Case3:11-cv-03911-LB Document56 Filed01/13/12 Page1 of 8
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`KORVEL M. SUTTON,
`Plaintiff,
`
`UNITED STATES DISTRICT COURT
`Northern District of California
`Oakland Division
`No. C 11-03911 LB
`ORDER GRANTING DEFENDANT’S
`MOTION TO SET ASIDE ENTRY OF
`v.
`DEFAULT AND DENYING
`PLAINTIFF’S MOTION FOR
`APPLE COMPUTERS ITUNES, et al.
`DEFAULT JUDGMENT
`Defendants.
`[Re: ECF Nos. 23, 33]
`_____________________________________/
`I. INTRODUCTION
`In this case, Defendant Apple Inc. (erroneously sued as “Apple Computers iTunes”) failed to
`timely answer or respond to plaintiff Korvel Sutton’s complaint for copyright infringement. Apple’s
`default was entered. Upon service of Mr. Sutton’s motion for default judgment, Apple finally
`answered his complaint. Its failure to timely answer or respond to his complaint apparently was the
`result of human error, and Apple moved to set its default aside. Pursuant to Civil Local Rule 7-1(b),
`the court finds that these matters are suitable for determination without oral argument and the
`January 19, 2012 hearing is VACATED. For the reasons set forth below, the court GRANTS
`Apple’s motion to set aside its default and, conversely, DENIES Mr. Sutton’s motion for default
`judgment.
`
`II. BACKGROUND
`On August 8, 2009, pro se plaintiff Korvel Sutton sued Apple Computers iTunes (“Apple”) and
`individuals Donald McMillan and James Callon (collectively, “Defendants”) for copyright
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`For the Northern District of California
`For the Northern District of California
`UNITED STATES DISTRICT COURT
`UNITED STATES DISTRICT COURT
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`Case3:11-cv-03911-LB Document56 Filed01/13/12 Page2 of 8
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`infringement. Complaint, ECF No. 1.1 Mr. Sutton, a former member of the early 1990s West Coast
`rap group, Pretty Boy Gangsters, alleges that Defendants infringed his copyrighted songs that appear
`on Pretty Boy Gangsters’ 1991 album, Rollin' Like A Star. Complaint, ECF No. 1 at 3-4, Ex. 2-C.2
`Mr. Sutton alleges that the album’s songs have been made available for download on Apple’s iTunes
`service without his consent or permission, in violation of Title 17 of the United States Code. Id. at
`3-4, Ex. 2-A.3
`The court granted Mr. Sutton’s application to proceed in forma pauperis and ordered the U.S.
`Marshal to serve Defendants with the complaint and summonses. IFP Order, ECF No. 6. All three
`Defendants were successfully served by the U.S. Marshal. Acknowledgment of Service (Apple),
`ECF No. 8; Acknowledgment of Service (Callon), ECF No. 10; Acknowledgment of Service
`(McMillan), ECF No. 19. Service was accepted on behalf of Apple by a “Ros, Q,” apparently a
`member of its legal department, at 2:00 p.m. on August 23, 2011. Acknowledgment of Service
`(Apple), ECF No. 8.
`Under Federal Rule of Civil Procedure 12(a)(1), Apple had until September 13, 2011 to answer
`Mr. Sutton’s complaint, but it did not.4 So, Mr. Sutton requested that the Clerk of the Court enter
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`1 Citations are to the Electronic Case File (“ECF”) with pin cites to the electronic page
`number at the top of the document, not the pages at the bottom.
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`2 The following songs appear on Rollin’ Like A Star: (1) “Pretty Boy Gangsters”; (2) “Hard
`as Fuck”; (3) “Activist”; (4) “Monies on My Mind”; (5) “Mack on Top of the Stack”; (6) “P.B.G.’s
`Get Funky (Rollin’ like a Star)”; (7) “K the Buster”; (8) “On the Tip of a Mack”; (9) “Indo Smoke”;
`and (10) “It Ain’t Right.” Complaint, ECF No. 1, Exs. 1-A & 1-B.
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`3 17 U.S.C. § 501(a) states that “[a]nyone who violated any of the exclusive rights of the
`copyright owner as provided by sections 106 through 122 . . . is an infringer of the copyright.” “In
`order to state a claim for copyright infringement, plaintiff must show (1) that it owns a valid
`copyright in the allegedly infringed material, and (2) that defendants violated an exclusive right
`granted to the copyright owner. The exclusive rights of the copyright owner are enumerated in
`Section 106 and include ‘to reproduce the copyrighted work in copies or phonorecords’ and ‘to
`distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of
`ownership, or by rental, lease, or lending.’” IO Group, Inc. v. Pralat, No. C 10–03647 WHA, 2011
`WL 4713748, at *2 (N.D. Cal. Oct. 7, 2011) (quoting 17 U.S.C. § 106(1), (3)).
