United States District Court, C.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT
JUDGMENT AGAINST DEFY MEDIA, LLC 
D. WRIGHT, II UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiffs David Rath and Kara
Welker's (“Plaintiffs”) Motion for Default
Judgment (“Motion”) against Defendant Defy Media,
LLC (“Defy Media”). (ECF No. 18.) For the
following reasons, the Court GRANTS
Plaintiffs' Motion for Default Judgment and awards
Plaintiffs $100, 000.
owned and operated Generate Holdings, Inc.
(“Generate”), a talent agency in which they
managed clients. (Compl. ¶ 10, ECF No. 1.) Generate
placed its clients in entertainment and commercial projects
and collected the revenues due to the clients. (Id.)
Plaintiffs placed the funds owed to the clients into a
segregated and protected client trust account. (Id.)
Plaintiffs allege at some point in 2011, AdGen, LLC, a wholly
owned subsidiary of Alloy Digital, LLC, purchased Generate.
(Id. ¶ 11.) Approximately two years later,
Alloy Digital, LLC merged into the entity Defy Media, LLC.
(Id. ¶ 12.) Plaintiffs allege that as a result
of the merger, Defy Media assumed the obligations set forth
under Plaintiffs' respective Employee Covenants Agreement
and Equity Incentive Letter Agreement. (Id.) Defy
Media personnel assumed certain accounting functions
Plaintiffs performed, including the collection of
Plaintiffs' client revenue and management fees.
(Id. ¶ 14.)
2017, Plaintiffs discussed with Defy Media through its
agents, Defendants Matthew Diamond (“Diamond”)
and Keith Richman (“Richman”), the possibility of
extricating Generate from Defy Media so that Plaintiffs could
operate Generate independently. (Id. ¶ 15.)
Diamond is Defy Media's CEO, and Richman is Defy
Media's President. (Id. ¶¶ 4-5.) Both
are alleged to be the principal, agent, or employee of Defy
Media and to have acted within the scope of that relationship
at all relevant times. (Id. ¶ 7.)
Defendants assured Plaintiffs that they were working
to extricate Generate but needed more time to ensure a smooth
transition. (Id. ¶ 16.) Defendants promised to
pay Plaintiffs additional compensation through 2018, totaling
at least $100, 000, to incentivize Plaintiffs to remain with
Defy Media until an exit strategy materialized.
(Id.) Plaintiffs allege that Defendants made these
representations knowing that it did not intend to help
Plaintiffs extricate Generate nor pay Plaintiffs the
increased compensation they promised, and that Defendants
purposefully kept Plaintiffs in the dark about the true state
of its business operations. (Id. ¶ 17.) This
was because Defendants wanted Plaintiffs and Generate's
revenue under Defy Media's umbrella for as long as
possible to artificially inflate its account. (Id.
¶¶ 17, 21, 22.)
notice, Defendants notified Plaintiffs that Defy Media was
ceasing all operations on November 6, 2018. (Id.
¶ 19.) Plaintiffs were required to continue servicing
their clients without infrastructure or equipment, while Defy
Media continued to hold around $200, 000 that was due to
Plaintiffs' clients. (Id. ¶ 20.) Defendants
did not place this money into a separate client trust account
but rather in Defy Media's general operating account.
result of Defendants' fraudulent conduct, Plaintiffs are
seeking $100, 000 in compensatory damages, $300, 000 in
punitive damages, as well as recovery of Generate's email
server and its contents, the telephone numbers associated
with Generate, and all trademarks and copyrights pertaining
to the Generate trade name and logos. (Mot. 9-11.)
filed their Complaint on November 14, 2018. (See
generally Compl.) Defy Media was served pursuant to
Federal Rule of Civil Procedure 4(e) on November 27, 2018.
(Proof of Service, ECF No. 12.) After Defy Media's
failure to answer the Complaint, Plaintiffs filed a Request
to Enter Default against Defy Media on December 20, 2018.
