PHYLLIS J. HAMILTON, District Judge.
The court has reviewed Magistrate Judge Joseph C. Spero's report and recommendation regarding plaintiffs' motion for default judgment. The report and recommendation was filed on October 6, 2014. During the intervening time, plaintiffs Automattic, Inc. ("Automattic") and Oliver Hotham ("Hotham") have been attempting to serve defendant Nick Steiner (who resides in the United Kingdom) with a copy of the report and recommendation, but have to date been unsuccessful.
Although defendant was not served with the report and recommendation, and thus did not file any objections, the court is satisfied by Judge Spero's detailed findings that the summons and complaint were properly served on defendant. There is no clear requirement in 28 U.S.C. § 636(b) that a report and recommendation be served on the opposing party. However, the court normally requests that the moving party do so, out of an abundance of caution. In this case, given that defendant was properly served (notwithstanding the difficulty of service in the U.K. under the Hague Convention) yet chose to default, the court will require no further expenditure of resources.
The court finds the report correct, well-reasoned and thorough, and adopts it in every respect. Accordingly, plaintiffs' motion for default judgment is GRANTED. Judgment shall be entered for the plaintiffs, and the court awards plaintiffs damages in the amount of $960.00 for Hotham's work and time, $1,860.00 for time spent by Automattic's employees, and $22,264.00 for Automattic's attorney's fees, for a total of $25,084.00.
JOSEPH C. SPERO, United States Magistrate Judge.
This action arises under subsection (f) of the Digital Millennium Copyright Act, 17 U.S.C. § 512 ("DMCA"), which provides a cause of action against any person who "knowingly materially misrepresents" that material or activity infringes a copyright to utilize the DMCA's takedown notice procedures. See 17 U.S.C. § 512(f). Plaintiffs Automattic Inc. ("Automattic") and Oliver Hotham ("Hotham") allege that Defendant Nick Steiner ("Defendant") violated subsection 512(f) by knowingly misrepresenting that Hotham published material on Automattic's website that infringed Defendant's copyright. Defendant has not filed an answer or otherwise responded to this action, and default has been entered by the clerk. Docket No. 21.
On May 22, 2014, Plaintiffs filed a Motion for Default Judgment ("Motion"). A hearing was held at which the Court requested supplemental evidence regarding damages. For the reasons explained below, it is recommended that Plaintiffs' Motion for Default Judgment be GRANTED.
Congress passed the DMCA in 1998, adding § 512 to Title 17 of the U.S.Code. See 17 U.S.C. § 512. The purpose of the DMCA was to create an environment that
The DMCA also creates liability for individuals who abuse the takedown notice system by filing meritless claims of infringement. 17 U.S.C. § 512(f). Subsection 512(f) provides that any person who makes knowing, material misrepresentations in filing a DMCA takedown notice "shall be liable for any damages, including costs and attorneys' fees[] incurred by the alleged infringer . . . or by a service provider. . ." Id.
Hotham is a student journalist residing in London who maintains a blog on Word-Press.com, a web-publishing platform operated by Automattic. Compl. ¶¶ 10, 12-13. Automattic is a corporation based in San Francisco that operates WordPress as an open source for users to "work on, change or contribute to" in an effort to "empower a community of bloggers." Sieminski Decl. (Dkt. 22-6) ¶¶ 13-14. While Automattic's free and user-friendly hosting of digital content promotes expression, it also creates potential for copyright infringement. See Doe v. Geller, 533 F.Supp.2d 996, 1001 (N.D.Cal.2008) (finding potential for copyright and trademark infringement in content hosted by YouTube).
In May or June of 2013, Hotham read an article about an organization called Straight Pride UK on the blog BuzzFeed. Compl. ¶ 21. On July 26, 2013, Hotham contacted Straight Pride UK, identifying himself as "a student and freelance journalist." Compl. ¶ 22. Hotham asked if he could send Straight Pride UK "some questions about [the] organisation . . . to find out a bit about who's involved and what [it] hope[d] to accomplish." Id.
On July 29, 2013, a staffer from Straight Pride UK responded affirmatively, and Hotham promptly sent a list of questions. Compl. ¶¶ 23-24. Defendant responded to Hotham's questions on August 1, 2013. Compl. ¶ 25. In his email response, Defendant identified himself as the "Press Officer" for Straight Pride UK, and attached a PDF file named "Press Statement—Oliver Hotham.pdf" Compl. ¶ 26, Ex. A ("Press Statement").
On August 3, 2013, Hotham posted an article to his blog on WordPress in which he discussed the information provided by Straight Pride UK in the Press Statement. Hotham wrote:
Compl. ¶ 29. Hotham also posted the questions he sent to Straight Pride UK and the corresponding answers in the Press Statement. Compl. ¶ 30.
On the same day that Hotham posted the article on the blog at WordPress, Defendant sent an email to both Hotham and Automattic with the subject line: "Digital Millennium Copyright Act—Removal Request". Compl. ¶ 31. Defendant wrote:
Gratz Decl. (Dkt. 22-1) Ex. B.
Automattic responded to Defendant and informed him that the "DMCA Takedown Notice has been received and reviewed for completeness," and that Automattic "disabled access to the material identified as infringing." Id. Automattic also informed Defendant that Hotham would have an opportunity to formally challenge this removal. Id. Plaintiffs allege that Automattic disabled access to Hotham's blog post in reliance on Defendant's takedown notice. See Compl. ¶ 36 ("But for those misrepresentations, Automattic would not have disabled access to the post identified in the notice.").
