Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-00144/USCOURTS-casd-3_13-cv-00144-2/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JELLYBEAN ENTERTAINMENT,

INC.,

Plaintiff,

Case No. 13-CV-144-IEG (WMC)

ORDER:

1. GRANTING DEFENDANTS’

MOTION TO SET ASIDE

DEFAULT; AND

[Doc. No. 14]

2. DENYING DEFENDANTS’ 

MOTION FOR EXTENSION 

OF TIME TO FILE A 

RESPONSIVE PLEADING.

[Doc. No. 32]

vs.

USNILE LLC, et al.,

Defendants.

Before the Court are Defendants’ motions to set aside the default, [Doc. No.

14], and for a 30-day extension of time to file a responsive pleading, [Doc. No. 32]. 

For the reasons below, the Court hereby GRANTS Defendants’ motion to set aside

default and DENIES Defendants’ motion for an extension.

BACKGROUND

On January 17, 2013, Plaintiff filed a complaint alleging copyright

infringement and related claims arising from Defendants’ purported broadcasting

and distribution of Arabic language television channels for which Plaintiff owns

exclusive broadcast and distribution rights. [Doc. No. 1.] Defendants were served

with the complaint on January 31, 2013. [See Doc. Nos. 9, 10.] 

On March 22, 2013, Plaintiff moved for a preliminary injunction. [Doc. No.

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4.] Defendants failed to oppose Plaintiff’s motion for preliminary injunction. On

April 4, 2013, defense counsel, Aiman Ibrahim applied for admission pro hac vice,

which admission was granted on April 5, 2013. [Doc. No. 7.] On April 8, 2013, as

Defendants had failed to answer or otherwise respond to the complaint, the Court

entered default. [Doc. No. 12.] 

On April 18, 2013, Defendants filed the present motion to set aside default as

well as a motion to dismiss. [Doc. Nos. 14, 15.] On May 16, 2013, without

obtaining a hearing date from chambers or properly moving ex parte, Defendants

filed a motion to stay the scheduled hearing on Plaintiff’s motion for preliminary

injunction pending ruling on Defendants’ motion to dismiss. [Doc. No. 27.] That

same day, May 16, 2013, the Court denied Defendants’ motion to dismiss because it

was filed after default, and consequently denied as moot Defendants’ motion to stay.

 [Doc. No. 28.]

On June 11, 2013, Plaintiff filed an opposition to Defendants’ motion to set

aside default. [Doc. No. 29.] Defendants failed to file a reply brief in support of the

motion to set aside default. On June 19, 2013, the Court granted Plaintiff’s motion

for preliminary injunction. [Doc. No. 31.] 

On June 24, 2013, Defendants filed a motion for a 30 day extension for filing

a responsive pleading, again without obtaining a hearing date from chambers or

properly moving ex parte. [Doc. No. 32.] The Court heard oral argument from the

parties on June 25, 2013. [See Doc. No. 33.]

DISCUSSION 

I. Motion to Set Aside Default

Pursuant to Federal Rule of Civil Procedure 55(c), a district court may set

aside the entry of default upon a showing of good cause. Fed. R. Civ. P. 55(c). To

determine “good cause,” a court considers three factors: (1) whether the party

seeking to set aside the default engaged in culpable conduct that led to the default;

(2) whether it had no meritorious defense; and (3) whether setting aside the default

would prejudice the other party. United States v. Mesle, 615 F.3d 1085, 1091 (9th

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Cir. 2010). “This standard . . . is disjunctive, such that a finding that any one of

these factors is true is sufficient reason for the district court to refuse to set aside the

default.” Id. But in considering a motion to set aside entry of default, courts must

bear in mind that “judgment by default is a drastic step appropriate only in extreme

circumstances; a case should, whenever possible, be decided on the merits.” Falk v.

Allen, 739 F.2d 461, 463 (9th Cir. 1984). 

1. Culpability

“[A] defendant’s conduct is culpable if he has received actual or constructive

notice of the filing of the action and intentionally failed to answer.” TCI Group Life

Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001) (emphasis in original). 

“The term ‘intentionally’ means that a movant cannot be treated as culpable simply

for having made a conscious choice not to answer; rather, to treat a failure to answer

as culpable, the movant must have acted with bad faith, such as an ‘intention to take

advantage of the opposing party, interfere with judicial decisionmaking, or otherwise

manipulate the legal process.’” Mesle, 615 F.3d at 1092. 

Defendants here do not dispute receiving actual notice or being aware of the

deadline to respond. Rather, defense counsel attributes the delay to an inability to

find local counsel willing to support his pro hac vice admission. Fed. R. Civ. P. 12

generally provides that Defendants must file a responsive pleading within 21 days of

receiving service. In this case, Defendants were served January 31, 2013. But

defense counsel did not even apply for admission pro hac vice until April 4, 2013,

approximately 6 weeks after a responsive pleading was due. While defense

counsel’s delay reflects inexcusable lack of diligence, nothing in the record suggests

bad faith. Thus, Defendants are not “culpable” for the purposes of this motion.