(Req. for Entry of Default, ECF No. 15.) The Clerk entered
default against Defy Media on December 21, 2018. (ECF No.
17.) Plaintiffs moved for default judgment on April 5, 2019.
to Federal Rule of Civil Procedure (“Fed. R. Civ.
P.”) 55(b), a court may grant default judgment after
the Clerk enters default under Rule 55(a). See PepsiCo
Inc., v. Cal. Security Cans, 238 F.Supp.2d 1172, 1174
(C.D. Cal. 2002). A district court has discretion whether to
enter default judgment. Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980). In exercising its discretion, a
court must consider several factors, including: the
possibility of prejudice to plaintiff; the merits of
plaintiff's substantive claim; the sufficiency of the
complaint; the sum of money at stake; the possibility of a
dispute concerning material facts; whether the
defendant's default was due to excusable neglect; and the
strong policy underlying the Federal Rules of Civil Procedure
favoring decisions on the merits. Eitel v. McCool,
782 F.2d 1470, 1471-72 (9th Cir. 1986).
default, the defendant's liability generally is
conclusively established, and the well-pleaded factual
allegations in the complaint are accepted as true.
Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915,
917-19 (9th Cir. 1987) (per curiam) (citing Geddes v.
United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). If
the allegations sufficiently establish liability, the court
must then determine the “amount and character” of
the relief that should be awarded. Elektra Entm't
Grp. Inc. v. Crawford, 226 F.R.D. 388, 394 (C.D. Cal.
a court can enter default judgment, the requesting party must
satisfy the procedural requirements set forth in Fed.R.Civ.P.
55, as well as the Local Rules of this district.
PepsiCo, 238 F.Supp.2d at 1174. Central District of
California Local Rule 55-1 requires the movant to submit a
declaration establishing: (1) when and against whom the
default was entered; (2) identification of the pleading to
which default was entered; (3) whether the defaulting party
is a minor, an incompetent person, or exempt under the
Servicemembers Civil Relief Act; and (4) that the defaulting
party was served with notice, if required by Fed.R.Civ.P.
55(b)(2). Vogel v. Rite Aid Corp., 992 F.Supp.2d
998, 1006 (C.D. Cal. 2014); C.D. Cal. L.R. 55-1.
accordance with Fed.R.Civ.P. 55 and Local Rule 55-1, the
Court finds that the procedural requirements are satisfied.
The Clerk of the Court entered default against Defy Media on
December 21, 2018. (ECF No. 17.) The default was entered as
requested by Plaintiffs as to their November 14, 2018
Complaint. (ECF No. 15.) Defy Media is neither a minor nor an
incompetent person, and is not exempt under the
Servicemembers Civil Relief Act. (Decl. of Peter D. Scott in
Supp. of Pls.' Req. for Entry of Default ¶¶
5-6, ECF No. 15-1.) Finally, Defy Media has not appeared in
this action, and as such, notice of default judgment is
unnecessary under Rule 55(b)(2), as referenced by Local Rule
55-1(e). (Id. ¶ 3-4.) Accordingly, the Court
finds that Plaintiffs have complied with all procedural
Plaintiffs' Motion for Default Judgment
Court finds that the Eitel factors favor default
judgment. The Court will address each factor in turn.
First Eitel Factor: Plaintiffs Would Suffer
Prejudice if Default is Not Entered
first Eitel factor considers whether Plaintiffs will
suffer prejudice if default judgment is not entered.
PepsiCo, 238 F.Supp.2d at 1177. When a defendant
fails to appear and defend the claims against it, the
plaintiff would be without recourse and suffer prejudice
unless default judgment is entered. Id.
Defy Media's failure to defend this suit, Plaintiffs
would be prejudiced if denied a remedy against Defy Media. As
a result, the first Eitel factor weighs in favor of
entering default judgment.
Second and Third Eitel Factors: Plaintiffs'
Claims are ...