Fraserside IP L.L.C. v. Youngtek Solutions Ltd.

• Citation: 796 F.Supp.2d 946,80 Fed.R.Serv.3d 122
• Decision Date: 12 July 2011
• Docket Number: No. C11–3005–MWB.,C11–3005–MWB.
• Parties: FRASERSIDE IP L.L.C., an Iowa Limited Liability Company, Plaintiff, v. YOUNGTEK SOLUTIONS LIMITED, dba EmpFlix, dba www. empflix. com, dba TNAFlix.com and www. tnaflix. com, and John Does 1–100 and John Doe Companies 1–100, Defendants.
• Court: U.S. District Court — Northern District of Iowa

796 F.Supp.2d 946

80 Fed.R.Serv.3d 122

FRASERSIDE IP L.L.C., an Iowa Limited Liability Company, Plaintiff,

v.YOUNGTEK SOLUTIONS LIMITED, dba EmpFlix, dba www. empflix. com, dba TNAFlix.com and www. tnaflix. com, and John Does 1–100 and John Doe Companies 1–100, Defendants.

No. C11–3005–MWB.

United States District Court, N.D. Iowa, Central Division.

July 12, 2011.

Chad Lorin Belville, Attorney at Law, Phoenix, AZ, for Plaintiff.

Constance M. Alt, Shuttleworth & Ingersoll, Cedar Rapids, IA, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT YOUNGTEK SOLUTIONS LIMITED'S MOTION TO SET ASIDE DEFAULT AND PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

MARK W. BENNETT, District Judge.

+-----------------+
                ¦TABLE OF CONTENTS¦
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                I. INTRODUCTION AND BACKGROUND                                        949
                

 A. Procedural Background                                           949
                   B. Factual Background                                              950
                

                II. LEGAL ANALYSIS                                                    950
                

 A. Entry Of Default And Default Judgment                           950
                   B. Motion To Set Aside Default                                     952
                

 1. Applicable rules for service                               952
                        2. Sufficiency of service on Youngtek                         953
                

 a. The Hague Convention                                   953
                            b. Service on Youngtek                                    954
                

 3. Setting aside default for good cause                       955
                

 a. Legal Standards                                        955
                            b. Analysis                                               955
                

 i. Blameworthiness or culpability                    955
                                ii. Youngtek's possible defenses                      957
                                iii. Whether Fraserside would be prejudiced            958
                                iv. Summary                                           958
                

 C. Motion For Default Judgment                                     958
                

                III. CONCLUSION                                                        958
                

In this lawsuit, the plaintiff asserts a variety of copyright and trademark infringement claims against defendants concerning adult motion pictures on their internet websites. The Clerk of Court has entered a default against defendant Youngtek Solutions Limited (“Youngtek”). Youngtek, a foreign corporation, has moved to set aside that default on the grounds that it is void for insufficient service of process and, alternatively, that it should be set aside for good cause. The plaintiff has resisted Youngtek's motion on all grounds, asserting that the default should be allowed to stand, and filed its own motion for default judgment in which it requests that default judgment be entered in its favor.

I. INTRODUCTION AND BACKGROUND

A. Procedural Background

On February 17, 2011, plaintiff Fraserside IP L.L.C. (“Fraserside”) filed a complaint against Youngtek, John Does, and John Doe Companies, alleging the following causes of action: copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq. ; contributory copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq. ; vicarious copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq. ; inducing copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq. ; trademark infringement, in violation of 15 U.S.C. § 1114; contributory trademark infringement, in violation of 15 U.S.C. § 1114; vicarious trademark infringement, in violation of 15 U.S.C. § 1114; false designation of origin, in violation of 15 U.S.C. § 1125(a); and, dilution of trademark, in violation of 15 U.S.C. § 1125(c). On April 13, 2011, Fraserside had a private process server, Tassos Kontos, serve copies of a summons and complaint upon Youngtek's registered agent for service of process in Cyprus.

On June 1, 2011, Fraserside filed a Motion for Clerks Entry of Default (docket no. 11). On June 2, 2011, the Clerk of Court entered Youngtek's default (docket no. 13). On June 16, 2011, Fraserside filed a Motion For Entry Of Default Judgment (docket no. 14). On June 17, 2011, Youngtek filed a Motion To Set Aside Default (docket no. 15). In its motion, Youngtek moves to set aside the default arguing it has not been properly served. Youngtek argues, alternatively, that the default should be set aside for good cause. On June 23, 2011, Fraserside filed a timely resistance to Youngtek's motion. Fraserside argues Youngtek's motion is premature because default judgment has not yet been entered against it. Fraserside, alternatively, argues Youngtek has not demonstrated excusable neglect to set aside the default.