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`4 Mr. Callon timely answered the complaint. Answer (Callon), ECF No. 9. To date, Mr.
`McMillan has not filed an answer or otherwise responded to the complaint.
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`Apple’s default, which it did on October 18, 2011. Motion for Entry of Default, ECF No. 21; Entry
`of Default (Apple), ECF No. 25.
`Mr. Sutton then moved for default judgment against Apple. Motion for Default Judgment, ECF
`No. 23. Given Apple’s default, Mr. Sutton also asked the court to approve a subpoena duces tecum
`to be served on Apple which would assist in the calculation of damages. In approving Mr. Sutton’s
`subpoena, the court ordered the U.S. Marshal once again serve Apple with documents related to this
`case, including the Clerk of the Court’s entry of its default and Mr. Sutton’s motion for default
`judgment. 11/10/2011 Order, ECF No. 31.
`Shortly thereafter, Apple answered Mr. Sutton’s complaint. Original Answer (Apple), ECF No.
`39. At the same time, Apple filed a motion to set aside its default. Motion to Set Aside Default,
`ECF No. 33. Both motions are discussed below.
`III. LEGAL STANDARD
`Under Federal Rule of Civil Procedure 55(c), a court may set aside an entry of default for “good
`cause.” See United States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085,
`1091 (9th Cir. 2010). To determine whether a defendant has shown good cause to justify vacating
`entry of default, a court considers three factors: (1) whether the defendant engaged in culpable
`conduct that led to the default; (2) whether the defendant had a meritorious defense; and (3) whether
`reopening the default would prejudice plaintiff. See id. (citing Franchise Holding II, LLC v.
`Huntington Rests. Group., Inc., 375 F.3d 922, 925 (9th Cir. 2004)). This standard is disjunctive,
`meaning, the court may deny the request to vacate default if any of the three factors is true. See id.
`(citing Franchise Holding II, 375 F.3d at 925). “Crucially, however, ‘[j]udgment by default is a
`drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided
`on the merits.’” Id. (quoting Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)).
` The standard to set aside an entry of default is the same standard used to determine whether a
`default judgment should be set aside under Federal Rule of Civil Procedure 60(b), except that in the
`Rule 55(c) context, courts have greater discretion and can apply the standard more liberally to grant
`relief from entry of judgment because there is no interest in the finality of the judgment. See id. at
`1091 n.1 (citations omitted); TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir.
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`2001); Hawaii Carpenters’ Trust Fund v. Stone, 794 F.2d 508, 513 (9th Cir. 1986); Mendoza v.
`Wight Vineyard Mgmt,783 F.2d 941, 945 (9th Cir. 1986). When considering whether to vacate a
`default under Rule 55(c), the court’s “underlying concern . . . is to determine whether there is some
`possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the
`default.” Hawaii Carpenters’ Trust Fund, 794 F.2d at 513.
`As the party seeking to set aside entry of default, a defendant bears the burden of showing good
`cause under this test. Id. To ensure that cases are decided on the merits whenever possible, the
`court resolves any doubt regarding whether to grant relief in favor of vacating default. O’Connor v.
`Nevada, 27 F.3d 357, 364 (9th Cir. 1994).
`IV. DISCUSSION
`In the next sections, the court addresses the legal standards for the three factors at issue here: (A)
`Apple’s culpability; (B) any meritorious defense; and (C) prejudice to Mr. Sutton.
`A. Apple’s Culpability
`“‘A defendant’s conduct is culpable if he has received actual or constructive notice of the filing
`of an action and intentionally failed to answer.’” Mesle, at 615 F.3d at 1092 (quoting TCI Group,
`244 F.3d at 697). “Intentionally” means that a movant is not culpable merely for making a
`conscious choice not to answer. Id. (quoting TCI Group, 244 F.3d at 697). Instead, to treat a failure
`to answer as culpable, the movant must act with bad faith, such as with “‘an intention to take
`advantage of the opposing party, interfere with judicial decisionmaking, or otherwise manipulate the
`legal process.’” Id. (quoting TCI Group, 244 F.3d at 697). For that reason, the Ninth Circuit has
`“‘typically held that a defendant’s conduct was culpable for purposes of the [good cause] factors
`where there is no explanation of the default inconsistent with a devious, deliberate, willful, or bad
`faith failure to respond.’” Id. (quoting TCI Group, 244 F.3d at 698). By contrast, a defendant’s mere
`negligent failure to file an answer is insufficient to establish culpability under this factor. TCI
`Group, 244 F.3d at 697.