2. Meritorious Defense

“A defendant seeking to vacate a default judgment must present specific facts

that would constitute a defense. But the burden on a party seeking to vacate a

default judgment is not extraordinarily heavy.” TCI Group, 244 F.3d at 700

(citations omitted). “All that is necessary to satisfy the ‘meritorious defense’

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requirement is to allege sufficient facts that, if true, would constitute a defense.” 

Mesle, 615 F.3d at 1094. 

Here, Defendant asserts the “first to file rule” as a meritorious defense. The

first to file rule is a “generally recognized doctrine of federal comity which permits a

district court to decline jurisdiction over an action when a complaint involving the

same parties and issues has already been filed in another district.” Pacesetter Sys.,

Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). The “rule promotes

judicial efficiency and prevents the risk of inconsistent decisions that would arise

from multiple litigations of identical claims.” Ruckus Wireless, Inc. v. Harris Corp.,

2012 WL 588792, at *2 (N.D. Cal. Feb. 22, 2012). Though the first to file “should

not be disregarded lightly,” Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625

(9th Cir. 1991), it is “not a rigid or inflexible rule to be mechanically applied, but

rather is to be applied with a view to the dictates of sound judicial administration.”

Pacesetter, 678 F.2d at 95. As such, the Ninth Circuit recognizes a range of

exceptions to the first to file rule, including bad faith, anticipatory suit, and forum

shopping. See Alltrade, 946 F.2d at 628. A court may also decline to apply the first

to file rule when the balance of convenience weighs in favor of the later-filed action.

See id. at 628. 

Plaintiff contends that Defendants provide only conclusory allegations,

without supporting documents or declarations, and thus fail to establish the first to

file rule as a meritorious defense. Plaintiff misconstrues the burden at this stage; the

Court need not determine whether the first to file rule in fact applies. Rather, “[a]ll

that is necessary to satisfy the ‘meritorious defense’ requirement is to allege

sufficient facts that, if true, would constitute a defense.” Mesle, 615 F.3d at 1094. 

Assuming Defendants’ allegations as true, the first to file rule would constitute a

defense and thus qualifies as a meritorious defense for the purposes of the present

motion. Thus, this factor weighs in favor of setting aside the default.

3. Prejudice

In determining whether the plaintiff will be prejudiced, “the standard is

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whether [plaintiff’s] ability to pursue his claim will be hindered.” Falk, 739 F.2d at

463. “To be prejudicial, the setting aside of a judgment must result in greater harm

than simply delaying resolution of the case.” TCI Group, 244 F.3d at 701. “[T]he

delay must result in tangible harm such as loss of evidence, increased difficulties of

discovery, or greater opportunity for fraud or collusion.” Thompson v. American

Home Assur. Co., 95 F.3d 429, 433-34 (9th Cir. 1996).

Here, nothing suggests any prejudice to Plaintiff beyond simple delay. 

Plaintiff’s contention that setting aside default causes prejudice by excusing six

months of infringement is unpersuasive in at least two respects: (1) Plaintiff did not

move for an injunction until March 22, 2013, months after filing the complaint,

which delay undermines the purported urgency and severity of past harm; and (2) an

order enjoining Defendants’ alleged copyright infringement and unfair business

practices already issued, which undermines the risk of future harm. [Doc. No. 31.] 

Whether Defendants are in fact violating the Court’s injunction order is not

presently before the Court. Thus, the absence of prejudice to Plaintiff weighs in

favor of setting aside the default. 

Because Defendants’ conduct is not culpable, Defendants have a meritorious

defense, and Plaintiff will not be prejudiced, the Court GRANTS Defendants’

motion to set aside the default.

II. Motion for Extension

Defendants’ motion for an extension of time was filed after default. It is thus

precluded. [See Doc. No. 28 (explaining that “[t]he Clerk of Court’s entry of default

cuts off a defendant’s right to appear in an action” and thus that motions, except to

set aside default, “filed after default . . . [are] precluded.”); see also Transamerica

Life Ins. Co. v. Shubin, 2012 WL 5364645, at *2 (E.D. Cal. Oct. 31, 2012). 

Accordingly, Defendants’ motion for an extension of time is DENIED.

CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ motion to set

aside the default, [Doc. No. 14], and DENIES Defendants’ motion for an extension,

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[Doc. No. 32]. Defendants shall answer or otherwise respond to Plaintiff’s

complaint on or before July 23, 2013.

IT IS SO ORDERED.

DATED: June 26, 2013 ______________________________

IRMA E. GONZALEZ

United States District Judge

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