Millennium Funding, Inc. et al v. 1701 Management, LLC. et al
Filing
167
ORDER ON PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANTS 1701 MANAGEMENT LLC dba LIQUIDVPN, AUH2O LLC AND CHARLES MUSZYNSKI aka FREDERICK DOUGLAS. Plaintiffs' Motion for Default Judgment, DE# 125 , is DENIED WITHOUT PREJUDICE. Plaintiffs may file an amended Motion after a final disposition on the merits of the case. Signed by Judge Beth Bloom on 11/18/2021. See attached document for full details. (ebz)
Case 1:21-cv-20862-BB Document 167 Entered on FLSD Docket 11/18/2021 Page 1 of 9
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 21-cv-20862-BLOOM/Otazo-Reyes
MILLENNIUM FUNDING, INC.,
a Nevada corporation, et al.,
Plaintiffs,
v.
1701 MANAGEMENT LLC d/b/a
LIQUIDVPN, a Puerto Rico limited
liability company, et al.,
Defendants.
____________________________________/
ORDER ON PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT
AGAINST DEFENDANTS 1701 MANAGEMENT LLC dba LIQUIDVPN,
AUH2O LLC AND CHARLES MUSZYNSKI aka FREDERICK DOUGLAS
THIS CAUSE is before the Court upon Plaintiffs Millennium Funding, Inc., Hunter Killer
Productions, Inc., Voltage Holdings, LLC, 211 Productions, Inc., AMBI Distribution Corp., After
Productions, LLC, After II Movie, LLC, Morgan Creek Productions, Inc., Eve Nevada, LLC,
Bedeviled LLC, Millennium Media, Inc., Colossal Movie Productions, LLC, Day of Dead
Productions, Inc., YAR Productions, Inc., FSMQ Film, LLC, FW Productions, LLC, I Am Wrath
Production, Inc., Killing Link Distribution, LLC, Badhouse Studios, LLC, LF2 Productions, Inc.,
LHF Productions, Inc., Venice PI, LLC, Rambo V Productions, Inc., Rupture CAL, Inc., MON,
LLC, SF Film, LLC, Speed Kills Productions, Inc., Millennium IP, Inc., Nikola Productions, Inc.,
Wonder One, LLC, Bodyguard Productions, Inc., Millennium SPVH, Inc., Outpost Productions,
Inc., Definition Delaware LLC, Hannibal Classics Inc., Justice Everywhere Productions LLC,
State of the Union Distribution and Collections, LLC, Paradox Studios, LLC, Dallas Buyers Club,
LLC, Screen Media Ventures, LLC and 42 Ventures, LLC’s (collectively, “Plaintiffs”) Motion
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for Default Judgment Against Defendants 1701 MANAGEMENT LLC dba LIQUIDVPN,
AUH2O LLC and Charles Muszynski aka Frederick Douglas, ECF No. [125] (“Motion”).
Defendants Quadranet, Inc. and Quadranet Enterprises, LLC (collectively, “Quadranet
Defendants” or “Quadranet”) filed a Special Objection and Limited Opposition, ECF No. [134]
(“Response”), to which Plaintiffs replied, ECF No. [137] (“Reply”). The Court has carefully
reviewed the Motion, the record in this case, the applicable law, and is otherwise fully advised.
For the reasons set forth below, the Motion is denied.
I. BACKGROUND
Plaintiffs filed their initial complaint on March 3, 2021, seeking injunctive relief and
damages against Charles Muszynski (“Muszynski”), 1701 MANAGEMENT, LLC d/b/a
LIQUIDVPN (“1701”), and DOES 1-100. See ECF No. [1]. On May 5, 2021, Plaintiffs filed their
First Amended Complaint (“FAC”) adding AUH2O, LLC (“AUH2O”), the Quadranet Defendants,
and others as defendants. See ECF No. [24]. On August 17, 2021, Plaintiffs filed a Second
Amended Complaint (“SAC”) adding VPNETWORKS, LLC d/b/a TorGuard (“TorGuard”) as a
defendant. See ECF No. [96]. Plaintiffs assert against Defendants 1701, AUH2O, and Muszynski
(collectively, “LiquidVPN Defendants” or “LiquidVPN”) direct copyright infringement,
contributory copyright infringement by intentional inducement, contributory copyright
infringement based on material contribution, vicarious infringement, violations of the Digital
Millennium Copyright Act (“DMCA”), trademark infringement, federal unfair trade competition,
breach of contract, unjust enrichment, and breach of publicity rights. See generally id.
