Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 1 of 6 Page ID #:112
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`United States District Court
`Central District of California
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`Case № 2:17-cv-02353-ODW (KS)
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`ORDER DENYING MOTION FOR
`DEFAULT JUDGMENT [17]
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`FABRIC SELECTIONS, INC.,
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`Plaintiff,
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`v.
`MANJEET INTERNATIONAL, INC.;
`UNION APPAREL GROUP, LTD.; and
`DOES 1 through 10, inclusive,
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`Defendants.
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`I.
`INTRODUCTION
`This is a fabric copyright case. Before the Court is Plaintiff Fabric Selection,
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`Inc.’s motion for default judgment against Defendant Manjeet International, Inc.
`(ECF No. 17.) For the following reasons, the Court DENIES the motion.1
`II. FACTUAL BACKGROUND
`Plaintiff is a Los Angeles-based fabric designer. (Compl. ¶ 1, ECF No. 1.)
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`Defendant Manjeet International, Inc. (“Manjeet”) is an “importer and/or wholesaler
`of apparel in the business of selling garments and apparel to retailers/distributors.”
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`1 After considering the moving papers, the Court deems the matter appropriate for decision without
`oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.
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`Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 2 of 6 Page ID #:113
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`(Id. ¶ 2.) Defendant Union Apparel Inc. (“Union”) is in essentially the same business
`as Manjeet. (Id. ¶ 3.)
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`Plaintiff designed the relevant SE41092 fabric pattern and subsequently
`registered the pattern with the United States Copyright Office. (Id. ¶¶ 9, 10.) At some
`point, Plaintiff discovered that Union and Manjeet (collectively “Defendants”) were
`distributing goods featuring the pattern without authorization. (Id. ¶ 15.) Plaintiff
`sent cease and desist letters to Defendants on September 20, 2016, demanding that
`they discontinue their unauthorized manufacture, sale, and distribution of goods
`featuring the infringing pattern. (Id.) Defendants did not cease their activities. (Id.
`¶¶ 18, 27.)
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`Plaintiff filed this lawsuit against Defendants on March 27, 2017, alleging (1)
`copyright infringement and (2) contributory copyright infringement. (Id. ¶¶ 11–30.)
`On May 1, 2017, the Clerk of Court entered default against Manjeet at Plaintiff’s
`request. (ECF No. 15.) On May 8, 2017, Plaintiff filed the pending motion for
`default judgment with the Court. (ECF No. 17.)
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`Attached to Plaintiff’s motion for default judgment is a declaration from
`Plaintiff’s attorney Stacy Knox attempting to clarify the roles that Union and Manjeet
`played in the infringing activity. (See Knox Decl., ECF No. 17.) According to the
`declaration, Knox spoke to Edison Wong, a Union representative, who indicated that
`Union had “received additional, unauthorized units . . . of garments bearing the
`Subject Design from Manjeet.” (Id. ¶ 3.) Knox then spoke with Sudeep Kaur, a
`Manjeet representative, who confirmed that Manjeet manufactured the goods in
`question. (Id. ¶ 4.) Kaur stated that Manjeet manufactured the goods at Union’s
`request, believing that Union “owned” the pattern. (Id.)
`III. LEGAL STANDARD
`Federal Rule of Civil Procedure 55(b) authorizes a district court to enter a
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`default judgment following an entry of default by the clerk against a defendant that
`fails to respond to a complaint. A district court has discretion as to whether to enter a
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`Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 3 of 6 Page ID #:114
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`default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon
`default, the defendant’s liability generally is conclusively established, and well-
`pleaded factual allegations in the complaint are accepted as true. TeleVideo Sys., Inc.
`v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam) (citing Geddes v.
`United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)).
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`In exercising its discretion, a court must consider several factors, including (1)
`the possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive claim;
`(3) the sufficiency of the complaint; (4) the sum of money at stake; (5) the possibility
`of a dispute concerning material facts; (6) whether the defendant’s default was due to
`excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v.
`McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).
`IV. DISCUSSION
`Since the Supreme Court’s decision in Frow v. De La Vega, 82 U.S. 552 (1872)
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`more than one hundred years ago, courts have consistently held that where “a
`complaint alleges [that the] defendants are jointly liable and one of them defaults,
`judgment should not be entered against the defaulting defendant until the matter has
`been adjudicated with regard to all defendants.” Nielson v. Chang, 253 F.3d 520, 532
`(9th Cir. 2001); Societe d’Equipments Internationaux Nigeria, Ltd v. Dolarian
`Capital, Inc., No. 115CV01553DADSKO, 2016 WL 6868023, at *2 (E.D. Cal. Nov.
`21, 2016) (cumulating cases to show that Frow remains good law in the Ninth
`Circuit). This is because it would be “absurd” for a court to enter inconsistent
`judgments against two defendants that essentially engaged in the same course of
`conduct. See Frow, 82 U.S. at 554; Vaughn v. Wells Fargo Bank, N.A., No.
`CV1205453DMGJEMX, 2012 WL 12893781, at *2 (C.D. Cal. Nov. 29, 2012)
`(“[C]ourts find that it would be ‘incongruous and unfair’ to allow a plaintiff to prevail
`against defaulting defendants on a legal theory later rejected with respect to an
`answering defendant ‘in the same action.’” (quoting Garamendi v. Henin, 683 F.3d
`1069, 1082–83 (9th Cir. 2012))).
