Clark Equip. Co. v. Walls

1

CLARK EQUIPMENT COMPANY, Plaintiff, v. CHRISTOPHER WALLS, Defendant.

No. 3:21-cv-05886-DGE

United States District Court, W.D. Washington, Tacoma

September 18, 2023

ORDER GRANTING IN PART PLAINTIFF'S MOTION TO STRIKE (DKT. NO. 30) AND MOTION FOR CONTEMPT, SANCTIONS, AND MODIFICATION OF PERMANENT INJUNCTION (DKT. NO. 23)

David G. Estudillo, United States District Judge

I INTRODUCTION

Before the Court is Plaintiff's Motion for Contempt, Sanctions and Modification of Permanent Injunction (Dkt. No. 23), and Plaintiff's Motion to Strike Defendant's Answer (Dkt No. 30). Plaintiff's motions are premised on Defendants' failure to comply with a permanent injunction issued by this Court (Dkt. No. 20); as well as Defendants' untimely answer to Plaintiff's complaint (Dkt. No. 28). The Court presumes familiarity with the facts of this case. (See Dkt. Nos. 20 at 2-3; 25 at 1-2.)

II DISCUSSION

A. Motion to Strike

Plaintiff moves to strike Defendants' answer, filed on June 19 2023 by Defendant Christopher Walls “on behalf of himself and also of [Defendant] Bobcat Rentals.” (Dkt. No. 28; Dkt. No. 30.) As an initial matter, the Court construes Mr. Walls' answer as filed solely on his own behalf, and not on behalf of Defendant Bobcat Rentals Co. While Mr. Walls may represent himself pro se, he may not, as a non-attorney, represent co-defendant Bobcat Rentals Co. See Simon v. Hartford Life, Inc., 546 F.3d 661, 664 (9th Cir. 2008).

The Court agrees with Plaintiff that Mr. Walls' answer must be stricken. Under Federal Rule of Civil Procedure 12(a)(1)(A)(i), a defendant must serve an answer “within 21 days after being served with the summons and complaint.” This court has “‘inherent power' to impose sanctions,” including “striking an untimely answer,” for violations of this rule. State Compensation Ins. Fund v. Capen, 2016 WL 9083270, at *2 (C.D. Cal. Dec. 16, 2016). Mr. Walls was served with the summons and complaint on January 18, 2022. (Dkt. No. 6.) His responsive pleading was due February 8, 2022. Yet Mr. Walls did not file an answer or any responsive pleading until June 19, 2023-over a year after the deadline and following the Court's order of default judgment. (Dkt. No. 28.) Accordingly, the Court strikes Mr. Walls' answer. See Lake v. Fellner, 2014 WL 664653, at *2 (D. Nev. Feb. 19, 2014) (striking an answer that was more than a year late and followed entry of default); Capen, 2016 WL 9083270, at *2 (striking an answer filed more than a year after service of the complaint).

The Court does not, however, strike Mr. Walls' accompanying declaration (Dkt. No. 29), which it construes as both a motion to vacate and an opposition to Plaintiff's motion for contempt, sanctions, and modification of permanent injunction. See Caldwell v. Navy Fed. Credit Union, 2023 WL 3150074, at *1 (C.D. Cal. Feb. 3, 2023) (“Pro se pleadings are to be liberally construed in the Ninth Circuit”). Indeed, Mr. Walls' declaration states that he “would like to motion the Court to vacate this order” and that his “immediate concern is to get out of federal court contempt waters ASAP.” (Dkt. No. 29 at 2.)

The Court nonetheless denies Mr. Walls' attempt to vacate the Court's default judgment. “[A] trial court has discretion to deny a Rule 60(b) motion to vacate a default judgment if” any one of the following are true: “(1) the plaintiff would be prejudiced if the judgment is set aside, (2) [the] defendant has no meritorious defense, or (3) the defendant's culpable conduct led to the default.” In re Hammer, 940 F.2d 524, 525-26 (9th Cir. 1991). As the third factor is satisfied, the Court's analysis need not proceed further. American Ass'n of Naturopathic Physicians v. Hayhurts, 227 F.3d 1104, 1108 (9th Cir. 2000). Mr. Walls' culpable conduct led to the Court's default judgment, as he received both actual and constructive notice of the action yet failed to answer. See Direct Mail Specialists, Inc. v. Eclat Computerized Techs, Inc., 840 F.2d 685, 690 (9th Cir. 1988). Mr. Walls had actual notice of the litigation, as he personally responded to Plaintiff's notice of intent to file for default and promised Plaintiff that it would have a responsive pleading “soon.” (Dkt. No. 30 at 9.) Moreover, Mr. Walls had constructive notice, as he was properly served with the complaint and summons. See Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 815 (9th Cir. 1985). The Court therefore denies Mr. Walls' motion to vacate.

