Harrington v. Equity Asset & Property Management, Inc.

          ORDER GRANTING PLAINTIFF'S MOTION FOR THIRD DEFAULT JUDGMENT, [ECF No. 27]

          Hon. Gonzalo P. Curiel United States District Judge

         Before the Court is the motion for Third Default Judgment filed by Plaintiff Blaine G. Harrington III. ECF No. 27. Defendant Equity Asset & Property Management, Inc. d/b/a Equity Residences LLC has not answered Plaintiff's complaint or otherwise appeared in this matter. For the reasons discussed below the Court GRANTS Harrington's motion.

         PROCEDURAL BACKGROUND

         On January 30, 2018, Harrington filed his Complaint in this Court. ECF No. 1. According to the Return of Service filed on February 8, 2018, the summons and complaint were served on “Jason Smith as Manager” at Equity's address of 1220 Rosecrans Street, #822, San Diego, CA, 92016 (“Rosecrans Street address”). ECF No. 4. On March 13, 2018, Harrington moved for entry of default against Equity, contending that Equity was served but did not answer or respond to the Complaint within the allowed time to do so. ECF No. 5. On March 14, 2018, the Clerk entered a default against Equity. ECF No. 6. On August 14, 2018, Harrington moved for a default judgment against Equity. ECF No. 9. On October 15, 2018, the Court denied Harrington's first motion for default judgment, citing a number of deficiencies in Harrington's service of the summons and complaint on Equity. ECF No. 12.

         Harrington served the summons and complaint again on Jason Smith at the Rosecrans Street address on November 28, 2018. ECF No. 21-3 ¶ 3. That same day, Harrington also mailed the summons, complaint, motion for default, motion for final default, and the order denying final default to the same Rosecrans Street address. Id. On January 4, 2019, Harrington requested an entry of default against Equity. ECF No. 18. The Clerk entered a default three days later. ECF No. 19. On August 21, 2019, Harrington filed its second motion for default judgment against Equity. ECF No. 21. On October 24, 2019, the Court denied Harrington's motion with leave to amend within the next 30 days. ECF No. 26. On November 25, 2019, Plaintiff filed a motion for third default judgment. ECF No. 27.

         FACTUAL BACKGROUND

         According to the Complaint, Harrington is a “travel/location photographer” based in Denver, Colorado. ECF No. 1 ¶ 2. In 2011, Harrington created the photograph that gives rise to this litigation. Id. ¶ 10. This photograph depicts a beach scene with ocean water, sand, and palm trees and is entitled “20110427florida4138.jpg” (“Copyrighted Work”). Id. ¶ 10. A person appears to be laying on the beach in the photo. Id. Harrington registered the photograph with the Register of Copyrights on August 29, 2011. Id. ¶ 11.

         Equity is a luxury real estate investment company. Id. ¶ 3. In its motion for third default judgment, Harrington alleges that Equity is a Nevada company with its main office in San Diego, California. ECF No. 27-1 at 15. Harrington asserts that Equity copied the Copyrighted Work without Harrington's permission, and then distributed it on the internet to promote Equity's business. ECF No. 1 ¶¶ 15, 16.

         DISCUSSION

         “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend . . . the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). After default is properly entered, a party seeking relief other than for a sum certain must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b). “[D]efault judgments are ordinarily disfavored.” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). “The decision to grant or deny default judgment is within the discretion of the district court.” Xifin, Inc. v. Sunshine Pathways, LLC, No. 16-CV-01218-GPC-DHB, 2016 WL 5930313, at *2 (S.D. Cal. Oct. 12, 2016) (citing Eitel, 782 F.2d at 1471). “In determining whether a Plaintiff is entitled to default judgment, the Court must first assess the adequacy of service of process on the party against whom default is requested.” Hupp v. San Diego Cty. Dist. Atty., No. 12-CV-492-IEG RBB, 2012 WL 2887229, at *4 (S.D. Cal. July 12, 2012) (citation and quotation marks omitted).

         In the order denying Plaintiff's second motion for default judgment, the Court held that the existing record was insufficient to exercise personal jurisdiction - both general and specific personal jurisdiction - over Equity. ECF No. 26.

         I. Jurisdiction

         When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, the Court may enter a judgment of default upon application by the plaintiff and after an entry of default. See Fed. R. Civ. P. 55(b)(2). Before assessing the merits of a default judgment, however, a court must confirm that it has subject matter jurisdiction over the case and personal jurisdiction over the parties. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Because Plaintiff is asserting a violation of the Copyright Act, 17 U.S.C. § 501, the Court has federal question jurisdiction over that claim by virtue of 28 U.S.C. §§ 1331, 1338(a). Accordingly, the Court has subject matter jurisdiction over the case. Next, the Court turns to the issue of personal jurisdiction.

         II. Personal Jurisdiction

         “When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties. A judgment entered without personal jurisdiction over the parties is void.” Id. The Court may dismiss an action sua sponte for lack of personal jurisdiction in order “[t]o avoid entering a default judgment that can later be successfully attacked as void.” Id. Even when the Court has jurisdiction to enter judgment, the decision whether to enter default judgment is within the Court's discretion. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).

         A. General Personal Jurisdiction

         Plaintiff corrected his initial characterization of Equity as a California corporation in the Complaint, see ECF No. 1 ¶ 9, now admitting that Equity is a Nevada company with its main office in San Diego, California. ECF No. 27-1 at 10 n.1. In his third motion for default judgment, Plaintiff argues that Equity has its principal place of business in San Diego, California and is therefore subject to this Court's exercise of general personal jurisdiction. In support of this, Plaintiff alleges that Equity has its main office in California, employees in California, a California phone number with a San Diego area code listed on its website, and a California address listed on its Statement of Information filed with the California Secretary of State. ECF No. 27-1 at 13. Plaintiff additionally alleges that Equity is registered with the State of California Bureau of Real Estate. Id.

