Broadcast Music, Inc. et al v. JMJ Enterprises of Erie County, Ltd. et al

Filing 19

ORDER denying 15 Motion to Set Aside Default. Signed by Hon. Richard J. Arcara on 7/21/2009. (JMB)

UNITED STATES DISTRICT COURT W ESTERN DISTRICT OF NEW YORK

BROADCAST MUSIC INC., et al., Plaintiffs, D E C IS IO N AND ORDER 0 8 -C V - 9 4 6 A

v.

JMJ ENTERPRISES OF ERIE COUNTY, LTD. d/b/a JACOBI'S RESTAURANT and JOHN JACOBI, each individually, Defendants.

D e fe n d a n ts have filed a motion to vacate the Order of Default Judgment e n te re d in this case on May 27, 2009. Defendants assert that they were not s e rve d personally with the complaint in this action and that available defenses to th e complaint warrant reopening the case. Defendants sought an expedited h e a rin g of their motion to vacate because, they claim, their family restaurant will c lo s e if the restaurant's bank account remains frozen. Because defendants have n o t set forth any facts suggesting a meritorious defense to plaintiffs' claims, the C o u rt will deny the motion. B AC K G R O U N D T h is case concerns allegations of copyright infringement. Plaintiffs are m u s ic companies that own copyrights to songs and that grant licensing rights for

th o s e songs. Defendants operate a family restaurant in the City of Lackawanna, N e w York. The restaurant plays music during its business hours. On December 23, 2008, plaintiffs filed a complaint accusing defendants of p la yin g their copyrighted songs without prior authorization. On January 8, 2009, p la in tiffs filed affidavits of service of the complaint on defendants. Defendants did n o t answer the complaint. On February 6, 2009, the Clerk of the Court filed an e n try of default against defendants. On February 27, 2009, plaintiffs filed a motion for default judgment seeking $ 3 3 ,0 0 0 in statutory damages for the alleged copyright infringements, plus $2,250 in attorney fees. The motion papers included an affidavit of Lawrence E. S te ve n s , sworn to on February 20, 2009. Mr. Stevens's affidavit ran 74 pages in c lu d in g attachments. In his affidavit, Mr. Stevens asserted that plaintiffs c o n ta c te d defendants on 24 different occasions in an unsuccessful attempt to n e g o tia te a license agreement. The attachments to Mr. Stevens's affidavit in c lu d e d copies of 23 letters from plaintiffs to defendants, and several email m e s s a g e s between the parties, concerning license negotiations and copyright in frin g e m e n ts . The attachments also included a detailed, minute-by-minute re p o rt of songs that plaintiffs observed defendants playing on September 19­20, 2 0 0 8 without authorization. On May 22, 2009, the Court granted the motion and is s u e d an Order of Default Judgment that was entered on May 27, 2009.

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O n July 13, 2009, defendants filed two motions: one to vacate the Order of D e fa u lt Judgment and one for an expedited hearing on the motion to vacate. The C o u rt granted the motion for an expedited hearing on July 13, 2009. In support of the motion to vacate, defendants contend that they were not served properly. Defendants contend that they contacted their prior attorney "immediately" upon s e rvic e of the complaint. (Docket No. 12-2 at 2.) Defendants contend further that th e ir prior attorney informed them that he was negotiating with plaintiffs' attorney to resolve the case.1 According to defendants, they never knew that a default ju d g m e n t had been entered against them until their bank informed them that the p e rs o n a l and business bank accounts had been frozen. The business bank a c c o u n t, defendants maintain, is critical to the operation of the family restaurant. Defendants conclude by asserting that they have "valid defenses" to plaintiffs' c la im s . These defenses are not specified, other than two affirmative defenses in th e proposed answer that negotiations for license rights were ongoing and that th e damages awarded by default exceed any actual damages suffered.

