This post examines an opinion recently issued by a U.S. District Court Judge who sits in the U.S. District Court for the Northern District of California: Craigslist, Inc. v. 3taps, Inc., et al., 2015 WL 5921212 (2015). There are several defendants in the suit, two
of which are 3taps, Inc. and Brian R. Niessen.
Craigslist, Inc. v. 3taps, Inc.,
supra.
The judge begins by explaining that
Plaintiff Craigslist . . . has filed a
motion for default judgment against Defendant Niessen . . . . See Motion for Default Judgment. .
. . The Clerk of Court entered a notice of default against Niessen after he
failed to respond to the Amended Complaint. . . . The Court has reviewed
Craigslist's motion and has given the Defendant an opportunity to respond in
writing and to appear at a hearing on October 9, 2015. . . . Defendant has not
responded or appeared. For the reasons outlined below, the Court GRANTS
Craigslist's motion for default judgment.
Craigslist, Inc. v. 3taps,
Inc., supra.
As Wikipedia explains, a default judgment is a
binding judgment in favor of
either party based on some failure to take action by the other party. Most
often, it is a judgment in favor of a plaintiff when
the defendant has not responded to a summons or has failed
to appear before a court of law. The failure to take action is the
default. The default judgment is the relief requested in the party's original
petition.
You can, if you are interested, read more about the process
of seeking a default judgment in this Wikipedia entry.
Getting back to the opinion, the District Court Judge goes
on to explain how, and why, this suit arose:
Craigslist is a Delaware corporation,
with its principal place of business and headquarters in San Francisco,
California. . . . It maintains one of the world's most popular websites,
offering a platform for millions of authorized users to seek employment, search
for housing, and trade goods and services. . . . Craigslist's Terms of Use
(`TOU’) grant users a limited revocable license to access and use Craigslist's
website in accordance with its terms. . . . The TOU prohibit, among other
things, `[a]ny copying, aggregation, display, distribution, performance or
derivative use of craigslist or any content posted on craigslist whether done
directly or through intermediaries,’ except in narrow circumstances applicable
to general purpose search engines. . . . Craigslist users are required to
accept the site's TOU before posting content to it. . . . If a user chooses not
to accept the TOU, then the user will not be allowed to post. . . .
According to the complaint, Niessen is
a self-described `hacker’ who remotely accesses and extracts content from
websites—including Craigslist—using a process called `scraping.’ . . . Niessen began a relationship with Defendant
3taps on April 30, 2010. . . . He responded to a Craigslist post seeking a
`Skilled Hacker at Scraping Web Content’ and stated he was already scraping `over
7,500 sites like [c]raigslist, Twitter, Groupon, Zagat, and others.’ 3taps commissioned Niessen to identify,
source, copy, and redistribute Craigslist content, without authorization, for
profit. . . . According to Megumi Nakamura, 3taps' Chief Operating
Officer, Niessen `was already [scraping] sites like craigslist and a bunch of
others. . . . And so, to the extent that [Niessen] was already doing this,
3taps was just a new place where he would send the data.’ . . .
Craigslist alleges that this scraping
and distribution of its content is unlawful, violated its TOU, and has `damaged
craigslist, and caused and continue[ ] to cause irreparable . . . harm and
injury to craigslist.’ . . . Niessen has posted to Craigslist's website at
least 37 times, verifying that he has acknowledged and agreed to be bound by
Craigslist's TOU on at least 37 separate occasions. . . .
Craigslist, Inc. v.
3taps, Inc., supra.
The judge goes on to note that
Niessen is the only defendant who has
not yet been permanently enjoined in this matter. . . . . On August 7, 2015, the
Clerk of Court entered a notice of default against Niessen after he failed to
respond to the Complaint within the time set by Federal Rule of Civil Procedure 12. . . . Craigslist now requests the entry of default judgment
against Niessen, permanently enjoining him from violating the Craigslist TOU.
Craigslist, Inc. v.