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`Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 4 of 6 Page ID #:115
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`While this common law rule was originally limited to jointly-liable co-
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`defendants, in recent years, the Ninth Circuit has extended the rule to encompass
`“similarly situated” parties. Garamendi, 683 F.3d at 1082–83. A defaulting party is
`similarly situated to an answering party when the case against both parties rests on the
`“same legal theory.” Id.; see also Vaughn, 2012 WL 12893781, at *2 (finding parties
`to be similarly situated where causes of action were common to defaulting and
`answering defendants and all defendants were liable for the full amount of damages);
`Mason v. City of Lake Forest Park, No. C13-0676-JCC, 2014 WL 4093933, at *4
`(W.D. Wash. Aug. 18, 2014) (denying motion for default judgment where “three of
`the four” claims were alleged against “all defendants,” some of whom answered and
`some of whom did not); Societe d’Equipments, 2016 WL 6868023, at *3 (finding that
`parties were “similarly situated” where “the claims, facts, and legal issues asserted in
`the complaint relative to each of the two defendants” were similar).
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`This case has the potential to implicate the common law rule annunciated in
`Frow because one of the defendants has answered the complaint (Union) and the other
`has not (Manjeet). See Nielson, 253 F.3d at 532. As such, the Court considers
`whether Defendants are jointly liable or similarly situated and whether there is a risk
`of inconsistent judgments.
`A. Whether Defendants are Jointly Liable or Similarly Situated
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`To begin, Union and Manjeet are likely to be held jointly liable for any
`infringement because it appears they were part of a distribution chain that produced
`infringing goods. (See Knox Decl. ¶¶ 3–4); see also Adobe Sys. Inc. v. Blue Source
`Grp., Inc., 125 F. Supp. 3d 945, 973 (N.D. Cal. 2015) (cumulating cases for the
`proposition that members of a distribution chain involving infringing goods may be
`held jointly liable for infringement).
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`Further, Defendants are similarly situated. Defendants are subject to the same
`two causes of action and are liable for the full range and amount of damages. See
`Vaughn, 2012 WL 12893781, at *2. Indeed, the complaint itself makes no distinction
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`Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 5 of 6 Page ID #:116
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`between the actions of Union and Manjeet. (See e.g., Compl. ¶¶ 12–13, 16.) Adding
`in the facts from the Knox declaration does little to change this—Defendants were
`allegedly on opposite ends of the same transaction involving infringing goods. (Knox
`Decl. ¶¶ 3–4.)
`B. Whether There is a Risk of Inconsistent Judgments
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`As discussed above, in reviewing a motion for default judgment, the Court must
`take the allegations in the complaint as true. TeleVideo Sys., 826 F.2d at 917–18. As
`such, the Court must take the allegation in the complaint that Manjeet engaged in
`various forms of infringing conduct as true. (See Compl. ¶¶ 12–13.)
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`Union, on the other hand, has answered the complaint and denied that any
`infringing conduct occurred. (Answer ¶¶ 11–30.) Union has also asserted a number
`of affirmative defenses, including that Plaintiff cannot establish authorship or the
`requisite level of originality for the work in question. (Id. ¶¶ 32–33, 38.) Union
`further asserts the affirmative defenses of fraud on the copyright office and unclean
`hands. (Id. ¶¶ 32, 41.)
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`These affirmative defenses would apply equally to Union and Manjeet. For
`instance, if Union proved that there was a lack of originality and by extension that
`Plaintiff’s copyright had been improperly granted by the copyright office, then there
`would be no basis for liability against either defendant. N. Coast Indus. v. Jason
`Maxwell, Inc., 972 F.2d 1031, 1033 (9th Cir. 1992) (“Originality is the indispensable
`prerequisite for copyrightability.”). If such a scenario came to pass, it would not be
`equitable to allow a default judgment to stand against Manjeet. See Vaughn, 2012 WL
`12893781, at *2 (“[C]ourts find that it would be ‘incongruous and unfair’ to allow a
`plaintiff to prevail against defaulting defendants on a legal theory later rejected with
`respect to an answering defendant ‘in the same action.’” (quoting Garamendi, 683
`F.3d at 1082–83)). While it is unclear whether Union will ultimately prevail on any of
`its affirmative defenses, the Court finds that the best course of action is to deny the
`pending motion for default judgment at this time. Plaintiff may refile this motion at
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`Case 2:17-cv-02353-ODW-KS Document 23 Filed 05/24/17 Page 6 of 6 Page ID #:117
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`the conclusion of the proceedings against Union. See Garamendi, 683 F.3d at 1083
`(noting that district courts should adjudicate defaults after adjudicating the case of
`answering defendants); see also Guotai USA, Co., Ltd. v. J&Company, LLC, No.
`216CV06948ODWPLA, 2017 WL 1740014, at *5 (C.D. Cal. May 3, 2017).
`V. CONCLUSION
`For the foregoing reasons, the Court DENIES Plaintiff’s motion for default
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`judgment without prejudice. (ECF No. 17.) Plaintiff may refile its motion at the
`conclusion of the proceedings against Union.
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`IT IS SO ORDERED.
`May 24, 2017
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` ____________________________________
` OTIS D. WRIGHT, II
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` UNITED STATES DISTRICT JUDGE
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