REBEL8 Inc. v. Bajie Zhu, et al.
Filing
64
ORDER. Signed by the Honorable Manish S. Shah on 10/16/2015: Yiwu Yuantai Import and Export Co., Ltd.'s motion to intervene 40 is granted. As an intervenor-defendant, Yiwu may file a motion, presumably under Rule 59(e) or 60(b)(6), to obtain relief from the final judgment as it relates to the PayPal account "cn-tattoo@hotmail.com." A status hearing is set for 10/23/15 at 9:30 a.m., at which time the court will enter a briefing schedule for post-judgment motions. Notices mailed by Judicial Staff. (psm, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
REBEL8 INC.,
Plaintiff,
No. 15 CV 5469
v.
Judge Manish S. Shah
BAJIE ZHU, et al.,
Defendants.
ORDER
Yiwu Yuantai Import and Export Co., Ltd.’s motion to intervene [40] is
granted. As an intervenor-defendant, Yiwu may file a motion, presumably under
Rule 59(e) or 60(b)(6), to obtain relief from the final judgment as it relates to the
PayPal account “cn-tattoo@hotmail.com.” A status hearing is set for 10/23/15 at
9:30 a.m., at which time the court will enter a briefing schedule for post-judgment
motions.
STATEMENT
Plaintiff Rebel8 obtained default judgments against more than 90 alleged
copyright infringers, including defendant “Miss Susan’s Store.” As to each
defendant, plaintiff was awarded $200,000 in statutory damages. The judgment also
ordered PayPal to turn over funds from an account associated with the email
address “cn-tattoo@hotmail.com,” which plaintiff believes belonged to Miss Susan’s
Store. The day before final judgment was entered, Yiwu Yuantai Import and Export
Co., Ltd. (“Yiwu”) moved to intervene in this case, claiming it owns the PayPal
account at issue, and that it had nothing to do with Miss Susan’s Store. Yiwu did
not object to final judgment being entered against Miss Susan’s Store, but it seeks
to have both its funds and account unencumbered. Plaintiff opposes Yiwu’s
intervention on both procedural and substantive grounds.
A petitioner seeking to intervene as of right under Federal Rule of Civil
Procedure 24(a) must meet four criteria: “(1) timely application; (2) an interest
relating to the subject matter of the action; (3) potential impairment, as a practical
matter, of that interest by the disposition of the action; and (4) lack of adequate
representation of the interest by the existing parties to the action.” Reich v.
ABC/York-Estes Corp., 64 F.3d 316, 321 (7th Cir. 1995) (quotation omitted). In
evaluating a motion to intervene, the district court must accept as true the motion’s
non-conclusory allegations. Reich, 64 F.3d at 321. The petitioner’s motion “must
state the grounds for intervention and be accompanied by a pleading that sets out
the claim or defense for which intervention is sought.” Fed. R. Civ. P. 24(c).
“Whether to permit a procedurally defective motion to intervene is within the sound
discretion of the district court.” Retired Chicago Police Ass’n v. City of Chicago, 7
F.3d 584, 595 (7th Cir. 1993).
Yiwu’s initial motion failed to attach “a pleading that sets out the claim or
defense for which intervention is sought.” Fed. R. Civ. P. 24(c). A “pleading,”
however, means a complaint, cross claim, counter claim, third-party complaint, or
answer to these documents. Fed. R. Civ. P. 7(a). And none of these options really fits
the bill for Yiwu, who cares nothing about the liability aspect of this case—only its
collections facet. In any event, the purpose of this requirement, as with any
pleading, is to put the litigants, the court, and the world on notice about what is
claimed. Yiwu accomplished that objective through its original motion to intervene
and its proposed motion to lift the asset freeze. I therefore exercise my discretion to
allow the petition to stand despite its technical deficiencies.
Plaintiff objects to Yiwu’s evidentiary offering on the grounds that, first,
Yiwu initially made none at all, and, second, its eventual offering was
“unauthenticated, untrustworthy, and irrelevant.” In light of a legal standard that
requires the district court to accept the motion’s allegations as true, however, it
does not appear a petitioner must offer evidence at this stage at all. Instead, the
question is simply whether the petitioner’s non-conclusory allegations satisfy Rule
24(a). This makes sense, since Rule 24(c)’s requirement that the petitioner also file
a “pleading” seems to place a petitioner in the same boat as a plaintiff filing a
complaint. Yiwu alleges a plausible and non-conclusory theory about why it could
have a claim to the funds in the PayPal account attached by the final judgment in
this case, and it has thereby given plaintiff fair notice of its claim. That is enough
for the time being.
Plaintiff says Yiwu’s claim is “irrelevant” because final judgment has been
entered against Miss Susan’s Store and plaintiff is entitled to any funds in Miss
Susan’s Store’s PayPal account “regardless of whether the funds are the proceeds of
Counterfeit REBEL8 Products.” This is partially true—plaintiff is entitled to receive
funds from any PayPal account owned by (or lent to) Miss Susan’s Store. But that is
exactly why Yiwu’s theory is relevant—Yiwu contests that the PayPal account
connected to “cn-tattoo@hotmail.com” actually belongs to (or was accessible by) Miss
Susan’s Store. It is not the case that plaintiff is entitled to Yiwu’s property if the
latter is truly an innocent bystander. And while final judgment has been entered in
this case, a judgment may be altered by motion under Rule 59(e) or relief from a
judgment may be granted under Rule 60(b). Without deciding the issue, it may be
that Yiwu’s motion to lift the asset freeze could be construed as a timely motion
under either rule.
