Sunday, April 21, 2019

Fifth Circuit - Copyright Law - Default Judgment For Failure To Comply With Local Rules/Delay Upheld

In  Sindhi v. Raina, 905 F.3d 327 (5th Cir. 2018): the Fifth Circuit affirmed a trial court's refusal to vacate a default judgment in a copyright infringement action.  The action was commenced in Texas against an Indian national residing in India for misappropriating software and trade secrets.   The action claimed that defendant Raina stole source code from an online content management system ("CMS") and used it to launch a competing CMS business.   Sindhi served Raina in India pursuant to the Hague Convention.

Raina responded with a motion to dismiss, but failed to file 1. a statement of interested persons; 2. have an attorney admitted to practice in the Northern District of Texas; and 3. have local counsel.   The court issued warnings that Raina ignored.  The court entered a default judgment.

Months later Raina moved to vacate under Rule 60(b)(4) of the Federal Rules of Civil Procedure arguing that the court lacked personal jurisdiction over him.  Raina lost the motion and the court entered a final judgment.  Raina moved again to vacate the judgment under Rule 55(c) of the Federal Rules of Civil Procedure.

Rule 55 – Default; Default Judgment
(a) Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.
(b) Entering a Default Judgment.

(2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals—preserving any federal statutory right to a jury trial—when, to enter or effectuate judgment, it needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.
(c) Setting Aside a Default or a Default Judgment. The court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).

Rule 60 – Relief from a Judgment or Order
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for 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.

The Fifth Circuit affirmed the trial court's finding of personal jurisdiction and affirmed the default judgment.  Because Raina's default was willful, he could not show good cause and presented no other valid reasons why the judgment should be vacated.

In Copyright Litigation Handbook (2018-2019) I discuss default judgments in Chapter 9: Motions Attacking The Complaint
 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd
 Copyright Litigation Handbook on Westlaw

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