Facebook, Inc. v. Power Ventures, Inc.

Filing 470

Order by Judge Lucy H. Koh Granting 446 Motion for Attorney Fees; Granting in Part and Denying in Part 447 Motion for Sanctions. (lhklc2S, COURT STAFF) (Filed on 8/8/2017)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 12 FACEBOOK, INC., Plaintiff, 13 ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS v. 14 15 Case No. 08-CV-05780-LHK POWER VENTURES, INC., et al., Re: Dkt. Nos. 446, 447 Defendants. 16 17 18 On May 2, 2017, the Court entered judgment in the instant case. On May 16, 2017, 19 Plaintiff Facebook, Inc. (“Facebook”) filed a motion for attorney’s fees and a motion for contempt 20 sanctions against Defendants Steve Vachani (“Vachani”) and Power Ventures, Inc. (“Power”). 21 ECF Nos. 446–47. Defendants did not oppose either of these motions. Having considered the 22 motions, the relevant law, and the record in this case, the Court hereby GRANTS Facebook’s 23 motion for attorney’s fees and GRANTS IN PART Facebook’s motion for contempt sanctions 24 against Defendants. 25 I. 26 27 28 BACKGROUND A. Factual Background 1 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 Facebook owns and operates the social networking website located at facebook.com. First 2 Amended Complaint (“FAC”) ¶ 2. Power Ventures (“Power”) is a corporation incorporated in the 3 Cayman Islands and doing business in California. Answer ¶ 10. At the times relevant to the instant 4 case, Power has operated the website www.power.com, which offered to integrate users’ various 5 social media accounts into a single experience. FAC ¶ 5; Answer ¶ 5. Vachani is the Chief 6 Executive Officer of power.com. Answer ¶ 11. In December 2008, Facebook brought against Defendants this action, which alleges 8 violations of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 9 (“CANSPAM Act”), 15 U.S.C § 7701; the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. 10 § 1030; California Penal Code § 502; and the Digital Millennium Copyright Act (“DMCA”), 17 11 United States District Court Northern District of California 7 U.S.C. § 1201; copyright infringement under 17 U.S.C. § 101; trademark infringement under 15 12 U.S.C. §§ 1114 and 1125(a) and under California law; and violations of California Business and 13 Professions Code Section 17200. ECF Nos. 1, 9. Facebook complained that Defendants employed 14 Facebook’s proprietary data without its permission by inducing Facebook users to provide their 15 login information and then using that information to “scrape” Facebook’s proprietary material. 16 FAC ¶¶ 49, 50, 52. Defendants then displayed Facebook’s material on power.com. FAC ¶ 52. 17 Facebook asserts that it never gave Defendants permission to use its material in this way. FAC ¶ 18 54. 19 Facebook also accuses Defendants of sending unsolicited and deceptive email messages to 20 Facebook users. FAC ¶¶ 65-69. To launch their site, Defendants promised power.com users a 21 chance to win $100 if they invited and signed up the most new users to Defendants’ site. FAC ¶ 22 65. Defendants provided to their users a list of the users’ Facebook friends from which the users 23 could choose people to whom to send the invitation. FAC ¶ 66. Power.com sent commercial 24 emails to those friends that included on the “from” line a “@facebookmail.com” address. FAC ¶¶ 25 66, 68. The content of the message included a line that the message was from “The Facebook 26 Team.” FAC ¶ 69, 70. Facebook contends that it never gave permission to send these messages 27 28 2 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 and that the emails were deceptive because they “do not properly identify the initiators of the 2 messages, nor do they provide clear or conspicuous notice that the messages are advertisements 3 for” power.com. FAC ¶ 71. 4 B. Procedural History 5 On December 30, 2008, Facebook filed the complaint in the instant case. ECF No. 1. On 6 January 13, 2009, Facebook filed a First Amended Complaint. ECF No. 9. On February 18, 2011, 7 Judge Ware granted the parties’ stipulation to dismiss Facebook’s DMCA claim, copyright and 8 trademark infringement claims, and claims for violations of California Business and Professions 9 Code Section 17200. ECF No. 97. On May 9, 2011, Defendants moved for summary judgment on Facebook’s CFAA, Section 502, and CAN-SPAM Act claims. ECF No. 98. On November 17, 11 United States District Court Northern District of California 10 2011, Facebook moved for summary judgment on Facebook’s § 502 and CFAA claims. ECF No. 12 214 (“§ 502/CFAA Motion”). On November 18, 2011, Facebook moved for summary judgment 13 on Facebook’s CAN-SPAM Act claim. ECF No. 215. On February 16, 2012, Judge Ware issued 14 an order denying Defendants’ motion for summary judgment and granting summary judgment in 15 Facebook’s favor as to Facebook’s § 502, CFAA, and CAN-SPAM Act claims. ECF No. 275 16 (“February 16, 2012 order”). 17 In the February 16, 2012 order, Judge Ware requested additional briefing regarding 18 Vachani’s individual liability and the amount of damages Facebook should receive in light of the 19 February 16, 2012 order. Id. at 19. On April 17, 2012, Facebook filed its supplemental brief 20 regarding damages and the liability of Vachani. ECF No. 299 (“Facebook Damages/Liability 21 Brief”). On August 15, 2012, Vachani submitted a supplemental brief regarding damages and 22 Vachani’s personal liability. ECF No. 317 (“Vachani Damages/Liability Brief”). 23 On June 4, 2012, the attorneys representing Vachani and Power moved to withdraw as 24 counsel. ECF Nos. 302, 303. On July 2, 2012, Judge Ware granted the motions to withdraw. ECF 25 No. 306. In the order granting the withdrawal motions, Judge Ware required Vachani and Power to 26 file Notices of Identification of Substitute Counsel no later than July 17, 2012. Id. Judge Ware 27 28 3 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 noted that although Vachani could proceed pro se, Power had to be represented by a member of 2 the bar pursuant to Civil Local Rule 3-9(b). Civil L.R. 3-9(b) (“A corporation, unincorporated 3 association, partnership or other such entity may appear only through a member of the bar of this 4 Court.”). Judge Ware cautioned Defendants that a failure to file timely Notices of Identification of 5 Substitute Counsel may result in default. Id. 6 On July 19, 2012, after neither Vachani nor Power had filed a Notice of Identification of 7 Substitute Counsel, Judge Ware ordered both parties to appear on August 6, 2012 to respond to an 8 Order to Show Cause regarding Defendants’ failure to obtain counsel. ECF No. 308. On August 6, 9 2012, the parties appeared for the hearing, and on August 8, 2012, Judge Ware issued an order regarding Defendants’ failure to obtain counsel (“August 8, 2012 order”). ECF No. 313. Because 11 United States District Court Northern District of California 10 Power had failed to identify replacement counsel, Judge Ware found good cause to strike Power’s 12 answer to Facebook’s complaint and enter default against Power. Id. Judge Ware permitted 13 Vachani a short extension to find new counsel, which was conditioned on Vachani’s immediate 14 filing of a Notice of Self-Representation. Id. The Clerk entered default against Power on August 9, 15 2012. ECF No. 314. 16 On August 15, 2012, new counsel filed a Notice of Appearance on behalf of Power. ECF 17 No. 316. That same day, Power moved for leave to file a motion for reconsideration of Judge 18 Ware’s August 8 order requiring entry of default against Power. ECF No. 318. Judge Ware gave 19 Power leave to file a motion for reconsideration on August 21, 2012. ECF No. 320. On August 23, 20 2012, Power filed its motion for reconsideration. ECF No. 321. 