Origami Owl LLC v. Mayo et al

Filing 86

DEFAULT JUDGMENT, Plaintiff's motion for default judgment 82 is granted in part and denied in part; default judgment is entered in favor of Plaintiff and against Defendant West Coast Charms on all claims; Plaintiff is awarded $357,869.67 against West Coast Charms; Plaintiff's request for injunctive relief is denied. Signed by Judge David G Campbell on 4/11/16. (REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Orgami Owl, LLC, a Delaware entity,
Plaintiff,

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No. CV15-00110-PHX-DGC

DEFAULT JUDGMENT

v.
Julie Mayo, a single woman, Ann L. Mayo,
a single woman, doing business as West
Coast Charms and 5th Avenue Pets, West
Coast Charms, LLC, a Nevada entity,

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Defendants.

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Pursuant to this Court’s February 11, 2016 order (Doc. 80), Plaintiff filed a motion

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for default judgment against Defendant West Coast Charms LLC pursuant to Rule

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55(b)(2) of the Federal Rules of Civil Procedure. Doc. 82. For the following reasons, the

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Court will grant Plaintiff’s motion in part.

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I.

Background.

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This case is an intellectual property infringement case involving customizable

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jewelry. Plaintiff’s amended complaint (Doc. 20) alleges claims for patent infringement

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pursuant to 35 U.S.C. § 271, trademark infringement pursuant to 15 U.S.C. § 1114,

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copyright infringement pursuant to 17 U.S.C. § 501, federal unfair competition pursuant

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to 15 U.S.C. § 1125, and common law unfair competition. On December 18, 2015, the

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Court held a telephonic hearing to discuss Defendants’ then-counsel’s motion to

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withdraw. Docs. 74; 75; 76. During the hearing, the Court warned Defendants Julie

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Mayo and Ann Mayo that their failure to obtain new counsel for Defendant West Coast

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Charms by January 22, 2016 would result in a default judgment being entered against

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West Coast Charms. Defendants failed to obtain new counsel for West Coast Charms as

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ordered by the Court. On February 10, 2016, the Court held a status conference with the

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parties explaining to Defendants that default judgment would be entered against West

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Coast Charms because new counsel had not been retained by the January 22, 2016

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deadline set by the Court. Doc. 78. Following the hearing on February 10, 2016, the

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Court entered an order allowing Plaintiff to file a motion setting forth the specific relief it

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seeks in the default judgment and directing the clerk to enter default judgment as to West

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Coast Charms. Doc. 80. On February 25, 2016, Plaintiff filed its motion for default

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judgment. Doc. 82. No response has been filed.

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II.

Legal Standard.

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Once the Clerk has entered default, a plaintiff may request entry of default

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judgment. Fed. R. Civ. P. 55(b)(2). “The district court’s decision whether to enter

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default judgment is a discretionary one.”

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(9th Cir. 1980). Factors the court may consider in deciding whether to grant default

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judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits of the

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claim, (3) the sufficiency of the complaint, (4) the amount of money at stake, (5) the

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possibility of a dispute concerning material facts, (6) whether default was due to

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excusable neglect, and (7) the policy favoring a decision on the merits. See Eitel v.

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McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In applying the Eitel factors, “the

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factual allegations of the complaint, except those relating to the amount of damages, will

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be taken as true.” Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)

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(citations omitted).

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III.

Aldabe v. Aldabe, 616 F.2d 1089, 1092

Analysis.

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A.

Eitel Factors.

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The first Eitel factor weighs in favor of granting default judgment. Plaintiff served

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process on Defendant West Coast Charms on March 26, 2015. Doc. 31. West Coast

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Charms filed an answer to Plaintiff’s amended complaint on March 30, 2015. Doc. 26.
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Counsel for Defendants subsequently withdrew from representation. Docs. 72; 73; 74;

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75; 76. The Court permitted the individual Defendants to proceed pro se, but, consistent

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with this Circuit’s precedent, required West Coast Charms to appear through counsel.

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Given that West Coast Charms has failed to secure new counsel, Plaintiff is stymied in its

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ability to prosecute this action against West Coast Charms. If Plaintiff’s motion for

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default judgment is not granted, Plaintiff “will likely be without other recourse for

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recovery.” PepsiCo, Inc. v. Cal. Security Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal.

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2002).

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The second and third Eitel factors favor a default judgment where the complaint

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sufficiently states a claim for relief. See Cal. Security Cans, 238 F. Supp. 2d at 1175-76;

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Danning v. Lavine, 572 F.2d 1386, 1388-89 (9th Cir. 1978). A review of Plaintiff’s

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amended complaint shows that Plaintiff has stated valid causes of action against West

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Coast Charms. See Doc. 20. Because Plaintiff seeks statutory damages solely on the

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basis of its copyright claim, the Court will focus on this claim. Plaintiff is the sole owner

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of a number of copyrights, which it registered with the United States Copyright Office.

