Craigslist, Inc. v. Kerbel, No. C-11-3309 EMC

CRAIGSLIST, INC., Plaintiff,

v.ALECKSEY KERBEL, et al., Defendants.

No. C-11-3309 EMC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: August 2, 2012

ORDER GRANTING PLAINTIFF'S

MOTION FOR DEFAULT JUDGMENT

(Docket No. 24)

I. INTRODUCTION

Plaintiff craigslist filed suit against Alecksey Kerbel, alleging violations of the Digital Millenium Copyright Act ("DMCA"), 17 U.S.C. § 1201; Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030; Cal. Penal Code § 502; Lanham Act, 15 U.S.C. §§ 1114, 1125(a), 1125(c)-(d); Common Law Trademark Infringement; Breach of Contract; Inducing Breach of Contract; Intentional Interference with Contractual Relations; and Fraud. craigslist's claims stem from Mr. Kerbel's alleged sales of products and services designed to automatically post to craigslist and circumvent its security and copyright protection mechanisms. Pending before the Court is Plaintiff's Motion for Default Judgment. Docket No. 24. No opposition has been filed. Having considered Plaintiff's submissions and oral argument, and for the reasons set forth below, the Court GRANTS Plaintiff's motion for default judgment.

II. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff craigslist operates the website, www.craigslist.org, which provides online localized classified advertising service and related online services. Compl., Docket No. 1, ¶ 1. Its headquarters is in San Francisco, CA, and it maintains the majority of its servers and computershere. Id. ¶ 21. craigslist enables authorized users to post classified ads on its website based on their geographic area and the product or service category in which they seek to advertise. Id. ¶¶ 23-25. The site lists ads within each category in reverse chronological order, so that the newest posts are at the top of the list. Id. ¶ 26.

craigslist governs access to its site with its Terms of Use ("TOU"). Id. ¶ 29. Each user who seeks to post to the site must accept the TOU before the ad is posted. Id. ¶¶ 30, 42-43. The TOU prohibit, inter alia, repeatedly posting the same or similar content, posting said content in more than one category or geographic area, posting ads on behalf of others, using a Posting Agent¹ to post ads, attempting to gain unauthorized access to craigslist's computer systems or engaging in any activity that disrupts or interferes with craigslist, using any automated device or computer program that enables non-manual postings, and making available content that uses automated means to download data from craigslist. Id. ¶ 32. The TOU also inform users of craigslist's location in California and secures users' consent to the personal and exclusive jurisdiction of San Francisco County, CA courts. Id. ¶ 34.

Once a user accepts the TOU, he or she must successfully respond to a CAPTCHA² challenge. Id. ¶ 44. CAPTCHAs are challenge-response tests in the form of partially obscured characters that the user must read and type into a box. Id. ¶ 59. They are designed to ensure that humans, rather than machines and automated devices, post ads. Id. ¶ 57. A user may also create an account to manage his or her postings, which sometimes requires a phone-verified account ("PVA"). Id. ¶ 46. PVAs are designed to prevent repetitious and unauthorized postings to craigslist by requiring users to provide a valid phone number in order to create an account. Id. ¶ 53. In addition to CAPTCHAs and PVAs, craigslist uses additional security measures to protect its site and systems, including IP address blocking, which blocks multiple ads from the same IP address within a short period of time. Id. ¶ 62.craigslist is a work of authorship protected by copyright law. Id. ¶ 69. Plaintiff owns all rights to craigslist's website, including the post-to-classifieds, account registration and account login expressions, and has registered copyrights for these features. Id. ¶¶ 70-71. It also owns and has registered the trademark CRAIGSLIST, which it has used since 1995. Id. ¶¶ 72-73.

Defendant Alecksey Kerbel is the owner and operator of the www.craigslist-poster.com website. Compl. ¶ 14. Defendant Kerbel is an individual residing in Osseo, Minnesota. Id. Plaintiff alleges Defendant develops, offers, and markets services designed to enable illegitimate uses of craigslist. Id. ¶ 5. For example, Craigslist Poster allows customers to create a campaign through which Defendant will repeatedly auto-post ads to craigslist. Id. ¶ 80. Defendant will repost customers' ads "24/7," in multiple geographic areas and categories. Id. ¶ 81. Customers purchase "credits" from Defendant which they can use to purchase various services, including ad-posting (1 credit), creating craigslist accounts (5 credits), and creating a PVA for posting in PVA-required categories (10 credits). Id. ¶ 82.