21 On August 27, 2012, Facebook filed its response and simultaneously requested entry of 22 default judgment against Power. ECF No. 322. On August 27, 2012, Defendants provided notice 23 that both Power and Vachani had filed for bankruptcy. ECF Nos. 323, 324. Noting that pursuant to 24 11 U.S.C. § 362(a)(1), a voluntary petition for bankruptcy operates as an automatic stay of any 25 judicial actions involving the petitioners, Judge Ware stayed the proceedings and administratively 26 closed the case on August 29, 2012. ECF No. 325. In the same order, Judge Ware denied as 27 28 4 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 premature Power’s motion for reconsideration of the August 8 order requiring entry of default. Id. 2 On March 20, 2013, Facebook notified the Court that the Bankruptcy Court had dismissed 3 Power’s bankruptcy case and had granted Facebook’s request for relief from the automatic stay in 4 Vachani’s bankruptcy case. ECF No. 327. Facebook sought to reopen the instant case. Id. 5 Facebook also sought reassignment to a new judge because on August 31, 2012, while the 6 automatic stay was in effect, Judge Ware resigned from the bench. Id. On April 8, 2013, the 7 undersigned judge, as the Duty Judge at the time Facebook filed its motion, granted Facebook’s 8 request. ECF No. 328. The undersigned judge ordered that the stay be lifted, the case be reopened, 9 and the case be reassigned. Id. The case then was reassigned to the undersigned judge. ECF No. 10 United States District Court Northern District of California 11 329. On April 25, 2013, Vachani moved for clarification of Judge Ware’s February 16, 2012 12 order regarding whether Vachani’s liability had been determined in the February 16, 2012 order. 13 ECF No. 332. On April 29, 2013, Facebook filed a case management statement in which Facebook 14 again requested that default judgment be entered against Power. ECF No. 333. On the same day, 15 Defendants filed a consolidated case management statement in which Power again sought to set 16 aside default. ECF No. 334. Defendants also stated their intent to request leave to file a motion for 17 reconsideration of the February 16, 2012 order. Id. In Facebook’s and Defendants’ respective case 18 management statements, the parties acknowledged that Vachani’s liability and the issues of 19 damages and injunctive relief still needed to be addressed. ECF No. 333, 334. 20 On May 2, 2013, following a case management conference, the Court issued a case 21 management order. ECF No. 340. In that order, the Court clarified that the February 16, 2012 22 order did not decide Vachani’s liability. Id. The Court granted Power’s request to set aside default 23 and denied Facebook’s request for entry of default judgment against Power. Id. The Court also set 24 a briefing schedule for the damages and injunctive relief issues. Id. The Court set a hearing date of 25 September 26, 2013 to consider Vachani’s liability and the issue of remedies. Id. 26 27 28 On August 1, 2013, Power filed its request for leave to file a motion to reconsider Judge 5 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 Ware’s February 16, 2012 order. ECF No. 353. On August 1, 2013, Facebook filed its 2 supplemental memorandum in support of its request for injunctive relief. ECF No. 354 (“Facebook 3 Injunction Brief”). On September 25, 2013, Facebook filed a supplemental motion for a 4 permanent injunction. ECF No. 369. 5 On August 7, 2013, Magistrate Judge Spero issued an order requiring Vachani to pay Facebook $39,796.73 as a discovery sanction because of Vachani’s noncompliance during a Rule 7 30(b)(6) deposition. ECF No. 356. Specifically, Judge Spero found that Vachani “was not 8 prepared for his Rule 30(b)(6) deposition, read from [a prepared] declaration, and was 9 ‘argumentative’ and ‘evasive.’” Id. at 5. In the same order, Judge Spero noted that Defendants had 10 committed another discovery violation by failing to timely disclose relevant emails. Id. Following 11 United States District Court Northern District of California 6 Judge Spero’s order, Vachani immediately appealed the discovery sanction to the Ninth Circuit on 12 September 6, 2013. ECF No. 360. Despite the appeal, this Court retained jurisdiction over aspects 13 of the case unrelated to the discovery sanctions. 14 On September 25, 2013, the Court filed an Order Denying Leave to File Motion for 15 Reconsideration, Finding Defendant Steven Vachani Liable as a Matter of Law, and Granting 16 Damages and Permanent Injunctive Relief. ECF No. 373. In the order, the Court first found that 17 Defendants had not identified any new material facts, changes in law, or issues that Judge Ware 18 manifestly failed to consider in his February 16, 2012 order. The Court therefore denied leave to 19 file a motion for reconsideration of the February 16, 2012 order. Id. at 15. The Court also found 20 that because Vachani directed and authorized the activities at issue, Vachani was personally liable 21 for violations of the CAN-SPAM Act, CFAA, and California Penal Code § 502 along with Power. 22 Id. at 17. 23 The Court then addressed the issue of damages for the first time. The Court noted that 24 under the CAN-SPAM Act, Facebook was entitled to elect between statutory damages and 25 monetary damages in the amount of actual losses. Id. at 22. Facebook elected to recover statutory 26 damages, and the Court ordered Defendants to pay $50 for each of 60,627 spam messages sent, for 27 28 6 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 a total of $3,031,350. Id. at 25–26. The Court then held that Facebook was entitled to 2 compensatory damages under the CFAA. The Court held that “Facebook has established through 3 undisputed testimony that it expended $80,543 to investigate Defendants’ actions and for outside 4 legal services in connection with the Defendants’ actions.” Id. at 26. 5 Finally, the Court issued a permanent injunction against Defendants. The Court found that 6 each of the applicable four factors – (1) irreparable injury, (2) no adequate remedy at law, (3) 7 balance of hardships, and (4) the public interest – favored granting a permanent injunction. Id. at 8 27 (citing eBay v. MercExchange, L.L.C., 547 U.S. 388, 390 (2006)). In doing so, the Court 9 considered Defendants’ CAN-SPAM Act violations as well as Defendants’ violations of the CFAA and § 502. The Court granted a permanent injunction that enjoined Defendants from (1) 11 United States District Court Northern District of California 10 making any misleading statement in advertising, including statements that Facebook had 12 authorized a particular communication; (2) accessing Facebook’s website or servers “for any 13 purpose” without Facebook’s prior permission; (3) using any data obtained from the unlawful 14 conduct; and (4) developing or using any software to commit the illegal acts alleged in the 15 complaint. Id. at 33–34. The injunction also required Defendants to destroy all the software at 16 issue, destroy all data obtained from Facebook with the illegal software, and take measures to 17 ensure that the injunction was obeyed. Id. at 34. The Court entered judgment against Defendants 18 the same day, September 25, 2013. ECF No. 374. 19 On October 23, 2013, Defendants appealed the Court’s grant of summary judgment. ECF 20 No. 379. On November 21, 2013, the Ninth Circuit dismissed Vachani’s appeal of Magistrate 21 Judge Spero’s August 7, 2013 order granting discovery sanctions because the August 7, 2013 22 order was not final or appealable. ECF No. 386. 23 On December 9, 2016, the Ninth Circuit affirmed in part and reversed in part this Court’s 24 grant of summary judgment. ECF No. 401. The Ninth Circuit reversed the Court’s finding that 25 Defendants had violated the CAN-SPAM Act because the Ninth Circuit found that Facebook 26 initiated the email messages at issue and that the sender of the messages was not materially 27 28 7 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 misleading within the meaning of the CAN-SPAM Act. Id. at 9–13. The Ninth Circuit then held 2 that Defendants had violated CFAA, but only for the period “after receiving written notification 3 from Facebook on December 1, 2008.” Id. at 19. The Ninth Circuit held that by sending the 4 December 1, 2008 notification, Facebook revoked Defendants’ permission to use Facebook’s 5 computers. Id. With respect to damages, the Ninth Circuit held that “[i]t is undisputed that Facebook 6 7 employees spent many hours, totaling more than $5,000 in costs, analyzing, investigating, and 8 responding to Power’s actions.” Id. at 14. However, in light of the Ninth Circuit’s finding that the 9 violation began only after Facebook sent its cease and desist letter on December 1, 2008, the Ninth Circuit remanded to “calculate damages only for the period after Power received the cease and 11 United States District Court Northern District of California 10 desist letter . . . .” Id. at 22. After remand, the Court initially scheduled a case management conference for January 11, 12 13 2017. However, Defendants filed a motion requesting a continuance of the case management 14 conference due to “ongoing personal considerations.” ECF No. 405. The Court granted this 15 motion and continued the case management conference to January 25, 2017. ECF No. 406. 