3taps, Inc., supra.
The judge then took up the issue as to whether Craigslist’s
request for entry of default judgment against Niessen should be granted. Craigslist, Inc. v. 3taps, Inc., supra. He began by outlining the law that governs
such an entry:
The Court may enter a default judgment
upon motion by the Plaintiff after entry of default by the Clerk. See Federal Rules of Civil Procedure Rule 55(b). Whether
to grant a motion for the entry of a default judgment is within the discretion
of the trial court. See Lau Ah Yew v.
Dulles, 236 F.2d 415 (U.S. Court of Appeals for the 9th Circuit 1956). Upon
an entry of default by the Clerk, the factual allegations of the plaintiff's
complaint will be taken as true, except those relating to the amount of
damages. See Derek Andrew,
Inc. v. Poof Apparel Corp., 528 F.3d 696 (U.S. Court of Appeals for the 9th
Circuit 2008).
In determining whether to enter a
default judgment, a court has `an affirmative duty to look into its
jurisdiction over both the subject matter and the parties.’ In re Tuli, 172 F.3d 707 (U.S. Court of
Appeals for the 9th Circuit 1999). The Court has found
subject matter jurisdiction over this matter in its prior orders, and regarding
Niessen, Craigslist alleges that its TOU provides for jurisdiction in this
Court and that Niessen made `systematic and continuous contacts with this
judicial district’ by accessing Craigslist's servers and targeted his `wrongful
acts at craigslist, which is headquartered in this judicial district.’ . . .
This Court thus has `jurisdiction over both the subject matter and the parties.’ In re Tuli, supra; see also Schwarzenegger
v. Fred Martin Motor Co., 374 F.3d 797 (U.S. Court of Appeals for the 9th
Circuit 2004).
Craigslist, Inc. v.
3taps, Inc., supra.
The judge then outlined the factors a court applies to
determine whether to enter a default judgment:
(1) the possibility of prejudice to the
plaintiff; (2) the merits of the plaintiff's substantive claims; (3) the
sufficiency of the complaint; (4) the sum of money at stake in the action; (5)
the possibility of a dispute concerning material facts; (6) whether the default
was due to excusable neglect; and (7) the likelihood of obtaining a decision on
the merits. Eitel v. McCool,
782 F.2d 1470 (U.S. Court of Appeals for the 9th Circuit 1986).
Here, these factors all weigh in favor of granting the injunctive relief
requested by Craigslist.
Craigslist, Inc. v.
3taps, Inc., supra.
He then applied the above factors, in order. He found that under the
first factor, Craigslist would be
prejudiced if the court does not enter default judgment against Niessen. See Eitel v. McCool, supra. Absent
the requested injunction, Craigslist would be left without any means to enforce
its TOU or protect the content of its website from Niessen's alleged
misappropriation. See Am. Auto. Ass'n, Inc. v. AAA Auto Body &
Repair, Inc., 2015 WL 1089746 (U.S. District Court for the Northern District
of California 2015).
Craigslist, Inc. v.
3taps, Inc., supra.
Then the judge took up the second and third factors, noting
that they
focus on the merits of Plaintiffs'
substantive claim and the sufficiency of the Complaint. See Eitel
v. McCool, supra. To state a claim for breach of contract, Craigslist
must allege that: (1) a contract exists; (2) it performed its own duties
thereunder; (3) Niessen breached; and (4) Craigslist suffered damages as a
result of the breach. Troyk v.
Famers Grp., Inc., 171 Cal. App. 4th 1305 (2009).
Here, Craigslist alleges that the TOU
constitute a contract to which Niessen assented. . . . Craigslist further
alleges that it has performed its own duties imposed pursuant to the TOU. . . .
Finally, Craiglist alleges that Niessen willfully, repeatedly and
systematically breached the TOU, and that this breach of the TOU damaged
Craigslist. . . . Craigslist thus adequately pleads a breach of contract
claim against Niessen and satisfies the second and third factors under Eitel. See Eitel v. McCool, supra.
