Court Opinion

ID: 4315315
Source: CourtListenerOpinion
Date Created: 2018-09-26 00:02:40.344986+00
Date Added: 2024-06-11T07:49:35.776134
License: Public Domain

Case: 17-11388   Document: 00514655570        Page: 1   Date Filed: 09/25/2018

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                United States Court of Appeals
                                                                         Fifth Circuit
                                    No. 17-11388                       FILED
                                                               September 25, 2018

SALIM I. SINDHI,
                                                                  Lyle W. Cayce
                                                                       Clerk

             Plaintiff - Appellee

v.

KUNAL R. RAINA,

             Defendant - Appellant

                Appeal from the United States District Court
                     for the Northern District of Texas

Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit
Judges.

CARL E. STEWART, Chief Judge:
      Salim Sindhi (“Sindhi”) sued Kunal Raina (“Raina”) for allegedly
misappropriating confidential software, asserting copyright infringement
claims under 17 U.S.C. §§ 501-505, as well as trade secret claims under the
Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code Ann.
§§ 134A.002-005 (West Supp. 2016).         After ignoring several district court
orders and warnings, the district court entered a default judgment against
Raina, who now appeals. Because the district court did not abuse its discretion
in entering a default judgment against Raina, we AFFIRM.
    Case: 17-11388     Document: 00514655570     Page: 2   Date Filed: 09/25/2018

                                  No. 17-11388
                                        I.
      On October 5, 2015, Sindhi sued Raina, a former employee, for allegedly
stealing source code from his online newspaper content management system
(“CMS”), and then using the software to create a competing CMS business. On
June 2, 2016, Sindhi served Raina, an Indian national and permanent resident
of India, through the Hague Service Convention. Later, on June 21, Raina
responded by filing a motion to dismiss for lack of personal jurisdiction. Raina
did not, however, comply with three local rules. The first local rule, N.D. Tex.
Civ. R. 7.4, required Raina to file a statement of interested persons; the second,
N.D. Tex. Civ. R. 83.9(b), required Raina’s attorney to be admitted to practice
before the Northern District of Texas or apply for admission pro hac vice; and
the third, N.D. Tex. Civ. R. 83.10(a), required Raina to retain local counsel. On
September 29, the district court notified Raina that he had not complied with
these local rules and issued two orders—one requiring Raina to file a statement
of interested persons, and the other requiring him to comply with the
admission and local counsel requirements. The district court gave him 21 days
to comply.
      After the 21 days elapsed, Raina had not complied with, or otherwise
responded to, the district court’s orders. On October 24, the district court
issued two more orders, warning Raina that he had 14 days to comply with the
court’s local rules; otherwise, the district court would strike Raina’s responsive
pleadings and enter a default judgment against him without additional
warning. Raina did not comply. So, on November 8, the district court struck
Raina’s motion to dismiss and entered an interlocutory default judgment
against him. Shortly thereafter, the district court entered an interlocutory
permanent injunction.
      Raina did not respond until April 2017. On April 24, Raina filed a motion
to set aside the district court’s entry of default. In his motion, Raina argued
                                        2
     Case: 17-11388       Document: 00514655570         Page: 3    Date Filed: 09/25/2018

                                      No. 17-11388
that the district court did not have personal jurisdiction over him, making the
default judgment void under Federal Rule of Civil Procedure 60(b)(4). 1 On
September 20, the district court denied this motion, finding that Raina had
minimum contacts with Texas, the forum state, in the form of ongoing
contractual relationships.
       On October 25, Raina filed another motion to set aside the default
judgment, this time under Rule 55(c). The district court again denied the
motion. Then, on November 6, the district court entered a final judgment and
corresponding permanent injunction against Raina.
       Raina now appeals, contending that the district court erred in entering
a default judgment against him and failing to vacate it. Raina also contests
the district court’s entry of final default judgment, permanent injunction, and
decision to exercise personal jurisdiction over him.
                                             II.
       We review both the entry of a default judgment and the district court’s
denial of a motion to vacate a default judgment “for abuse of discretion.”
Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 495 (5th Cir. 2015)
(citations omitted). Factual determinations that support the district court’s
default decision “are reviewed for clear error.” Lacy v. Sitel Corp., 227 F.3d
290, 292 (5th Cir. 2000).
       “Because of the seriousness of a default judgment, and although the
standard of review is abuse of discretion, even a slight abuse of discretion may
justify reversal.” Id. Default judgments involve competing policy interests.
On one hand, we have “‘adopted a policy in favor of resolving cases on their

