Microsoft Corp. v. Doe
| Decision Date | 27 December 2022 |
| Docket Number | Civil Action 1:21-cv-822 RDA/IDD |
| Parties | MICROSOFT CORPORATION, a Washington corporation, Plaintiff, v. JOHN DOES 1-2, Controlling a Computer Network and Thereby Injuring Plaintiff and Its Customers, Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
REPORT AND RECOMMENDATION
This matter is before the Court on Plaintiff Microsoft Corporation's (“Microsoft” or “Plaintiff”) Motion for Default Judgment against Defendants, John Does 1-2 (collectively “Defendants”). Pl.'s Mot. for Default J. Dkt. No. 36. After the Defendants failed to file an answer plead, or otherwise defend this action, the undersigned Magistrate Judge took this matter under advisement to issue this Report and Recommendation. Upon consideration of the Complaint, Plaintiff's Motion for Default Judgment, the supporting memorandum, and relevant portions of the underlying record, the undersigned Magistrate Judge makes the following findings and recommends that Plaintiff's Motion be GRANTED as to Count I and DISMISSED without prejudice as to the remaining counts.
Plaintiff filed its Complaint against Defendants on July 13, 2021. Dkt. No. 1. Plaintiff brought claims for: (1) violation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030; (2) violation of the Stored Communications Act (“SCA”), 18 U.S.C. § 2701 et seq.; (3) violation of the Virginia Computer Crimes Act (Virginia Code Ann. § 18.2-152.1); (4) common law trespass to chattels; (5) and conversion. Compl. ¶ 1. Specifically, Plaintiff filed the lawsuit seeking “injunctive and other equitable relief and damages” against Defendants, to prevent Defendants from engaging in these alleged violations of law and causing Plaintiff further injury. Id.
For a court to render default judgment against a party, it must have subject matter jurisdiction, personal jurisdiction, and be the appropriate venue for the action.
This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331, because this case involves federal questions arising under the CFAA (18 U.S.C. § 1030) and the SCA (18 U.S.C. § 2701 et seq.). Further, federal courts may exercise supplemental jurisdiction over state claims that are so closely related to the original claim that said claims arise out of the “same case or controversy,” subject to exceptions that are inapplicable in this case. 28 U.S.C. § 1367(a). Here, in addition to the allegations of violations of the CFAA and SCA, Plaintiff brought state-law claims under the Virginia Computer Crimes Act (Virginia Code Ann. § 18.2-152.5:1) and for common law trespass to chattels and conversion. The undersigned finds that these statelaw claims arise from the same set of facts giving rise to Plaintiff's claims under the CFAA and SCA, and therefore arise out of the same case or controversy. As a result, this Court may properly exercise supplemental jurisdiction over the state-law claims. Accordingly, this Court has subjectmatter jurisdiction over all of Plaintiff's claims.
The Court must also be satisfied that it has personal jurisdiction over Defendants. For this Court to exercise personal jurisdiction, two requirements must be satisfied. First, Virginia's long- arm statute must authorize the exercise of jurisdiction. CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292 (4th Cir. 2009). Second, if that authorization exists, then the Due Process Clause of the Fourteenth Amendment requires that the defaulting defendants have sufficient minimum contacts with the forum state. Christian Sci. Bd. Of Dirs. of the First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 205 (4th Cir. 2001). Particularly, the defendants' conduct must have such a connection with Virginia that it is fair for the defendants to be required to defend themselves in a court in the Commonwealth of Virginia. Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414-15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).
In the online context, a state may exercise jurisdiction over a defendant when the defendant (1) directs electronic activity into the State; (2) with the manifest intent of engaging in business or other activities within the State; and (3) that activity gives rise to the plaintiff's claims. See ALS Scan, Inc., v. Digital Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002). Regarding the Court's ability to exercise personal jurisdiction in a case involving the use of the internet, the Fourth Circuit has adopted the framework set forth in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997); see also ALS Scan, Inc., 293 F.3d at 707. Under Zippo, the exercise of personal jurisdiction is directly proportionate to the nature and quality of commercial activity that a defendant-entity conducts over the internet. Zippo, 952 F.Supp. at 1124.