`Here, Apple’s failure to answer or respond to Mr. Sutton’s complaint was the result of neglect,
`not bad faith. According to declarations submitted from several of its employees, Mr. Sutton’s
`complaint was erroneously tagged as a subpoena rather than a complaint, and this error led to the
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`complaint not be timely reviewed by the appropriate persons. Motion to Set Aside Default, ECF No.
`33 at 6-8.5
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`5 As Apple explained in its motion:
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`On August 23, 2011, Roslyn Quinn, a legal specialist in Apple’s legal
`department responsible for the intake and logging of legal correspondence, received
`and signed for Mr. Sutton’s complaint. (Declaration of Roslyn Quinn (“Quinn
`Decl.”) ¶ 5.) Pursuant to Apple’s procedures, Ms. Quinn was to categorize the
`document by type and, for subpoenas and search warrants, route the document to the
`responsible lawyers and/or paralegals in Apple’s legal department [(Declaration of
`Jeff C. Risher (“Risher Decl.”)] ¶ 6; Quinn Decl. ¶¶ 3, 6-7); for service of process of
`a complaint, Ms. Quinn was to deliver the complaint to another Apple employee,
`Claudia Newsome, for intake and logging according to a separate procedure. (Risher
`Decl. ¶ 5; Quinn Decl. ¶ 4.) Ms. Quinn mistakenly identified Mr. Sutton’s complaint
`as a subpoena in a copyright case and treated it accordingly. (Quinn Decl. ¶ 6.) She
`did not forward the complaint to Ms. Newsome but, instead, logged it as a “subpoena
`for business records.” (Id.) She then emailed the document to the responsible
`individuals in the legal department with a subject line indicating that the attached
`document—i.e., the complaint—was a subpoena. (E.g., Quinn Decl. ¶ 7, Ex. 1;
`Risher Decl. ¶ 8, Ex. 1.) Ms. Quinn sent that email to Jeff Risher, an attorney, and
`Charstie Wheelock and Stanley Flemister, both legal specialists. (Id.) Mr. Risher
`was the person primarily responsible for taking steps to respond to the “subpoena.”
`(Risher Decl. ¶ 8.) Unfortunately, he did not open the attachment to the email and
`did not realize that the document labeled “subpoena” was in fact a complaint. (Id.)
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`Nor did Ms. Wheelock or Mr. Flemister discover the error. (Declaration of
`Charstie Wheelock (“Wheelock Decl.”) ¶ 4); Declaration of Stanley Flemister
`(“Flemister Decl.”) at ¶ 4.).) Because this email did not indicate that the subpoena
`was from a governmental entity, because both Ms. Wheelock and Mr. Flemister were
`merely copied on the email, and because the email was sent to an attorney, Mr.
`Risher, their standard practice would have been to await further instructions from Mr.
`Risher. (Id.) To the best of their recollections, neither Ms. Wheelock nor Mr.
`Flemister opened the attachment or realized that it was a complaint. (Id.)
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`Apple would have caught the errors but for an additional consequence of the
`original miscategorization. Because there is significant variation in the time within
`which subpoenas require a response, and because Apple attorneys may not be able to
`immediately review subpoenas attached to notification emails, Apple’s procedures
`require that in the absence of a response from an attorney or legal specialist regarding
`a subpoena, Ms. Quinn would communicate further with the responsible attorney in
`advance of the subpoena’s return date. (Risher Decl. ¶ 8.) In this instance, however,
`Ms. Quinn did not log a return date for the “subpoena” (because it was in fact a
`complaint and did not bear a “return date”) and, consequently, did not undertake her
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`Mr. Sutton suggests in his opposition brief that Apple’s explanation is implausible, given the
`procedures its has in place to prevent such an oversight, and that Apple’s employees have not acting
`honestly. Opposition, ECF No. 40 at 2. While Apple does indeed have procedures to identify legal
`documents that are served upon (as detailed in Apple’s motion), the court has no reason to disbelieve
`Apple’s employees’ declarations. Sometimes mistakes happen, and Apple’s mistakes do not
`evidence “‘a devious, deliberate, willful, or bad faith failure to respond.’” Mesle, at 615 F.3d at 1092
`(quoting TCI Group, 244 F.3d at 698).