       1  Raina also argued that Sindhi was judicially estopped from arguing that Raina had
minimum contacts with Texas, because he had made seemingly contradictory statements in
three other lawsuits concerning the same subject matter that were ongoing in India. The
district court rejected these arguments, finding that judicial estoppel did not apply because
Raina had not shown that the Indian courts accepted Sindhi’s representations.
                                             3
    Case: 17-11388     Document: 00514655570      Page: 4    Date Filed: 09/25/2018

                                  No. 17-11388
merits and against the use of default judgments.’” Wooten, 788 F.3d at 496
(quoting In re Chinese-Manufactured Drywall Prods. Liab. Litig., 742 F.3d 576,
594 (5th Cir. 2014)).     “On the other, this policy is ‘counterbalanced by
considerations of social goals, justice and expediency, a weighing process that
lies largely within the domain of the trial judge’s discretion.’” Id. (quoting In re
Chinese-Manufactured Drywall, 742 F.3d at 594).
                                        III.
      On appeal, Raina challenges three primary sets of decisions. First, he
argues that the district court erred by entering a default judgment against him
and then denying his motions to vacate the entry of default. Second, he argues
that the district court erred by entering a final default judgment against him.
Finally, he challenges, in his notice of appeal, the district court’s permanent
injunction and its exercise of personal jurisdiction.
                                        A.
      Before turning to the merits of Raina’s argument, we first examine this
court’s appellate jurisdiction. Sindhi argues that three of the district court’s
orders are interlocutory and, therefore, cannot be appealed. He specifically
points to: (1) the November 8, 2016 order striking Raina’s motion to dismiss
for lack of jurisdiction; (2) the September 20, 2017 order denying Raina’s
motion to overturn the interlocutory default judgment; and (3) the October 27,
2017 order denying Raina’s motion to set aside the default judgment. The
district court’s entry of final judgment, however, undermines Sindhi’s
argument.
      While it is true that interlocutory orders typically cannot be appealed,
this general rule changes after the district court enters a final judgment. As
we have held in the past, “an appeal from a final judgment sufficiently
preserves all prior orders intertwined with the final judgment.” Tr. Co. of La.
v. N.N.P. Inc., 104 F.3d 1478, 1485 (5th Cir. 1997). Even if a litigant incorrectly
                                         4
    Case: 17-11388     Document: 00514655570      Page: 5   Date Filed: 09/25/2018

                                  No. 17-11388
designates “the ruling from which he seeks to appeal, the notice of appeal is
liberally construed and a jurisdictional defect will not be found if (1) there is a
manifest intent to appeal the unmentioned ruling or (2) failure to designate
the order does not mislead or prejudice the other party.” Id. at 1486; see also
Jordan v. Ector Cty., 516 F.3d 290, 294 (5th Cir. 2008).
      We do not perceive—and Sindhi does not point to—any prejudice that
would result from exercising appellate jurisdiction and considering Raina’s
arguments. Raina also clearly presents his intention to challenge the district
court’s final default judgment.       Accordingly, we will exercise appellate
jurisdiction over all the issues that Raina adequately raises on appeal.
                                        B.
      Raina first challenges the district court’s entry of default against him, as
well as the district court’s two denials of his motions to vacate the entry of
default, though he does not make clear the legal basis for this challenge.
      Normally, entries of default are challenged under Rule 55(c), which
permits a district court judge to “set aside an entry of default for good cause.”
Fed. R. Civ. P. 55. In determining whether good cause exists to set aside an
entry of default, the court considers “(1) whether the failure to act was willful;
(2) whether setting the default aside would prejudice the adversary; and (3)
whether a meritorious claim has been presented.”            Effjohn Int’l Cruise
Holdings, Inc. v. A & L Sales, Inc., 346 F.3d 552, 563 (5th Cir. 2003) (citing
Lacy, 227 F.3d at 292). The burden of showing good cause lies with the party
challenging the default entry. CJC Holdings, Inc. v. Wright & Lato, Inc., 979
F.2d 60, 64 (5th Cir. 1992).
      Here, Raina’s brief did not offer any reasons why good cause exists to
overturn the district court’s entry of default. His unsupported position also
conflicts with the well-settled principle that a district court may “enter default
judgment pursuant to Rule 55 for failure of a party to comply with court rules
                                        5
    Case: 17-11388        Document: 00514655570      Page: 6    Date Filed: 09/25/2018

