Court Opinion

ID: 4153473
Source: CourtListenerOpinion
Date Created: 2017-03-16 20:01:05.709517+00
Date Added: 2024-06-11T14:33:52.086430
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                             MAR 16 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

CHARA CURTIS; CYNTHIA ALDRICH;                   No. 14-35686
ALFRED CURRIER,
                                                 D.C. No. 2:12-cv-00991-JLR
              Plaintiffs-Appellees,

 v.                                              MEMORANDUM*

ILLUMINATION ARTS, INC.;
ILLUMINATION ARTS PUBLISHING,
L.L.C.; JOHN M. THOMPSON; KIMMIE
LYNN THOMPSON,

              Defendants-Appellants.

                    Appeal from the United States District Court
                       for the Western District of Washington
                     James L. Robart, District Judge, Presiding

                            Submitted March 8, 2017**
                               Seattle, Washington

Before: GRABER, IKUTA, and HURWITZ, Circuit Judges.

      Plaintiffs Chara Curtis, Cynthia Aldrich, and Alfred Currier are the author

and illustrators of three children’s books. They sued Defendants—two publishing

      *
        This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
        The panel unanimously concludes that this case is suitable for decision
without oral argument. Fed. R. App. P. 34(a)(2).
entities and two individuals involved with those entities—for copyright

infringement and breach of contract after Defendants allegedly stopped paying

royalties but continued to sell Plaintiffs’ books without permission. Defendants

appeal from the final judgment against them, and we affirm.

      1. The district court did not abuse its discretion by entering a default

judgment against Defendants. DirecTV, Inc. v. Hoa Huynh, 503 F.3d 847, 852

(9th Cir. 2007). The court appropriately applied the factors identified in Eitel v.

McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The court documented

Defendants’ numerous discovery violations and delays that took place over many

months. The court issued several warnings and lesser sanctions that were

ineffective in causing Defendants to comply with deadlines and court orders.

Finally, the court held an evidentiary hearing before entering a default judgment.

      2. The district court did not err in failing to construe Defendant John

Thompson’s pro se declarations as requests to withdraw Defendants’ admission as

to Request for Admission #41, pursuant to Federal Rule of Civil Procedure 36(b),

and in failing to order that the admission be withdrawn. The pro se filings at issue

are not reasonably interpreted to ask for withdrawal of any admissions. No party

cited Rule 36 in the district court. Moreover, even if we construed the filings as

Rule 36(b) motions, withdrawal of an admission is permissive, not mandatory, and

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we review the denial of such a motion only for abuse of discretion. Conlon v.

United States, 474 F.3d 616, 621 (9th Cir. 2007). And finally, because all

infringement-related facts were deemed admitted because of the default, Derek

Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008); TeleVideo

Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam),

withdrawal of the admissions would not make any difference to the outcome.

      3. Because Plaintiffs’ allegations of willful infringement are deemed true on

account of the default, the district court properly found that the infringement was

willful. We find no abuse of discretion in the court’s award of statutory damages.

See BMG Music v. Perez, 952 F.2d 318, 320 (9th Cir. 1991) (describing "‘wide

discretion’ in setting the amount of damages within the statutory range," reviewed

for an abuse of discretion (quoting Harris v. Emus Records Corp., 734 F.2d 1329,

1335 (9th Cir. 1984)); Harris, 734 F.2d at 1335 ("The award will be overturned

only for abuse of discretion."). The court awarded only one-third of the allowable

maximum, and an award of statutory damages is meant to serve both compensatory

and punitive purposes. L.A. News Serv. v. Reuters Television Int’l, Ltd., 149 F.3d
987, 996 (9th Cir. 1998).

      4. The district court did not err in finding Defendant Kimmie Thompson

individually liable for copyright infringement. As noted, upon entry of default, the

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allegations of the complaint were deemed true. And the complaint accused all

Defendants of directly continuing to publish, sell, and distribute the books even

after Plaintiffs terminated the publishing agreement. Those facts make her liable

for damages under the Copyright Act, 17 U.S.C. § 501(a).

      5. The district court did not clearly err in applying the alter ego doctrine to

hold Defendant John Thompson individually liable to Plaintiffs on their breach of

contract claim. See Towe Antique Ford Found. v. IRS, 999 F.2d 1387, 1391 (9th

Cir. 1993) (holding that we review application of the alter ego doctrine for clear

error). Under Washington law, "[f]irst, the corporate form must be intentionally

used to violate or evade a duty; second, disregard must be necessary and required

to prevent unjustified loss to the injured party." Meisel v. M & N Modern

Hydraulic Press Co., 645 P.2d 689, 692 (Wash. 1982) (internal quotation marks

omitted). "Intentional misconduct must be the cause of the harm that is avoided by

disregard." Id. at 693. First, the court cited undisputed facts demonstrating that

John Thompson used corporate assets to pay for obviously personal expenses, such

as grocery bills, salon services, pet services, and dental work, and that he freely

transferred money between personal and company accounts. Second, the court did

not clearly err in concluding that this behavior dissipated corporate assets available

to pay Plaintiffs’ royalties. Although the district court did not explicitly hold that

disregard of the corporate form was necessary to prevent unjustified losses to

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Plaintiffs, this oversight was harmless. The record shows that the corporate entities

were nearly insolvent, and therefore any dissipation resulting from John

Thompson’s use of corporate assets to pay personal expenses would directly and

unjustifiably harm Plaintiffs.

      AFFIRMED.

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