`Given that bad motive cannot be inferred from Apple’s explanation for its failure to timely
`answer or respond to Mr. Sutton’s complaint, and given the Ninth Circuit’s forgiving standard for
`evaluating “culpable conduct,” the court finds that Apple is not culpable for its default.
`B. Meritorious Defense
`Under the second factor, a defendant seeking to vacate entry of default must allege specific facts
`that, if true, that would constitute a defense. See Mesle, 615 F.3d at 1094 (citing TCI Group, 244
`F.3d at 700). The burden on the defendant is “not extraordinarily heavy.” Id. (citing TCI Group,
`244 F.3d at 700). That being said, a mere general denial without facts to support it is insufficient to
`justify vacating an entry of default. Franchise Holdings II , 375 F.3d at 926.
`Apple has put forth specific facts supporting two potentially meritorious defenses. It first
`contends that a third-party rights holder granted Apple a valid license to promote, sell, and distribute
`the allegedly infringed works. Motion to Set Aside Default, ECF No. 33 at 12 (citing Declaration of
`Jeremy Smith, ECF No. 38, ¶ 7). See Worldwide Church of God v. Philadelphia Church of God,
`Inc., 227 F.3d 1110, 1114 (9th Cir. 2000) (“The existence of a license creates an affirmative defense
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`normal practice of following up with Mr. Risher regarding the “subpoena.” (Quinn
`Decl. ¶ 7; Risher Decl. ¶¶ 8-9.)
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`Apple’s procedures typically function effectively to enable it to respond in a
`timely fashion to the large volume of legal documents that Apple receives on a daily
`basis. (Risher Decl. ¶¶ 3, 10.) In this case, Apple’s procedures did not function as
`intended, which unfortunately resulted in a failure to timely respond to Mr. Sutton’s
`complaint. (Id. ¶¶ 10-11.)
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`Motion to Set Aside Default, ECF No. 33 at 7-8.
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`to a claim of copyright infringement.”) (citing I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th
`Cir.1996)). Second, it contends that Mr. Sutton’s claim for damages resulting from “worldwide
`sales” fails because the United States’ copyright laws have no application to extraterritorial
`infringement. Id. (citing Subafilms, Ltd. v. MGM-Pathe Commc’ns Co., 24 F.3d 1088, 1095-96 (9th
`Cir. 1994).
`Mr. Sutton makes no effort to refute Apple’s contentions, and given that Apple’s burden with
`respect to this factor is “not extraordinarily heavy,” Mesle, 615 F.3d at 1094 (citing TCI Group, 244
`F.3d at 700), the court finds that Apple has set forth meritorious defenses to support its motion to set
`aside its default.
`C. Prejudice to Plaintiff
`The final factor examines whether setting aside the default prejudices the plaintiff. Prejudice is
`more than “simply delaying the resolution of a case. Instead, the standard is whether [the plaintiff’s]
`ability to pursue his claim will be hindered.” TCI Group, 244 F.3d at 701 (internal quotations
`omitted). “[T]he delay must result in tangible harm such as a loss of evidence, increased difficulties
`of discovery, or greater opportunity for fraud or collusion.” Id. By contrast, merely requiring a
`plaintiff to litigate the merits of a case is not prejudice under this third prong. Id. As the Ninth
`Circuit explains, “A default judgment gives the plaintiff something of a windfall by sparing her from
`litigating the merits of her claim because of her opponent’s failure to respond; vacating the default
`judgment merely restores the parties to an even footing in the litigation.” Id.
`Here, Mr. Sutton has not shown that he has been prejudiced by Apple’s failure to timely answer
`or respond to his complaint. At worst, Apple’s oversight has resulted delayed the prosecution of Mr.
`Sutton’s case by a few months. As noted above, such delay does not prejudice Mr. Sutton, as it does
`not hindered his ability to pursue his copyright infringement claim.
`V. CONCLUSION
`Based on the foregoing, the court GRANTS Apple’s motion to set aside its default. And because
`Apple is no longer in default, Mr. Sutton’s motion for default judgment is DENIED. See, e.g., Solar
`Liberty Energy Sys., Inc. v. Suacci, 2011 U.S. Dist. LEXIS 130583, at *5-6, 15 (S.D. Cal. Nov. 10,
`2011) (granting defendant’s motion to set aside default and summarily denying plaintiff’s motion for
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`default judgment).
`This disposes of ECF Nos. 23, 33.
`IT IS SO ORDERED.
`Dated: January 13, 2012
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`_______________________________
`LAUREL BEELER
`United States Magistrate Judge
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