25, 2016), aff’d in 26 part, rev’d in part, 749 F. App’x 502 (9th Cir. 2018). 27 1 Here, Harrington alleges that Equity has listed a San Diego, California phone 2 number as the sole contact phone number on its website and lists “La Jolla” as its location 3 on LinkedIn webpage; additionally, all of Equity’s employees appear to live in the greater 4 San Diego area. ECF No. 27-1 at 11. Harrington also presents evidence that Defendant 5 has real estate licenses with the State of California that list the Rosecrans Street address 6 as its “main office” address. ECF Nos. 27-8, 27-9. And finally, Equity cites California 7 law on privacy rights in its privacy policy listed on its website. ECF No. 27-16 at 8. 8 In sum, Harrington has presented substantial evidence corroborating its claim that 9 Equity’s principal place of business is in fact in San Diego, California. The Court is 10 mindful that any analysis of Equity’s location and business conduct is impeded by 11 Equity’s failure to appear. While the Delphix plaintiff was able to present a more 12 fulsome record as to the defendant’s location and business model; here, Harrington has 13 ultimately gathered sufficient evidence about an absent defendant. While there is still a 14 level of uncertainty with respect to Equity’s ties to Nevada, the Court will afford a degree 15 of flexibility to Harrington on the question of jurisdiction in Equity’s absence. Mwani, 16 417 F.3d at 7 (“[T]he absence of the defendants counsels greater flexibility toward the 17 plaintiffs because it impedes their ability to obtain jurisdictional discovery.”). 18 Accordingly, the Court finds that Harrington has made a prima facie case showing that 19 Equity’s principal place of business is in California and that this Court has general 20 personal jurisdiction over Equity.1 21 22 23 1 The Court notes that the “persisting rule” is that a defendant who makes no appearance remains free to 24 challenge a default judgment for want of personal jurisdiction. See Wright & Miller, 18A Fed. Prac. & Proc. Juris. § 4430 (3d ed.) (citing Baldwin v. Iowa State Traveling Men's Assn., 283 U.S. 522, 525 25 (1931)). Under Rule 55(c), a defendant may challenge a default judgment rendered against it on the 26 basis of lack of personal jurisdiction in accordance with the provisions of Rule 60(b). See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 706 (1982) (“A defendant is always free to 27 ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on 1 B. Specific Personal Jurisdiction 2 Since the Court has already found general personal jurisdiction, the question of 3 specific personal jurisdiction is rendered moot. However, the Court will nevertheless 4 address this analysis. 5 The Ninth Circuit applies the following three-prong test for determining specific 6 jurisdiction over a non-resident defendant: 7 (1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some 8 act by which he purposefully avails himself of the privilege of conducting 9 activities in the forum, thereby invoking the benefits and protections of its laws; 10 (2) the claim must be one which arises out of or relates to the defendant’s forum- 11 related activities; and 12 (3) the exercise of jurisdiction must comport with fair play and substantial justice, 13 i.e., it must be reasonable. 14 See Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227 (9th Cir. 2011) (citing 15 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)). 16 The first prong of the specific jurisdiction test refers to both purposeful direction 17 and purposeful availment, and the Ninth Circuit has explained that in cases involving 18 tortious conduct, the purposeful direction analysis is most often employed. Id. In tort 19 cases, the Ninth Circuit has inquired whether a defendant purposefully directs her 20 activities at the forum state by applying an “effects” test that focuses on the forum in 21 which the defendant’s actions were felt, whether or not the actions themselves occurred 22 within the forum. Id. at 1228. The “effects” test, which is based on the Supreme Court’s 23 24 25 26 jurisdictional grounds”); see also Ruddies v. Auburn Spark Plug Co., 261 F. Supp. 648 (S.D. N.Y. 1966) (default judgment was void for lack of personal jurisdiction over defendant and defendant was granted 27 relief four years after the judgment had been entered). 