16 Facebook then filed a motion requesting a continuance due to scheduling problems with the 17 January 25, 2017 date. ECF No. 407. The Court therefore continued the case management 18 conference to February 15, 2017. ECF No. 408. The Court held a case management conference on February 15, 2017. At the case 19 20 management conference, the Court set a briefing schedule for the remanded issue of remedies. 21 ECF No. 410. The Court also ordered Defendants to pay by March 15, 2017 the $39,796.73 22 discovery sanction that the Ninth Circuit affirmed.1 23 Pursuant to the briefing schedule, Facebook filed its supplemental remedies brief on March 24 8, 2017. ECF No. 416. On March 9, 2017, Defendants filed a petition for certiorari with the United 25 26 27 28 1 Although the Ninth Circuit dismissed Vachani’s earlier appeal of Magistrate Judge Spero’s August 7, 2013 order granting discovery sanctions, ECF No. 386, the Ninth Circuit later considered the issue of discovery sanctions in its December 9, 2016 order, ECF No. 401. 8 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 States Supreme Court. ECF No. 418. Defendants failed to pay the $39,796.73 discovery sanction 2 by the March 15, 2017 deadline and still have not done so. Subsequently, on March 28, 2017, 3 Vachani filed an “urgent motion” requesting that the Court stay all district court proceedings for 4 90 days or grant a 45–60 day extension because Vachani had been unable to contact Power’s 5 attorney for over a month. ECF No. 420. Vachani stated that he would likely be forced to find new 6 counsel and that it would “truly take some time to properly regroup and get new counsel up to 7 speed.” Id. at 3. The same day, Vachani filed a letter with the Court stating that although he has 8 not paid the $39,796.73 discovery sanction, Vachani is “in compliance with this court’s order” 9 because he is “in an active bankruptcy proceeding.” ECF No. 421. 10 On March 29, 2017, the Court denied Vachani’s motion for a stay and for an extension of United States District Court Northern District of California 11 time. ECF No. 422. The next day, despite Vachani’s claim that he had been unable to contact 12 Power’s attorney for 30 days and that an extension was necessary in light of a “truly exceptional 13 emergency,” ECF No. 420 at 2, Power’s attorney filed a 20 page brief addressing the issue of 14 remedies, ECF No. 423. Subsequently, on April 17, 2017, Vachani filed yet another motion to stay 15 pending resolution of the writ of certiorari to the United States Supreme Court. ECF No. 434. 16 On May 2, 2017, the Court ruled on the remanded issue of damages. ECF No. 435. In 17 doing so, the Court noted that despite the Court’s explicit warning, Defendants had raised several 18 issues that the Ninth Circuit had not reversed on appeal. For example, although the Ninth Circuit 19 had held that “Facebook expressly rescinded [its] permission when Facebook issued its written 20 cease and desist letter to Power on December 1, 2008,” Defendants nevertheless argued 21 extensively that Facebook did not actually deny Defendants permission to use Facebook’s website 22 until December 26, 2008. Id. at 14. 23 In ruling on the issue of remedies, the Court found that Facebook was entitled to 24 $79,640.50 in compensatory damages. This figure did not include the $3,031,350 in CAN-SPAM 25 damages that were reversed by the Ninth Circuit. This figure also did not include $902.50 in 26 damages incurred on or before December 1, 2008, when Facebook sent the cease and desist letter. 27 28 9 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 Instead, this figure reflected only the damages incurred by Facebook after December 1, 2008 in 2 responding to Defendants’ CFAA violation. 3 The Court also issued a permanent injunction against Defendants that was narrowly tailored to Defendants’ CFAA violation. The injunction prohibited Defendants and anyone in 5 participation with Defendants from “[a]ccessing or using, or directing, aiding, facilitating, causing, 6 or conspiring with others to use or access the Facebook website or servers for any commercial 7 purpose, without Facebook’s prior permission”; from “using any data . . . obtained as a result of 8 the unlawful conduct”; or from developing or using “any software that allows the user to engage in 9 the conduct found to be unlawful.” Id. at 28–29. The injunction also required Defendants and 10 those in participation with Defendants to “destroy any software, script(s) or code designed to 11 United States District Court Northern District of California 4 access” Facebook’s services and to “destroy Facebook data and/or information obtained from 12 Facebook or Facebook’s users, or anything derived from such data and/or information.” Id. at 29. 13 Finally, the injunction required Defendants within three days to “affirm that they already have 14 notified, or shall notify, their current and former officers, agents, servants, employees, successors, 15 and assigns, and any persons acting in concert or participation with them of this permanent 16 injunction” and within seven days to “certify in writing, under penalty of perjury, that they have 17 complied with the provision of this order, and state how notification of this permanent injunction . 18 . . was accomplished, including the identities of all email accounts (if any) used for notification 19 purposes.” Id. at 29–30. 20 Finally, the Court again ordered Defendants to pay the $39,796.73 discovery sanction and 21 denied Defendants’ May 1, 2017 motion to stay. Id. at 31. The Court issued a judgment on May 2, 22 2017. ECF No. 437. 23 On May 9, 2017, Defendants filed a letter representing compliance with the permanent 24 injunction. ECF No. 439. According to Facebook’s motion for contempt, Facebook informed 25 Vachani that it did not believe that the May 9, 2017 letter was sufficient to comply with the 26 permanent injunction. In response, on May 11, 2017 Defendants filed a new letter “recalling and 27 28 10 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 rescinding” the May 9, 2017 letter. ECF No. 440. In the May 11, 2017 letter, Vachani stated that 2 “[a]s defendants have different requirements, different counsel, and different interests, Defendants 3 intend to file revised letters of compliances [sic] or responses to court separately.” Id. at 1. 4 Vachani and Power then filed separate updated letters on May 12, 2017. ECF Nos. 441–42. The 5 letter sent on behalf of Power, which Vachani drafted and signed, stated that Power has “abided by 6 all the provisions of this court’s order to the best of its abilities” and that “Power has no reasons to 7 believe that it has not fully complied with all provisions.” ECF No. 442. Vachani’s letter on his 8 own behalf claimed that Sections 2 through 4 of the permanent injunction did not apply to 9 Vachani. Id. Further details of the May 11, 2017 letters are discussed below. 10 On May 16, 2017, Facebook filed the instant motion for attorney’s fees and motion for United States District Court Northern District of California 11 contempt sanctions. ECF Nos. 446–47. Defendants’ oppositions to these motions were due May 12 30, 2017. Id. On May 31, 2017, the day after these oppositions were due, Power filed an ex parte 13 application for extensions of time to file an opposition. ECF No. 449. Power stated that this 14 extension was justified based on Power’s counsel’s “uncharacteristic and prohibitively 15 burdensome workload . . . .” Id. at 2. The Court denied this ex parte application on May 31, 2017. 