Default Gamble

To default or not to default, that is often a question when facing litigation.  In the realm of online copyright infringement it is no different.   Many attorneys actively advise clients to ignore letters and even complaints with the knowledge that sometimes Judges will only award $750 in damages, with costs and fees totaling only a few thousand dollars.

But the ignore strategy does not always go as planned, such as in the case of Dallas Buyers Club v. Scott. 3:15-cv-00730-AC (D.Or.). Possibly banking on a minimum damages, Scott was surprised to find a $5,000 default judgment entered against him (docket-41) together with a request for $1,800 more in fees. Scott hired an attorney and tried to set aside the default arguing he was never served and did not know about the case. (docket-54)

Defaults are often set aside as a matter of course, and often by agreement.   But in this case Dallas Buyers Club opposed setting aside the default. (docket-62) Scott replied and added the argument that at the time of the infringing activity he was not even living at the address. (docket-65)

In response, the Judge wrote in total:

Document Number: 68(No document attached)
Docket Text:

ORDER: DENYING Defendant’s Motion to Set Aside Default Judgment [54]. “If a default judgment is entered as the result of a defendant’s culpable conduct, however, [the Court] need not consider whether a meritorious defense was shown, or whether the plaintiff would suffer prejudice if the judgment were set aside.” Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) (citation omitted). “Defendant’s conduct is culpable if he has received actual or constructive notice of the filing of the action and intentionally failed to answer.” Id. Defendant was aware of potential litigation in October 2014, as he called Plaintiff’s counsel, and he admits to receiving a notice of default in December 2014. I find that he received at least constructive notice and therefore his failure to answer or otherwise defend was culpable conduct. As such, I DENY the Motion to Set Aside the Default Judgment. Defendant’s response to the Motion for Attorney Fees and Costs [44, 43] is due August 22, 2016. Ordered by Chief Judge Michael W. Mosman. (dls)

The Magistrate assigned the case then followed with:

Document Number: 69(No document attached)
Docket Text:

SCHEDULING ORDER by Judge Acosta – In light of the fact that defendant filed a motion to set aside default and default judgment (#54) and that motion being denied by Order (#68), which was filed on 8/2/16, the court still must address plaintiff’s Bill of Costs [43] and Motion for Attorney Fees and Costs[44]. Accordingly, as plaintiff had to prepare further briefing in response to the motion to set aside default and default judgment, plaintiff may, if it deems appropriate, file supplemental briefing in support of it’s motion for attorney fees and bill of costs by 8/22/16. If plaintiff does not intend to supplement it’s motions, counsel for plaintiff is to notify the court no later than 8/12/16. Defendant’s response(s) to plaintiff’s bill of costs and motion for attorney fees are due by 9/6/16. Plaintiff’s Motion for Attorney Fees [44] and Bill of Costs [43] will be taken under advisement by the court as of 9/22/16. (peg)

Taking the hint, the case concludes with a stipulation and judgment for an additional $7,000 in costs and fees against Scott to address the motion to set aside the default.

The result – Gambling on a $750 default resulted in $12,000 in costs, fees and damages.

 

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