Fraserside IP LLC v. Faragalla et al

Filing 11

ORDER re 10 MOTION for Default Judgment as to Mark Faragalla and Mina Faragalla filed by Fraserside IP LLC. Ruling is reserved and a hearing on 10 MOTION for Default Judgment as to Mark Faragalla and Mina Faragalla shall be held 2/10/2012 03:00 PM in SC 3rd Fl Ct before Judge Mark W Bennett. Signed by Judge Mark W Bennett on 1/17/12. (djs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION

FRASERSIDE IP L.L.C.,
Plaintiff,

No. C11-3032-MWB

vs.
MARK FARAGALLA and MINA
FARAGALLA d/b/a
www.PornVisit.com, and John Does 1100 and John Doe Companies 1-100,

ORDER REGARDING PLAINTIFF’S
MOTION FOR DEFAULT
JUDGMENT

Defendants.
____________________

Plaintiff asserts a variety of copyright and trademark infringement claims against
defendants concerning its adult motion pictures shown on defendants’ internet websites.
Having obtained an entry of default against defendants, plaintiff now requests that I enter
a default judgment against defendants.
I. INTRODUCTION AND BACKGROUND
A. Procedural Background
On July 10, 2011, plaintiff Fraserside IP L.L.C. (“Fraserside”) filed a complaint
against Mark Faragalla, Mina Faragalla, John Does, and John Doe Companies, alleging
the following causes of action: copyright infringement, in violation of 17 U.S.C. §§ 106
and 501 et seq.; contributory copyright infringement, in violation of 17 U.S.C. §§ 106 and
501 et seq.; vicarious copyright infringement, in violation of 17 U.S.C. §§ 106 and 501
et seq.; inducing copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.;

false designation of origin, in violation of 15 U.S.C. § 1125(a); and, dilution of trademark,
in violation of 15 U.S.C. § 1125(c).
On July 31, 2011, Fraserside served a copy of the summons and complaint upon
Milad Faragalla, a person of suitable age, at the Faragallas’ residence in Beaumont,
California.

Also on July 31, 2011, a copy of the summons, complaint, and Civil

Servicepacket was mailed to the Faragallas’ home address. The Faragallas did not file an
answer or any responsive pleading to the complaint. On August 30, 2011, Fraserside filed
a Motion for Clerks Entry of Default. On August 30, 2011, the Clerk of Court entered
the Faragallas’ default. On October 21, 2011, Fraserside filed a Motion For Default
Judgment (docket no. 10). The Faragallas have not filed any response to Fraserside’s
Motion for Default Judgment.
II. LEGAL ANALYSIS
A. Entry Of Default And Default Judgment
Rule 55 of the Federal Rules of Civil Procedure provides, in pertinent part, as
follows:
Rule 55. Default
(a) Entry. When a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise
defend as provided by these rules and that fact is made to
appear by affidavit or otherwise, the clerk shall enter the
party’s default.
(b) Judgment. Judgment by default may be entered as
follows:
(1) By the Clerk. When the plaintiff’s claim against a
defendant is for a sum certain or for a sum which can by
computation be made certain, the clerk upon request of the
plaintiff and upon affidavit of the amount due shall enter
judgment for that amount and costs against the defendant, if
2