On September 3, 2021, a Clerk’s Default was entered against the LiquidVPN Defendants,
ECF No. [112], after the LiquidVPN Defendants failed to appear, answer, or otherwise plead to
the SAC, despite having been served. On September 20, 2021, Plaintiffs filed the instant Motion
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for Default Judgment against the LiquidVPN Defendants. ECF No. [125].1 On the same date,
Plaintiffs filed a Notice stating that the LiquidVPN Defendants and the other Defendants are not
jointly and severally liable. ECF No. [124] at 2. On October 4, 2021, the Quadranet Defendants
filed their Response. ECF No. [134]. In the Response, the Quadranet Defendants argue that
the Court should deny the Motion without prejudice or defer ruling until a disposition on the
merits relative to all Defendants in the lawsuit. See generally id. In support of their argument,
the Quadranet Defendants claim that the Motion improperly seeks injunctive against the
Quadranet Defendants, that granting the Motion may result in inconsistent judgments, and
that there is just reason for delay given the procedural posture of the case. See generally id.
The Quadranet Defendants argue, in the alternative, that if the Court enters a Default
Judgment, then the Default Judgment should specify that it cannot be used against the
Quadranet Defendants. See id. at 12-14.2 On October 5, 2021, Plaintiffs filed their Reply in
which Plaintiffs voluntarily withdrew their request for injunctive relief against Quadranet. See
ECF No. [137] at 4-5. However, Plaintiffs insist that the Court grant the Motion because
Plaintiffs will continue to suffer irreparable harm if the Motion is not granted. See id at 5-6.3
1
On September 23, 2021, Defendant Muszynski filed a Motion to Quash Service of Process. ECF No.
[126]. The Court denied the Motion after determining that service of process was proper. ECF No.
[166].
2
The Quadranet Defendants also argue that the Motion should be denied because the SAC is an
impermissible shotgun pleading. ECF No. [134] at 14. The same argument is raised in Quadranet’s pending
Motion to Dismiss. ECF No. [108] at 18. Because there are sufficient grounds to deny the instant Motion
without addressing whether the SAC is a shotgun pleading, the Court reserves ruling on the Quadranet
Defendants’ argument.
3
Plaintiffs also claim that the Quadranet Defendants “arguably” waived personal jurisdiction and venue
challenges by filing a Response. ECF No. [137] at 3. The Court notes that the Quadranet Defendants
expressly preserved all of their Rule 12(b) defenses already pled in their Motion to Dismiss and did not
extensively participate in the case as to waive personal jurisdiction by conduct. See ECF No. [134] at 2,
n.1; see also Wray v. Petersen, No. 8:17-CV-2449-T-36CPT, 2018 WL 3719323, at *6 (M.D. Fla. Jul. 17,
2018), report and recommendation adopted, No. 8:17-CV-2449-T-36CPT, 2018 WL 3707904 (M.D. Fla.
Aug. 3, 2018).
3
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II. LEGAL STANDARD
In general, “a defendant’s default does not in itself warrant the court in entering a default
judgment.” Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).4
The Eleventh Circuit has held that if “multiple defendants are jointly liable, it would be
‘incongruous’ for judgment to be entered against a defaulting defendant prior to the decision on
the merits as to the remaining defendants.” Drill S., Inc. v. Int’l Fidelity Ins. Co., 234 F.3d 1232,
1237, n.8 (11th Cir. 2000) (quoting Frow v. De La Vega, 82 U.S. 552, 554 (1872)). “The Eleventh
Circuit has also extended the prohibition against logically inconsistent judgments to other cases
beyond those where liability is deemed to be joint.” Island Stone Int’l Ltd. v. Island Stone India
Priv. Ltd., No. 616CV656ORL40KRS, 2016 WL 9488685, at *1 (M.D. Fla. Dec. 20, 2016)
(denying a motion for default judgment because the defendants were similarly situated and there
was a possibility of inconsistent judgments) (citing Gulf Coast Fans, Inc. v. Midwest Elecs. Imps.,
Inc., 740 F.2d 1499, 1512 (11th Cir. 1984)). In the Eleventh Circuit, it is “sound policy” that “when
defendants are similarly situated, but not jointly liable, judgment should not be entered against a
defaulting defendant. . . .” Gulf Coast Fans, Inc., 740 F.2d at 1512 (citation omitted); see also
Manufacturers All. Ins. Co. v. Brencorp, Inc., No. 4:15-CV-0140-HLM, 2016 WL 4582074, at *2
(N.D. Ga. Mar. 22, 2016) (denying a motion for default judgment because the defendants were
“similarly situated[,]” the claims against the defendants arose from the “same set of facts and
circumstances,” and it was possible that granting a default judgment against one defendant could
lead to “inconsistent results”).