Plaintiff requests that “the Court order Defendants to pay Plaintiff's attorneys' fees incurred in connection with bringing [Plaintiff's motion to strike].” (Dkt. No. 30 at 10.) The Court declines Plaintiff's request. While Mr. Walls' answer was untimely and has been stricken, and while his motion to vacate was unsuccessful, the Court does not find that Defendant Walls' deficient filing amounts to bad faith supporting an award of attorneys' fees to Plaintiff. See Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991).

B. Civil Contempt and Sanctions

Plaintiffs ask “the Court [to] find Defendants in contempt for failure to comply with the Court's permanent injunction against Defendants' continued use of the BOBCAT Marks.” (Dkt. No. 23 at 2.) Plaintiff therefore must “show[] by clear and convincing evidence that [Defendants] violated a specific and definite order of the court.” FTC v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999) (internal citation and quotation omitted). Defendants may avoid contempt by demonstrating an inability to comply with the order, id., or substantial compliance with the order, Balla v. Idaho State Bd. of Corrections, 869 F.2d 461, 466 (9th Cir. 1989). “[W]here . . . the affidavits offered in support of a finding of civil contempt are uncontroverted,” a district court need not hold an evidentiary hearing on the matter. Peterson v. Highland Music, Inc., 140 F.3d 1313, 1324 (9th Cir. 1998).

The Court finds contempt warranted. The Court's order is specific and definite: it requires Defendants to cease use of Plaintiff's BOBCAT Marks, as well as terms, names, symbols or devices that imitate the BOBCAT Marks; and it requires Defendants to cease offering services in conjunction with those marks. (Dkt. No. 20 at 10.) Defendants flagrantly violated this order through their continued use of signs and decals containing BOBCAT Marks; and their republication of their website, Bobcat Rentals Co. (Dkt. No. 23 at 3-4, 7-8.) The parties' affidavits are uncontroverted on the issue of noncompliance. While Mr. Walls expresses “concern” about “federal court contempt waters,” his response does not point to any inability to comply or actions that would constitute substantial compliance with the Court's permanent injunction. (Dkt. No. 29 at 2-3.)

As Defendants have been found in contempt, the Court next addresses Plaintiff's argument for sanctions in the form of (1) an escalating fine in the event Defendants' noncompliance persists for two weeks following this Order and (2) an award of attorneys' fees and costs incurred by Plaintiff in investigating Defendants' contempt and bringing the instant motion. (Dkt. No. 23 at 12-14.) “Although the district court generally must impose the minimum sanction necessary to secure compliance . . . the district court retains the discretion to establish appropriate sanctions.” United States v. Bright, 596 F.3d 683, 696 (9th Cir. 2010).

“[C]ourts have long imposed civil contempt sanctions” for the purpose of “‘coerc[ing] the defendant into compliance' with an injunction or ‘compensat[ing] the complainant for losses' stemming from the defendant's noncompliance with an injunction.” Taggart v. Lorenzen, 139 S.Ct. 1795, 1801 (2019). The sanctions requested by Plaintiff comport with these goals. See United States v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999) (per diem fines may be used to coerce a party into compliance); In re Dyer, 322 F.3d 1178, 1195 (9th Cir. 2003) (“attorneys' fees are an appropriate component of a civil contempt award”).

The Court therefore imposes a per diem fine of $500 for each day of noncompliance with the Court's July 29, 2022 order, to begin to accrue two weeks after entry of this Order. The Court declines, however, to find escalating fines necessary. Defendants may avoid the per diem fine by complying with the Court's July 29th Order within 14 days from the date of this Order. Additionally, Plaintiff is directed to submit any request for attorneys' fees and costs, including detailed billing records, for the Court's review within 14 days from the date of this Order.

C. Modification of Permanent Injunction

Plaintiff asks this Court to modify the permanent injunction in its July 29, 2022 Order, in light of Defendants' continued violation of the Order and the refusal by third parties to stop Defendants' infringing acts online. (Dkt. No. 23 at 13.) “A party requesting modification [of an injunction] must show ‘a significant change [] in factual conditions.'” America Unites for Kids v. Rousseau, 985 F.3d 1075, 1097 (9th Cir. 2021) (internal citation omitted). Importantly, a “substantial violation of a court order constitutes a significant change in factual circumstances.” Kelly v. Wengler, 822 F.3d 1085, 1098 (9th Cir. 2016). Defendants' blatant noncompliance with the Court's prior permanent injunction therefore provides sufficient basis for modification.

1. Third Parties

Plaintiff asks that the Court's permanent injunction be modified “to address third parties' refusal to cooperate.” (Dkt. No. 23 at 13.) Plaintiff explains that it “has made repeated attempts to enforce the Court's July 29 Order by requesting third parties [] take town Defendants' infringing [online] content and listings, but these third parties have been reluctant to act because the injunction presently only states...