16 ECF No. 450. 17 On June 1, 2017, Defendants appealed the Court’s May 2, 2017 judgment to the Ninth 18 Circuit. ECF No. 451. Defendants did not move to stay execution of the judgment under Federal 19 Rule of Civil Procedure 62(b). Defendants also never timely opposed Facebook’s motion for 20 attorney’s fees or Facebook’s motion for contempt sanctions. Facebook filed reply briefs for both 21 motions on June 6, 2017. ECF Nos. 454–55. 22 On July 14, 2017, Defendants filed a “recertification of compliance.” ECF No. 462. This 23 “recertification of compliance” was essentially an untimely opposition to Facebook’s motion for 24 contempt sanctions. The details of the July 14, 2017 letter are discussed below. 25 26 27 28 On July 28, 2017, the Court ordered Facebook to file detailed billing records and further justification of its billing rates in support of Facebook’s motion for attorney’s fees. ECF No. 464. 11 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 Facebook filed a supplemental declaration and submitted detailed billing records for in camera 2 review on August 3, 2017. ECF No. 467. 3 II. DISCUSSION A. Motion for Attorney’s Fees 4 5 Facebook requests $145,028.40 in attorney’s fees pursuant to California Penal Code 6 § 502(e)(2).2 California Penal Code § 502(e)(2) states that “[i]n any action brought pursuant to this 7 subdivision the court may award reasonable attorney's fees.” This provision allows prevailing 8 Plaintiffs to recover attorney’s fees for actions brought under § 502(e). See Swearingen v. HAAS 9 Automation, Inc., 2010 WL 1495204, *2 (S.D. Cal. Apr. 14, 2010) (“[A]n examination of the history of § 502 reveals that it was the intention of the California legislature to allow only 11 United States District Court Northern District of California 10 prevailing plaintiffs to recover attorney’s fees.”). Facebook brought this action under § 502(e) and 12 is a prevailing plaintiff for the purposes of determining attorney’s fees. See California Code of 13 Civil Procedure § 1032(a)(4) (“’Prevailing party’ includes the party with a net monetary recovery . 14 . . .”); see also Farrar v. Hobby, 506 U.S. 103, 109 (1992) (“Under our generous formulation of 15 the term, plaintiffs may be considered prevailing parties for attorney’s fees purposes if they 16 succeed on any significant issue in litigation which achieves some of the benefit the parties sought 17 in bringing suit.”) (internal quotation marks omitted). 18 As the prevailing party, Facebook is entitled to reasonable attorney’s fees under California 19 Penal Code § 502(e)(2). Although Facebook is entitled to all reasonable attorney’s fees incurred in 20 this action, Facebook requests only a small subset of those attorney’s fees. Specifically, Facebook 21 requests only “a narrow recovery encompassing its attorneys’ and paralegals’ preparation for post- 22 remand proceedings” through April 2017. ECF No. 446 at 4. The instant motion does not request 23 attorney’s fees for any other work performed in the eight years between the filing of the complaint 24 25 26 27 28 2 Facebook’s original motion on May 16, 2017 sought $146,667.84 in attorney’s fees. ECF No. 446. However, in Facebook’s August 3, 2017 response to the Court’s order regarding billing records, Facebook stated that it had decided to “remove[] $1,639.44 of attorneys’ fees related to services performed in response to Defendants’ Supreme Court petition.” ECF No. 467, at 1. Thus, Facebook now requests only $145,028.40 in attorney’s fees. 12 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS The reasonableness of the requested rates is strongly supported by the fact that these are 1 2 the rates that counsel billed to Facebook and that Facebook has already paid. See ECF No. 446-1, 3 at 1 (“The tables below reflect the amount of legal fees expended by Facebook, Inc. specifically 4 related to services billed by Orrick, Herrington & Sutcliffe LLP after the Ninth Circuit’s 5 December 2016 remand.”); ECF No. 446-2, at 1 (“The tables below reflect the amount of legal 6 fees expended by Facebook, Inc. specifically related to services billed by Goodwin Procter LLP 7 after the Ninth Circuit’s December 2016 remand.”). Thus, the fact that this is the rate that counsel 8 actually charged Facebook “provides a market-based cross-check” for the reasonableness of the 9 fees. Nitsch v. DreamWorks Animation SKG Inc., 2017 WL 2423161, at *9 (N.D. Cal. June 5, 10 United States District Court Northern District of California 11 2017). Additionally, in the instant case, Magistrate Judge Spero previously evaluated similar 12 hourly rates and found them to be reasonable. See ECF No. 356, at 4 (“[T]he Court has reviewed 13 the hours and rates in detail and finds them to be reasonable.”); see also ECF No. 347, at 4 14 (detailing hourly rates found reasonable). Furthermore, the Court has previously approved hourly 15 rates in a similar range for attorneys of similar experience. Specifically, in Nitsch v. DreamWorks 16 Animation SKG Inc., 2017 WL 2423161, at *9 (N.D. Cal. June 5, 2017), the Court approved rates 17 of “$870 and $1,200 per hour” for lead attorneys, rates of “$275 to $750” for associates, and rates 18 of $290 or lower for paralegals. Similarly, in In re High-Tech Employee Antitrust Litig., 2015 WL 19 5158730, at *9 (N.D. Cal. Sept. 2, 2015), the Court approved rates of “about $490 to $975” for 20 partners, rates of “$310 to $800” for non-partner attorneys, and rates of “about $190 to $430” for 21 support staff including paralegals. The rates for which Facebook seeks compensation in the instant 22 case are comparable to these rates. See ECF Nos. 446-1 & 446-2 (describing hourly rates for 23 partners, associates, and paralegals). 24 Additionally, having reviewed the declarations accompanying the motion for attorney’s 25 fees, the Court finds that the hours expended are reasonable in light of the work required for post- 26 remand proceedings. This work included preparing a joint case management statement in advance 27 28 14 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS of a case management conference, ECF No. 409; attending the case management conference, ECF 2 No. 412; filing an initial brief and a reply brief on the issue of remedies in light of the Ninth 3 Circuit’s remand, ECF Nos. 416 & 424; engaging in extensive correspondence with Defendants; 4 filing a March 20, 2017 letter informing the Court of Defendants’ failure to pay the discovery 5 sanction, ECF No. 419; and opposing Defendants’ motion to stay pending resolution of 6 Defendants’ petition for writ of certiorari, ECF No. 429. As discussed above, the reasonableness 7 of the hours worked is strongly supported by the fact that Facebook is requesting only a small 8 fraction of the total attorney’s fees to which Facebook is entitled as a prevailing party. The 9 reasonableness of the fees is also strongly supported by the fact that the requested fees are fees 10 that counsel actually charged Facebook, which “provides a market-based cross-check” for the 11 United States District Court Northern District of California 1 reasonableness of the fees. Nitsch v. DreamWorks Animation SKG Inc., 2017 WL 2423161, at *9. 12 Thus, the Court finds that Facebook’s request of $145,028.40 in attorney’s fees is 13 reasonable and that Facebook is entitled to these fees because Facebook is the prevailing party in 14 the instant case pursuant to California Penal Code § 502(e)(2). For these reasons, the Court 15 GRANTS Facebook’s motion for attorney’s fees. The Court finds that Vachani and Power are 16 jointly and severally liable for the $145,028.40 attorney’s fee award. 