         “With respect to a corporation, the place of incorporation and principal place of business are paradigm bases for general jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (citations omitted). “Daimler ma[de] clear the demanding nature of the standard for general jurisdiction over a corporation, ” and that courts are prohibited from exercising general jurisdiction solely on the basis of a corporation's “substantial, continuous, and systematic course of business” in a state. Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014) (citing Daimler, 571 U.S. at 139). In other words, “[g]eneral jurisdiction does not exist simply because of the magnitude of the defendant's in-state contacts.” Wright & Miller, 4 Fed. Prac. & Proc. Civ. § 1067.5 (4th ed.) (citations omitted). “General jurisdiction instead calls for an appraisal of a corporation's activities in their entirety, nationwide and worldwide.” Daimler, 571 U.S. at 139 n.20. If the magnitude of a corporation's business activities in the forum state substantially exceeds the magnitude of the corporation's activities in other places, general jurisdiction may be appropriate in the forum state. See id. When there has been no evidentiary hearing, a plaintiff need only make out a prima facie showing of jurisdictional facts. See Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010); Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). “It is only if the court takes evidence on the issue or rules on the personal jurisdiction question in the context of a trial that a heightened, preponderance of the evidence standard applies.” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005). Absent such a showing, however, general jurisdiction will be improper. See, e.g., Martinez, 764 F.3d at 1070 (finding general jurisdiction lacking where corporation was not licensed to do business in California and had no office, staff, or physical presence in California, and therefore its California contacts were minor compared to its other worldwide contacts).

         In its prior order denying Plaintiff's motion for second default judgment, the Court noted the need for a comparative analysis. ECF No. 26 at 5. In his motion for third default judgment, Harrington does not provide a comparative analysis but alleges that Equity's principal place of business is in San Diego, California and “does not appear to be operating from anywhere else but California.” ECF 27-1 at 13.

         Plaintiff has not cited cases that define the requirements for a “principal place of business” in the context of general personal jurisdiction. At least in the context of diversity of citizenship, the Supreme Court has referred to the corporation's “principal place of business” as its “nerve center, usually its main headquarters, ” where “a corporation's officers direct, control, and coordinate the corporation's activities.” Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010).

         In Delphix, the Ninth Circuit permitted the exercise of general jurisdiction over Embarcadero, a Delaware corporation, despite Embarcadero's claims that it had moved its principal place of business from California to Texas. Delphix Corp. v. Embarcadero Techs., Inc., 749 Fed.Appx. 502, 506 (9th Cir. 2018). The Ninth Circuit found that the plaintiff had presented sufficiently extensive evidence showing that Embarcadero's headquarters were still in California. Specifically, the plaintiff cited the following facts to demonstrate that Embarcadero's principal place of business remained in California: (1) Embarcadero continued to promote itself on social media as having a principal place of business in California; (2) Embarcadero had denied that its principal place of business was in Texas in an answer to a complaint filed in the Eastern District of Texas; (3) Embarcadero continued to represent that it has a California address to the Trademark Office; (4) Embarcadero had failed to substantiate in its pleadings and discovery responses that most of its employees were located in Texas at the time that the lawsuit was filed; and (5) Embarcadero relied on California law and its California-based offices in its contracts and policies addressed to consumers. See Delphix Corp. v. Embarcadero Techs., Inc., 2016 WL 4474631, at *6 (N.D. Cal. Aug. 25, 2016), aff'd in part, rev'd in part, 749 Fed.Appx. 502 (9th Cir. 2018).

         Here, Harrington alleges that Equity has listed a San Diego, California phone number as the sole contact phone number on its website and lists “La Jolla” as its location on LinkedIn webpage; additionally, all of Equity's employees appear to live in the greater San Diego area. ECF No. 27-1 at 11. Harrington also presents evidence that Defendant has real estate licenses with the State of California that list the Rosecrans Street address as its “main office” address. ECF Nos. 27-8, 27-9. And finally, Equity cites California law on privacy rights in its privacy policy listed on its website. ECF No. 27-16 at 8.

         In sum, Harrington has presented substantial evidence corroborating its claim that Equity's principal place of business is in fact in San Diego, California. The Court is mindful that any analysis of Equity's location and business conduct is impeded by Equity's failure to appear. While the Delphix plaintiff was able to present a more fulsome record as to the defendant's location and business model; here, Harrington has ultimately gathered sufficient evidence about an absent defendant. While there is still a level of uncertainty with respect to Equity's ties to Nevada, the Court will afford a degree of flexibility to Harrington on the question of jurisdiction in Equity's absence. Mwani, 417 F.3d at 7 (“[T]he absence of the defendants counsels greater flexibility toward the plaintiffs because it impedes their ability to obtain jurisdictional discovery.”). Accordingly, the Court finds that Harrington has made a prima facie case showing that Equity's principal place of business is in California and that this Court has general personal jurisdiction over Equity.^[1]

         B. Specific Personal Jurisdiction

         Since the Court has already found general personal jurisdiction, the question of specific personal jurisdiction is rendered moot. However, the Court will nevertheless address this analysis.

         The Ninth Circuit applies the following three-prong test for determining specific jurisdiction over a non-resident defendant:

(1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it ...