Lastly, according to Rule 54(b), “[w]hen an action presents more than one claim for
relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple
4
Pursuant to Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), opinions of the Fifth Circuit
issued prior to October 1, 1981, are binding precedent in the Eleventh Circuit.
4
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parties are involved, the court may direct entry of a final judgment as to one or more, but fewer
than all, claims or parties only if the court expressly determines that there is no just reason for
delay.” Fed. R. Civ. P. 54(b). As such, a court entering default judgment must expressly determine
that there is no just reason for delay. See Poole v. Tire Recycling Servs. of Fla., Inc., No.
218CV810FTM38MRM, 2019 WL 4043959, at *2 (M.D. Fla. Aug. 8, 2019), report and
recommendation adopted, No. 218CV810FTM38MRM, 2019 WL 4040063 (M.D. Fla. Aug. 27,
2019) (interpreting Rule 54 to mean that “when a default is entered against one defendant in a
multi-defendant case, the preferred practice is for the court to withhold granting a default judgment
until after trial on the merits against the remaining defendants”) (quoting North Pointe Ins. Co. v.
Global Roofing & Sheet Metal, Inc., No. 6:12-cv-476-Orl-31TBS, 2012 WL 5378740, at *1 (M.D.
Fla. Oct. 31, 2012)).
III. ANALYSIS
The Quadranet Defendants argue that the Motion should be denied because the Motion
improperly seeks injunctive relief against Quadranet, granting the Motion may result in
inconsistent judgments, and there is just reason for delay given the procedural posture of the
case. See generally ECF No. [134]. Plaintiffs respond that the Court should grant the Motion
because Plaintiffs withdrew their request for injunctive relief against Quadranet and Plaintiffs
will continue to suffer irreparable harm if the Motion is not granted. See generally ECF No.
[137]. The Court considers the Quadranet Defendants’ arguments in turn.
A. Withdrawal of Injunctive Relief Against the Quadranet Defendants
As an initial matter, the Court notes that Plaintiffs withdrew their request for injunctive
relief against the Quadranet Defendants in their Reply. ECF No. [137] at 4-5. As such, the
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Quadranet Defendants’ contention that the Motion should be denied because it seeks
injunctive relief against Quadranet is moot.
B. Unnecessary Risk of Inconsistent Judgments
Next, the Court considers the Quadranet Defendants’ argument that granting the
Motion may result in inconsistent judgments. See ECF No. [134] at 7-8. As stated above, if
defendants are similarly situated, judgment should not be entered against a defaulting defendant
due to the risk of inconsistent judgments, even when the defendants are not jointly liable. See
Island Stone Int’l Ltd., 2016 WL 9488685, at *1; Manufacturers All. Ins. Co., 2016 WL 4582074,
at *2. In this case, the Quadranet Defendants argue that although Plaintiffs claim that there is
no joint and several liability between the LiquidVPN Defendants and the remaining
Defendants, claims against the LiquidVPN Defendants and the remaining Defendants arise
from the same set of facts and circumstances, which raises the risk of inconsistent judgments.
ECF No. [134] at 8. Plaintiffs, on the other hand, do not dispute Quadranet’s claim that
Defendants are similarly situated or address the risk of inconsistent judgments. See generally ECF
No. [137].
The Quadranet Defendants’ argument is persuasive. As the Quadranet Defendants
correctly argue, if the Court were to enter a Default Judgment against the LiquidVPN
Defendants, an adjudication on the merits could later determine that other similarly situated
Defendants, such as TorGuard, did not directly or indirectly infringe on Plaintiff’s copyright
claims, thus resulting in inconsistent judgments between LiquidVPN Defendants and
TorGuard. Both the LiquidVPN Defendants and TorGuard are accused of relying on Quadrant
to provide VPN services to their end users so that the end users can infringe on Plaintiffs’
copyrights. See generally ECF No. [96].
6
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Given the similarities in the factual allegations against the Defendants, the court finds
Island Stone Int’l Ltd., 2016 WL 9488685, at *1, to be instructive. In Island Stone Int’l Ltd., the
court denied the plaintiffs’ motion for default judgment because even if the defaulting defendant
and the non-defaulting defendant did not have joint liability, the two defendants were so similarly
situated that entering a default judgment against only one defendant raised the possibility of
inconsistent judgments if the other defendant successfully defended against the plaintiff’s claims.