the defendant has been defaulted for failure to appear and is
not an infant or incompetent person.
(2) By the Court. In all other cases the party entitled
to a judgment by default shall apply to the court therefor; but
no judgment by default shall be entered against an infant or
incompetent person unless represented in the action by a
general guardian, committee, conservator, or other such
representative who has appeared therein. If the party against
whom judgment by default is sought has appeared in the
action, the party (or, if appearing by representative, the party’s
representative) shall be served with written notice of the
application for judgment at least 3 days prior to the hearing on
such application. If, in order to enable the court to enter
judgment or to carry it into effect, it is necessary to take an
account or to determine the amount of damages or to establish
the truth of any averment by evidence or to make an
investigation of any other matter, the court may conduct such
hearings or order such references as it deems necessary and
proper and shall accord a right of trial by jury to the parties
when and as required by any statute of the United States.
(c) Setting Aside Default. For good cause shown the
court may set aside an entry of default and, if a judgment by
default has been entered, may likewise set it aside in
accordance with Rule 60(b).
FED. R. CIV. P. 55(a)-(c). In Hayek v. Big Brothers/Big Sisters of America, 198 F.R.D.
518 (N.D. Iowa 2001), this court summarized the mechanics under Rule 55 for obtaining
the entry of default and default judgment, as well as the method for setting aside a default
or default judgment, as follows:
Under Rule 55, “[w]hen a party ‘has failed to plead or
otherwise defend’ against a pleading listed in Rule 7(a), entry
of default under Rule 55(a) must precede grant of a default
judgment under Rule 55(b).” See Johnson v. Dayton Elec.
Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998); see also Hagen
v. Sisseton-Wahpeton Community College, 205 F.3d 1040,
3

1042 (8th Cir. 2000) (citing Johnson for this requirement).
“Entry of a default under Federal Rule of Civil Procedure
55(a) is not, as such, entry of a judgment; it merely permits
the plaintiff to move for a default judgment under Rule
55(b)(2), assuming that the default is not set aside under Rule
55(c).” Inman v. American Home Furniture Placement, Inc.,
120 F.3d 117, 118 n. 2 (8th Cir. 1997). Moreover, “‘a
default judgment cannot be entered until the amount of
damages has been ascertained.’” Hagen, 205 F.3d at 1042
(quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 97 (2d
Cir. 1993)). Thus, if the judgment sought is not for a sum
certain, Rule 55(b)(2) provides that “the court may conduct
such hearings or order such references as it deems necessary
and proper” in order to “enable the court to enter judgment.”
Fed. R. Civ. P. 55(b)(2). In short, as this court has explained,
Rule 55 “requires two steps before entry of a default
judgment: first, pursuant to Fed. R. Civ. P. 55(a), the party
seeking a default judgment must have the clerk enter the
default by submitting the required proof that the opposing
party has failed to plead or otherwise defend; second, pursuant
to Fed. R. Civ. P. 55(b), the moving party may seek entry of
judgment on the default under either subdivision (b)(1) or
(b)(2) of the rule.” Dahl v. Kanawha Inv. Holding Co., 161
F.R.D. 673, 683 (N.D. Iowa 1995).
Hayak, 198 F.R.D. at 520.
B. Is Entry Of Default Judgment Appropriate?
The Clerk of Court has entered a default against the Faragallas pursuant to Rule
55(a), completing the first step in the two-step process toward default judgment. See id.
Thus, the questions presented by the pending motion are whether I should now take the
second step, and enter default judgment pursuant to Rule 55(b)(2). See id. The second
step of the process, pursuant to Rule 55(b)(2), requires that the moving party make a

4

second application, this time to the court for default judgment. By virtue of the default,
the Faragallas are deemed to have admitted to the truth of the well-pleaded allegations of
the complaint. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155,
158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993); United States v. Di Mucci, 829
F.2d 1488, 1497 (7th Cir. 1989); Dundee Cement Co., 722 F.2d at 1323; Flaks v. Koegel,
504 F.2d 702, 707 (2d Cir. 1974). However, “[w]hile a party's default is deemed to
constitute a concession of all well pleaded allegations of liability, it is not considered an
admission of damages.” Greyhound Exhibitgroup, Inc., 973 F.2d at 158; Antoine v. Atlas
Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995); Fehlhaber v. Fehlhaber, 681 F.2d 1015,
1026 (5th Cir. 1982) (en banc), cert. denied, 464 U.S. 818 (1983); Flaks, 504 F.2d at 707.
Despite the wording of Rule 55, a hearing on a motion for default judgment is not
required. 10A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE,
§ 2688 (3d ed. 1998). No hearing on substantive issues is necessary if evidence sufficient
to justify a default judgment is already before the court. See Dundee Cement Co., 722
F.2d at 1323; United States v. Forma, 784 F. Supp. 1132, 1141 (S.D.N.Y. 1992);
Southern Gen. Ins. Co. v. O'Keefe, 275 F. Supp. 107, 109 (D. Md. 1967). According to
Wright and Miller, the court's inquiry should proceed as follows:
In determining whether to enter a default judgment, the
court is free to consider a number of factors that may appear
from the record before it. Among these [factors] are . . .
whether material issues of fact . . . are at issue; . . . and
whether the grounds for default are clearly established or are
in doubt. Furthermore, the court may consider how harsh an
effect a default judgment might have . . . Finally, the court
may consider whether it later would be obliged to set aside the
default on defendant's motion . . . .
10A CHARLES ALAN WRIGHT ET AL., supra at § 2685.

