Park Miller, LLC et al v. Durham Group, Ltd. et al
Filing
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ORDER GRANTING 53 MOTION FOR DEFAULT JUDGMENT by Judge William H. Orrick. (jmdS, COURT STAFF) (Filed on 10/13/2020)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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PARK MILLER, LLC, et al.,
Plaintiffs,
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DURHAM GROUP, LTD., et al.,
Re: Dkt. No. 53
Defendants.
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United States District Court
Northern District of California
ORDER GRANTING MOTION FOR
DEFAULT JUDGMENT
v.
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Case No. 19-cv-04185-WHO
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Plaintiffs (collectively, “Park Miller”) move for default judgment against defendants
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Durham Group, Ltd. (“DGL”) and Durham Commercial Capital Corp. (“DCC”) (collectively, “the
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defendants”) and seek discovery related to damages that they contend is needed to effectuate
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judgment. I find that Park Miller has satisfied the standard for granting default judgment, and its
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Motion is GRANTED. However, Park Miller has not adequately provided the specific discovery
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needed to effectuate judgment, as I previously instructed it to do. In addition, Park Miller has not
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provided the required support for the damages it requests. Accordingly, Park Miller’s request for
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damages is DENIED without prejudice. Park Miller’s request for discovery is GRANTED IN
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PART and DENIED IN PART.
BACKGROUND
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Park Miller filed this action on July 19, 2019 and filed an amended complaint on October
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16, 2019. Dkt. Nos. 1, 19. Defendants moved to dismiss on September 25, 2019, which I granted
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on December 16, 2019. Dkt. Nos. 13, 24. After Park Miller filed another amended complaint,
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defendants again moved to dismiss, which I granted in part and denied in part. Dkt. Nos. 29, 33,
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46.
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Park Miller filed a Motion for Default Judgment on July 27, 2020. Dkt. No. 53 (“Mot.”).
The Clerk entered default against the remaining defendants, DCC and DGL, on May 28, 2020.
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Dkt. No. 51. On July 21, 2020, DCC and DGL’s attorney moved to withdraw. Dkt. No. 52.
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Following a case management conference on August 18, 2020, I granted the motion to withdraw
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and provided Park Miller with guidance on its pending motion for default judgment. See Dkt. No.
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60. I heard Park Miller’s motion for default judgment on September 16, 2020, and again provided
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counsel further guidance regarding its discovery request. Dkt. No. 63. Park Miller filed a
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supplemental brief regarding its Motion for Default Judgment on September 30, 2020. Dkt. No.
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64-1 (“Supp. Mot.”).1
LEGAL STANDARD
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Pursuant to Federal Rule of Civil Procedure 55(b)(2), a district court may enter a final
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judgment in a case following a defendant’s default. Whether to enter a judgment lies within the
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United States District Court
Northern District of California
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court’s discretion. Bd. of Trustees of Laborers Health & Welfare Tr. Fund for N. California v.
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Cazadores Constr., Inc., No. 17-cv-05242-WHO, 2018 WL 986020, at *2 (N.D. Cal. Feb. 20,
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2018). In order to exercise this discretion, the court must first confirm that it has subject matter
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jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy
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of service on the defendant. Id. Once these elements are satisfied, the court turns to the following
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factors (the “Eitel factors”) to determine whether it should grant a default judgment:
(1) the possibility of prejudice to the plaintiff, (2) the merits of
plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4)
the sum of money at stake in the action[,] (5) the possibility of a
dispute concerning material facts [,] (6) whether the default was due
to excusable neglect, and (7) the strong policy underlying the Federal
Rules of Civil Procedure favoring decision on the merits.
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Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).
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DISCUSSION
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I.
MOTION FOR DEFAULT JUDGMENT
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A.
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Park Miller properly served the defendants with the complaint and summons, and the
Procedural Requirements
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defendants subsequently appeared in this case. See Dkt. No. 10. Park Miller asserts that I have
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diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332. Dkt. No. 29 ¶ 22. Defendants
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I find that this motion is suitable for decision without oral argument pursuant to Civil Local Rule
7-1(b) and VACATE the hearing set for October 14, 2020.
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filed multiple motions to dismiss, challenging personal jurisdiction and the substance of the
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complaint. Dkt. Nos. 13, 33. I granted the motions as to personal jurisdiction for some of the
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defendants. Dkt. No. 46. Defendants DGL and DCC did not object to personal or subject-matter
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jurisdiction. See Dkt. No. 33 at 16. Based on these facts, I find that Park Miller has satisfied the
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procedural requirements for default judgment.
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B.
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Park Miller asserts that it will be prejudiced if its Motion is not granted, because it will
Eitel Factors
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otherwise have no remedy. I agree, and find that this factor weighs in favor of granting its
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Motion.