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Doc. 20 at 9. Plaintiff owns registered copyrights for eleven separate charm collections,

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which include over 40 separate charms. Docs. 20 at 9-10; 20-1 at 1-3. West Coast

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Charms sells charms that are substantially similar or identical to Plaintiff’s copyrighted

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charms. Doc. 20 at 4. As Plaintiff has released new collections of charms, West Coast

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Charms has mimicked those designs in its charms. Id. West Coast Charms has been put

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on notice of its infringing activity, but has failed to cease this activity. Id. at 4, 9-10.

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Taking Plaintiff’s allegations in its amended complaint as true, Plaintiff has sufficiently

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stated a claim for copyright infringement under 17 U.S.C. § 501. The Court is similarly

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persuaded that Plaintiff has stated valid causes of action for its patent infringement,

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trademark infringement, federal statutory unfair competition, and common law unfair

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competition claims.

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Under the fourth Eitel factor, the court considers the amount of money at stake in

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relation to the seriousness of the defendant’s conduct. See Cal. Security Cans, 238 F.
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Supp. 2d at 1176-77. Plaintiff seeks $330,000.00 in statutory damages for its copyright

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infringement claim – $30,000 for each of the eleven copyrighted works infringed by

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Defendant West Coast Charms.

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trademark, patent infringement, federal statutory unfair competition, and common law

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unfair competition claims. See Doc. 82 at 9-10. The conduct of West Coast Charms

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alleged in the complaint – and admitted by the default – it willful, and has occurred over

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a prolonged period of time even after notice of the infringement. This factor weighs in

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favor of granting Plaintiff’s motion.

Plaintiff does not seek monetary damages for its

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The fifth Eitel factor weighs in favor of default judgment. Given the sufficiency

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of the complaint and Defendant’s default, after which Plaintiff’s allegations are accepted

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as true, “no genuine dispute of material facts would preclude granting [Plaintiff’s]

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motion.” Cal. Security Cans, 238 F. Supp. 2d at 1177; see Geddes, 559 F.2d at 560.

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The sixth Eitel factor favors default judgment. West Coast Charms was aware that

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its failure to obtain new counsel by January 22, 2016 would result in default judgment.

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See Doc. 75. The Court clearly explained this in two separate telephonic hearings with

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Julie Mayo and Ann Mayo, the owners. Docs. 76; 78. To date, over two months after the

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Court’s deadline, West Coast Charms has not obtained new counsel. Defendant’s failure

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to obtain counsel is not due to “excusable neglect.” Gemmel v. Systemhouse, Inc., No.

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CV 04-187-TUC-CKJ, 2008 WL 65604, at *5 (D. Ariz. Jan. 3, 2008) (citation omitted).

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As for the seventh factor, it is true that “[c]ases should be decided upon their

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merits whenever reasonably possible,” Eitel, 782 F.2d at 1472, but the mere existence of

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Rule 55(b) “indicates that this preference, standing alone, is not dispositive,” California

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Security Cans, 238 F. Supp. at 1177 (quotation marks and citation omitted). Defendant’s

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failure to obtain new counsel as directed by the Court to allow this lawsuit to proceed

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“makes a decision on the merits impractical, if not impossible.” Id. This factor also

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favors granting Plaintiff’s motion.

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Considering the Eitel factors as a whole, the Court concludes that the entry of

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default judgment against West Coast Charms is appropriate. Plaintiff requested two
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forms of relief: damages and injunctive relief.

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B.

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With respect to damages, Plaintiff requests statutory damages, costs, and

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attorneys’ fees. “It is well settled that a default judgment for money may not be entered

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without a hearing unless the amount claimed is a liquidated sum or capable of

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mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981). A

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district court has “wide latitude” in granting damages under Rule 55 of the Federal Rules

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of Civil Procedure. Elektra Entm’t Grp. Inc. v. Crawford, 226 F.R.D. 388, 394 (C.D.

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Cal. 2005) (citing In re Frame, 6 F.3d 307, 310 (9th Cir. 1993)). The Court has reviewed

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Damages.

Plaintiff’s motion and supporting documentation, and awards the following damages.

