Khraibut v. Chahal
| Decision Date | 26 March 2021 |
| Docket Number | Case No. 15-cv-04463-CRB |
| Court | U.S. District Court — Northern District of California |
| Parties | YOUSEF KHRAIBUT, Plaintiff, v. GURBAKSH CHAHAL, et al., Defendants. |
Plaintiff Yousef Khraibut has moved for default judgment against Defendants Gurbaksh Chahal and Gravity4, Inc. He seeks $4,421,428.49 in damages and $560,742 in attorneys' fees and costs. The Court grants Khraibut's motion with a reduced damage award of $1,246,950.20, plus $538,492 in attorneys' fees and costs.
The Courts finds that Khraibut asserted valid claims against Chahal and Gravity4 and that the standard for entering default judgment is otherwise met. The Court reduces the damages award because, at least in some instances, the requested award is excessive based on cases involving comparable facts. The Court also reduces attorneys' fees because one of Khraibut's lawyers has not provided enough justification for his $1,750 hourly rate.
Plaintiff Yousef Khraibut was hired by Defendant Gurbaksh Chahal to work at Chahal's start-up, Defendant Gravity4, in 2014. Compl. ¶ 5 (dkt. 1). Khraibut had already created and sold a multi-million dollar company, and left his home in Ontario, Canada to work as head of design for Chahal and Gravity4 in San Francisco, California. Id. ¶ 25.
Khraibut alleges as follows: Khraibut was promised a senior management role, 1% equity in Gravity4 with immediate vesting, housing accommodations, work immigration sponsorship, and a $6,000 per month salary. Id. ¶¶ 41-42. Chahal and Khraibut orally agreed to these terms, and Khraibut never received or signed any employment documents, as there was little administrative infrastructure when he joined the company. Id. ¶¶ 42, 44. Chahal denied Khraibut's repeated requests for a written employment agreement and work visa sponsorship, and at one point suggested that Khraibut become authorized to work in Bermuda or Ireland while continuing to work in the United States. Id. ¶¶ 66, 72.
While Khraibut was working at Gravity4, Chahal subjected him to ridicule, discrimination and harassment, threats of physical violence, and daily abuse. Id. ¶¶ 174-82, 223, 227, 233. Khraibut frequently expressed concern orally and in writing about Chahal's treatment of employees, including pressuring employees to drink heavily, consume prescription Adderall, and take the drug MDMA. Id. ¶¶ 132-34. Chahal often used ethnic slurs in the workplace, including calling Khraibut an "Arab ghetto," "habibi ghetto," and a "terrorist" both privately and in front of coworkers. Id. ¶¶ 84-85. Chahal also made derogatory remarks about Khraibut's Muslim religion. Id. ¶¶ 178, 283. Further, on multiple occasions, Chahal lifted Khraibut's shirt, slapped his stomach, and made derogatory remarks about his body hair and Arab ethnicity in front of others. Id. ¶¶ 176-77, 283. Chahal also threatened to "beat him," "break his teeth," stick a knife between his teeth, track him down, and have him "taken care of." Id. ¶¶ 210, 229, 248.
The abuse went beyond insults and threats. Chahal ordered employees to install keystroke monitoring software on other employees' computers, including Khraibut's personal computer. Id. ¶¶ 256, 325; Mot. for Default Judgment at 24 (dkt. 90). Chahal falsely accused Khraibut of stealing intellectual property and called him a "hacker" to Gravity4 employees and business associates. Compl. ¶¶ 245-46. And Chahal directed a Gravity4 employee to send an email to Business Insider accusing Khraibut of extortion. Id. ¶ 271; Mot. at 26.
Chahal and Gravity4 withheld pay, a written employment agreement, and immigration sponsorship while subjecting Khraibut to this treatment. Compl. ¶¶ 7, 174- 82, 223, 227, 233. After Chahal threatened Khraibut with deportation and violence and fired him, Khraibut left the country and returned to Canada. Id. ¶¶ 158, 172, 191, 203, 209, 214, 229, 240-74. But, due to continuing threats from Chahal, Khraibut still feared for his life and left Canada to go "into hiding for months." Id. ¶ 241. Because of the violent threats, the San Francisco Police Department obtained a criminal protective order for Khraibut against Chahal in October 2014. Id. ¶ 242. Despite the protective order, Chahal continued to harass Khraibut by attempting to interfere in his business ventures and directing Gravity4 employees to file false police reports against Khraibut. Id. ¶¶ 263-67.
