MerchSource, LLC v. HSM International et al

Filing 39

ORDER DISMISSING CASE. Court dismisses Plaintiff's action without prejudice. Signed by Judge Cynthia Bashant on 5/26/2016. (jah)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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MERCHSOURCE, LLC,

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Case No. 13-cv-01945-BAS(DHB)
Plaintiff,

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ORDER DISMISSING ACTION
WITHOUT PREJUDICE

v.

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HSM INTERNATIONAL, et al.,

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Defendants.

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This case is a copyright and trademark infringement action in which the only

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remaining Defendant—HSM International, a Hong Kong Company (“HSM”)—has

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been in default since April 1, 2015. Plaintiff filed two motions for default judgment

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against HSM, but the Court denied Plaintiff’s motions without prejudice. (ECF Nos.

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34, 38.) The Court provided Plaintiff with a third opportunity to move for default

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judgment and warned Plaintiff that a failure to file an amended motion would result

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in this action being dismissed. (ECF No. 38.) An amended motion was not filed.

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Accordingly, for the reasons discussed below, the Court exercises its inherent

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authority to DISMISS WITHOUT PREJUDICE Plaintiff’s action.

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I.

BACKGROUND

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On August 20, 2013, Plaintiff Merchsource, LLC commenced this action

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seeking damages and other appropriate relief for copyright infringement, trademark

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infringement, and related claims. (ECF No. 1.) On July 28, 2014, the Court granted

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Plaintiff’s request to appoint a Special Process Server to allow Plaintiff to effect

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service on HSM in Hong Kong. (ECF No. 22.) On August 28, 2014, Plaintiff filed

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an affidavit of service demonstrating that HSM had been delivered a package

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containing the summons for this matter and related items at its address in Hong Kong.

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(ECF No. 25.) After HSM failed to appear or otherwise answer the Complaint,

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Plaintiff moved for an entry of default against HSM. (ECF No. 29.) The Clerk of the

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Court entered default against HSM on April 1, 2015. (ECF No. 30.)

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On May 1, 2015, Plaintiff moved for default judgment against HSM. (ECF No.

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32.) The Court denied Plaintiff’s request after hearing oral argument on the motion.

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(ECF No. 34.) In doing so, the Court permitted Plaintiff the opportunity to file an

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amended motion for default judgment but directed that any future motion would need

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to contain the following: (1) specifics, including any necessary affidavits,

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demonstrating that the Court has personal jurisdiction over HSM; (2) a summary of

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law for each claim for which Plaintiff is requesting a default judgment, including

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both the elements that need to be proved and where those elements can be found in

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the Complaint; and (3) legal authority demonstrating that Hong Kong permits service

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by mail. (See ECF Nos. 34, 36.) On November 18, 2015, Plaintiff filed a supplement

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to its initial motion for default judgment. (ECF No. 35.)

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On January 12, 2016, the Court issued an order noting that there was no motion

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for default judgment pending before the Court because Plaintiff did not file a new or

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amended motion. (ECF No. 36 at 2.) The Court also noted that Plaintiff’s supplement

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to its initial motion did not contain the additional information requested by the Court.

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(Id.) The Court ultimately provided Plaintiff with a February 8, 2016, deadline to file

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an amended motion for default judgment containing the requested additional
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information. (Id. at 3.)

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On February 3, 2016, Plaintiff filed an amended motion for default judgment.

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(ECF No. 37.) The Court denied Plaintiff’s amended motion because it again did not

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contain the requested specifics, including any necessary evidence, establishing that

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the Court has personal jurisdiction over HSM. (ECF No. 38.) The Court also denied

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the motion because it similarly did not address the sufficiency of the Complaint. (Id.)

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The Court provided Plaintiff with one final opportunity to adequately move for

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default judgment by May 12, 2016, and cautioned Plaintiff that a failure to do so

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would result in a dismissal without prejudice. (Id.) Plaintiff did not renew its motion

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for default judgment.

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II.

DISCUSSION

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“District courts have the inherent power to control their dockets and, ‘[i]n the

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exercise of that power they may impose sanctions including, where appropriate, . . .

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dismissal of a case.’” Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992)

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(quoting Thompson v. Hous. Auth. of L.A., 782 F.2d 829, 831 (9th Cir. 1986)); accord

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Link v. Wabash R.R., 370 U.S. 626, 630–31 (1962) (holding courts are vested with

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an inherent power “to manage their own affairs so as to achieve the orderly and

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expeditious disposition of cases”). This inherent power exists independently of a

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district court’s authority to dismiss an action under Federal Rule of Civil Procedure

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41(b). Link, 370 U.S. at 630–32. “Despite this authority, dismissal is a harsh penalty

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and, therefore, it should only be imposed in extreme circumstances.” Ferdik, 963

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F.2d at 1260.

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The circumstances in which a court may exercise its inherent power to dismiss

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an action include where a plaintiff has failed to prosecute the case, failed to comply

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with a court order, or engaged in judge shopping. Link, 370 U.S. at 630; Yourish v.

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Cal. Amplifier, 191 F.3d 983, 989–90 (9th Cir. 1999); Hernandez v. City of El Monte,

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138 F.3d 393, 399 (9th Cir. 1998). In determining whether to exercise this power,
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“the district court must weigh five factors including: (1) the public’s interest in

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expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the

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risk of prejudice to the defendants; (4) the public policy favoring disposition of cases

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on their merits; and (5) the availability of less drastic alternatives.” Ferdik, 963 F.2d

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at 1260–61 (quoting Henderson, 779 F.2d at 1424, and Thompson, 782 F.2d 829 at

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831) (internal quotation marks omitted). Although it is preferred, the district court is

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not required to “make explicit findings in order to show that it has considered these

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factors.” Ferdik, 963 F.3d at 1261.