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The Court finds that Plaintiff is entitled to $330,000.00 in statutory damages under

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17 U.S.C. § 504(c)(1). Statutory damages are an example of damages that may be

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awarded without a hearing for a default judgment. McComb v. Vejar, No. 2:14-CV-

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00941-RSWL-E, 2014 WL 5494017, at *8 (C.D. Cal. Oct. 28, 2014) (citing Davis, 650

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F.2d at 1161). Statutory damages serve both compensatory and punitive purposes with

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the aim of discouraging infringement. L.A. News Serv. v. Reuters Television Int’l, Ltd.,

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149 F.3d 987, 996 (9th Cir. 1998). District courts have “wide discretion in determining

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the amount of statutory damages to be awarded, constrained only by the specified

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maxima and minima.” Id. (quotation marks and citation omitted). By statute, the owner

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of an infringed copyrighted work may recover, in lieu of actual damages, up to $30,000

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per infringed work, “as the court considers just.” 17 U.S.C. § 504(c)(1). In the case of

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willful infringement, the owner may recover up to $150,000 per infringed work. 17

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U.S.C. § 504(c)(2). Although Plaintiff is seeking the maximum allowable amount under

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section 504(c)(1), Plaintiff has elected not to pursue the higher amount of damages

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reserved for cases of willful infringement. As discussed above, Plaintiff alleges willful

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copyright infringement on the part of West Coast Charms, and those allegations have

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been admitted by default. The Court is particularly troubled by what appears to be a

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pattern of intentional infringement by West Coast Charms.
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The Court finds that

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awarding the maximum amount of statutory damages under 17 U.S.C. § 504(c)(1) is

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appropriate to punish West Coast Charms and deter future infringement.

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The Court concludes that Plaintiff is entitled to recover costs and attorneys’ fees,

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but finds that Plaintiff is entitled to only $27,768.00 in fees and $101.67 in costs. Under

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Rule 54(d) of the Federal Rules of Civil Procedure, a district court has discretion to

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award a prevailing party its costs and attorneys’ fees. Similarly, by statute, a district

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court has discretion to award a prevailing party in a copyright infringement case its costs

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and attorneys’ fees by statute. 17 U.S.C. § 505. Plaintiff requested $83,304.00 in

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attorneys’ fees and $305.01 in costs for its “affirmative claims against defendants.”

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Docs. 82 at 19-22; 82-6 at 2, ¶¶ 3-4. These fees and costs were incurred in prosecuting

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its claims against all three Defendants in this matter, not just West Coast Charms. Some

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of the requested attorneys’ fees and costs were incurred to prosecute Plaintiff’s claims

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against the individual Defendants, not West Coast Charms. See, e.g., Doc. 82-6 at 17

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(“Review of written discovery to access remaining discovery needs for affirmative case

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against Julie and Ann Mayo.”). Plaintiff has obtained a judgment against West Coast

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Charms, but its claims against Julie Mayo and Ann Mayo remain pending. Because

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Plaintiff has obtained a judgment against only one of the three Defendants in this lawsuit,

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the Court concludes that it should recover one-third of its requested attorneys’ fees and

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costs. The Court therefore awards Plaintiff $27,768.00 in fees and $101.67 in costs. This

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is consistent with the Court’s wide latitude in awarding damages for a default judgment.

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Elektra Entm’t Grp., 226 F.R.D. at 394.

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The Court finds that no hearing is necessary to determine the amount of damages

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Plaintiff is entitled to recover. Davis, 650 F.2d at 1161. The Court will award Plaintiff

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$357,869.67, consisting of $330,000.00 in statutory damages for copyright infringement,

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$27,768.00 in attorneys’ fees, and $101.67 in fees.

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C.

Permanent Injunction.

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Plaintiff also requested a permanent injunction. An injunction is “an extraordinary

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remedy never awarded as of right.” Winter v. Natural Res. Defense Council, Inc., 555
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U.S. 7, 24 (2008). A plaintiff seeking a permanent injunction must show: “(1) that it has

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suffered an irreparable injury; (2) that remedies available at law, such as monetary

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damages, are inadequate to compensate for that injury; (3) that, considering the balance

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of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4)

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that the public interest would not be disserved by a permanent injunction.” eBay Inc. v.

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MercExchange, LLC, 547 U.S. 388, 391 (2006). “While ‘[t]he decision to grant or deny

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permanent injunctive relief is an act of equitable discretion by the district court,’ the

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‘traditional principles of equity’ demand a fair weighing of the factors listed above,

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taking into account the unique circumstances of each case.” La Quinta Worldwide LLC

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v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 880 (9th Cir. 2014) (quoting eBay, 547 U.S. at

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391, 394).

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Plaintiff’s requested permanent injunction covers not only West Coast Charms,

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but also its officers, employees, agents, and those acting in concert with it.

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injunction therefore would apply to Defendants Julie and Ann Mayo, who have not been

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found liable in this case. For this reason, the Court declines to enter the injunction

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proposed by Plaintiffs.

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IT IS ORDERED:

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The

denied in part.

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Plaintiff’s motion for default judgment (Doc. 82) is granted in part and

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Default judgment is entered in favor of Plaintiff and against Defendant
West Coast Charms on all claims.

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Plaintiff is awarded $357,869.67 against West Coast Charms.

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4.

Plaintiff’s request for injunctive relief is denied.

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Dated this 11th day of April, 2016.

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