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finding success on the merits after granting plaintiffs' motion for default
Summary of this case from Columbia Pictures Indus., Inc. v. WhittingOpinion
Civil No. 3:03-CV-1191-H.
April 23, 2004
MEMORANDUM OPINION, ORDER, AND JUDGMENT
Before the Court is the Plaintiffs Arista Records, Inc., Atlantic Recording Corporation, BMG Music, Interscope Records, Loud Records LLC, Sony Music Entertainment Inc., UMG Recordings, Inc., Warner Bros. Records, Inc., and Zomba Recording Corporation's ("Plaintiffs'") Motion for Judgment by Default Against Arif Rahim and Rukhsana Arif a/k/a/ Rukhsana Rahim ("Rahims"), filed April 9, 2004;
This is a copyright infringement suit. The Plaintiffs seek recovery under the Copyright Act of the United States against the Rahims for their alleged sale and/or distribution of unauthorized sound recordings owned by the Plaintiffs at Stop N Save, a retail store which the Defendants allegedly own or operate. (First Am. Compl. at 1-2). See 17 U.S.C. § 101 et seq. Plaintiffs ask the Court to enter a post-answer judgment by default against the Rahims pursuant to Rule 55(b)(2). (Mot. at 2-4).
I. RULE 55(b)(2) POST-ANSWER DEFAULT
Rule 55 provides that a Court may enter a default against a Party who has "failed to plead or otherwise defend." FED.R.CIV.P.55. Rule 55(b) includes a notice requirement, however, for parties who have appeared in the case: "If the party against whom judgment by default is sought has appeared in the action, the party . . . shall be served with written notice of the application at least 3 days prior to the hearing on such application." Rogers v. Hartford Life Accident Ins. Co., 167 F.3d 933, 937 (5th Cir. 1999) (emphasis added) (quoting FED.R.CIV.P. 55(b)(2)). In the instant case, the Rahims have made an appearance, and then seemingly disappeared.
In S.E.C. v. First Financial Group of Texas, the Fifth Circuit discusses the Rule 55(b)(2) notice requirement stating that the Rule does not require a district court "to hold either an evidentiary hearing or oral argument on a motion for a default judgment. S.E.C. v. First Financial Group of Texas, Inc., 659 F.2d 660, 669 (1981) (citing Thomas v. United Stated, 531 F.2d 746, 748 (5th Cir. 1976). In the instant case the Court will rule on the Plaintiffs' Motion and supporting materials.
Plaintiffs filed their Original Complaint against Defendant Rubina A. Kabani ("Kabani") on May 29, 2003, alleging that she owned or operated a Stop N Save store ("store") wherein she sold or distributed unauthorized copies of sound recording owned by the Plaintiffs. (Original Compl. at 1). On July 23, 2003 the Plaintiffs amended their Complaint adding the current Defendants, Rukhsana Rahim and Arif Rahim. On September 17, 2003 the Rahims appeared in the case by filing an Answer in Response to the Amended Complaint.
Defendant Kabani added the Rahims as cross-defendants in her Original Answer and Cross Claim, filed September 29, 2003, claiming that the Rahims owned the Stop N Save on the "day the infringing activities occurred." (Rubina A. Kabani's Original Ans. and Cross Claim, at 8). The Rahims initially failed to respond, but on November 10, 2003 they filed an Answer to Kabani's Cross Claims.
The Rahims joined with the other Parties in a Joint Status Report to the Court which was filed October 20, 2003; in the Report the Rahims indicated that they would agree to mediation. (Joint Status Report at #12). Defendant Kabani subsequently settled with both the Plaintiffs and the Rahims and filed a Motion to Dismiss the Rahims which was granted by the Court on January 7, 2004. According to the Docket Report for this case, notices of the January 7 Order were sent to the Rahims but were "Returned as Undeliverable." (Docket Report at 01/07/2004 and 03/02/2004).
On November 3, 2003 the Court referred the Parties to mediation with the Hon. Oswin P. Chrisman. On February 20, 2004 the Court received a letter from Judge Chrisman requesting an extension on the mediation deadline, because "defendant Arif Rahim travels extensively and has not been available." (Chrisman letter). The Court extended the deadline for a mediator's report until March 17, 2004. Notice of this extension was sent to the Rahims, but returned to the Clerk's Office as "Undeliverable." (Docket Report at 03/08/2204).
On March 10, 2004 the Court vacated the Order for Mediation after hearing from the mediator that Defendant Rahim had moved from the addresses on record for him and was unreachable.