5

As discussed above, the grounds for default are clearly established. However,
substantive material issues of fact alleged in the complaint appear to be at issue, namely
Fraserside’s damages. A copyright owner may elect either actual or statutory damages
under 17 U.S.C. § 504. On its copyright infringement claim only, Fraserside seeks
statutory damages. Where statutory damages are elected, a court may, in its discretion,
award between $750 and $30,000 for each act of infringement. 17 U.S.C. § 504(c)(1).
If the court finds the infringement to have been willful, the court has the discretion to
increase the maximum to $150,000 for each act of infringement. 17 U.S.C. § 540(c)(2).
Conversely, if the infringer proves he had no reason to believe his acts constituted
copyright infringement, the court may reduce the award to no less than $200 for each act
of infringement. Id. Courts have wide discretion in determining the amount of statutory
damages to be awarded, “constrained only by the specified maxima and minima.” Harris
v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984). Here, Fraserside has
alleged the Faragallas’ copyright violations were all willful and is seeking $150,000 in
statutory damages for each infringement of its 20 works, for a total of $3,000,000.
Fraserside, however, is also seeking to be awarded the Faragallas’ domain name,
www.PornVisit.com, and an additional monetary award for each of its remaining causes
of action, to be determined following an evidentiary hearing. The Eighth Circuit Court
of Appeals has directed that “‘a default judgment cannot be entered until the amount of
damages has been ascertained.’” Hagen v. Sisseton-Wahpeton Community College, 205
F.3d 1040, 1042 (8th Cir. 2000) (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 97
(2d Cir. 1993));see also American Red Cross v. Community Blood Ctr., 257 F.3d 859,
864 (8th Cir. 2001) (“When a default judgment is entered on a claim for an indefinite or
uncertain amount of damages, facts alleged in the complaint are taken as true, except facts
relating to the amount of damages, which must be proved in a supplemental hearing or
6

proceeding.” (quoting Everyday Learning Corp. v. Larson, 242 F.3d 815, 818 (8th Cir.
2001) (internal quotation marks omitted))). Fraserside must prove its actual damages by
a preponderance of the evidence. See Everyday Learning Corp. v. Larson, 242 F.3d 815,
818 (8th Cir. 2001). “Once the amount of damages has been established, the court may
enter judgment pursuant to the rule.” Stephenson v. El–Batrawi, 524 F.3d 907, 916 (8th
Cir. 2008). Thus, as to step two of the process for entry of a default judgment against the
Faragallas, see, e.g., Dahl v. Kanawha Inv. Holding Co., 161 F.R.D. 673, 683 (N.D.
Iowa 1995), I will set a hearing to determine whether, and in what amount, default
judgment should be entered in this case. See FED. R. CIV. P. 55(b)(2); Hagen, 205 F.3d
at 1042 (quoting Enron Oil Corp., 10 F.3d at 97.
Therefore, ruling is reserved on Fraserside’s Motion For Default Judgment Against
the Faragallas. A hearing on Fraserside’s Motion For Default Judgment against the
Faragallas shall be held on Friday, February 10, 2012, at 3:00 p.m., at the Federal
Courthouse in Sioux City, Iowa.
IT IS SO ORDERED.
DATED this 17th day of January, 2012.

__________________________________
MARK W. BENNETT
U. S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

7