United States District Court, N.D. California, San Jose Division
ERICKSON PRODUCTIONS INC. and JIM ERICKSON, Plaintiffs,
v.
KRAIG R. KAST, Defendant.
ORDER DENYING KAST’S MOTION TO STAY JUDGMENT;
DENYING ERICKSON’S MOTION FOR APPEAL BOND RE: DKT. NOS.
133, 136, 147
HOWARD
R. LLOYD UNITED STATES MAGISTRATE JUDGE
Erickson
Productions, Inc. and Jim Erickson (collectively,
“Erickson”) sued Kraig R. Kast for infringement
of three copyrighted photographs. Following trial, the jury
found Kast liable for willful vicarious and contributory
infringement, concluded that the infringement was willful,
and returned a verdict awarding Erickson the maximum $450,
000 in statutory damages. Judgment was entered accordingly.
The matter is on appeal.
Kast
asks this court to stay the judgment, pending the appeal,
without requiring him to post a supersedeas bond. Erickson
opposes that motion[1] and moves for an order directing Kast to
post an appeal bond in the amount of $2, 500 to cover
anticipated costs of acquiring a transcript and filing
documents with the Ninth Circuit. The matter is deemed
suitable for determination without oral argument. Upon
consideration of the moving and responding papers, this court
denies both motions.
A.
Kast’s Motion for a Stay of Judgment
Federal
Rule of Civil Procedure 62(d) provides that “[i]f an
appeal is taken, the appellant may obtain a stay by
supersedeas bond, ” to take effect when the court
approves the bond. “The purpose of a supersedeas bond
is to secure the appellees from a loss resulting from the
stay of execution and a full supersedeas bond should
therefore be required.” Rachel v. Banana Republic,
Inc., 831 F.2d 1503, 1505 n. 1 (9th Cir.1987). The
district court has the discretion to grant a stay upon the
posting of security other than a bond. See Int’l
Telemeter Corp. v. Hamlin Int’l Corp., 754 F.2d
1492, 1495 (9th Cir.1985). And, if the court finds that the
appellees’ interests are adequately protected, it may
also enter a stay without requiring the appellant to post any
security. See American Color Graphics, Inc. v. Travelers
Property Casualty Ins. Co., No. C04-03518 SBA, 2007 WL
1520952 (N.D. Cal., May 23, 2007) (concluding that no
security was required to stay the execution of the judgment
where it was undisputed that the appellant would be able to
pay the judgment if it lost its appeal).
In
determining whether to waive a supersedeas bond requirement,
courts consider several factors:
(1) the complexity of the collection process; (2) the amount
of time required to obtain a judgment after it is affirmed on
appeal; (3) the degree of confidence that the district court
has in the availability of funds to pay the judgment; (4)
whether the defendant’s ability to pay the judgment is
so plain that the cost of a bond would be a waste of money;
and (5) whether the defendant is in such a precarious
financial situation that the requirement to post a bond would
place other creditors of the defendant in an insecure
position.
Cotton ex rel McClure v. City of Eureka, 860
F.Supp.2d 999, 1028 (N.D. Cal. 2012); Soares v.
Lorono, No. 12-cv-05979-WHO, 2015 WL 1247020, at *2
(N.D. Cal., Mar. 18, 2015).
Kast’s
central contention is that he does not have sufficient assets
to post any bond. That is a hotly contested point, and
Erickson argues that Kast has more resources than he claims.
And, while Erickson may be overstating some of their
arguments, on the record presented, this court harbors some
doubt as to whether Kast has been fully forthcoming about his
finances. But, even assuming Kast is in a precarious
financial condition, the above-listed factors weigh in favor
of requiring a bond. The collection process is likely to be
complex and lengthy. See Inhale, Inc. v. Starbuzz
Tobacco, Inc., No. 2:11-cv-03838-ODW (FFMx), 2013 WL
361109, at *2 (C.D. Cal., Jan. 30, 2013) (acknowledging
“that collecting from a party having financial
hardships (whether now or later) is difficult, complex, and
costly.”) Although requiring a bond might endanger
other creditors, Kast’s ability to pay is not plain,
and the cost of a bond would not be a waste of money.
See, e.g., Soares, 2015 WL 1247020, at *2-3
(requiring a debtor in bankruptcy to post a supersedeas
bond); Inhale, Inc., 2013 WL 361109, at *2
(“The fact that Inhale ‘does not have sufficient
liquid assets ‘to cover the award of attorneys’
fees and costs is precisely why it must post a supersedeas
bond.”); Funai Elec. Co. Ltd. v. Daewoo Elecs.
Corp., No. C04-01830 JCS, 2009 WL 975787, at *1 (N.D.
Cal., Apr. 9, 2009) (concluding that the appellant’s
“relatively weak” financial condition militated
in favor of requiring a supersedeas bond at 125% of the
judgment amount).
Kast’s
motion to stay the judgment without a supersedeas bond is
denied.
B.
Erickson’s Motion for an Appeal Bond
As
previewed above, Erickson seeks an order directing Kast to
post an appeal bond in the amount of $2, 500 to cover the
anticipated costs of acquiring a transcript and filing
documents with the Ninth Circuit.
Federal
Rule of Appellate Procedure 7 provides that “[i]n a
civil case, the district court may require an appellant to
file a bond or provide other security in any form and amount
necessary to ensure payment of costs on appeal.”
“The following costs on appeal are taxable in the
district court for the benefit of the party entitled to costs
under this rule: (1) the preparation and transmission of the
record; (2) the reporter’s transcript, if needed to
determine the appeal; (3) premiums paid for a supersedeas
bond or other bond to preserve rights pending appeal; and (4)
the fee for filing the notice of appeal.” Fed. R. App.
P. 39(e). The purpose of a Rule 7 bond is to protect the
amount the appellee stands to have reimbursed, and not to
impose an independent penalty on the appellant. Fleury v.
Richemont N. Am., Inc., No. C05-4525 EMC, 2008 WL
4680033, at *6 (N.D. Cal., Oct. 21 2008) (citation omitted).
District
courts within the Ninth Circuit have considered the following
factors in determining whether to require an appeal bond: (1)
the appellant’s financial ability to post a bond; (2)
the risk that the appellant would not pay the costs if the
appeal is unsuccessful; and (3) an assessment of the
likelihood that the appellant will lose the appeal and be
subject to costs. Fleury, ...