                                     No. 17-11388
of procedure.” United States v. Dajj Ranch, No. 92-2462, 1993 WL 82260, at
*2 (5th Cir. 1993) (per curiam) (citing McGrady v. D’Andrea Elec., Inc., 434
F.2d 1000, 1001 (5th Cir. 1970)).
         Raina failed at several points to follow the district court’s rules. He failed
to follow the district court’s September 29, 2016 orders to file a certificate of
interested persons and comply with local rules regarding the admission of
counsel. Nearly a month later, on October 24, the district court warned Raina
that failure to comply with the earlier orders would result in an entry of
default. Even with these warnings, Raina did not comply with the district
court’s orders. In fact, Raina did not respond at all until nearly six months
later.
          Given Raina’s repeated failures to comply with the district court’s rules
of procedure, as well as his significant delay in challenging the entry of default,
the district court did not abuse its discretion by entering, and declining to
vacate, a default judgment against Raina. Accordingly, we affirm both the
district court’s entry of default against Raina and its subsequent decisions not
to vacate the entry of default.
                                           C.
         Raina also argues that the district court erred when it entered a final
default judgment against him. Raina compares several lawsuits involving
Sindhi—three in India and this one—and points to perceived inconsistencies
in Sindhi’s arguments across the lawsuits. These inconsistencies, he argues,
justify a full presentation of evidence to assess the merits of the underlying
dispute. Again, Raina does not specify the legal basis for challenging the
court’s final default judgment.
         The primary route for attacking a final default judgment is Rule 60(b).
Fed. R. Civ. P. 60. A district court may set aside “a final default judgment” for

                                            6
     Case: 17-11388        Document: 00514655570         Page: 7     Date Filed: 09/25/2018

                                        No. 17-11388
one of the listed reasons under Rule 60(b). 2 Fed. R. Civ. P. 55(c). Because the
district court here entered a final default judgment, Rule 60(b) applies. 3 See
2015 Amendment to Fed. R. Civ. P. 55 (“Until final judgment is entered, Rule
54(b) allows revision of the default judgment at any time. The demanding
standards set by Rule 60(b) apply only in seeking relief from a final
judgment.”). Raina’s 60(b) arguments, however, all fail.
       Raina did not raise arguments under Rule 60(b)(2) or (3) in front of the
district court, precluding him from raising those arguments here. As we have
consistently held, “arguments not raised before the district court are waived

       2  Federal Rule of Civil Procedure 60(b) provides that the district court “may relieve a
party . . . from a final judgment, order, or proceeding” for one of the following reasons:
        (1) mistake, inadvertence, surprise, or excusable neglect;

       (2) newly discovered evidence that, with reasonable diligence, could not have
       been discovered in time to move for a new trial under Rule 59(b);

       (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation,
       or misconduct by an opposing party;

       (4) the judgment is void;

       (5) the judgment has been satisfied, released or discharged; it is based on an
       earlier judgment that has been reversed or vacated; or applying it
       prospectively is no longer equitable; or

       (6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b).

       3 In 2015, Rule 55 was amended to “make plain the interplay between Rules 54(b),
55(c), and 60(b).” 2015 Amendment to Fed. R. Civ. P. 55. The amendment clarifies that
“final” default judgments should be challenged using Rule 60(b), while less-than-final
judgments should be challenged through Rule 55(c). This change is consistent with our prior
precedent holding that final judgments must be attacked using Rule 60(b), instead of Rule
55(c). See, e.g., In re OCA, Inc., 551 F.3d 359, 369 (5th Cir. 2008) (holding that “Rule 60(b)
applies” because a final judgment was entered).
                                                7
     Case: 17-11388       Document: 00514655570         Page: 8    Date Filed: 09/25/2018