1 decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), 2 requires that “the defendant allegedly must have (1) committed an intentional act, (2) 3 expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to 4 be suffered in the forum state.” 5 1. Intentional Act 6 In its prior order, the Court held that plaintiff had successfully proved the first 7 prong of the Calder test, but failed to prove the latter two. ECF 26 at 6. The Court 8 incorporates the analysis of the first prong from its prior order. 9 2. Expressly Aimed at the Forum State 10 On the second prong, Harrington argues that Equity has expressly aimed its 11 intentional act at the forum state. The Ninth Circuit has held that “operating even a 12 passive website in conjunction with ‘something more’—conduct directly targeting the 13 forum—is sufficient” to confer personal jurisdiction.” Mavrix Photo, Inc. v. Brand 14 Techs., Inc., 647 F.3d 1218, 1229 (9th Cir. 2011). In determining whether the defendant 15 has done “something more,” the Ninth Circuit has considered the interactivity of the 16 defendant's website, the geographic scope of the defendant's commercial ambitions, and 17 whether the defendant “individually targeted” a plaintiff known to be a forum resident. 18 Id. 19 Plaintiff argues first that Equity’s website is not a “passive website” since investors 20 are able to access private information through its website and that Equity specifically 21 targets California residents with its website. In support of this, Plaintiff points to 22 Equity’s license to sell real estate in California and Equity’s offerings of California real 23 estate. ECF No. 27-1 at 14. 24 However, in Mavrix, the Ninth Circuit ultimately found “most salient the fact that 25 [the defendant] used [plaintiff’s] copyrighted photos as part of its exploitation of the 26 California market for its own commercial gain” since it sold advertising space on its 27 1 website to companies that directed their advertisements towards Californians. Mavrix, 2 647 F.3d at 1225. The Mavrix court held that based on the website’s subject matter, 3 which was centered on celebrity and entertainment industries, that the defendant 4 “anticipated, desired, and achieved a substantial California viewer base.” Here, Equity 5 did not use Harrington’s photo in order to sell California-based real estate, but instead 6 used the photo in order to advertise investment opportunities for real estate in Florida and 7 Hawaii. ECF No. 27-21 at 7. Plaintiff notes that in this “brochure,” Equity stated that it 8 offered investment to “investors on the ‘east and west’ coast”; however, this only further 9 bolsters the conclusion that the “brochure” in question was not specifically directed at a 10 California audience, but instead at a nationwide audience. ECF No. 27-1 at 14. 11 Harrington additionally asserts that the only residence fund open for investors on 12 Defendant’s website is the Mammoth Residence Fund, which consists of two residences 13 in Mammoth Lakes, California. ECF No. 27-1 at 16. However, this argument is 14 unavailing since Equity’s website also offers investment opportunities in its “Equity 15 Platinum Fund” which includes properties in Costa Rica, Hawaii, the Dominican 16 Republic, Italy, the U.S. Virgin Islands, Turks and Caicos, and Florida. 17 Finally, it is clear that Equity did not “individually target” any plaintiff known to 18 be a forum resident since Harrington is a resident of Denver, Colorado. Cf. Brayton 19 Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1130 (9th Cir. 2010) (defendant 20 knew that the plaintiff was a resident of forum in question – i.e., Northern California – 21 when it infringed plaintiff’s copyrighted material). 22 3. Foreseeable Harm 23 On the third prong, Harrington argues that Equity has destroyed the photograph’s 24 market value by its unauthorized use, and that Equity knew that the harm would likely be 25 suffered in California since it features a Northern California resident on its YouTube 26 channel and includes discussion of California privacy law in its website’s privacy 27 1 policies. This evidence falls short of the evidence presented by the Mavrix plaintiff, 2 which showed that the a substantial part of the photos’ value was based on the fact that a 3 significant number of Californians would have bought celebrity gossip magazines in 4 order to see the Mavrix plaintiff’s photograph. See Mavrix, 647 F.3d at 1232 (9th Cir. 5 2011). Here, there is insufficient evidence to establish that Equity’s use of the 6 Copyrighted Work, which depicts a beach in Florida, shows that a jurisdictionally 7 significant amount of economic harm took place in California. 