17 18 B. Motion for Contempt Sanctions Civil contempt “consists of a party’s disobedience to a specific and definite court order by 19 failure to take all reasonable steps within the party's power to comply.” Reno Air Racing Ass’n., 20 Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006) (internal quotation marks and citation 21 omitted). “The contempt need not be willful, and there is no good faith exception to the 22 requirement of obedience to a court order.” In re Dual-Deck Video Cassette Recorder Antitrust 23 Litig., 10 F.3d 693, 695 (9th Cir.1993) (internal quotation marks and citation omitted). However, 24 contempt sanctions are not warranted where the alleged contemnor's actions appear to be based 25 upon a reasonable interpretation of the court's order. Id. Substantial compliance also is a defense to 26 civil contempt—“[i]f a violating party has taken all reasonable steps to comply with the court 27 28 15 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS order, technical or inadvertent violations of the order will not support a finding of civil contempt.” 2 Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir.1986) (internal quotation marks 3 and citation omitted). “The party alleging civil contempt must demonstrate that the alleged 4 contemnor violated the court’s order by clear and convincing evidence.” Dual-Deck, 10 F.3d at 5 695 (internal quotation marks and citation omitted). Thus, the party alleging civil contempt must 6 demonstrate by clear and convincing evidence that (1) the contemnor violated a court order, (2) 7 the noncompliance was more than technical or de minimis, and (3) the contemnor’s conduct was 8 not the product of a good faith or reasonable interpretation of the violated order. See United States 9 v. Bright, 596 F.3d 683, 694 (9th Cir. 2010) (outlining these factors); Inst. of Cetacean Research v. 10 Sea Shepherd Conservation Society, 774 F.3d 935, 945 (9th Cir. 2014) (same). “Sanctions for civil 11 United States District Court Northern District of California 1 contempt may be imposed to coerce obedience to a court order, or to compensate the party 12 pursuing the contempt action for injuries resulting from the contemptuous behavior, or both.” Gen. 13 Signal Corp., 787 F.2d at 1380. 14 In the instant case, Facebook asks the Court to find both Power and Vachani in contempt 15 for two reasons. First, Facebook argues that Power and Vachani have failed to comply with the 16 Court’s February 15, 2017 order requiring Power to pay $39,796.73 in discovery sanctions by 17 March 15, 2017. ECF No. 447 at 1. Second, Facebook argues that Power and Vachani have not 18 fully complied with the Court’s May 2, 2017 permanent injunction. Id. The Court addresses these 19 issues in turn. 20 1. Discovery Sanction 21 First, the Court addresses Defendants’ failure to pay the $39,796.73 discovery sanction. At 22 the outset, the Court notes that Facebook does not seek a finding of contempt for Vachani’s failure 23 to pay the discovery sanction based on Vachani’s personal liability. Id. at 1 n.1. Instead, Facebook 24 seeks a finding of contempt against Power and against Vachani in his capacity as Power’s Chief 25 Executive Officer (CEO). Id. 26 27 28 As discussed above, Magistrate Judge Spero issued an order on August 7, 2013 imposing 16 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 the discovery sanction because of Vachani’s noncompliance during a Rule 30(b)(6) deposition. 2 ECF No. 356. Specifically, Judge Spero found that Vachani “was not prepared for his Rule 3 30(b)(6) deposition, read from [a prepared] declaration, and was ‘argumentative’ and ‘evasive.’” 4 Id. at 5. Vachani immediately appealed the discovery sanction to the Ninth Circuit on September 5 6, 2013. ECF No. 360. On November 21, 2013, the Ninth Circuit dismissed Vachani’s appeal of 6 Magistrate Judge Spero’s August 7, 2013 order granting discovery sanctions because the August 7 7, 2013 order was not final or appealable. ECF No. 386. 8 9 The Ninth Circuit affirmed the discovery sanction in its December 9, 2016 order affirming in part and reversing in part the Court’s grant of summary judgment. ECF No. 401 at 22. The Ninth Circuit found that Defendants had waived their right to appellate review of the issue. Id. The 11 United States District Court Northern District of California 10 Ninth Circuit also found that even if the issue was not waived, “[t]he magistrate judge’s findings 12 that Vachani was unprepared, unresponsive, and argumentative and that Power Ventures had 13 failed to produce many e-mails responsive to Facebook’s requests prior to discovery are supported 14 by the record.” Id. 15 Because the Ninth Circuit affirmed the discovery sanction, at the February 15, 2017 case 16 management conference following the Ninth Circuit’s remand, the Court ordered Defendants to 17 pay the $39,796.73 discovery sanction by March 15, 2017. ECF No. 410. On March 20, 2017, 18 Facebook filed a letter with the Court stating that Defendants had not yet paid the sanction. ECF 19 No. 419. On March 28, 2017, Vachani filed a letter in which he stated that Vachani personally was 20 not required to pay the sanction because of his ongoing bankruptcy proceedings. ECF No. 421. As 21 to Power, Vachani stated that Power did not have “the financial resources to pay this $39,796.73 22 immediately” and reached out to Facebook to request an extension of time. Id. at 4. Vachani also 23 suggested that “it might be best to wait at least 90 days so that we all have a clearer idea on the 24 final amounts owed.” Id. Vachani requested that the Court grant a 90-day extension to make the 25 payment as well as a 90-day stay of all proceedings. Id.; ECF No. 420. On March 29, 2017, the 26 Court denied the request for a payment extension and the request for a stay. ECF No. 422. As part 27 28 17 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 of that order, the Court stated that “[t]o the extent that Facebook asserts that Defendants are not in 2 compliance with this Court’s order to pay Facebook $39,796.73 by March 15, 2017, Facebook 3 may file a motion for contempt of Court.” Id. at 3. 4 Defendants still had not paid the discovery sanction by the time the Court ruled on the 5 remanded issue of remedies on May 2, 2017. Thus, in ruling on the issue of remedies, the Court 6 stated that “despite being ordered three times to pay the $39,796.73 discovery sanction, 7 Defendants have not yet done so and the Court has even invited a motion to hold Defendants in 8 contempt of Court.” ECF No. 435 at 25. The Court therefore again ordered Defendants to pay the 9 discovery sanction. Id. at 30–31; ECF No. 437. 10 However, although the Court has ordered Defendants to pay the discovery sanction at least United States District Court Northern District of California 11 four times, Defendants have not yet paid the discovery sanction. ECF No. 356 (August 7, 2013 12 order requiring Defendants to pay discovery sanction); ECF No. 401 (affirming discovery 13 sanction); ECF No. 410 (ordering Defendants to pay discovery sanction by March 15, 2017); ECF 14 No. 422 (inviting motion to hold Defendants in contempt of Court); ECF No. 435 (remedies 15 order). Defendants did not file an opposition to the motion for contempt. However, on July 14, 16 2017, Defendants filed a letter of “recertification of compliance” with the permanent injunction. 17 ECF No. 462. This letter was essentially an untimely opposition to Facebook’s motion for 18 contempt sanctions. In this letter, Defendants stated that “Power Ventures is financially unable to 19 pay the $39,796 sanctions payment that was ordered by this court on February 15, 2017. Power 20 Ventures has not had a bank account or any incoming revenues, investment, or cash flow since 21 2013.” Id. at 5. 22 In short, there is clear and convincing evidence that Defendants violated the court’s order 23 to pay the discovery sanction, that this noncompliance was more than technical or de minimis, and 24 that Defendants’ conduct was not the product of a good faith or reasonable interpretation of the 25 violated order. See Bright, 596 F.3d at 694 (describing the factors in a contempt finding). 