Warner Bros. Entertainment Inc. v. Caridi

• Decision Date: 18 November 2004
• Docket Number: No. CV 04-582SVW.,CV 04-582SVW.
• Court: U.S. District Court — Central District of California
• Parties: WARNER BROS. ENTERTAINMENT INC., a Delaware corporation; WV Films III LLC, a Delaware limited liability company, Plaintiffs, v. Carmine CARIDI, an individual; Russell Sprague, an individual; and Does 1 through 10, Defendants.

346 F.Supp.2d 1068

WARNER BROS. ENTERTAINMENT INC., a Delaware corporation; WV Films III LLC, a Delaware limited liability company, Plaintiffs, v. Carmine CARIDI, an individual; Russell Sprague, an individual; and Does 1 through 10, Defendants.

No. CV 04-582SVW.

United States District Court, C.D. California.

November 18, 2004.

Andrew M. White, David E. Fink, White O'Connor Curry & Avanzado, Los Angeles, CA, for Plaintiffs.

ORDER RE: MOTION FOR DEFAULT JUDGMENT

WILSON, District Judge.

I. INTRODUCTION

On January 28, 2004, Warner Bros. Entertainment Inc. and WV Films III LLC (collectively "Warner Bros.") filed this action for copyright infringement against Carmine Caridi ("Caridi") and Russell Sprague ("Sprague"), seeking a permanent injunction, enhanced statutory damages, and reasonable attorney's fees and costs.

Warner Bros. is the owner of all rights, title, and interest in and to the copyrights in the screenplay and motion picture The Last Samurai and Mystic River. Warner Bros. submitted both The Last Samurai and Mystic River to the Academy of Motion Picture Arts and Sciences (the "Academy") for consideration in connection with the 76th Annual Academy Awards. As is common practice within the industry, Warner Bros. distributed copies of both films to members of the Academy for award consideration. Within the industry, copies like these are known as "Academy screeners" or "screeners."

Because of the growing concern about film piracy, Warner Bros. instituted a series of new anti-piracy measures for Academy screeners. Among other safeguards, any member of Academy who wished to receive screeners was required to acknowledge, "prior to receipt," that he had only a limited license to use the screeners, which remained the property of Warner Bros.

Caridi was a member of the Academy and was entitled to receive copies of the screeners. Caridi was provided notice of the limited license and, on or about October 26, 2003, executed a written acknowledgment with respect to the screeners (the "Acknowledgment") which stated:

As a member in good standing of the Academy of Motion Picture Arts and Sciences, I want to receive copies of `screeners' of motion pictures in contention for the 2003 Academy awards.

I understand that my receipt of such screeners does not convey to me any of the underlying intellectual property rights to the films involved, and that each physical cassette or DVD will remain the property of the company which supplied it.

I agree to ensure that I know, at all times, the whereabouts of all screeners sent to me under this agreement. I agree not to allow the screeners to circulate outside my residence or office. I agree not to allow them to be reproduced in any fashion, and not to sell them or to give them away at any time.

Upon notification by the Academy that Caridi had executed the Acknowledgment, Warner Bros. made arrangements to have the screeners of the two films delivered to Caridi. Caridi received and personally signed for his personal Academy screener of The Last Samurai on or about December 18, 2003. He received his screener of Mystic River on or about December 10, 2003.

Each and every screener, including the copies sent to Caridi, contained clear notice of the limited nature of the license granted to screener recipients. The notice aired for twenty seconds at the commencement of each motion picture. The notice stated:

THIS DVD/VIDEO CASSETTE IS THE PROPERTY OF WARNER BROS. It is being lent for the purposes of personal review by the recipient and may not be used for any other purpose or transferred to any third party. Warner Bros. reserves the right to cancel the loan and recall possession of the DVD/video cassette at any time. Any duplication, transmission, or public exhibition of the material contained in this DVD/video cassette is a violation of federal law.

In addition, the screeners contained a "special disclaimer," which aired after the main titles for sixty seconds and thereafter every thirty minutes for another sixty seconds. The additional "special disclaimer" stated, "This copy property of Warner Bros. loaned for Award consideration only."

Shortly after Caridi received the screeners, he made them available to Sprague for unauthorized copying and distribution on the Internet and via other delivery mediums. Sprague provided Caridi with shipping materials, address labels and Federal Express account numbers for Caridi's use in shipping the screeners from his home to Sprague at a location in Homewood, Illinois. Using the materials provided by Sprague, Caridi shipped the screeners to Sprague who duplicated, exhibited, and distributed the films. In addition to making duplicate copies of the films in their original VHS format, Sprague converted the screeners to a digital format, which could be transmitted, uploaded and downloaded via the Internet and copied on DVD.