8 Given Harrington’s failure to meet the requisite elements of the Calder test, the 9 Court finds there is no specific personal jurisdiction over Equity. 10 III. Eitel Factors 11 The Ninth Circuit looks to seven factors to assist the court in determining whether 12 default judgment is appropriate. The seven factors are: 13 (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claim; 14 (3) the sufficiency of the complaint; 15 (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; 16 (6) whether the default was due to excusable neglect; and 17 (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 18 19 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Upon default, the factual 20 allegations in the complaint are taken as true, except those related to the amount of 21 damages. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977); see Fed. R. 22 Civ. P. 8(b)(6). Allegations of damages must be proven. Geddes, 559 F.2d at 560. The 23 decision to grant or deny default judgment is within the discretion of the district court. 24 Eitel, 782 F.2d at 1471. Here, the Eitel factors weigh in favor of entering default 25 judgment against Equity. 26 27 1 A. Prejudice to Plaintiff 2 The first Eitel factor considers whether a party will suffer prejudice if a default 3 judgment is not entered. Potential prejudice to Plaintiff favors granting a default 4 judgment. PepsiCo, Inc. v. Calif. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 5 2002). Harrington argues that he will suffer prejudice if a default judgment is not entered 6 since he has will have no other recourse to obtain compensation for Equity’s use of the 7 Copyrighted Work and will otherwise be unable to assure that Equity will not reproduce, 8 display or continue to display the Copyrighted Worked in the future. The Court agrees 9 that this factor weighs in favor of granting Plaintiff’s motion. 10 B. Substantive Merits and Sufficiency of the Complaint 11 The Ninth Circuit has suggested that the second and third Eitel factors – i.e., the 12 substantive merits and sufficiency of the complaint – require that a plaintiff “state a claim 13 on which the [plaintiff] may recover.” Kloepping, 1996 WL 75314, at 14 *2 (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978)). Thus, in order to 15 weigh these two factors the Court must turn to Plaintiff’s complaint, which pleads one 16 count of copyright infringement against Equity in violation of 17 U.S.C. § 501. 17 In order to state a claim for copyright infringement, a plaintiff must allege “(1) 18 ownership of a valid copyright, and (2) copying of constituent elements of the work that 19 are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Here, 20 Harrington has stated a claim for copyright infringement. Harrington registered the 21 Copyrighted Work with the Register of Copyrights and owns all exclusive rights to the 22 Copyrighted Work. ECF No. 1 ¶¶ 11-12. Equity made unauthorized use of Plaintiff’s 23 copyrighted work on its website. Id. ¶ 15. This factor weighs in favor of granting 24 Plaintiff’s motion. 25 26 27 1 C. Sum of Money at Stake 2 The fourth factor balances the sum of money at stake “in relation to the seriousness 3 of the action.” Lehman Bros. Holdings Inc. v. Bayporte Enters., Inc., 2011 WL 6141079, 4 at *7 (N.D. Cal. Oct. 7, 2011) (internal citations and quotations omitted). The amount at 5 stake must not be disproportionate to the harm alleged. Id. 6 Here, Plaintiff requests that Defendant be required to pay Plaintiff actual damages 7 or statutory damages as provided by 17 U.S.C. § 504. Plaintiff also seeks a permanent 8 injunction prohibiting Equity from further infringement of the Copyrighted Work. 9 Specifically, Plaintiff seeks $23,661.72 in attorneys’ fees and costs plus interest, in 10 addition to either actual damages of $200,000 or, in the alternative, statutory damages of 11 $150,000. 