                                      No. 17-11388
and cannot be raised for the first time on appeal.” LeMaire v. La. Dep’t of
Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007). 4
       Raina did raise arguments under subsections (1), (4), (5), and (6) before
the district court. But even for these subsections, Raina fails to explain how
inconsistency in Sindhi’s remarks would qualify him for relief.                       More
specifically, he does not explain how Sindhi’s alleged inconsistency resulted in
“mistake, advertence, surprise, or excusable neglect,” as required under
subsection (b)(1). Fed. R. Civ. P. 60(b)(1). Similarly, Raina’s brief does not
argue that Sindhi’s alleged inconsistency renders the district court’s judgment
void under Rule 60(b)(4). Nor has he shown how the inconsistent statements
make the “continuing operation” of the judgment inequitable, as required
under subsection (b)(5). Cook v. Birmingham News, 618 F.2d 1149, 1152 (5th
Cir. 1980).    Raina also fails to clarify how inconsistencies amount to the
“extraordinary circumstances” that would qualify him for relief under
subsection (b)(6). Hess v. Cockrell, 281 F.3d 212, 216 (5th Cir. 2002). In short,
Raina provides some facts but does not explain why they matter under any
Rule 60(b) subsection or provide any authority to support his position.
       Given Raina’s failure to show how the district court abused its discretion
under any of the Rule 60(b) subsections, we affirm the district court’s denial of
his motion to vacate the default judgment.

       4 Raina’s arguments fit most logically into subsection (3), which permits a district
court to overturn a default judgment due to “fraud (whether previously called intrinsic or
extrinsic), misrepresentation, or misconduct by an opposing party.” Fed. R. Civ. P. 60(b)(3).
But even if Raina had raised an argument below under Rule 60(b)(3), he did not provide “clear
and convincing evidence” of fraud, misrepresentation, or misconduct.               Longden v.
Sunderman, 979 F.2d 1095, 1103 (5th Cir. 1992). Nor did he show that “the conduct
complained of . . . [prevented him] from fully and fairly presenting [his] case.” Id.
                                             8
     Case: 17-11388     Document: 00514655570    Page: 9   Date Filed: 09/25/2018

                                  No. 17-11388
                                       D.
       In his notice of appeal, Raina also appeared to contest three other orders
from the district court. Specifically, Raina challenges: (1) the November 8,
2016 order striking Raina’s motion to dismiss for lack of personal jurisdiction;
(2) the November 21, 2016 order granting a permanent injunction against
Raina; and (3) the September 20, 2017 order ruling that the district court
properly exercised personal jurisdiction over Raina. Raina’s brief, however,
does not discuss any of these orders—a failure that is fatal to his appeal.
       A litigant can waive an issue on appeal in a variety of ways. Issues that
are not “briefed are waived and will not be considered on appeal.” Matter of T-
H New Orleans Ltd. P’ship, 116 F.3d 790, 796 (5th Cir. 1997) (internal citations
omitted); see also Fed. R. App. P. 28(a); United States v. Martinez, 263 F.3d
436, 438 (5th Cir. 2001) (“[A] defendant waives an issue if he fails to adequately
brief it.”).   Likewise, a litigant can waive an argument if he fails to cite
authority to support his position. United States v. Upton, 91 F.3d 677, 684 n.10
(5th Cir. 1996) (“[C]laims made without citation to authority or references to
the record are considered abandoned on appeal.”); L & A Contracting Co. v. S.
Concrete Servs., 17 F.3d 106, 113 (5th Cir. 1994) (waiver for failing to cite
authority).
       Nowhere does Raina address—much less adequately brief or present
authority challenging—the district court’s November 21 injunction. Raina’s
treatment of the November 8 and September 20 orders is no better. Indeed,
Raina does not mention these rulings anywhere in his brief. By failing to
address these orders, we consider his challenges abandoned. Martinez, 263
F.3d at 438.
       As a result of Raina’s waiver, we affirm: (1) the November 8, 2016 order
striking Raina’s motion to dismiss for lack of jurisdiction; (2) the November 21,
2016 order granting a permanent injunction against Raina; and (3) the
                                        9
   Case: 17-11388        Document: 00514655570    Page: 10   Date Filed: 09/25/2018

                                   No. 17-11388
September 20, 2017 order ruling that the district court properly exercised
personal jurisdiction.
                                        IV.
      For the foregoing reasons, the judgment of the district court is
AFFIRMED.

                                        10