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Erickson Productions Inc. v. Kast

United States District Court, N.D. California, San Jose Division

July 22, 2016

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, ...


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