26 27 28 Thus, all three requirements for a contempt finding are met. Nevertheless, even when all 18 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 requirements for contempt are met, “[a] party’s inability to comply with a judicial order 2 constitutes a defense to a charge of civil contempt.” FTC v. Affordable Media, 179 F.3d 1228, 3 1239 (9th Cir. 1999); see also United States v. Bryan, 339 U.S. 323, 330-331 (1950). However, 4 the burden is on the party against whom contempt is sought to show “categorically and in detail” 5 why the party is unable to pay. NLRB v. Trans Ocean Exp. Packing, Inc., 473 F.2d 612, 616 (9th 6 Cir. 1973); see also Cutting v. Van Fleet, 252 F. 100, 102 (9th Cir. 1918) (“[T]he inability to pay 7 must clearly appear.”). 8 9 Defendants have not met this burden in the instant case. For example, Defendants’ July 14, 2017 letter states “under penalty of perjury” that “Power Ventures has not had a bank account or any incoming revenues, investment, or cash flow since 2013.” ECF No. 462 at 5. However, 11 United States District Court Northern District of California 10 Defendants do not state that Power “owns no property, real or personal, out of which [the required 12 payment] could be realized, or that it [has] no property concealed, or transferred to others, or other 13 resources out of which [it] might pay the required sum.” Cutting, 252 F. at 102. Additionally, 14 Defendants do not state that Power has insufficient cash on hand to pay the $39,796.73 discovery 15 sanction. 16 Power’s ability to pay is particularly uncertain in light of the fact that Power previously 17 filed for Chapter 11 bankruptcy, but the bankruptcy petition was dismissed on November 27, 18 2012, nearly five years ago. ECF No. 327-1. Additionally, on March 28, 2017, Defendants stated 19 that “Power will need further time to consult with its remaining interested stakeholders to 20 determine its best path forward.” ECF No. 421. The March 28, 2017 letter also stated that Power 21 did not “have the financial resources to pay this $39,796.73 immediately” and therefore requested 22 a 90-day extension. Id. at 3. This suggests that as of March 28, 2017, Power anticipated that it 23 would be able to pay the discovery sanction within 90 days, which would have been the end of 24 June 2017. Thus, Power’s financial situation may not be as straightforward as Defendants’ July 25 14, 2017 letter suggests. In short, Defendants have not met their burden of showing “categorically 26 and in detail” that Power is unable to pay the $39,796.73 discovery sanction. 27 28 19 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 Thus, because each of the requirements for contempt is met and because Defendants have 2 not met their burden of establishing an affirmative defense, a finding of civil contempt is justified. 3 As discussed above, Facebook does not seek a contempt finding against Vachani in his personal 4 capacity. Instead, Facebook seeks a contempt finding only against Power and Vachani in his 5 capacity as CEO of Power. 6 Therefore, the Court finds that Power and Vachani, in his capacity as CEO of Power, are in 7 contempt of Court for their ongoing failure to pay the $39,796.73 discovery sanction. The Court 8 will discuss the proper contempt sanction below. 9 10 2. Permanent Injunction Next, the Court discusses Defendants’ failure to comply with the permanent injunction that United States District Court Northern District of California 11 the Court issued on May 2, 2017. Section 1 of the May 2, 2017 permanent injunction prohibited 12 Defendants and anyone in participation with Defendants from “[a]ccessing or using, or directing, 13 aiding, facilitating, causing, or conspiring with others to use or access the Facebook website or 14 servers for any commercial purpose, without Facebook’s prior permission”; from “using any data . 15 . . obtained as a result of the unlawful conduct”; or from developing or using “any software that 16 allows the user to engage in the conduct found to be unlawful.” Id. at 28–29. Section 2 of the 17 permanent injunction required Defendants and those in participation with Defendants to “destroy 18 any software, script(s) or code designed to access” Facebook’s services and to “destroy Facebook 19 data and/or information obtained from Facebook or Facebook’s users, or anything derived from 20 such data and/or information.” Id. at 29. Section 3 of the injunction required Defendants within 21 three days to “affirm that they already have notified, or shall notify, their current and former 22 officers, agents, servants, employees, successors, and assigns, and any persons acting in concert or 23 participation with them of this permanent injunction.” Id. Section 4 of the injunction required 24 Defendants within seven days to “certify in writing, under penalty of perjury, that they have 25 complied with the provision of this order, and state how notification of this permanent injunction . 26 . . was accomplished, including the identities of all email accounts (if any) used for notification 27 28 20 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 2 purposes.” Id. at 29–30. On May 9, 2017, Vachani filed a letter with the Court regarding his and Power’s 3 compliance with the permanent injunction. ECF No. 439. This letter was not signed under penalty 4 of perjury. Id. Additionally, the letter simply stated that “Defendants hereby certify in this written 5 letter that they have complied with all provisions of Sections 1, 2, 3, and 4 of this order to the best 6 of their knowledge and capabilities” and that Power “ha[s] notified or shall notify” employees and 7 agents of Power about the terms of the injunction. Id. 8 9 This May 9, 2017 letter was not sufficient to comply with the terms of the injunction. Section 4 of the injunction required Defendants to “certify in writing, under penalty of perjury, that they have complied with the provision of this order, and state how notification of this 11 United States District Court Northern District of California 10 permanent injunction in accordance with paragraph 3 above was accomplished, including the 12 identities of all email accounts (if any) used for notification purposes.” ECF No. 435 at 29–30. 13 However, the May 9, 2017 letter was not signed under penalty of perjury, nor did the letter specify 14 how notification was accomplished. 15 After the May 9, 2017 letter, Facebook sent a letter to Defendants indicating that Facebook 16 did not believe that the letter was sufficient to comply with the May 2, 2017 permanent injunction. 17 In response, on May 10, 2017, Vachani sent a letter “rescinding and recalling the letter filed on 18 May 9th.” ECF No. 440. The May 10, 2017 letter also stated that “[a]s [D]efendants have different 19 requirements, different counsel, and different interests, Defendants intend to file revised letters of 20 compliances [sic] or responses to court separately.” Id. On May 12, 2017, Vachani filed an 21 “updated letter” with the Court. ECF No. 441. In the letter, Vachani claimed that Sections 2 22 through 4 of the permanent injunction did not apply to Vachani. Id. (“Sections 2,3, and 4 of the 23 May 2nd order do not directly apply to me in an individual capacity and are specifically directed at 24 the corporate defendant Power Ventures Inc.”). 25 26 27 28 On May 12, 2017, Vachani also filed a separate letter on behalf of Power, which stated that Power has “abided by all the provisions of this court’s order to the best of its abilities” and that 21 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 “Power has no reasons to believe that it has not fully complied with all provisions.” ECF No. 442. 