In addition to the Court's and the Mediator's attempts to reach the Rahims, Plaintiffs' counsel, Samantha Trahan, has also attempted to contact them in order to schedule a mediation. (March 12, 2004 Aff. of Samantha Trahan at 1-3). According to Ms. Trahan, the last contact she had from the Rahims was a telephone call from Mr. Rahim in late December, 2003; the purpose of call was his request for an extension for the mediation. ( Id. at 2). Since then, Ms. Trahan states that the Rahims have failed to return her telephone calls. Further, she states that the telephone numbers of record for them have been disconnected or provide a recorded message that the individuals are "unreachable." According to Ms. Trahan's Affidavit, the Plaintiffs also sent a FedEx letter to the Rahim's last known address which was returned as "undeliverable"; correspondence sent through the United States Postal Service was returned as "undeliverable"; and, a fax number for the Rahims which the Plaintiffs had used successfully on previous occasions connects to a store which is not currently owned by the Rahims. ( Id.).
The Court has not heard from the Rahims since they filed an Answer in this case on November 10, 2003. The Court concludes that the Rahims are unreachable, and, in this unusual set of circumstances, will not require the Plaintiffs to attempt to serve the Rule 55(b)(2) written notice of the application for default judgment prior to the Court's ruling on the matter. The Court finds the Defendants Arif Rahim and Rukhsana Rahim to be IN DEFAULT under Rule 55(a) for failure to defend.
II. DEFAULT JUDGMENT
In the instant case, the Plaintiffs seek the following: (1) a finding of willful infringement against the Defendants and statutory damages under Section 504(a) of the Copyright Act of $35,000 for each of 48 infringements alleged in their Complaint; (2) a permanent injunction pursuant to Section 502(a) of the Copyright Act; and (3) costs and attorney's fees and expenses in the amount of $10,150.12 pursuant to Section 505 of the Copyright Act. (Mot. for J. at 2).
Plaintiffs ask for $150,000 per infringement in their First Amended Complaint, but ask for $35,000 in their Motion. (Third Am. Compl. at 9).
The Court must premise any award on the number of infringements proved by admissible evidence. See Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 237 (5th Cir. 1988). Damages may not be awarded "without a hearing or a demonstration by detailed affidavits establishing the necessary facts." Id. (quoting United Artists v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
I. STATUTORY DAMAGES UNDER 17 U.S.C. § 504(c)
Once liability is established in a copyright infringement action under the Copyright Act, a plaintiff may elect to recover statutory damages instead of actual damages or the infringer's profits. See 17 U.S.C. § 504(c); see also Broadcast Music, 855 F.2d at 236. In the instant case, the Plaintiffs have elected to recover statutory damages.
Under 17 U.S.C. § 504(c) damages include "not less than $750 or more than $30,000" for "all infringements involved in the action, with respect to any one work . . . as the court considers just." 17 U.S.C. § 504(c)(1). See also Broadcast Music, 855 F.2d at 237 (applying the § 504(c) formula for statutory damages); see also Playboy Enterprises, Inc. v. Webbworld, Inc., 991 F. Supp. 543, 561 (N.D. Tex. 1997), aff'd, 168 F.3d 486 (5th Cir. 1999). If the Court finds that infringement was committed willfully, it may increase the award of statutory damages to a sum of not more than $150,000. See 17 U.S.C. § 504(c)(2).
The Plaintiffs' First Amended Complaint alleges that the Defendants "offered for sale and distributed unauthorized, and therefore illegal, copies of [of] Plaintiffs' Copyrighted Recordings." (First Am. Compl. at 5). Plaintiffs allege that their investigator "purchased the pirate and/or counterfeit recordings of the Copyrighted Recordings listed in [their] Exhibit A." ( Id.). Exhibit A of the Complaint, entitled "Schedule A for Stop N Save 99cents Plus Store" is a list of 48 recordings containing the following information about each of the alleged copyright violations: "Title of Pirate/Counterfeit Album," "Artist," "Song Title," "Legitimate Album Title," "Copyright Plaintiff," and "SR#." (First Am. Compl. at App. A)
Plaintiffs also show that Defendant Rukhsana Rahim failed to respond to the Plaintiffs' Request for Admissions (including requests for admission on ownership of the Stop N Save at the time of the violations and for admission that the Defendants did not obtain permission from the copyright owners to offer "any Infringing Phonorecord for sale or distribution"). (Aff. of Samantha Trahan at 2; Mot. at 6).
