On Demand Direct Response, LLC et al v. McCart-Pollak

Filing 390

ORDER DENYING without prejudice the renewed Motion to calculate damages for default judgment (ECF No. 380 ). The discovery period is REOPENED through December 17, 2018 for the purpose specified herein. A second renewed motion to calculate damages shall be filed by December 17, 2018, and must show with reasonable certainty On Demand's profits. (See pdf order for details and specifics.) Signed by Magistrate Judge Nancy J. Koppe on 10/16/2018. (Copies have been distributed pursuant to the NEF - DRM)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 DISTRICT OF NEVADA 10 11 ON DEMAND DIRECT RESPONSE, LLC, et al., Case No.: 2:15-cv-01576-MMD-NJK Plaintiff(s), 12 13 v. 14 Order SHANA LEE MCCART-POLLAK, 15 16 [Docket No. 380] Defendant(s). The matter of calculating damages for default judgment has been referred to the 17 undersigned. See Docket No. 361. The undersigned previously rejected Ms. McCart-Pollak’s 18 request for punitive damages as not sufficiently supported. See Docket No. 374. Ms. McCart19 Pollak has now filed a renewed motion to calculate damages that excludes punitive damages. 20 Docket No. 380.1 The Court held a prove-up hearing on October 16, 2018. 21 A party must prove the amount of damages to be awarded through default judgment. See, 22 e.g., Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003). 23 The Court has wide discretion in determining the amount of damages to award in default judgment. 24 E.g., HTS, Inc. v. Boley, 954 F. Supp. 2d 927, 947 (D. Ariz. 2013). In determining damages for 25 default judgment, the Court may rely on the declaration submitted by the movant or may order a 26 full evidentiary hearing. See Fed. R. Civ. P. 55(b)(2). The movant’s burden with respect to 27 1 Ms. McCart-Pollak is proceeding pro se, and the Court construes her papers liberally. 28 Erickson v. Pardus, 551 U.S. 89, 94 (2007). 1 1 proving up her damages is “relatively lenient.” Philip Morris, 219 F.R.D. at 498. Nonetheless, 2 lost profits and other compensatory damages must be proven with “reasonable certainty.” See 3 Rubicon Global Ventures, Inc. v. Chongqing Zongshen Grp. Import/Export Corp., 226 F. Supp. 4 3d 1141, 1149 (D. Ore. 2016) (citing, inter alia, Jones v. Zimmer, 2016 WL 1122852, at *2 (D. 5 Nev. Mar. 22, 2016)). 6 “[D]isgorgement is a remedy intended to prevent a wrongdoer from unjust enrichment.” 7 Eckard Brandes, Inc. v. Riley, 338 F.3d 1082, 1088 (9th Cir. 2003). It has long been recognized 8 in intellectual property cases that the opposing party’s profits is an appropriate remedy. See, e.g., 9 Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 1011 (9th Cir. 1994) (finding that “the 10 profits made by the infringer” is an appropriate measure for actual damages under both the 11 Copyright Act and the Lanham Act). 12 The affidavit filed to prove-up On Demand’s profits in this case relies on several 13 assumptions. It provides evidence as to Spiral Toys’ profits for 2015. See, e.g., Docket No. 38014 1 at 34. From there, however, the affidavit assumes that 30% of that revenue went to On Demand 15 and assumes a profit margin for On Demand of 25%. Docket No. 380 at ¶¶ 26, 28. The affidavit 16 indicates that the sales figures are unknown for 2016 to the present, but assumes consistent sales 17 numbers for those years. See id. at ¶ 33. The affidavit concludes by seeking $1,564,500 in 18 compensatory damages. Id. at ¶ 34. 19 At the prove-up hearing, Ms. McCart-Pollak presented additional exhibits and analysis that 20 were not included in the affidavit. Ms. McCart-Pollak also alluded to an attempt to obtain 21 discovery from Spiral Toys.2 While it appears some discovery was obtained, it is not clear from 22 the hearing what scope of documents were requested in that subpoena or whether Spiral Toys 23 properly complied with its obligations in responding to the subpoena. 24 Given the circumstances, the Court rules as follows: 25 • The Court DENIES without prejudice the renewed motion to calculate damages for default judgment (Docket No. 380). 26 27 28 2 Efforts to obtain discovery from On Demand itself were unsuccessful. 2 1 • Ms. McCart-Pollak may seek additional documents from Spiral Toys and/or seek 2 compliance with the subpoena previously served, and the discovery period is 3 REOPENED for that purpose only through December 17, 2018. 4 • and must show with reasonable certainty On Demand’s profits.3 5 6 A second renewed motion to calculate damages shall be filed by December 17, 2018, • To the extent the second renewed motion to calculate damages relies on settlement 7 communications, Ms. McCart-Pollak must provide meaningful discussion as to why it 8 is proper for the Court to consider such communications. Cf. Fed. R. Evid. 408. 9 • To the extent the second renewed motion to calculate damages seeks the inclusion of 10 punitive damages, Ms. McCart-Pollak must (1) provide meaningful discussion as to 11 why punitive damages may be awarded based on the prayer for relief made in the 12 counterclaim4 and (2) provide an evidentiary basis for showing On Demand’s conduct 13 is sufficiently egregious to justify an award of punitive damages.5 See Docket No. 374. 14 IT IS SO ORDERED. 15 Dated: October 16, 2018 ______________________________ Nancy J. Koppe United States Magistrate Judge 16 17 18 19 20 21 22 23 3 It is not clear whether a further prove-up hearing will be held, so the filing must include all evidence that Ms. McCart-Pollak wishes to present as to damages from On Demand. 4 At the hearing, Ms. McCart-Pollak argued that her prayer for relief must be construed 24 liberally and that punitive damages are included within the demand for “damages as permitted by law.” Docket No. 51 at 70. Case law on this issue has noted, however, that “the demand for relief 25 must be specific.” Philip Morris, 219 F.R.D. at 499. 26 5 At the prove up hearing, Ms. McCart-Pollak relied on litigation misconduct in seeking punitive damages. It does not appear that such conduct can form the basis of a punitive damages 27 award. E.g., Bosack v. Soward, 586 F.3d 1096, 1105 (9th Cir. 2009) (under California law, finding that “a defendant’s trial tactics and litigation conduct may not be used to impose punitive damages 28 in a tort action”). 3

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