2 As to Section 1 of the injunction, the letter stated that “Power Ventures acknowledges this court’s 3 injunction and this section requires no further action from Power Ventures Inc.” Id. at 2. As to 4 Section 2, of the injunction, the letter stated the following: 5 6 7 8 9 10 Power Ventures Inc. represents that all employees, subsidiary companies or entities, affiliated or related companies and entities, assignees, and successors-ininterest, and those in active concert or participation with them have destroyed any software, script(s) or code designed to access or interact with the Facebook website, Facebook users, or the Facebook service. Power further represents that it has destroyed Facebook data and/or information obtained from Facebook or Facebook’s users, or anything derived from such data and/or information. Id. As to Section 3 of the injunction, the letter affirmed that Power had notified all agents, employees, etc. in compliance with the injunction. Id. As to Section 4, the letter stated that on May United States District Court Northern District of California 11 9, 2017, Power sent “a copy of this Court’s May 2nd order and permanent injunction” to the email 12 addresses listed in Exhibit A. Id. Power also stated it will “communicate with remaining parties by 13 telephone or US mail.” Id. 14 15 16 Facebook argues that both Vachani and Power should be found in contempt for failure to comply with the May 2, 2017 permanent injunction. As discussed above, Defendants did not file a timely opposition to the instant motion for contempt sanctions. However, on July 14, 2017, 17 Defendants filed a letter of “recertification of compliance” to the permanent injunction. ECF No. 18 462. This letter certified Defendants’ compliance with the permanent injunction and argued against 19 20 21 22 23 24 25 26 27 28 the imposition of contempt sanctions. In this letter, Defendants stated the following: [D]efendants hereby certify they have taken all necessary steps to comply with and implement the Permanent Injunction. Defendants have notified officers, agents, servants, employees, successors, and assigns, and any persons acting in concert with them of the permanent injunction. Defendants, their agents, officers, contractors, directors, shareholders, employees, subsidiary companies or entities, affiliated or related companies and entities, assignees, and successors-in-interest, and those in active concert or participation with them have destroyed any software, script(s) or code designed to access or interact with the Facebook website, Facebook users, or the Facebook service, and Facebook data and/or information obtained from Facebook or Facebook’s users, or anything derived from such data and/or information. Defendants declare under the penalty of perjury of the laws of the State of California that the foregoing is true and correct. 22 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 2 3 Id. at 4. The Court first addresses Power and then addresses Vachani. a. Power Facebook argues that Power has failed to comply with the permanent injunction. 4 Specifically, Facebook claims that Power’s May 12, 2017 letter, which was drafted and signed by 5 Vachani, “provides a short list of email recipients but does not provide any details as to who 6 received the notice emails or what the notice emails said. Moreover, Power’s submissions do not 7 even mention what efforts Power undertook to destroy the software and scraped data underlying 8 Facebook’s claims.” ECF No. 447 at 7. Because of these failures, Facebook asks the Court to hold 9 Power in contempt. 10 However, no provision of the permanent injunction requires Power to “provide details” United States District Court Northern District of California 11 about “what the notice emails said.” ECF No. 447 at 7. Instead, the permanent injunction stated 12 that Power must “state how notification of this permanent injunction in accordance with paragraph 13 3 above was accomplished, including the identities of all email accounts (if any) used for 14 notification purposes.” ECF No. 435 at 29–30. The May 12, 2017 letter lists the email accounts to 15 which notice was sent and also stated that Power will “communicate with remaining parties by 16 telephone or US mail.” ECF No. 442 at 2. The letter also states that “on May 9th, 2017, [Power] 17 sent emails to the last known email address to all known parties listed in section 3 with a copy of 18 this court’s May 2nd order and permanent injunction.” ECF No. 442 at 2. Thus, Defendants have 19 certified that the notice emails contained at least a copy of the Court’s May 2, 2017 order and the 20 permanent injunction. Therefore, the May 12, 2017 letter complies with the terms of the 21 permanent injunction. At the very least, the May 2, 2017 letter is in “substantial compliance” with 22 a “reasonable interpretation” of the permanent injunction. Bright, 596 F.3d at 694. 23 Similarly, although Facebook complains that the May 12, 2017 letter does not describe 24 “what efforts Power undertook to destroy the software and scraped data,” there is no provision of 25 the permanent injunction that requires Power to describe these efforts. ECF No. 447 at 7. Instead, 26 the permanent injunction requires only that Power certify under penalty of perjury that it has 27 28 23 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 complied with the provisions of the permanent injunction.3 Except for a requirement that 2 Defendants describe how notice of the permanent injunction was accomplished, there is no 3 requirement that Defendants describe how they complied with the permanent injunction. Although the Court is sympathetic to Facebook’s concerns that Power may attempt to 4 5 “skirt the Permanent Injunction’s requirements,” Facebook has not presented “clear and 6 convincing evidence” that Power is violating the terms of the permanent injunction. ECF No. 447 7 at 7. Power has certified under penalty of perjury that it has complied with the permanent 8 injunction, and although this certification of compliance is not detailed, it meets the requirements 9 of Section 4 of the permanent injunction. If this certification of compliance is knowingly false, Power and Vachani may be subject to prosecution for perjury. However, Facebook has not 11 United States District Court Northern District of California 10 produced “clear and convincing evidence” of noncompliance that is more than de minimis and is 12 not the product of a “reasonable interpretation” of the permanent injunction. For these reasons, the Court finds that a contempt finding is not warranted against Power 13 14 based on failure to comply with the permanent injunction. 15 a. Vachani 16 Vachani’s May 12, 2017 letter to the Court stated that Vachani acknowledged Section 1 of 17 the permanent injunction, but that “Sections 2, 3, and 4 of the May 2nd order do not directly apply 18 to me in an individual capacity and are specifically directed at the corporate defendant Power 19 Ventures Inc.” ECF No. 441. However, this is inaccurate. The May 2, 2017 permanent injunction 20 did not distinguish between Vachani and Power. Specifically, Sections 2, 3, and 4 each stated that 21 “Defendants” shall comply with their terms. ECF No. 435, at 29–30 (“Defendants . . . shall destroy 22 any software . . . .”); id. (“Defendants shall affirm that they have already notified . . . .”); id. 23 (“Defendants shall certify in writing . . . .”). 24 25 26 27 28 3 The permanent injunction did require Defendants to certify compliance within seven days of the May 2, 2017 order. ECF No. 435 at 29–30. Thus, Defendants’ May 12, 2017, and July 14, 2017 did not comply with this deadline. However, Facebook does not seek a finding of contempt based on the untimeliness of the letters. 24 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS Thus, Vachani’s refusal to certify that he has personally complied with Sections 2, 3, and 4 1 2 of the permanent injunction violates the terms of the Court’s May 2, 2017 order. Particularly, 3 Vachani’s failure to certify compliance with Section 3 raises the possibility that Vachani 4 personally has possession of “script(s) or code designed to access or interact with the Facebook 5 website” or “data and/or information obtained from Facebook.” ECF No. 435 at 29. Therefore, at 6 the time that Facebook filed its motion for contempt sanctions on May 16, 2017, Vachani was in 7 contempt of court for failing to certify compliance with all provisions of the permanent injunction. However, in Defendants’ July 14, 2017 letter, Vachani states generally that both 8 Defendants “have destroyed any software, script(s) or code designed to access or interact with the 10 Facebook website, Facebook users, or the Facebook service, and Facebook data and/or information 11 United States District Court Northern District of California 9 obtained from Facebook or Facebook’s users, or anything derived from such data and/or 12 information.” ECF No. 462 at 4. The July 14, 2017 letter also states that “Defendants have notified 13 officers, agents, servants, employees, successors, and assigns, and any persons acting in concert 14 with them of the permanent injunction.” Id. Thus, the July 14, 2017 letter suggests that Vachani in 15 his personal capacity has certified compliance with the permanent injunction. Nevertheless, Vachani has not withdrawn his earlier statement that Sections 2, 3, and 4 of 16 17 the permanent injunction do not apply to Vachani personally. In short, there is tension between 18 Vachani’s May 12, 2017 letter, which denies that portions of the permanent injunction apply to 19 Vachani personally, and Vachani’s July 14, 2017 letter, which appears to certify that both 20 Defendants have complied with each section of the permanent injunction. However, although there 21 is some doubt about Vachani’s compliance with the permanent injunction, there is not clear and 22 convincing evidence of noncompliance. 