As part of their proof for damages the Plaintiffs have provided a declaration by Raul Murillo, in which he states that on November 16, 2002 he shopped at Stop N Save as an investigator for the Defendants. (Declaration of Raul Murillo at 21). Murillo further states that in the course of his investigation he purchased ten illegal compact discs ("CDs") in the store "which contained 48 of Plaintiffs' unauthorized copyrighted sound recordings." ( Id. at 22).
Plaintiffs allege that the Defendants' infringement of their copyrights was willful. (First Am. Compl. at 6). As evidence of willfulness they provide copies of the covers of recordings purchased by Mr. Murillo. ( Id. at Exh. B). They argue that these CDs were obviously unauthorized because, among other reasons, they "did not bear the usual and customary markings of legitimate CDs that any reasonable consumer would recognize." (e.g., none of the CDs contained any original art work or copyright notices; and they were CD-Rs). (Mot. at 5). Based on this evidence, the Court finds that the Defendants willfully infringed on the Plaintiffs' copyrighted recordings. See Arista Records, Inc. v. Beker Enterprises, Inc., 2003 WL 23105482 at 2 (S.D. Fla., 2003) (in which the Court found willful infringement in a case with nearly identical facts).
IT IS HEREBY ORDERED AND ADJUDGED:
II. PERMANENT INJUNCTION UNDER § 502(a) OF THE COPYRIGHT ACT
1. Defendants Ruksana and Arif Rahim are liable for the willful copyright infringement of each of the 48 infringements alleged in the Complaint.
2. The Plaintiffs are awarded a total of $48,000 in statutory damages under 17 U.S.C. § 504(c)(1) against the Defendants.
In addition to damages, the Plaintiffs ask the Court to Enter a permanent injunction against the Defendants. Under the Copyright Act, a Court may grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright. 17 U.S.C. § 502(a). See Playboy Enterprises, 99 F. Supp. at 561.
To establish entitlement to permanent injunctive relief, a party must demonstrate the following: (1) actual success on the merits; (2) no adequate remedy at law; (3) that the threatened injury outweighs any damage to the defendant; and (4) that the injunction will not disserve the public interest. See Playboy Enterprises, 99 F. Supp. at 561; see also DSC Comms. Corp. v. DGI Tech., Inc., 81 F.3d 597, 600 (5th Cir. 1996) (applying the traditional factors to a preliminary injunction application for copyright infringement).
In this case, the Plaintiffs have succeeded on the merits. The burden that would be imposed on the Defendants by an injunction to refrain from further infringements is light in comparison to the threatened injury to the Plaintiffs should such infringement occur. Further, the Court finds that the public interest is affirmatively served by requiring continuing strict adherence to intellectual property law. See Playboy Enterprises, 99 F. Supp. at 561; Beker, 2003 WL 23105482 at 4.
As to whether the Plaintiffs have an adequate remedy at law in this case, the Court finds that the Defendants' failure to appear in this case after late December 2003 and failure to notify the Court or Plaintiffs' counsel of forwarding addresses or telephone or fax numbers suggest that the Defendants do not take seriously the illegality of the infringing activity. Without an injunction the Plaintiffs' Copyrighted Recordings, past and future, would remain vulnerable to continued infringement by the Defendant. See Beker, 2003 WL 23105482 at 4.
IT IS HEREBY ORDERED AND ADJUDGED that a permanent injunction is entered against Defendants Rukhsana and Arif Rahim requiring Defendants and Defendants' respective agents, servants, employees, officers, successors, licensees, assigns and all persons acting in concert or participation with each or any of them to cease and desist from infringing any of Plaintiffs' respective copyrights (whether now in existence or hereafter created) in any manner, including without limitation, the selling, offering to sell and/or distribution of unauthorized copies of the Copyrighted Recordings in Exhibit A to the Complaint and any other of Plaintiffs' copyrighted works.
In addition, Defendants must deliver all unauthorized phonorecords in Defendants' possession to Plaintiffs' attorneys within 10 days of the entry of this Order.
Defendants must REPORT COMPLIANCE with the terms of the Permanent Injunction to this Court by noon, May 24, 2004.
III. ATTORNEY'S FEES AND COSTS
The Plaintiffs ask for $10,150.12 in attorneys' fees and costs pursuant to Section 505 of the Copyright Act. (Mot.at 23-26). Plaintiffs' counsel, Geoffrey H. Bracken, attests to this amount in his affidavit of April 8, 2004, and provides itemization to support this amount.
IT IS HEREBY ORDERED AND ADJUDGED:
The Plaintiffs are awarded $10,150.12 in attorneys' fees and costs against the Defendant.
IV. CONCLUSION
The Court retains jurisdiction over this case for the purposes of enforcement of the permanent injunction.
SO ORDERED.