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Plaintiff says it is highly suspicious of Yiwu’s representations, especially
because it sells items related to plaintiff’s line of wares. Plaintiff also notes that it
would make no sense for a counterfeiter to “instruct a potential customer to submit
payment to a PayPal account in which the online store would be unable to receive
funds submitted for counterfeit goods.” Plaintiff may have good reason to doubt
petitioner’s story, but that evidentiary test is for a later date. For now, I must
accept Yiwu’s allegations as true. Reich, 64 F.3d at 321.
Plaintiff does not dispute that Yiwu’s motion is timely, so the first factor to
consider under Rule 24(a) is whether Yiwu has an interest relating to the subject
matter of the action. This requires a “direct, significant, and legally protectable
interest in the question at issue in the lawsuit.” Wisconsin Educ. Ass’n Council v.
Walker, 705 F.3d 640, 658 (7th Cir. 2013) (quotation omitted). “That interest must
be unique to the proposed intervenor.” Id. “Moreover, the question of whether an
applicant has an interest sufficient to warrant intervention as a matter of right is a
highly fact-specific determination, making comparison to other cases of limited
value.” Id. (quotation omitted). Yiwu alleges that it has an interest “in protecting its
PayPal funds and use of its PayPal account while Plaintiff is seeking to use [Yiwu’s]
PayPal in satisfaction of a judgment.” Plaintiff contends this interest is insufficient
because it “has nothing to do with the legal and factual issues underlying
[plaintiff’s] causes of action for trademark infringement and counterfeiting, false
designation of origin, violation of the Anticybersquatting Consumer Protection Act,
and violation of the Illinois Uniform Deceptive Trades Practices Act.” While
certainly true, this case is about more than just these enumerated claims.
Like many civil actions, this case features issues of both liability and
collection. Case in point: Plaintiff asked the court not only for a judgment against
the defendants, but also for an order compelling the turnover of funds in
satisfaction of that judgment. Yiwu plainly has a direct, significant, and legally
protectable interest in the collections aspect of this case, because the thing to be
collected—the res so to speak—belongs to Yiwu (we must assume). See John v.
Sotheby’s Inc., 141 F.R.D. 29, 35 (S.D.N.Y. 1992) (“Dr. Nava, by claiming ownership
of the painting, which is the object of this litigation, also satisfies the requirement
that he have a direct and protectable interest in this action.”). Nor does Yiwu have
only a “betting interest”—i.e., a situation in which “a third party who has some
outstanding monetary claim from one of the parties attempts to intervene to ensure
that the outcome of the case preserves as much of its claim as possible.” Reich, 64
F.3d at 322. If Yiwu is actually blameless and the PayPal account is not Miss
Susan’s Store’s account, its issue is not just with Miss Susan’s Store—it’s also with
the judgment order itself that directs PayPal to turn over the funds in the account
to plaintiff.
3
Next, “[t]he existence of an ‘impairment’ depends on whether the decision of a
legal question involved in the action would as a practical matter foreclose rights of
the proposed intervenors in a subsequent proceeding.” Meridian Homes Corp. v.
Nicholas W. Prassas & Co., 683 F.2d 201, 204 (7th Cir. 1982). “Potential foreclosure
is measured by the general standards of stare decisis.” Id. Yiwu says that “[i]f
[plaintiff is] allowed to apply judgment against this account, [Yiwu] would be
entirely unable to protect its assets.” Plaintiff disagrees, suggesting instead that
Yiwu can bring a separate action against Miss Susan’s Store, “the entity who
allegedly improperly used a PayPal account purportedly belonging to Yiwu . . . .”
Although Yiwu may have a claim against Miss Susan’s Store, if Yiwu were denied
intervention and the judgment went unchallenged, it would mean a United States
District Court determined the account Yiwu seeks to protect is not its own (at least
not exclusively). Denying Yiwu intervention would, as a practical matter, foreclose
its rights in the subject property.
The final factor under Rule 24(a), adequate representation, is satisfied here
as well. Defendant Miss Susan’s Store has not appeared in this case. Under no
circumstances, therefore, could it be said that Yiwu’s interests would be adequately
represented by the defendant. Reich, 64 F.3d at 323 (where party did “as little as
possible to defend its own stakes” in the action, the inadequacy of the
representation of the petitioner’s interest “could not be more manifest”).
Accordingly, accepting Yiwu’s allegations as true, the petitioner has demonstrated
grounds to intervene as of right.*
ENTER:
___________________________
Manish S. Shah
United States District Judge
Date: 10/16/15
Because Yiwu may intervene as of right, I do not reach the question of permissive
intervention under Rule 24(b).
*
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