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Leadership Studies, Inc. v. Readytomanage, Inc.

United States District Court, C.D. California

June 2, 2017

LEADERSHIP STUDIES, INC.
v.
READYTOMANAGE, INC.

          PRESENT: THE HONORABLE CHRISTINA A. SNYDER

          CIVIL MINUTES - GENERAL

         Proceedings: (IN CHAMBERS) - PLAINTIFF LEADERSHIP STUDIES' NOTICE OF FAILURE TO COMPLY WITH COURT ORDER TO SHOW CAUSE WHY DEFAULT JUDGMENT SHOULD NOT BE ENTERED AND REQUEST FOR ENTRY OF DEFAULT JUDGMENT (Dkt. 90, filed March 29, 2017)

         I. INTRODUCTION AND BACKGROUND

         On December 8, 2015, plaintiff Leadership Studies, Inc. filed this action for trademark infringement, copyright infringement, unfair competition, accounting, and declaratory relief against Jon Warner; ReadyToManage, Inc. (“RTM”); Team Publications (“TP”); Worldwide Center for Organizational Development, LLC (“WCOD”); and Profiles-R-Us.com, Pty. Ltd (“PRU”). Dkt. 2 (“Compl.”). Plaintiff provides leadership training services and materials for major corporations in the United States and through worldwide affiliates. See generally id. Plaintiff owns numerous trademarks, most notably its “Situational Leadership® Model, ” as well as numerous copyrighted works. Id. at ¶ 5. Warner is involved with several entities that publish and offer for sale leadership training materials directed toward businesses. Four of those entities--defendants RTM, TP, WCOD, and PRU--are named as defendants in this action.

         On August 16, 2016, the Court granted the motion-filed by RTM, TP, and Warner (“moving defendants”)-to set aside the Clerk's entry of default against them, conditioned upon the moving defendants' payment to plaintiff of associated, reasonable costs. Dkt. 75. WCOD and PRU did not join the moving defendants' application to set aside the default or the opposition to plaintiff's motion for the default judgment. As a result, the Court granted default judgment as against WCOD and PRU, but reserved its decision regarding the calculation of damages until the matter was adjudicated as to all defendants. Id. at 14.

         On January 17, 2017, the Court concluded that plaintiff's request for fees and costs was reasonable and, therefore, granted plaintiff's request for $154, 689.50 in attorneys' fees and $3, 330.89 in costs from the moving defendants, for a total of $158, 020.39. Dkt. 84. The Court ordered defendants to comply within 45 days. Id.

         On March 7, 2017, plaintiff filed a notice that the moving defendants had failed to comply with the Court's January 17, 2017 order. Dkt. 88.

         On March 9, 2017, the Court ordered the moving defendants to show cause on or before March 24, 2017, why a default judgment should not be entered against them. Dkt. 89.

         On March 29, 2017, plaintiff filed a notice that the moving defendants failed to show cause why a default judgment should be entered against them. Dkt. 90. Plaintiff reiterated its request that a default judgment be entered against the moving defendants and that the Court award full remedies, including statutory damages, costs, and attorneys' fees as against all defendants. Id.

         Given the moving defendants' failure to comply with Court's January 17 and March 9, 2017 orders, the Court DIRECTS the Clerk of Court to re-enter default against the moving defendants.

         Furthermore, proceeding on the papers previously filed on plaintiff's motion for default judgment, see dkts. 50 (“MDJ”), 69, 70, the Court finds that entry of default judgment against the moving defendants is appropriate under Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (directing courts to consider seven factors in deciding whether to enter default judgment).

         II. LEGAL STANDARD

         Pursuant to Federal Rule of Civil Procedure 55, when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and the plaintiff does not seek a sum certain, the plaintiff must apply to the court for a default judgment. Fed.R.Civ.P. 55.

         As a general rule, cases should be decided on the merits as opposed to by default, and, therefore, “any doubts as to the propriety of a default are usually resolved against the party seeking a default judgment.” Judge William W. Schwarzer, California Practice Guide: Federal Civil Procedure Before Trial ¶ 6:11 (The Rutter Group 2015) (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). Granting or denying a motion for default judgment is a matter within the court's discretion. Elektra Entm't Grp. Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005); see also Sony Music Entertainment, Inc. v. Elias, 2004 WL 141959, *3 (C.D. Cal. Jan. 20, 2004).

         The Ninth Circuit has directed that courts consider the following factors in deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiff; (2) the merits of plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning the material facts; (6) whether defendant's default was the product of excusable neglect; and (7) the strong policy favoring decisions on the merits. See Eitel, 782 F.2d at 1471-72; see also Elektra, 226 F.R.D. at 392.

         III. DISCUSSION

         A. Eitel Factors

         1. Possibility of Prejudice to Plaintiff

         The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered. PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002); see also Eitel, 782 F.2d at 1471-72. Courts have concluded that a plaintiff is prejudiced if the plaintiff would be “without other recourse for recovery” because the defendant failed to appear or defend against the suit. Pepsi, 238 F.Supp.2d at 1177; see also Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 499 (C.D. Cal. 2003). Given the moving defendants' failure properly to respond and defend this suit, plaintiff would be prejudiced if denied a remedy against the moving defendants. As a result, the first Eitel factor weighs in favor of the entry of default judgment.

         2. Substantive Merits and ...


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