12 Plaintiff has demonstrated actual damages of at least $10,000 in lost potential 13 licensing fees for a one-year term. Declaration of Blaine G. Harrington (“Harrington 14 Decl.”), ECF 27-22 ¶ 10. Plaintiff seeks to add a scarcity multiplier of five, which would 15 bring the damages to $50,000, and also seeks to multiply the damages by the number of 16 years that Equity’s made infringing use of the Copyrighted Work. Id. ¶ 12. Plaintiff 17 seeks to multiply the sum by four to account for each year of Equity’s infringing use, but 18 the Court notes that the correct number is three, since Plaintiff has alleged that Equity 19 used Harrington’s photo from at least 2016 through 2018.2 20 Alternatively, Plaintiff seeks statutory damages of $150,000 due to the “willful 21 nature” of Equity’s infringement based on Equity’s failure to appear and properly defend 22 itself against Plaintiff’s claims. ECF No. 27-1 at 22. 23 24 25 26 2 Plaintiff identified Equity’s infringement on April 6, 2016. ECF No. 1-4 at 3. At some point between January 2, 2018 and August 11, 2018, Equity removed the Copyrighted Work from its website. 27 Declaration of Jonah A. Grossbardt (“Grossbardt Decl.”) ¶ 22 1 Plaintiff’s claims for damages are discussed further below; however, given 2 Equity’s failure to appear and address the infringement, the Court finds that the even 3 damages for the licensing fee per year of use (i.e., $30,000) plus the attorneys’ fees and 4 interest tips this factor in favor of entering default judgment. 5 D. Possibility of Dispute 6 The fifth Eitel factor requires the Court to determine whether it is likely that there 7 would be a dispute of material facts. The Court finds that such a dispute is unlikely. 8 Plaintiff has submitted an exhibit with the Complaint showing that Equity used Plaintiff’s 9 Copyrighted Work and superimposed the words “Equity Residences” on to the image in 10 the bottom right corner. ECF No. 1-4 at 3, 7. This factor weighs in favor of entry of 11 default judgment. 12 E. Possibility of Excusable Neglect 13 The sixth Eitel factor considers whether Defendant’s failure to litigate is due to 14 excusable neglect. The Court denied Plaintiff’s first motion for default judgment on 15 August 14, 2018 due to concerns that Plaintiff had failed to properly serve Equity with 16 the summons and the Complaint. ECF No. 12. Plaintiff thereafter sufficiently addressed 17 each of the Court’s concerns with service. ECF No. 21-1 at 12-14. As such, there is no 18 remaining indication that Equity’s default was due to excusable neglect. This factor also 19 weighs in favor of entry of default judgment. 20 F. Policy of Deciding on the Merits 21 The seventh Eitel factor encourages courts to decide cases on their merits 22 “whenever reasonably possible.” Eitel, 782 F.2d at 1472. This factor tends to weigh 23 against granting a motion for default judgment. However, in this case, Equity’s choice 24 not to appear to defend itself renders a decision on the merits “impractical, if not 25 impossible.” Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 26 27 1 2002). Since Equity has failed to appear or respond in this matter, a decision on the 2 merits is impossible. Thus, this factor favors entry of default judgment. 3 IV. Relief Sought 4 Once a court concludes that default judgment is appropriate, it must determine 5 what damages or other relief is warranted. Plaintiff carries the burden of showing it is 6 entitled to the requested relief. See Bd. of Trs. of the Boilermaker Vacation Tr. v. Skelly, 7 Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005). As stated above, Plaintiff seeks 8 $23,661.72 in attorneys’ fees and costs plus interest, in addition to either actual damages 9 of $200,000 or, in the alternative, statutory damages of $150,000. 10 A. Permanent Injunctive Relief 11 Plaintiff is entitled to permanent injunctive relief. Section 502(a) of the Copyright 12 Act specifically authorizes the court to grant injunctive relief on such terms as it may 13 deem reasonable to prevent or restrain infringement of a copyright. Plaintiffs must meet 14 their burden with respect to the following four-part test: “(1) that it has suffered an 15 irreparable injury; (2) that remedies available at law, such as monetary damages, are 16 inadequate to compensate for that injury; (3) that, considering the balance of hardships 17 between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the 18 public interest would not be disserved by a permanent injunction.” eBay Inc. v. 19 MercExchange, L.L.C., 547 U.S. 388, 126 S.Ct. 1837, 1839, 164 L.Ed.2d 641 (2006). 