23 Therefore, in light of Vachani’s July 14, 2017 letter certifying compliance, the Court finds 24 that there is not clear and convincing evidence that Vachani has failed to comply with the May 2, 25 2017 permanent injunction.4 Thus, a contempt finding against Vachani is not warranted at this 26 27 28 4 As discussed above, Defendants’ May 12, 2017, and July 14, 2017 were untimely. However, 25 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 stage. However, in order to clarify whether Vachani is compliant with the permanent injunction, 2 the Court ORDERS that within five days of the instant order, Vachani shall file a certification in 3 writing, under penalty of perjury, that all sections of the permanent injunction apply to Vachani 4 personally. Vachani shall also explicitly certify his compliance in his personal capacity with each 5 section of the permanent injunction. If Vachani fails to file this certification within five days, the 6 Court may find Vachani in contempt of court and order additional sanctions. 7 3. Contempt Sanctions 8 As discussed above, the Court holds that Power and Vachani, in his capacity as CEO of 9 Power, are in contempt of court for failing to pay the $39,796.73 discovery sanction. The Court 10 United States District Court Northern District of California 11 now considers the proper contempt sanction. Facebook requests a fine of $500 per day of noncompliance as well as an award of 12 attorney’s fees for the instant motion. Thus, attorney’s fees are justified because “the cost of 13 bringing the violation to the attention of the court is part of the damages suffered by the prevailing 14 party . . . .” Id.; see also Gen. Signal Corp., 787 F.2d at 1380 (“Compensatory awards are limited 15 to actual losses sustained as a result of the contumacy.”). The instant motion was necessary to 16 “bring a violation of an order to the court’s attention.” Perry v. O’Donnell, 759 F.2d 702, 705 (9th 17 Cir. 1985). Specifically, the instant motion was necessary to inform the Court of Defendants’ 18 ongoing failure to pay the discovery sanction. Additionally, as discussed above, at the time of 19 Facebook’s motion for contempt sanctions, Vachani was in contempt for failing to certify 20 compliance with the injunction in his personal capacity, and the instant motion was necessary to 21 bring this failure to the Court’s attention. Therefore, an attorney’s fees award is justified. As 22 discussed above, Facebook has filed a companion motion for attorney’s fees along with the instant 23 motion. The Court has granted this motion. In the motion for attorney’s fees, Facebook has chosen 24 not to request fees for any work performed after April 2017. See ECF No. 446-1, at 1 (“Billings 25 for May 2017 have not been included.”). 26 27 Facebook does not seek a finding of contempt based on the untimeliness of the letters. 26 28 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 As to the requested fine, the Ninth Circuit has held that a “per diem fine imposed for each day a contemnor fails to comply with an affirmative court order” is a “paradigmatic civil contempt 3 sanction[].” United States v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999); NLRB v. Ironworkers Local 4 433, 169 F.3d 1217, 1222 (9th Cir. 1999) (describing per diem fines as a method of “coercing 5 future compliance” with court orders). Facebook argues that a $500 per day fine is appropriate in 6 coercing compliance. See, e.g., United States v. Ayres, 166 F.3d 991, 994 (9th Cir. 1999) 7 (upholding $500 per day coercive sanction for failing to comply with subpoena); United States v. 8 Bright, 2009 U.S. Dist. LEXIS 15915, *40 (D. Haw. 2009) (issuing $500 per day coercive 9 sanction until party produced documents); Cleveland Hair Clinic, Inc. v. Puig, 106 F.3d 165, 166 10 (7th Cir. 1997) (discussing $300 per day coercive sanction until defendants complied with order to 11 United States District Court Northern District of California 2 pay for previous sanctionable misconduct). 12 However, the Ninth Circuit has held that “a district court should apply the least coercive 13 sanction (e.g., a monetary penalty) reasonably calculated to win compliance with its orders.” 14 United States v. Alfredofllores, 628 F.2d 521, 527 (9th Cir. 1980) (internal quotation marks 15 omitted). In light of the fact that the Court has not found contempt based on the permanent 16 injunction and the fact that Defendants appear to have few assets, the Court finds that a $500 per 17 day fine is not “the least coercive sanction . . . reasonably calculated to win compliance.” Id. 18 Although higher awards are sometimes appropriate, the Ninth Circuit and other courts have found 19 that a fine in the amount of $100–$200 per day is proper and proportional in coercing compliance. 20 See In re Rubin, 172 F.3d 876 (9th Cir. 1999) (unpublished) (affirming $100 per day contempt 21 fine); In re E. W. Const. Co., Inc., 21 F.3d 1112 (9th Cir. 1994) (same); Rich v. Kirkland, 2016 22 WL 199390, at *4 (C.D. Cal. Jan. 15, 2016) (ordering $200 per day contempt sanction). The Court 23 finds that a $100 per day coercive sanction is warranted in the instant case. 24 Courts may also apply grace periods before coercive sanctions go into effect. See Ayres, 25 166 F.3d at 994 (upholding order providing for ten-day grace period); Donovan v. Mazzola, 761 26 F.2d 1411, 1416 (9th Cir. 1985) (discussing month-long grace period). The Court finds that a short 27 28 27 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS 1 five-day grace period is warranted in the instant case. The Court therefore ORDERS that after a five-day grace period beginning on the date of 2 3 this order, for each day that Power does not pay the $39,796.73 discovery sanction, $100 shall be 4 added to the amount owed. 5 III. CONCLUSION 6 For the foregoing reasons, the Court makes the following rulings: 7 The Court GRANTS Facebook’s motion for attorney’s fees. The Court finds that Vachani 8 and Power are jointly and severally liable for the $145,028.40 attorney’s fee award. In order to clarify whether Vachani is compliant with the permanent injunction, the Court 9 ORDERS that within five days of the instant order, Vachani shall file a certification in writing, 11 United States District Court Northern District of California 10 under penalty of perjury, that all sections of the permanent injunction apply to Vachani personally 12 and that Vachani personally has complied with each section of the permanent injunction. The Court also finds that Power and Vachani, in his capacity as CEO of Power, are in 13 14 contempt of Court for their ongoing failure to pay the $39,796.73 discovery sanction. The Court 15 therefore ORDERS that after a five-day grace period beginning on the date of this order, for each 16 day that Power does not pay the $39,796.73 discovery sanction, $100 shall be added to the amount 17 owed. 18 IT IS SO ORDERED. 19 20 21 22 Dated: August 8, 2017 ______________________________________ LUCY H. KOH United States District Judge 23 24 25 26 27 28 28 Case No. 08-CV-05780-LHK ORDER GRANTING MOTION FOR ATTORNEY'S FEES AND GRANTING IN PART MOTION FOR CONTEMPT SANCTIONS

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