Fabric Selection, Inc. v. Manjeet International, Inc. et al

Filing 23

ORDER DENYING MOTION FOR DEFAULT JUDGMENT 17 by Judge Otis D. Wright, II: The Court DENIES Plaintiffs motion for default judgment without prejudice. Plaintiff may refile its motion at the conclusion of the proceedings against Union. (lc)

O

1
2
3
4
5
6
7

United States District Court
Central District of California

8
9
10
11

Case № 2:17-cv-02353-ODW (KS)

FABRIC SELECTIONS, INC.,
Plaintiff,

12

v.

13

ORDER DENYING MOTION FOR

14

MANJEET INTERNATIONAL, INC.;

15

UNION APPAREL GROUP, LTD.; and

16

DOES 1 through 10, inclusive,

17

Defendants.

DEFAULT JUDGMENT [17]

18
19

I.

INTRODUCTION

20

This is a fabric copyright case. Before the Court is Plaintiff Fabric Selection,

21

Inc.’s motion for default judgment against Defendant Manjeet International, Inc.

22

(ECF No. 17.) For the following reasons, the Court DENIES the motion.1

23

II.

FACTUAL BACKGROUND

24

Plaintiff is a Los Angeles-based fabric designer. (Compl. ¶ 1, ECF No. 1.)

25

Defendant Manjeet International, Inc. (“Manjeet”) is an “importer and/or wholesaler

26

of apparel in the business of selling garments and apparel to retailers/distributors.”

27

1

28

After considering the moving papers, the Court deems the matter appropriate for decision without
oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.

1

(Id. ¶ 2.) Defendant Union Apparel Inc. (“Union”) is in essentially the same business

2

as Manjeet. (Id. ¶ 3.)

3

Plaintiff designed the relevant SE41092 fabric pattern and subsequently

4

registered the pattern with the United States Copyright Office. (Id. ¶¶ 9, 10.) At some

5

point, Plaintiff discovered that Union and Manjeet (collectively “Defendants”) were

6

distributing goods featuring the pattern without authorization. (Id. ¶ 15.) Plaintiff

7

sent cease and desist letters to Defendants on September 20, 2016, demanding that

8

they discontinue their unauthorized manufacture, sale, and distribution of goods

9

featuring the infringing pattern. (Id.) Defendants did not cease their activities. (Id.

10

¶¶ 18, 27.)

11

Plaintiff filed this lawsuit against Defendants on March 27, 2017, alleging (1)

12

copyright infringement and (2) contributory copyright infringement. (Id. ¶¶ 11–30.)

13

On May 1, 2017, the Clerk of Court entered default against Manjeet at Plaintiff’s

14

request. (ECF No. 15.) On May 8, 2017, Plaintiff filed the pending motion for

15

default judgment with the Court. (ECF No. 17.)

16

Attached to Plaintiff’s motion for default judgment is a declaration from

17

Plaintiff’s attorney Stacy Knox attempting to clarify the roles that Union and Manjeet

18

played in the infringing activity. (See Knox Decl., ECF No. 17.) According to the

19

declaration, Knox spoke to Edison Wong, a Union representative, who indicated that

20

Union had “received additional, unauthorized units . . . of garments bearing the

21

Subject Design from Manjeet.” (Id. ¶ 3.) Knox then spoke with Sudeep Kaur, a

22

Manjeet representative, who confirmed that Manjeet manufactured the goods in

23

question. (Id. ¶ 4.) Kaur stated that Manjeet manufactured the goods at Union’s

24

request, believing that Union “owned” the pattern. (Id.)

25

III.

LEGAL STANDARD

26

Federal Rule of Civil Procedure 55(b) authorizes a district court to enter a

27

default judgment following an entry of default by the clerk against a defendant that

28

fails to respond to a complaint. A district court has discretion as to whether to enter a

2

1

default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon

2

default, the defendant’s liability generally is conclusively established, and well-

3

pleaded factual allegations in the complaint are accepted as true. TeleVideo Sys., Inc.

4

v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam) (citing Geddes v.

5

United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)).

6

In exercising its discretion, a court must consider several factors, including (1)

7

the possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive claim;

8

(3) the sufficiency of the complaint; (4) the sum of money at stake; (5) the possibility

9

of a dispute concerning material facts; (6) whether the defendant’s default was due to

10

excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v.

11

McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).

12

IV.

DISCUSSION

13

Since the Supreme Court’s decision in Frow v. De La Vega, 82 U.S. 552 (1872)

14

more than one hundred years ago, courts have consistently held that where “a

15

complaint alleges [that the] defendants are jointly liable and one of them defaults,

16

judgment should not be entered against the defaulting defendant until the matter has

17

been adjudicated with regard to all defendants.” Nielson v. Chang, 253 F.3d 520, 532

18

(9th Cir. 2001); Societe d’Equipments Internationaux Nigeria, Ltd v. Dolarian

19

Capital, Inc., No. 115CV01553DADSKO, 2016 WL 6868023, at *2 (E.D. Cal. Nov.

20

21, 2016) (cumulating cases to show that Frow remains good law in the Ninth

21

Circuit). This is because it would be “absurd” for a court to enter inconsistent

22

judgments against two defendants that essentially engaged in the same course of

23

conduct.

24

CV1205453DMGJEMX, 2012 WL 12893781, at *2 (C.D. Cal. Nov. 29, 2012)

25

(“[C]ourts find that it would be ‘incongruous and unfair’ to allow a plaintiff to prevail

26

against defaulting defendants on a legal theory later rejected with respect to an

27

answering defendant ‘in the same action.’” (quoting Garamendi v. Henin, 683 F.3d

28

1069, 1082–83 (9th Cir. 2012))).

