BladeRoom Group Limited et al v. Facebook, Inc.

Filing 500

ORDER denying 363 Motion for Bond. Signed by Judge Edward J. Davila on 1/4/2018. (ejdlc1S, COURT STAFF) (Filed on 1/4/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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BLADEROOM GROUP LIMITED, et al.,

Case No. 5:15-cv-01370-EJD

Plaintiffs,
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ORDER DENYING DEFENDANT’S
MOTION FOR A BOND

v.
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FACEBOOK, INC., et al.,

Re: Dkt. No. 363

United States District Court
Northern District of California

Defendants.
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Presently before the court is Defendant Facebook, Inc.’s motion requesting an order

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requiring Plaintiffs BladeRoom Group Ltd. and Bripco (UK) Limited to post an undertaking of

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$15 million pursuant to California Civil Procedure Code § 1030. Dkt. No. 363. Plaintiffs, both of

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which are foreign companies, unsurprisingly object to such an order. Having now fully reviewed

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the record first for the parties’ summary judgment motions and again for this matter, the court

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finds, concludes and orders as follows:

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1.

“There is no specific provision in the Federal Rules of Civil Procedure relating to

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security for costs.” Simulnet E. Assocs. v. Ramada Hotel Operating Co., 37 F.3d 573, 574 (9th

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Cir. 1994). But that does not mean undertakings are off the table in federal court. Instead,

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“district courts have inherent power to require plaintiffs to post security for costs.” Id. These

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courts, “either by rule or by case-to-case determination, follow the forum state’s practice with

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regard to security for costs, as they did prior to the federal rules; this is especially common when a

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non-resident party is involved.” Id. (quoting 10 Wright, Miller & Kane, Federal Practice and

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Procedure: Civil 2nd § 2671).

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2.

This district’s Civil Local Rules provide that upon demand and “where authorized

Case No.: 5:15-cv-01370-EJD
ORDER DENYING DEFENDANT’S MOTION FOR A BOND
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by law and for good cause shown,” the court may require a party to post a undertaking “for costs

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which can be awarded against such party” in an amount and on terms the court deems appropriate.

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Civ. L.R. 65.1. The legal authorization relevant to this motion is Civil Procedure Code § 1030.

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That statute generally permits a court, upon motion by the plaintiff, to order a foreign defendant

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“to file an undertaking to secure an award of costs and attorney’s fees which may be awarded” to

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the plaintiff in an action. “The purpose of [§ 1030] is to enable a California resident sued by an

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out-of-state resident ‘to secure costs in light of the difficulty of enforcing a judgment for costs

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against a person who is not within the court’s jurisdiction.’” Alshafie v. Lallande, 171 Cal. App.

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4th 421, 428 (2009) (citation omitted). It also acts as a deterrent; that is, “to prevent out-of-state

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residents from filing frivolous lawsuits against California residents.” Yao v. Super. Ct., 104 Cal.

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United States District Court
Northern District of California

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App. 4th 327, 331 (2002).

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4.

A motion under § 1030 must “be made on the grounds that the plaintiff resides out

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of the state or is a foreign corporation and that there is a reasonable possibility that the moving

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defendant will obtain judgment in the action or special proceeding. Cal. Civ. Proc. Code §

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1030(b) (emphasis added). This standard is a “relatively low” one. Circle Click Media LLC v.

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Regus Mgmt. Grp. LLC, No. 3:12-cv-04000-SC, 2015 WL 6638929, at *16 (N.D. Cal. Oct. 29,

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2015). “Thus, a defendant need not show that there is ‘no possibility’ that plaintiff would win at

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trial, ‘but only that it [is] reasonably possible that the defendant will win.’” Id. (quoting Baltayan

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v. Estate of Getemyan, 90 Cal. App. 4th 1427, 1432 (2001)).

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5.