20 “[T]he decision whether to grant or deny injunctive relief rests within the equitable 21 discretion of the district courts.” Id.at 1841. 22 Here, Plaintiff alleges that Equity is causing irreparable harm and that Equity’s 23 conduct demonstrates that it may again willfully infringe on the Copyrighted Work unless 24 the Court enjoins Equity from doing so. ECF No. 27-1 at 25. Copyright infringement is 25 presumed to give rise to irreparable injury. A & M Records, Inc. v. Napster, Inc., 114 26 F.Supp.2d 896, 925 (N.D. Cal. 2001) (citing Micro Star v. Formgen Inc., 154 F.3d 1107, 27 1 1109 (9th Cir. 1998)). Accordingly, when seeking a permanent injunction in copyright 2 cases, irreparable harm is presumed on a showing of success on the merits. Micro 3 Star, 154 F.3d at 1109. Consequently, Plaintiffs in this case need not show irreparable 4 harm, as the default against Defendants satisfies the element of success on the merits. 5 The Court finds that such injunctive relief to protect Plaintiff’s Copyrighted Work 6 is appropriate. Despite the fact that Equity is aware of Plaintiff’s claims and has removed 7 the Copyrighted Work from its website, Equity has still chosen to ignore this lawsuit, 8 suggesting that Equity does not appreciate the gravity of such infringement. 9 B. Actual Damages 10 Plaintiff has demonstrated actual damages of at least $10,000 in lost potential 11 licensing fees for a one-year term. ECF 27-22 ¶ 10. Plaintiff seeks to add a scarcity 12 multiplier of five, which would bring up the damages to $50,000, and additionally seeks 13 to multiply this sum for each year of Equity’s infringing use. Id. ¶ 12. Plaintiff seeks to 14 multiply the sum by four to account for each year of use, but the correct multiplier is 15 three, since Plaintiff has only presented exhibits showing that Equity made use of the 16 Copyrighted Work from 2016 through 2018.3 17 In sum, Plaintiff has demonstrated actual damages of $30,000 in lost potential 18 licensing fees for the three years of Equity’s infringing use of the Copyrighted Work. 19 1. Scarcity Multiplier 20 Plaintiff seeks to add a scarcity multiplier of five and cites in support Leonard v. 21 Stemtech Int’l Inc, 834 F.3d 376 (3d Cir. 2016) and Reiffer v. Legendary Journeys, Inc., 22 2019 WL 2029973 (M.D. Fla. Apr. 10, 2019), report and recommendation adopted, 2019 23 24 25 26 3 Plaintiff identified Equity’s infringement on April 6, 2016. ECF No. 1-4 at 3. At some point between January 2, 2018 and August 11, 2018, Equity removed the Copyrighted Work from its website. 27 Declaration of Jonah A. Grossbardt (“Grossbardt Decl.”) ¶ 22 1 WL 2029829 (M.D. Fla. May 2, 2019). However, both cases are distinguishable in 2 significant respects. In Leonard, the plaintiff’s photograph depicted stem cell images 3 which were notably rare at the time of their publication in the 1990s. Leonard, 834 F.3d 4 at 385. The Leonard plaintiff’s expert witness stated that the scarcity multiplier was 5 warranted given this scarcity and rarity of stem cell images and recommended a 6 multiplier between three to five. See id. In Reiffer, the plaintiff explained that the 7 scarcity multiplier that he charged to a client depended on a number of factors, including 8 that the photograph would be impossible to recreate since the rooftop where it was taken 9 from was no longer accessible. The Reiffer plaintiff additionally explained that the 10 scarcity multiplier was warranted since had previously turned down an offer to license his 11 photograph since he was not prepared to lower his licensing fee, which would have posed 12 a risk value to his photograph’s scarcity. Here, Plaintiff has explained that he employed 13 significant technical skills to create the Copyrighted Work, including monitoring the 14 environment with regard to atmospheric conditions, location scouting, and the use of 15 advanced photo exposure control and post-production software. However, Plaintiff has 16 failed to show that the employment of these technical skills is sufficient to merit the 17 application of a scarcity multiplier of five. 18 C. Statutory Damages 19 In the alternative, Plaintiff seeks the maximum amount of statutory damages of 20 $150,000. 