Shortly after converting the screeners to digital format, Caridi and Sprague transmitted the digital files embodying Caridi's screeners of The Last Samurai and Mystic River to a third party or third parties for unauthorized use, distribution, and exhibition on the Internet. Digital files embodying Caridi's screeners were posted on the Internet for the purpose of making them available for unauthorized use, review, download, reproduction, and distribution by third parties. Caridi and Sprague produced and distributed numerous additional copies of the films in DVD and VHS formats, and distributed them to third parties. Sprague later shipped some of the copies and one or both of Caridi's original screeners back to Caridi at his residence in California.

On March 5, 2004, Warner Bros. effected personal service of the Complaint on Caridi. Caridi never responded.

On or about March 23, 2004, Sprague entered into a plea agreement with the United States Attorney's Office for the Central District of California. Sprague agreed to plead guilty to violations of 17 U.S.C. § 506(a)(2) and 18 U.S.C. § 2319(c)(1). (Fink Decl. ¶ 3, Ex. A.)

As a result of Caridi's failure to respond to the Complaint, Warner Bros. filed its Request for Entry of Default against Caridi on April 13, 2004.

On April 16, 2004, the Court entered default of Caridi.

II. DISCUSSION

A. Default Judgment

Rule 55(b) (2) of the Federal Rules of Civil Procedure provides for the entry of judgment by default by the court. Fed.R.Evid. 55(b)(2). However, a court may not enter judgment by default against an infant or incompetent person unless she is represented by a general guardian, committee, conservator, or other such representative. Id. Moreover, the Soldiers' and Sailors' Civil Relief Act of 1940, 50 U.S.C. Appendix, § 501, provides specific requirements which must be fulfilled before a default judgment may be entered. 50 U.S.C. § 520.

Caridi is not an infant or incompetent person. (Fink Decl. ¶ 4.) Nor is Caridi in the military or otherwise exempted under the Soldiers' and Sailors' Civil Relief Act. (Fink Decl. ¶ 4.) Thus, there is nothing in Rule 55(b)(2) or the Soldiers' and Sailors' Civil Relief Act that prevents the Court from entering judgment by default. The only question is whether the Court should.

The grant or denial of a motion for the entry of a default judgment is within the discretion of the court. Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir.1956). However, default judgments are ordinarily disfavored. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir.1986). Thus, although the factual allegations in the non-defaulting party's complaint are taken as true upon entry of default, Valley Oak Credit Union v. Villegas (In re Villegas), 132 B.R. 742, 746 n. 5 (9th Cir.BAP 1991)¹, "[e]ntry of default does not entitle the non-defaulting party to a default judgment as a matter of right." Id. at 746. The Ninth Circuit has indicated that a court should consider the following factors in exercising its discretion as to the entry of a default judgment:

(1) the possibility of prejudice to the plaintiff,

(2) the merits of the plaintiff's substantive claim,

(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 strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel, 782 F.2d at 1471-72.

Here these factors weigh in favor of granting the motion for entry of default judgment.

1. Possibility of Prejudice to the Plaintiff

Failure to grant the motion would clearly prejudice Warner Bros. Warner Bros. filed this action in January and default was entered in April. Thus, Caridi's failure to respond has already delayed the case for ten months, during which time Caridi may have continued to infringe upon Warner Bros.'s copyrights.

2. The Merits of the Plaintiff's Substantive Claim

There is clearly merit to Warner Bros.'s claim since one of the named defendants (Sprague) has already pled guilty to criminal charges arising out of the conduct complained of here.

3. The Sufficiency of the Complaint

Warner Bros.'s Complaint is clearly sufficient. "In order `[t]o establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'" Rice v. Fox Broad. Co., 330 F.3d 1170, 1174 (9th Cir.2003) (quoting Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). Here, Warner Bros. alleged both ownership of a valid copyright and copying of constituent elements by Caridi. Thus, the Complaint is sufficient.

4. The Amount of Money at Stake

The amount of actual monetary damage Warner Bros. sustained as a result of Caridi's conduct is unclear. However, with every day that passes, that amount may be growing larger since Caridi may be continuing to infringe upon Warner Bros.'s copyrights. Moreover, since Warner Bros. alleged (and, by virtue of the...