Defendant's services require Defendant and his customers to circumvent craigslist's security measures, create fraudulent accounts and PVAs, and fraudulently accept the TOU. Id. ¶¶ 83-92. Defendant also uses the CRAIGSLIST mark without authorization. Id. ¶¶ 93-100. Defendant has continued his activities despite receiving multiple cease and desist letters from craigslist. Id. ¶ 89. Defendant's activities burden craigslist's systems and cause it to incur expenses to increase server capacity, provide additional customer service and support for its legitimate customers, and investigate and enforce its policies. Id. ¶¶ 6-7, 101-06.

Plaintiff filed its complaint on July 6, 2011, asserting ten causes of action based on the above conduct. It served Defendant on July 8, 2011, by leaving the summons and complaint with Defendant's mother at her home in Osseo, Minnesota. Mot. at 2; Docket No. 15. at 5-6. His mother informed the process server that Defendant lived at that address. Docket No. 15 at 5-6. On July 31, 2011, Plaintiff mailed a copy of the summons and Complaint by first class mail with postage prepaid to the same address. Docket No. 15 at 3. On September 21, 2011, the Clerk entered default against Defendant. Docket No. 20.

Plaintiff now seeks default judgment for nine of those causes of action under the Digital Millenium Copyright Act ("DMCA"), 17 U.S.C. § 1201; Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030; Cal. Penal Code § 502; Lanham Act, 15 U.S.C. §§ 1114, 1125(a), 1125(c)-(d); Common Law Trademark Infringement; Breach of Contract; Inducing Breach of Contract; Intentional Interference with Contractual Relations; and Fraud. Plaintiff seeks a permanent injunction prohibiting Defendant from continuing its activities, and damages under the DMCA and for trademark infringement. Mot. at 4.

On May 7, 2012, the Court issued an order requesting supplemental briefing and/or evidence on two issues. Docket No. 25. First, the Court requested proof that craigslist had served Mr. Kerbel with the motion for default judgment not less than 35 days before a hearing on the motion. Second, the Court requested supplemental briefing as to whether there was personal jurisdiction over Mr. Kerbel. craigslist has now filed a proof of service by U.S. mail, Docket No. 27, and a supplemental brief, Docket No. 28.

III. DISCUSSION

A. Jurisdiction

"When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties." Levi Strauss & Co. v. Toyo Enter. Co., Ltd., 665 F. Supp. 2d 1084, 1092 (N.D. Cal. 2009) (citing In re Tuli, 172 F.3d 707, 712 (9th Cir.1999)).

In this case, subject matter jurisdiction is apparent as Plaintiff raises federal statutory claims, and its state law claims are integrally related to the federal claims. See Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1051-52 (N.D. Cal. 2010) (so holding). However, because Defendant is a Minnesota resident, it is necessary to examine personal jurisdiction. In addition, the Court must assess the adequacy of service of process.

1. Personal Jurisdiction

"[A] court may exercise personal jurisdiction over a defendant consistent with due process only if he or she has 'certain minimum contacts' with the relevant forum "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Yahoo! Inc. v.La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Where, as here, no federal statute authorizes personal jurisdiction, the Court applies the law of the state in which the court sits. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). California's long-arm statute, Cal. Code Civ. P. § 410.10, extends to the limits of federal due process requirements, so the Court need only conduct jurisdictional analysis under federal due process. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).

In this case, Plaintiff argues that Defendant's consent to craigslist's TOU, which includes a California forum selection clause, and Defendant's minimum contacts with California suffice to establish specific personal jurisdiction. See Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1052-54 (N.D. Cal. 2010) (so holding based on similar conduct); Craigslist, Inc. v. Doe 1, C09-4739 SI BZ, 2011 WL 1897423, at *2-3 (N.D. Cal. Apr. 25, 2011) report and recommendation adopted sub nom. Craigslist, Inc. v. Meyer, C 09-4739 SI, 2011 WL 1884555 (N.D. Cal. May 18, 2011) (same). In addition, Plaintiff argues that Defendant's interactive commercial website creates general personal jurisdiction.

a. Specific Personal Jurisdiction

The Ninth Circuit has established a three-prong test for analyzing a claim of specific jurisdiction:

(1) The non-resident defendant must purposefully direct activities or consummate some transaction with the forum or resident thereof; or perform some act which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the

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