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Here, the procedural history summarized above demonstrates that Plaintiff has

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failed to advance this case. Plaintiff was provided multiple opportunities to secure a

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default judgment against the only remaining Defendant, but it has not done so. The

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Court warned Plaintiff that if it did not file an amended motion for default judgment

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by May 12, 2016, the Court would dismiss this action without prejudice. No motion

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was filed. Accordingly, the Court turns to considering whether it is appropriate to

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exercise its inherent authority to dismiss Plaintiff’s action based on the five factors

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enumerated above.

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Public’s Interest in Expeditious Resolution of Litigation

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A.

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“[T]he public’s interest in expeditious resolution of litigation always favors

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dismissal.” Yourish, 191 F.3d at 990. Here, this case has been pending for almost

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three years, and Plaintiff has failed to secure a default judgment against HSM, despite

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that HSM has been in default for over a year. Thus, the Court finds that this factor

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weighs in favor of dismissal.

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Court’s Need to Manage Its Docket

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B.

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A district court “is in the best position to determine whether the delay in a

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particular case interferes with docket management and the public interest.” Ash v.

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Cvetkov, 739 F.2d 493, 496 (9th Cir.1984). In this case, Plaintiff’s unsuccessful
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motions for default judgment consumed the Court’s time and resources “that could

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have been devoted to other cases on the docket.” See Pagtalunan, 291 F.3d at 642.

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That Plaintiff has not filed an amended motion for default judgment by the deadline

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specified by the Court demonstrates that Plaintiff does not intend to prosecute this

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action and “that its continued presence on the court’s docket will waste valuable

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resources.” See Curtis v. Bank of Am., N.A., No. CV 12-09158 MMM MANX, 2013

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WL 1561475, at *2 (C.D. Cal. Apr. 12, 2013). Consequently, this factor also weighs

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in favor of dismissal.

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C.

Risk of Prejudice to Defendants

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“To prove prejudice, a defendant must establish that plaintiff’s actions

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impaired defendant’s ability to proceed to trial or threatened to interfere with the

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rightful decision of the case.” Pagtalunan, 291 F.3d at 642 (citing Malone v. U.S.

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Postal Serv., 833 F.2d 128, 131 (9th Cir.1987)). “[T]he pendency of the lawsuit is

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not sufficiently prejudicial itself to warrant dismissal.” Yourish, 191 F.3d at 991;

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accord Ash, 739 F.2d at 496. However, “even in the absence of a showing of actual

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prejudice to the defendant,” prejudice is presumed from unreasonable delay. In re

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Eisen, 31 F.3d 1447, 1452–53 (9th Cir. 1994). Here, it is challenging to discern actual

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prejudice to HSM, given that HSM is in default and there is no indication that HSM

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intends to move to set aside the default and appear or otherwise defend itself in this

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action. That said, the Court finds that Plaintiff’s delay in securing a default judgment

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against HSM and Plaintiff’s decision not to file an amended motion for default

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judgment have unreasonably delayed the resolution of this matter. Thus, prejudice is

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presumed, and this factor weighs in favor of dismissal.

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D.

Public Policy Favoring Disposition of Cases on Their Merits

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Public policy favors disposition of cases on the merits. Pagtalunan, 291 F.3d

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at 643. Accordingly, this factor weighs against dismissal. See id.; Hernandez, 138

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F.3d at 399.

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E.

Availability of Less Drastic Alternatives

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This factor examines whether less drastic alternatives to dismissal are feasible

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given the circumstances of the case. In re Eisen, 31 F.3d at 1455. “[A] district court’s

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warning to a party that [its] failure to obey the court’s order will result in dismissal

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can satisfy the ‘consideration of alternatives’ requirement.” Ferdik, 963 F.2d at 1262.

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Here, because the remaining Defendant, HSM, is in default, this case may only

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proceed by either HSM moving to set aside the default or by Plaintiff obtaining a

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default judgment against HSM. As default was entered against HSM on April 1,

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2015, there is no indication that HSM intends to set aside the default. Therefore, this

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case cannot be resolved unless Plaintiff secures a default judgment against HSM.

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With this is mind, the Court provided Plaintiff multiple opportunities to obtain

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a default judgment against HSM, but Plaintiff was unsuccessful in doing so. The

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Court also cautioned Plaintiff that a failure to file an amended motion for default

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judgment with the necessary supporting information would result in a dismissal

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without prejudice. Plaintiff elected not to file an amended motion. The Court

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consequently finds that less drastic alternatives to dismissal are not available in these

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circumstances. See Curtis, 2013 WL 1561475, at *2 (finding the plaintiffs’ “failure

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to amend [their complaint] in accordance with the court’s order granting the motion

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with leave to amend indicates that there are no less drastic alternatives that are

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realistically available”). As a result, this factor weighs in favor of dismissal.

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On balance, four out of five factors weigh in favor of dismissal. Accordingly,

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the Court exercises its inherent authority to dismiss Plaintiff’s complaint without

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prejudice. See Pagtalunan, 291 F.3d at 643.
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III.

CONCLUSION
For the foregoing reasons, the Court DISMISSES WITHOUT PREJUDICE

Plaintiff’s action.
IT IS SO ORDERED.

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DATED: May 26, 2016

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