See id. Similar to the defendants in Island Stone Int’l Ltd., the Court finds that the LiquidVPN
Defendants are so similarly situated to the other Defendants that there is a risk of inconsistent
judgments if the other Defendants were to succeed on the merits. Therefore, the risk of unnecessary
judgments weighs in favor of denying Plaintiffs’ Motion.
C. Just Reason for Delay
The Court next addresses whether there is no just reason for delay in entering a Default
Judgment. Rule 54(b) states that the “court may direct entry of a final judgment as to one or
more, but fewer than all, claims or parties only if the court expressly determines that there is no
just reason for delay.” In Poole, 2019 WL 4043959, at *2, the court interpreted Rule 54 to mean
that “when a default is entered against one defendant in a multi-defendant case, the preferred
practice is for the court to withhold granting a default judgment until after trial on the merits against
the remaining defendants.” As such, much of the analysis above regarding the unnecessary risk of
inconsistent judgments is applicable in this section as just reason for delay.
Nevertheless, the Court considers the Quadranet Defendants’ argument that there is just
reason for delay because of the procedural posture of the instant case. ECF No. [134] at 9. First,
the Quadranet Defendants emphasize that their Motion to Dismiss is pending. Id.; see also ECF
No. [108]. Second, after the Quadranet Defendants filed their Response, Defendant TorGuard has
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filed its pending Motion to Dismiss. ECF No. [145]. Third, DOES 1-100 (collectively, “John
Does”) have not yet been served or otherwise named in the lawsuit. See ECF No. [134] at 9.
According to the SAC, the John Does infringed on Plaintiffs’ copyrights by similarly using
Quadranet’s services. See ECF No. [96] ¶ 110. Given the similarities in Plaintiffs’ claims against
the LiquidVPN Defendants, TorGuard, the John Does, and Quadranet, the procedural posture of
the case indicates that granting Default Judgment would create an unnecessary risk of inconsistent
judgments.
Plaintiffs notably do not address Defendants’ contention that the procedural posture of the
case is just reason for delay. See generally ECF No. [137]. Instead of addressing the Quadranet
Defendants’ arguments about the just reason for delay, Plaintiffs contend that it will suffer
irreparable harm if the Motion is not granted. See id. at 5-6. Plaintiffs’ contention appears to be
that because of the irreparable harm that Plaintiffs will suffer if the Motion is not granted, the
procedural posture of the case and the risk of inconsistent judgments are not just reasons for delay.
See id. Plaintiffs argue that because the Court denied Plaintiff’s Motion for a Temporary
Restraining Order (“Motion for TRO”) due to Plaintiffs’ delay in seeking a TRO, they continue to
suffer irreparable harm, and that a Default Judgment would provide the necessary injunctive relief.
See id.; see also ECF No. [93]. Plaintiffs also raise two new arguments addressing their delay in
seeking a TRO. See ECF No. [137] at 5. Plaintiffs claim that they were delayed in seeking the
TRO because they were not aware of AUH2O until they received further information from a
separate lawsuit and because the country was in the midst of the coronavirus pandemic. See id.
However, the Court is unpersuaded by Plaintiffs’ argument that the delay was justified.
Plaintiffs could have sought a TRO against Defendants other than AUH2O, if they were not aware
of AUH2O’s existence, yet Plaintiffs chose not to do so until May 6, 2021, more than two months
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after filing their initial complaint on March 3, 2021. See ECF No. [28]. In addition, without further
information, the Court cannot determine why Plaintiffs could not have sought a TRO during the
intervening two months, despite the pandemic, if the harm was truly immediate and irreparable as
Plaintiffs claim. A review of the record suggests that Plaintiffs were able to file other motions and
affidavits during the time. See ECF Nos. [3], [15], [21], [22]. As such, the Court determines that
the alleged harm to Plaintiffs does not outweigh the procedural posture of the case and the risk of
inconsistent judgments, which other courts have found to be just reason for delay. See, e.g., Poole,
2019 WL 4043959, at *2.
Because the Plaintiffs’ Motion should be denied, the Court does not consider the Quadranet
Defendants’ arguments in the alternative.
IV. CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED that Plaintiffs’ Motion for Default
Judgment, ECF No. [125], is DENIED WITHOUT PREJUDICE. Plaintiffs may file an
amended Motion after a final disposition on the merits of the case.
DONE AND ORDERED in Chambers at Miami, Florida, on November 18, 2021.
_________________________________
BETH BLOOM
UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of Record
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