Here, Plaintiff's Complaint alleges that Defendants' conduct justifies this Court's exercise of personal jurisdiction because Defendants directed electronic activity into the state of Virginia through domain names registered in the Eastern District of Virginia for the purpose of targeting Microsoft customers and their network. Compl. ¶13. Furthermore, these alleged actions form the basis of the claims in Plaintiff's Complaint. Accordingly, the undersigned finds this Court has personal jurisdiction over Defendants.
Venue is proper in “a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located” and in a judicial district where “a substantial part of the events or omissions giving rise to the claim occurred.” 28 U.S.C. §§ 1391(b)(1)-(2). Venue is also proper where a defendant “is subject to the court's personal jurisdiction with respect to such action.” 28 U.S.C. § 1391(b)(3). Here, a substantial part of the events giving rise to this lawsuit occurred in this District. Compl. ¶12. Furthermore, as discussed above, Defendants are subject to the Court's personal jurisdiction. Therefore, the undersigned finds that venue is proper in this district under 28 U.S.C. § 1391(b).
The Court must also be satisfied that the defaulting party has been properly served. Pursuant to Federal Rule of Civil Procedure 4(f)(3), a plaintiff may serve an individual who does not reside within a judicial district of the United States “by other means not prohibited by international agreement, as the court orders.” FED. R. CIV. P. 4(f)3). Here, Defendants' identities are unknown, and the Court previously ordered that Plaintiff could serve the Defendants ‘by any means authorized by law, including... publishing notice on a publicly available Internet website.” Dkt. 18 at p. 8, Dkt. 27 at p. 10-11. Plaintiff served Defendants by publication on the publicly available website, www.noticeofpleadings.com/maliciousdomains, on July 19, 2021. Ramsey Decl. ¶ 6. Therefore, the undersigned finds that service of process is proper in this action.
Plaintiff filed its Complaint on July 13, 2021. Dkt. No. 1. In accordance with the Court's July 16, 2021 Order authorizing service by Internet publication, Plaintiff served Defendants on July 19, 2021. Dkt. No. 33. Plaintiff then filed a Request for Clerk's Entry of Default on February 23, 2022, and the Clerk of the Court entered default on February 24, 2022. Dkt. Nos. 32, 35. On March 9, 2022, Plaintiff filed its Motion for Default Judgment and accompanying memorandum in support of its motion. Dkt. Nos. 36-37. Upon this matter's referral, a hearing was held before the undersigned on April 15, 2022. Dkt. No. 44. Because of Defendants' failure to appear at the hearing or otherwise defend this action, the undersigned Magistrate Judge took this matter under advisement to issue this Report and Recommendation. Id.
Rule 55 of the Federal Rules of Civil Procedure provides for the entry of default judgment when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” A defendant in default concedes the factual allegations of the complaint. See, e.g., DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008); Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006); Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Default does not, however, constitute an admission of the adversary's conclusions of law and is not to be “treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover.” Ryan, 253 F.3d at 780 (quoting Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Instead, the Court must “determine whether the well-pleaded allegations in [the plaintiff's] complaint support the relief sought in [the] action.” Id.
Thus in issuing this Report and Recommendation, the undersigned Magistrate Judge must evaluate Plaintiff's claims against the standards of Rule 12(b)(6) of the Federal Rules of Civil Procedure to ensure that the Complaint contains plausible claims upon which relief may be granted. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (). To meet this standard, a complaint must set forth “sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In determining whether allegations are plausible, the reviewing court may draw on context, judicial experience, and common sense. Francis v. Giacomelli, 588 F.3d 186, 193 (4th...
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