As discussed above, defendants challenged the complaint multiple times. I found that the
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United States District Court
Northern District of California
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“LCCM” plaintiffs adequately stated a claim for promissory fraud, that all plaintiffs had
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adequately stated a claim for negligence and negligent misrepresentation, and that Park Miller had
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stated a claim for interference. Accordingly, as to the remaining claims, the sufficiency of the
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complaint weighs in favor of granting Park Miller’s Motion. For the same reasons, the merits of
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Park Miller’s substantive claims also weighs in favor of granting its Motion.
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As discussed further below, the amount at stake is substantial, and this factor also weighs
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in favor of granting Park Miller’s motion. With regard to a possible dispute of material facts, the
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defendants’ prior motions to dismiss did not raise any dispute, and their failure to further appear
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after my Order on their motion suggests that a dispute of material facts is unlikely. Accordingly,
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this factor weighs in favor of granting Park Miller’s Motion.
Next, the defendants’ default was not due to excusable neglect. Defendants appeared in
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this case and challenged the complaint. According to their attorney, they then indicated that they
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would not further respond to this lawsuit. Dkt. No. 52 at 5. Because the defendants declined to
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further appear in this matter, a decision on the merits is not possible, and the policy favoring
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decision on the merits does not weigh against default.
Taken together, the Eitel factors weigh in favor of granting Park Miller’s Motion.
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II.
DAMAGES REQUESTED
In its supplemental motion, Park Miller provides further information regarding three
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categories of damages sought.
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A.
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Park Miller calculates the damages resulting from breach of each of the promissory notes,
Contract Damages
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including interest after default. See Supp. Mot. 4-6. Based on these assumptions, Park Miller
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correctly calculated that the total unpaid principals on the loans amount to $4,200,000. Based
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upon its statements regarding default, Park Miller calculated the interest rates on the loans from
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default until October 1, 2020, $1,521,666.67.2 Together, the contract damages equal
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$5,721,666,67.
Park Miller provided the underlying notes and a declaration of John Miller, a Principal at
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Park Miller. Dkt. No. 64-3. These documents support Park Miller’s assertions as to the amount of
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United States District Court
Northern District of California
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principal for each note and the interest rates. See id. However, Park Miller provides no
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evidentiary support for its assertions that (i) none of the sums loaned had been repaid as of the
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default, (ii) the defendants defaulted on all of the notes on December 1, 2018, and (iii) as of the
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default, the principal on every note had been transferred to the “Operating Account,” which
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triggered a higher interest rate. Park Miller must provide a declaration certifying that this
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information is true.
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B.
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Park Miller also asserts that it suffered damages as a result of the defendants’ intentional
Tort Damages
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interference with contractual relations and negligent interference with prospective economic
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relations. Supp. Mot. 7. It asserts that it lost eight clients due to these wrongful actions, resulting
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in $1,065,407.49 in damages. Id. at 8. It also lost $60,675.00 as a result of refunding fees to its
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clients associated with the defendants’ investment accounts. Id. In addition, it faces threatened
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lawsuits from former clients as a result of the defendants’ actions in the amount of $5,350,000.00.
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Id.
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In support of these statements, Park Miller again relies upon Miller’s declaration. He
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states that “[t]he lost revenue Park Miller has suffered due to this loss [of eight clients] totals
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Park Miller’s individual calculations are correct; however, the total of these sums equals
$1,521,666.67 and not $1,851,666.67.
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$1,065,407.49.” Dkt. No. 64-3 ¶ 15. This sum is a result of lost revenue of $126,819.48 per year
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for 8.59 years, along with the federal mid-term discount rate of .58%. Id. Miller also affirms that
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Plaintiffs lost $60,675.00 in lost or refunded fees to clients. Id. ¶ 16.
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Finally, Miller asserts that Park Miller had contracts with six clients that invested
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$5,350,000 in “similar promissory notes” to the contracts at issue here. Id. ¶ 10. He states that
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“[t]hese clients either are or are threatening to seek recovery from Park Miller for their losses, for
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which Park Miller is entitled to indemnity.” Id. ¶ 17.
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“The moving party has the burden to ‘prove up’ the amount of damages” requested in a
default judgment. Frazier v. Am. Credit Resolution, Inc., No. 18-CV-07729-TSH, 2019 WL
5310718, at *8 (N.D. Cal. Oct. 21, 2019); see also Cent. California IBEW/NECA Pension Tr. v.
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United States District Court
Northern District of California
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Ozzimo Elec., Inc., No. C 13-03800 JSW, 2015 WL 1883906, at *2 (N.D. Cal. Apr. 22, 2015)
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(“To recover damages after securing a default judgment, a plaintiff must prove the relief it seeks
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through testimony or written affidavit.”). Park Miller’s short assertions as to its tort damages do
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not satisfy this burden. In order to justify an award of such damages, Park Miller must provide
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evidentiary support for its statements that it lost clients, refunded fees to existing clients, and faces
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lawsuits from clients stemming from the defendants’ wrongful conduct. General assertions of
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total damages will not suffice; Park Miller must explain how each amount was calculated, provide
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evidentiary support for its losses, and provide support for its contention that these losses resulted
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from the defendants’ conduct as alleged in the complaint. In addition, Park Miller must provide
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further information regarding the lawsuits that it faces and why damages resulting from such
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lawsuits would not run afoul of the election of remedies doctrine.