See Frow, 82 U.S. at 554; Vaughn v. Wells Fargo Bank, N.A., No.

3

1

While this common law rule was originally limited to jointly-liable co-

2

defendants, in recent years, the Ninth Circuit has extended the rule to encompass

3

“similarly situated” parties. Garamendi, 683 F.3d at 1082–83. A defaulting party is

4

similarly situated to an answering party when the case against both parties rests on the

5

“same legal theory.” Id.; see also Vaughn, 2012 WL 12893781, at *2 (finding parties

6

to be similarly situated where causes of action were common to defaulting and

7

answering defendants and all defendants were liable for the full amount of damages);

8

Mason v. City of Lake Forest Park, No. C13-0676-JCC, 2014 WL 4093933, at *4

9

(W.D. Wash. Aug. 18, 2014) (denying motion for default judgment where “three of

10

the four” claims were alleged against “all defendants,” some of whom answered and

11

some of whom did not); Societe d’Equipments, 2016 WL 6868023, at *3 (finding that

12

parties were “similarly situated” where “the claims, facts, and legal issues asserted in

13

the complaint relative to each of the two defendants” were similar).

14

This case has the potential to implicate the common law rule annunciated in

15

Frow because one of the defendants has answered the complaint (Union) and the other

16

has not (Manjeet). See Nielson, 253 F.3d at 532. As such, the Court considers

17

whether Defendants are jointly liable or similarly situated and whether there is a risk

18

of inconsistent judgments.

19

A. Whether Defendants are Jointly Liable or Similarly Situated

20

To begin, Union and Manjeet are likely to be held jointly liable for any

21

infringement because it appears they were part of a distribution chain that produced

22

infringing goods. (See Knox Decl. ¶¶ 3–4); see also Adobe Sys. Inc. v. Blue Source

23

Grp., Inc., 125 F. Supp. 3d 945, 973 (N.D. Cal. 2015) (cumulating cases for the

24

proposition that members of a distribution chain involving infringing goods may be

25

held jointly liable for infringement).

26

Further, Defendants are similarly situated. Defendants are subject to the same

27

two causes of action and are liable for the full range and amount of damages. See

28

Vaughn, 2012 WL 12893781, at *2. Indeed, the complaint itself makes no distinction

4

1

between the actions of Union and Manjeet. (See e.g., Compl. ¶¶ 12–13, 16.) Adding

2

in the facts from the Knox declaration does little to change this—Defendants were

3

allegedly on opposite ends of the same transaction involving infringing goods. (Knox

4

Decl. ¶¶ 3–4.)

5

B. Whether There is a Risk of Inconsistent Judgments

6

As discussed above, in reviewing a motion for default judgment, the Court must

7

take the allegations in the complaint as true. TeleVideo Sys., 826 F.2d at 917–18. As

8

such, the Court must take the allegation in the complaint that Manjeet engaged in

9

various forms of infringing conduct as true. (See Compl. ¶¶ 12–13.)

10

Union, on the other hand, has answered the complaint and denied that any

11

infringing conduct occurred. (Answer ¶¶ 11–30.) Union has also asserted a number

12

of affirmative defenses, including that Plaintiff cannot establish authorship or the

13

requisite level of originality for the work in question. (Id. ¶¶ 32–33, 38.) Union

14

further asserts the affirmative defenses of fraud on the copyright office and unclean

15

hands. (Id. ¶¶ 32, 41.)

16

These affirmative defenses would apply equally to Union and Manjeet. For

17

instance, if Union proved that there was a lack of originality and by extension that

18

Plaintiff’s copyright had been improperly granted by the copyright office, then there

19

would be no basis for liability against either defendant. N. Coast Indus. v. Jason

20

Maxwell, Inc., 972 F.2d 1031, 1033 (9th Cir. 1992) (“Originality is the indispensable

21

prerequisite for copyrightability.”). If such a scenario came to pass, it would not be

22

equitable to allow a default judgment to stand against Manjeet. See Vaughn, 2012 WL

23

12893781, at *2 (“[C]ourts find that it would be ‘incongruous and unfair’ to allow a

24

plaintiff to prevail against defaulting defendants on a legal theory later rejected with

25

respect to an answering defendant ‘in the same action.’” (quoting Garamendi, 683

26

F.3d at 1082–83)). While it is unclear whether Union will ultimately prevail on any of

27

its affirmative defenses, the Court finds that the best course of action is to deny the

28

pending motion for default judgment at this time. Plaintiff may refile this motion at

5

1

the conclusion of the proceedings against Union. See Garamendi, 683 F.3d at 1083

2

(noting that district courts should adjudicate defaults after adjudicating the case of

3

answering defendants); see also Guotai USA, Co., Ltd. v. J&Company, LLC, No.

4

216CV06948ODWPLA, 2017 WL 1740014, at *5 (C.D. Cal. May 3, 2017).

5

V.

CONCLUSION

6

For the foregoing reasons, the Court DENIES Plaintiff’s motion for default

7

judgment without prejudice. (ECF No. 17.) Plaintiff may refile its motion at the

8

conclusion of the proceedings against Union.

9
10

IT IS SO ORDERED.

11

May 24, 2017

12
13
14
15

____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

16
17
18
19
20
21
22
23
24
25
26
27
28

6