That said, this court joins other district courts by declining to read § 1030 “so

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broadly as to require every out-of-state litigant who brings a non-frivolous suit in California to

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post a bond simply because there is a reasonable chance the defendant may prevail.” Id.; Wilson

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& Haubert, PLLC v. Yahoo! Inc., No. C-13-5879 EM, 2014 WL 1351210, at *3 (N.D. Cal. Apr. 4,

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2014) (finding the “reasonable possibility” standard is not “so low as to be non-existent”). Indeed,

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“‘toll-booths cannot be placed across the courthouse doors in a haphazard fashion’” to deprive

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legitimate plaintiffs from access to federal courts. Simulnet, 37 F.3d at 576 (quoting Aggarwal v.

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Ponce Sch. of Med., 745 F.2d 723, 727-28 (1st Cir. 1984)).

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Case No.: 5:15-cv-01370-EJD
ORDER DENYING DEFENDANT’S MOTION FOR A BOND
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6.

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With that clarification, and with § 1030’s purpose in mind, the court considers three

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factors to determine whether an undertaking should be required: “(i) the degree of

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probability/improbability of success on the merits, and the background and purpose of the suit; (ii)

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the reasonable extent of the security to be posted, if any, viewed from the defendant’s perspective;

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and (iii) the reasonable extent of the security to be posted, if any, viewed from the nondomiciliary

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plaintiff’s perspective.” Id. (internal quotation marks omitted); accord Gabriel Techs. Corp. v.

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Qualcomm Inc., No. 08 CV 1992 MMA (POR), 2010 WL 3718848, at *2 (S.D. Cal. Sept. 20,

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2010).
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The extended discussion of Plaintiffs’ claims and Facebook’s defenses in the three

recently-issued summary judgment orders demonstrates two points relevant to determining

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United States District Court
Northern District of California

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Facebook’s probability of success on the merits. First, the court is unable to classify Plaintiffs’

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claims as either frivolous or completely lacking in evidentiary support. Consequently, the policy

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underlying § 1030 - to apply a layer of protection against irresponsible litigation by out-of-state

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plaintiffs - would not be served by requiring Plaintiffs to post a bond. The court therefore

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disagrees with Facebook’s characterization of this lawsuit as “squarely within the purview” of §

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1030.

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Second, the existence of several triable issues of fact requiring a jury to draw inferences

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from the record before a victor is chosen on each of Plaintiffs’ claims means that Facebook’s

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probability of success “appears no greater on this record than any other case where the parties’

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proffered facts are mutually disputed.” Wilson & Haubert, 2014 U.S. Dist. LEXIS 47157, at *3.

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The summary judgment ruling undermines Facebook’s assumption, made when this motion was

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filed, that Plaintiffs’ claims would not survive a Rule 56 challenge. Plaintiffs have their evidence

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and Facebook has its counter-evidence, leaving both with an opportunity to prevail.

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Furthermore, the reasonability of a bond from Facebook’s perspective is not a

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particularly compelling factor. For the most part, Facebook attempts to articulate significant

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burden by relying on extraneous allegations against Plaintiffs along with its own characterization

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of how this litigation unfolded. But in this court’s experience, Facebook’s description reveals

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Case No.: 5:15-cv-01370-EJD
ORDER DENYING DEFENDANT’S MOTION FOR A BOND
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nothing special about this litigation apart from comparable cases involving similar parties. Like

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defendants in those other cases, Facebook chose to dedicate extensive resources to advocating its

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position. And though Facebook estimates it expended considerable fees and costs, it does not also

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identify why attempting to recover a costs or fees judgment from Plaintiffs would be a risky

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endeavor. See Circle Click Media, 2015 WL 6638929, at *16.

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Finally, the reasonability of a bond from Plaintiff’s perspective needs little

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discussion. This is because the prospect of requiring Plaintiffs to deposit $15 million to continue

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pursuing their claims to trial is plainly unreasonable at this point.

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Accordingly, the court finds that Facebook has not shown there is a “reasonable
possibility” it will prevail under this action, at least for the purposes of § 1030. The Motion for a

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United States District Court
Northern District of California

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Bond (Dkt. No. 363) is DENIED.

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IT IS SO ORDERED.
Dated: January 4, 2018
______________________________________
EDWARD J. DAVILA
United States District Judge

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Case No.: 5:15-cv-01370-EJD
ORDER DENYING DEFENDANT’S MOTION FOR A BOND
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