Attorneys’ Fees and Costs
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C.
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Finally, Park Miller asserts that it has incurred $131,937.50 in attorneys’ fees and
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$4,577.80 in costs in this action. Supp. Mot. 8. In support of these assertions, it provides a
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declaration of its attorney, Alexandra Tomp. Dkt. No. 64-2. Tomp asserts only that “Plaintiffs
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have incurred $ 131,937.50 of attorney’s fees to date and have paid $4,577.80 in court costs to
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date,” but provides no further break-down of these fees and costs. Id. ¶ 11. In order to recover
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these fees, Park Miller must provide a legal basis for the attorneys’ fees and costs, as well as
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detailed information regarding this request, including what costs were incurred, attorney billing
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rates, and the hours worked on particular tasks for this matter. Mountz, Inc. v. Ne. Indus. Bolting
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& Torque, LLC, No. 15-CV-04538-JD (MEJ), 2017 WL 780585, at *3 (N.D. Cal. Jan. 27, 2017),
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report and recommendation adopted, No. 3:15-CV-04538-JD, 2017 WL 766598 (N.D. Cal. Feb.
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28, 2017) (“To allow the undersigned to assess whether the number of hours billed is reasonable,
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Plaintiff must submit detailed records justifying the hours that have been expended”); Operating
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Engineers' Health & Welfare Tr. Fund for N. California v. Breneman, Inc., No. 17-CV-05172-
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EDL, 2018 WL 5099250, at *8 (N.D. Cal. Aug. 15, 2018), report and recommendation adopted,
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No. C 17-CV-05172 WHA, 2018 WL 6822624 (N.D. Cal. Oct. 9, 2018) (“The party requesting
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fees must provide detailed time records documenting the tasks completed and the time spent”).
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United States District Court
Northern District of California
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III.
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REQUEST FOR DISCOVERY
In my August 18 Order, I stated that “I am particularly interested in knowing exactly what
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discovery plaintiffs believe is necessary prior to presenting the court with a specific form of
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judgment that is supported by sufficient evidence.” Dkt. No. 60 at 2. Park Miller requests
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discovery related to punitive damages, as well as to DGL and DCC’s assertions that they are
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insolvent. Mot. 3. After I instructed Park Miller to provide further detailed discovery requests, it
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did so in its supplemental brief. See Dkt. No. 64-1. However, the requested discovery is far from
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narrowly tailored. It includes 50 interrogatories and 71 requests for production of documents,
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which request broad information such as the identity of all of the defendants’ employees for the
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past ten years, all financial records for the past ten years, and all documents related to
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communications that the defendants had with any person affiliated with 1-800 SOLAR. See id.
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Park Miller also seeks to subpoena Craig McGrain and includes 47 document requests. Id.
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Park Miller’s discovery requests are overbroad and its request for discovery is DENIED IN
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PART. The cases that it cites reflect narrowly-tailored discovery requests that differ from the
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requests here. See Oakley, Inc. v. Moda Collection, LLC, No. SACV16160JLSJCGX, 2016 WL
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7495835, at *7 (C.D. Cal. June 9, 2016) (granting plaintiff discovery into profits made as a result
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of infringing products); Sugarfina, Inc. v. Sweitzer LLC, No. 217CV07950ODWJCX, 2018 WL
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6265074, at *10 (C.D. Cal. Mar. 8, 2018) (same); Tech. LED Intellectual Prop., LLC v. Revogi,
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LLC, No. 18-CV-03827-JSC, 2019 WL 2716610, at *6 (N.D. Cal. June 27, 2019) (permitting
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limited discovery regarding sales information and denying request for enhanced damages).
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When Park Miller responds to this Order, it should resubmit proposed limited discovery in
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support of the specific form of judgment it seeks. I am inclined to allow Park Miller’s request to
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subpoena Craig McGrain for deposition with no more than five document requests that are
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narrowly tailored to the defendants’ financial state and/or its request for punitive damages, and to
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propound up to five interrogatories and five document requests to DGL and DCC, similarly
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narrowly tailored. If Park Miller asserts that more discovery than that is required, it must explain
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why and limit it substantially from what was attached to the subject motion.
CONCLUSION
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United States District Court
Northern District of California
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For the above reasons, Park Miller’s Motion for Default Judgment is GRANTED.
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However, in order to obtain a judgment in the amount sought, Park Miller must provide further
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information, as described above, to support its request for damages and attorneys’ fees. Park
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Miller’s request for discovery is GRANTED IN PART. Park Miller may request discovery
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consistent with the views expressed in the penultimate paragraph of this Order.
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IT IS SO ORDERED.
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Dated: October 13, 2020
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William H. Orrick
United States District Judge
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