21 A plaintiff may elect to recover an award of statutory damages. See 17 U.S.C. 22 504(c)(1). A court, in its discretion, can award not less than $750 but not more than 23 $30,000 per copyright infringed. Enhanced damages of up to $150,000 per copyright 24 infringed may be granted on a finding of willful infringement. Allegations of willful 25 infringement are deemed to be true on default. Derek Andrew, Inc. v. Poof Apparel 26 Corp., 528 F.3d 696, 702 (9th Cir. 2008). 27 1 Here, Plaintiff seeks enhanced statutory damages statutory damages due to the 2 “willful nature” of Equity’s infringement based on Equity’s failure to appear and properly 3 defend itself against Plaintiff’s claims. ECF No. 72-1 at 22. Equity was notified of the 4 infringement and refused to pay for the use of the Copyrighted Work before the Plaintiff 5 filed the action. Even though Equity’s conduct was willful, the Court finds that the 6 request for $150,000 is excessive, particularly given the amount that Plaintiff would have 7 otherwise charged for its license fee. 8 Given the willful nature of the violation, the Court finds that $30,000 in statutory 9 damages, plus an added enhancement of $45,000, is merited for the infringement of the 10 Copyright Work. 11 D. Fees and Costs 12 Plaintiff seeks recovery of attorney’s fees and costs in the amount of $23,661.72 13 plus post-judgment interest. 14 The Copyright Act permits a discretionary award of attorneys’ fees to the 15 prevailing party in a copyright lawsuit. See 17 U.S.C. § 505; Fogerty v. Fantasy, Inc., 16 510 U.S. 517, 533 (1994) (noting § 505 “clearly connotes discretion” and a district court 17 may not “award[ ] attorney’s fees as a matter of course”). The award of attorney’s fees is 18 merited when the conduct of the infringer is “patently unreasonable, and an award of 19 attorney's fees would further the goal of deterrence.” Warner Bros. Entm’t Inc. v. Caridi, 20 346 F. Supp. 2d 1068, 1074 (C.D. Cal. 2004). In determining whether to award 21 attorney’s fees, courts “give substantial weight to the objective reasonableness of the 22 losing party's position,” and also consider other factors, including “frivolousness, 23 motivation . . . and the need in particular circumstances to advance considerations of 24 compensation and deterrence.” Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979, 25 1983, 195 L. Ed. 2d 368 (2016). Default judgments “almost invariably give rise to fee 26 awards.” Id. at 1988 n.3. “When calculating the amount of attorney fees to be awarded 27 1 a litigation, the district court applies the lodestar method, multiplying the number of 2 || hours reasonably expended by a reasonable hourly rate.” Ryan v. Editions Ltd. W., Inc., 3 || 786 F.3d 754, 763 (9th Cir. 2015). 4 Here, Plaintiff has submitted the number of hours expended on litigating this action 5 || showing the sum of fees totaling at $23,661.72. ECF No. 27-20. Equity’s failure to 6 || appear also weighs in favor of granting these attorney’s fees in order to further goal of 7 || deterring counsel from failing to appear in court in future actions. Accordingly, the Court 8 ||awards Plaintiff the attorney’s fees and costs of $23,661.72 plus the post-judgment 9 interested calculated from the date of this Order. 10 E. Summary 11 In sum, the Court GRANTS Plaintiff’s request for permanent injunctive relief and 12 || further GRANTS Plaintiff an award of $75,000 in statutory damages, and $23,661.72 in 13 || attorney’s fees and costs plus post-judgment interest calculated from the date of this 14 || Order. 15 CONCLUSION 16 Based on the foregoing analysis, the Court GRANTS Plaintiff's Motion for 17 || Default Judgment and further GRANTS Plaintiff's request for relief in the amounts and 18 || forms described above. Plaintiff is directed to submit a proposed order providing 19 injunctive relief on or before January 27, 2020. 20 IT IS SO ORDERED. 21 ||Dated: January 13, 2020 2 << 22 Hon. athe Cae 23 United States District Judge 24 25 26 27 19 28 3:18-cv-00216-GPC-NLS