B. Factual Background

On April 13, 2011, the summons and complaint, with no Greek translation, were served on Youngtek's agent for process in Cyprus. Although Youngtek does have an office in Cyprus for service of process, none of its management is located there. Youngtek's agent did not understand the importance of the summons and complaint because of the lack of a Greek translation. Youngtek's Cyprus office mailed hard copies of the summons and complaint to Youngtek's management. Youngtek maintains that this mailing process took “a couple weeks.” Wijnveen Aff. at ¶ 12 (docket no. 15–4). When Youngtek's management received the documents, it consulted with its European counsel and was advised that the documents had not been properly served. On April 29, 2011, Youngtek's European counsel sent a letter to Keys Systems GmbH, the registrar for the domain names TnaFlix.com and EmpFlix.com, which referenced this lawsuit. Because Youngtek assumed that proper service of process might be made it contacted attorney Valentin Gurvitis to retain him to represent it in this matter. After he was formally retained, Gurvitis spent two weeks locating qualified local counsel in Iowa. Gurvitis Aff. at ¶ 6 (docket no. 15–7). On June 17, 2011, Gurvitis retained local counsel in Iowa. Gurvitis Aff. at ¶ 6. On this same date, Youngtek filed its Motion To Set Aside Default.

II. LEGAL ANALYSIS

A. Entry Of Default And Default Judgment

Rule 55 of the Federal Rules of Civil Procedure provides, in pertinent part, as follows:

Rule 55. Default; Default Judgment

(a) Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.

(b) Entering a Default Judgment.

(1) By the Clerk. If the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, the clerk—on the plaintiff's request, with an affidavit showing the amount due—must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.

(2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals—preserving any federal statutory right to a jury trial—when, to enter or effectuate judgment, it needs to:

(A) conduct an accounting;

(B) determine the amount of damages;

(C) establish the truth of any allegation by evidence; or

(D) investigate any other matter.

(c) Setting Aside a Default or a Default Judgment. The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).

Fed.R.Civ.P. 55.

In Hayek v. Big Brothers/Big Sisters of America, 198 F.R.D. 518 (N.D.Iowa 2001), I summarized the mechanics under Rule 55 of obtaining the entry of default and default judgment, as well as the method for setting aside a default or default judgment, as follows:

Under Rule 55, “[w]hen a party ‘has failed to plead or otherwise defend’ against a pleading listed in Rule 7(a), entry of default under Rule 55(a) must precede grant of a default judgment under Rule 55(b).” See Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir.1998); see also Hagen v. Sisseton–Wahpeton Community College, 205 F.3d 1040, 1042 (8th Cir.2000) (citing Johnson for this requirement). “Entry of a default under Federal Rule of Civil Procedure 55(a) is not, as such, entry of a judgment; it merely permits the plaintiff to move for a default judgment under Rule 55(b)(2), assuming that the default is not set aside under Rule 55(c).” Inman v. American Home Furniture Placement, Inc., 120 F.3d 117, 118 n. 2 (8th Cir.1997). Moreover, “ ‘a default judgment cannot be entered until the amount of damages has been ascertained.’ ” Hagen, 205 F.3d at 1042 (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 97 (2d Cir.1993)). Thus, if the judgment sought is not for a sum certain, Rule 55(b)(2) provides that “the court may conduct such hearings or order such references as it deems necessary and proper” in order to “enable the court to enter judgment.” Fed.R.Civ.P. 55(b)(2). In short, as this court has explained, Rule 55 “requires two steps before entry of a default judgment: first, pursuant to Fed.R.Civ.P. 55(a), the party seeking a default judgment must have the clerk enter the default by submitting the required proof that the opposing party has failed to plead or otherwise defend; second, pursuant to Fed.R.Civ.P. 55(b), the moving party may seek entry of judgment on the default under either subdivision (b)(1) or (b)(2) of the rule.” Dahl v. Kanawha Inv. Holding Co., 161 F.R.D. 673, 683 (N.D.Iowa 1995).

Hayek, 198 F.R.D. at 520.

The Clerk of Court has entered the default of Youngtek pursuant to Rule 55(a), completing the...