Craigslist, Inc. v.
3taps, Inc., supra.
Having disposed of the first three factors, he took up the
fourth one, explaining that it
examines the sum of money at stake in
the action. Eitel v. McCool,
supra. Courts have held that where a plaintiff seeks only injunctive
relief, this factor weighs in favor of granting default judgment. See U.S. v. Broaster Kitchen, Inc.,
2015 U.S. Dist. LEXIS 88403 (U.S. District Court for the Central District of California May 27, 2015); U.S. v. Torres,
2013 U.S. Dist. LEXIS 185079 (U.S. District Court for the Central District of
California Apr. 17, 2013). Craigslist solely requests and injunction here, so
this factor also weighs in favor of granting default judgment for
Craigslist. . . .
Craigslist, Inc. v.
3taps, Inc., supra.
The District Court Judge concluded by addressing several
residual issues:
Turning to remaining factors, there is
no possibility of dispute over material facts because, upon an entry of default
by the Clerk, the factual allegations of the plaintiff's complaint related to
liability will be taken as true. See Derek Andrew, Inc. v. Poof
Apparel Corp., 528 F.3d 696 (U.S. Court of Appeals for the 9th Circuit
2008); Eitel v. McCool, supra.
Furthermore, there is no evidence of
excusable neglect by Niessen, given that he was properly served with the
Complaint over a year ago. See Certificate of Service (docket 274); Eitel v. McCool, supra.
Finally, although default judgments are
generally disfavored because cases should ordinarily be decided on the
merits, see Pena v. Seguros La
Comercial, S.A., 770 F.2d 811 (U.S. Court of Appeals for the 9th Circuit 1985).
Niessen's failure to appear has made a decision on the merits impossible. See Eitel v. McCool, supra. Each of the Eitel factors thus weighs in favor of default judgment.
Craigslist, Inc. v.
3taps, Inc., supra.
Rule 5(d)(1) of the Federal Rules of Civil Procedure (which
govern procedure in civil suits) requires that a plaintiff file a certificate
of service, which shows that the Complaint has been served on the defendant(s),
with the court “within a reasonable time after service.”
The judge then took up a related issue:
Craiglist requests permanent injunctive relief to prohibit Niessen from violating its TOU and misusing Craigslist web
content. See Motion for Default
Judgment (dkt. 277) at 9. Injunctive relief is appropriate when a party
demonstrates `(1) that it has suffered an irreparable injury; (2) that remedies
available at law . . . are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between the plaintiff and defendant, a
remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction.’ Northern
Cheyenne Tribe v. Norton, 503 F.3d 836 (U.S. Court of Appeals for the 9th
Circuit 2007).
Craigslist, Inc. v.
3taps, Inc., supra.
As Wikipedia explains, an injunction
is an equitable remedy in the
form of a court order that compels a party to do or refrain from
specific acts. A party that fails to comply with an injunction faces
criminal or civil penalties, including possible monetary sanctions and
even imprisonment. They can also be charged with contempt of court.
In this case, the District Judge found that
Craigslist has alleged irreparable
injury from Niessen's `scraping’ activities. . . . Craigslist also argues that
the clandestine nature of scraping . . . makes the extent of this injury
difficult to calculate and translate into monetary damages, rendering remedies
available at law inadequate. See Northern Cheyenne Tribe v. Norton, supra.
Regarding the balance of hardships,
Craigslist asserts that it only requests compliance with its TOU, and thus
imposes no hardship on Niessen. See Northern Cheyenne Tribe v. Norton, supra. Finally,
Craigslist asserts that the public interest is not served by Niessen's breach
of its TOU. See Northern Cheyenne Tribe v. Norton, supra. The
Court thus concludes that injunctive relief is appropriate in this case.
Craigslist, Inc. v.
3taps, Inc., supra.
You can, if you are interested, read more about this lawsuit
and how and it arose in this Wikipedia entry.
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