On September 28, 2015, Khraibut filed a complaint against Chahal and Gravity4 asserting claims for (1) workplace discrimination and harassment in violation of the Fair Employment and Housing Act ("FEHA"), (2) failure to prevent harassment and discrimination in violation of the FEHA, (3) breach of contract, (4) failure to provide accurate wage statements in violation of California Labor Code Section 226, (5) fraudulent misrepresentation in violation of Labor Code Section 970, (6) retaliation for reporting unsafe work conditions in violation of Labor Code Section 6310, (7) wrongful termination in violation of public policy, (8) unfair business practices in violation of California's Business and Professions Code, (9) defamation per se, (10), intrusion upon seclusion, and (11) intentional infliction of emotional distress.
Defendants' counsel accepted service and successfully moved to compel arbitration. First Dhillon Decl. ¶ 24 (dkt. 90-1); see Mot. to Compel Arbitration (dkt. 15); Order Granting Mot. to Compel Arbitration (dkt. 31). But Defendants failed to respond to Khraibut's numerous requests to select an arbitrator and schedule arbitration, and the American Arbitration Association administratively closed the arbitration. Grewal Decl. ¶¶ 6, 9 (dkt. 58-1). On November 27, 2018, the Court granted Khraibut's motion seeking an order (1) requiring Defendants to show cause for their failure to defend, and (2) terminating arbitration. See Order Granting Admin. Mot. (dkt. 59). The Court ordered Defendants to appear on December 7, 2018, and to show cause why the Court should not enter judgment against them for failure to defend. Id.
On November 29, 2018, Chahal filed a pro se response requesting that the hearing be continued until March 2019 because he was incarcerated. See First Mot. to Continue (dkt. 62). The Court granted the continuance and rescheduled the hearing for March. See Order Granting Continuance (dkt. 68). On February 27, 2019, Chahal moved for another continuance so that he could seek medical treatment. See Second Mot. to Continue (dkt. 70). The Court granted that continuance as well, and reset the hearing to June 14, 2019. See Order Granting Second Continuance (dkt. 72). On June 10, 2019, Chahal moved for yet another continuance, which Khraibut opposed. See Third Mot. to Continue (dkt. 73); Opp. to Third Mot. to Continue (dkt. 74). The Court reset the hearing to July 12, 2019, but warned that it would move the hearing again only after a substantial showing of good cause. See Order Granting Third Continuance (dkt. 76). When Chahal moved to continue the hearing once more, the Court denied his motion. See Fourth Mot. to Continue (dkt. 77); Order Denying Fourth Continuance (dkt. 79).
No Defendants appeared at the hearing. See Minute Entry (dkt. 81). The Court thus entered default against Defendants on July 12, 2019 for failure to defend. See id. On November 6, 2020, Khraibut moved for default judgment under Rule 55(b) of the Federal Rules of Civil Procedure. See Mot. (dkt. 90). He seeks $4,982,170.49, which includes compensatory damages of $1,857,703.39, statutory damages of $63,725.10, punitive damages of $2,500,000, costs of $350, and attorneys' fees of $560,392. Supp. Br. at 1 (dkt. 102).
Khraibut served Defendants with copies of all the moving papers at the last known address listed on the docket. First Dhillon Decl. ¶ 28. But the last four mail notices sent by the Court to Chahal were returned as undeliverable, including the notice that Khraibut was filing a Motion for Default Judgment. See Mail Returned as Undeliverable (dkt. 82-84, 91). On January 1, 2021, the Court ordered Khraibut to file a Certificate of Service indicating that he has served the Motion for Default Judgment on Defendants. See Order Re Certificate of Service (dkt. 92). On January 29, 2021, Khraibut filed a Certificate of Service indicating that an employee of Dhillon Law Group served Defendants via certified mail sent on January 11, 2021 at their last known address. See Certificate of Service (dkt. 95).1
Upon an entry of default, the factual allegations of the plaintiff's complaint are taken as true, except those relating to damages. See Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008).
In determining whether to enter default judgment, the Court has "an affirmative duty to look into its jurisdiction over both the subject matter and the parties," In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999), including whether notice has been adequately given, see Fed. R. Civ. P. 55(a); Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987); accord Dytch v. Bermudez, 2018 WL 2230945, at *2 (N.D. Cal. May 16, 2018). If a defendant has appeared personally or through a representative, that defendant must be served with written notice of the application for default judgment at least seven days before the hearing. Fed. R. Civ. P. 55(b)(2).
To determine whether default judgment is appropriate, courts in the Ninth Circuit weigh the following factors: (1) the possibility of prejudice to the plaintiff; (2) the merits of the 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 material facts; (6) whether the default was due to excusable neglect; and (7) the likelihood of obtaining a decision on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
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