Defendants did not identify this "prior attorney" in their motion papers or s u b m it an affidavit from him supporting this contention. At oral argument, d e fe n d a n ts named the attorney in response to a question from the Court, but d e c lin e d to offer any information to help the Court understand defendants' re la tio n s h ip with prior counsel. Cf. U.S. v. Cirami, 535 F.2d 736, 739 (2d Cir. 1 9 7 6 ) ("W e have been provided with no affidavit of [prior counsel] which would c a s t any light on the circumstances of his failure . . . . Neither have we received a n y affidavits from present counsel of [defendants] which would indicate what e ffo rts , if any, have been made to elicit [prior counsel's] testimony, either vo lu n ta rily or under subpoena . . . . On the record before us we are totally u n in fo rm e d of the reasons for the failure . . . or whether the failure was deliberate o r inadvertent."). 3

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In opposition to defendants' motion, plaintiffs deny ever hearing from "a n yo n e purporting to be an attorney for the Defendants . . . to discuss possible re s o lu tio n of the case prior to the default judgment being entered." (Docket No. 1 8 at 2.) Plaintiffs assert that defendants are the owners and president of the fa m ily restaurant, meaning that service on them subjected them to personal ju ris d ic tio n . Finally, plaintiffs contend that defendants have submitted no other fa c ts that suggest the availability of a meritorious defense. Oral argument was h e ld on July 20, 2009. D IS C U S S I O N "[W ]e have established three criteria that must be assessed in order to d e c id e whether to relieve a party from default or from a default judgment. These w id e ly accepted factors are: (1) whether the default was willful; (2) whether s e ttin g aside the default would prejudice the adversary; and (3) whether a m e ritorio u s defense is presented." Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2 d Cir. 1993) (citations omitted). From the papers that defendants have s u b m itte d , the requirement of a meritorious defense presents the most immediate c o n c e rn . "A defendant seeking to vacate an entry of default must present some e vid e n c e beyond conclusory denials to support his defense. The test of such a d e fen s e is measured not by whether there is a likelihood that it will carry the day, b u t whether the evidence submitted, if proven at trial, would constitute a complete d e fen s e ." Id. at 98 (citations omitted); accord State St. Bank & Trust Co. v.

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In v e rs io n e s Errazuriz Limitada, 374 F.3d 158, 167 (2d Cir. 2004) (citing Enron). No meritorious defense has been presented here. Defendants have not specified a n y problems with the affidavits of service filed on January 8, 2009, affidavits that o n their faces establish service of process on defendants pursuant to N.Y. CPLR 3 0 8 (2 ), a means allowed by Rule 4(e)(1) of the Federal Rules of Civil Procedure. The rest of defendants' motion papers set forth no facts at all that explain what d e fe n s e s might exist whose completeness this Court could assess. At oral a rg u m e n t, defendants insisted that they could not articulate any meritorious d e fe n s e s yet because they do not have enough facts about plaintiffs' allegations, d e s p ite the detailed affidavit of Mr. Stevens that is available on the docket. Defendants state only that valid defenses do exist, and that the bank accounts in q u e s tio n need to be unfrozen to allow the restaurant to continue to operate. These conclusory assertions provide the Court with so little information that it c a n n o t conclude that defendants have articulated a potentially complete defense. As a result, the Court will not disturb a judgment that occurred because d e fe n d a n ts failed to keep abreast of a lawsuit that they knew immediately had c o m m e n c e d . Cf. SEC v. McNulty, 137 F.3d 732, 739 (2d Cir. 1998) ("Normally, th e conduct of an attorney is imputed to his client, for allowing a party to evade th e consequences of the acts or omissions of [ ]his freely selected agent would b e wholly inconsistent with our system of representative litigation, in which each p a rty is deemed bound by the acts of his lawyer-agent. Thus, in the context of a

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d e fa u lt judgment, we ha[ve] rather consistently refused to relieve a client of the b u rd e n s of a final judgment entered against him due to the mistake or omission of h is attorney.") (alterations in the original) (internal quotation marks and citations o m itte d ). W ith o u t a meritorious defense or any information about the actions of d e fe n d a n ts ' supposed prior counsel, vacating the judgment by default in this case w o u ld be unwarranted. C O N C L U S IO N F o r all of the foregoing reasons, defendants' motion to vacate the Order of D e fa u lt Judgment entered in this case on May 27, 2009 is denied.

SO ORDERED.

s/ Richard J. Arcara
HONORABLE RICHARD J. ARCARA CHIEF JUDGE UNITED STATES DISTRICT COURT DATED: July 21, 2009

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