Following the removal of his blog post, it appears that Hotham posted more content
Id.
On August 14, 2014, Defendant sent a third email asking Automattic again to take down certain content posted by Hothman. Gratz Deck, Ex. D. Defendant wrote that he had "a good faith belief that use of the copyrighted materials described above as allegedly infringing is not authorized by the copyright owner, its agent, or the law." Id. In response to Defendant's third email, Automattic informed Defendant that "the DMCA Takedown Notice you have submitted is incomplete," and asked Defendant to resubmit the takedown notice with additional information. Id.
Plaintiffs allege Automattic expended staff time and resources in reviewing the takedown notices, disabling Hotham's posts, notifying Hotham of the takedown notices, handling requests for comment from press, and pursuing the instant action. Compl. ¶¶ 37-38. Plaintiffs also allege that Hotham expended time and resources corresponding with Automatitic about the takedown notice and addressing this dispute. Id. ¶¶ 39. Further, Hotham alleges that his free speech rights have been chilled. Id. ¶ 40.
Plaintiffs filed this action for misrepresentation under 17 U.S.C. § 512(f) against Defendant on November 21, 2013. On December 10, 2013, Plaintiffs filed a Motion for an Extension of Time to serve Defendant in the United Kingdom. Dkt. No. 10. The court granted Plaintiffs' motion, and Plaintiffs served Defendant on December 23, 2013. See Dkt. No. 14 (Summons); Gratz Deck, Exs. B, D.
Defendant's answer was due on January 13, 2014. See Fed. R. Civ. P. 12(a)(1)(A)(i). Defendant has not filed an answer to the Complaint or otherwise appeared in this action. On May 20, 2014, the Clerk entered default against Defendant. Dkt. No. 21. On May 22, 2014, Plaintiffs filed a Motion for Default Judgment against Defendant. Dkt. No. 22. The Court held a hearing, and Plaintiffs have since submitted supplemental declarations.
Courts must determine the adequacy of service of process on a motion for default judgment. Bank of the West v. RMA Lumber Inc., No. 07-6469 JSW, 2008 WL 2474650, at *2 (N.D.Cal. June 17, 2008). The Proof of Service in this case shows that a process server, Rick Hamilton of ABC Legal Services, sent the complaint, summons and other relevant documents to the "English Authorities," which in turn served the documents by "posting them through defendant's letterbox."
Id. at 1 (Summons); see also Dkt. No. 14-2. This was the address of The Straight Forward Project that was provided by Defendant in his communications with Automattic. See Gratz Decl., Exs. B, D. There is no indication from those communications that this address is Defendant's personal residence.
Service outside of the United States must be done in accordance with Rule 4(f) of the Federal Rules of Civil Procedure. Rule 4(f)(1) provides that an individual "may be served at a place not within any judicial district of the United States . . . by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents." Fed. R. Civ. P. 4(f)(1).
In Brockmeyer v. May, the Ninth Circuit wrote that "Rule 4(f)(1) authorizes service by those methods of service authorized by international agreements, including the Hague Convention." 383 F.3d 798, 804 (9th Cir.2004). The court continued:
Id. Because it was "undisputed that Brockmeyer did not use either the Central Authority under the Hague Convention or any other internationally agreed means for accomplishing service," the court found that Rule 4(f)(1) did not provide a proper basis for service. See id.
The Hague Convention provides that "[e]ach Contracting State shall designate a Central Authority which will undertake to receive requests for service coming from other contracting States." Hague Convention Art. 2. "The Central Authority then may serve the document itself, or have it served by a method prescribed by its internal law for the service of documents in domestic actions upon persons within its territory." Id. at art. 5. The Central Authority must complete a certificate confirming the "method, the place and the date of service and the person to whom the document was delivered." Id. at art. 6.
Plaintiffs present three documents to support that Defendant was served in compliance with the Federal Rules of Civil Procedure and the Hague Convention. First, the American Proof of Service shows that a process server, Rick Hamilton of ABC Legal Services, sent the Complaint, Summons and other relevant documents to the "English Authorities," which in turn served the documents by "posting them through defendant's letterbox." Dkt. No. 14 at 2 (Proof of Service). Next, Plaintiffs provide a copy of the USM-94, Request for Service Abroad of Judicial or Extrajudicial Documents. Dkt. No. 14-1. Use of this form accompanying American judicial process is a recognized procedure by foreign Central Authorities for a "private litigant who wishes to effect service in a foreign country pursuant to the Hague Convention."
Further, the Certificate complies with Article 6 because it states the "method, the place and the date of the service and the person to whom the document was delivered." Id. at art. 6. The Certificate provides that on December 23, 2013, the documents were served "by posting them through the defendant's letterbox" to the address of The Straight Forward Project that was provided by Defendant in his communications with Automattic. Dkt. No. 14-2; see Gratz Decl., Exs. B, D. In the Ninth Circuit, a Certificate accurately executed by Central Authority "constitutes prima facie evidence of valid service which can only be overcome by strong and convincing evidence." Oak Point Partners, Inc. v. Lessing, No. 11-3328-LHK, 2012 WL 4121109, *1, *2 (N.D.Cal. Sept. 18, 2012) (citing S.E.C. v. Internet Solutions for Bus. Inc, No. 06-15204, 509 F.3d 1161, 1166 (9th Cir.2007)). The Court is aware of no such countervailing evidence in this case.
The Court finds that Plaintiffs adequately served the Defendant through use of a designated Central Authority under article 18 of the Hague Convention in compliance with Rule 4(f)(1) of the Federal Rules of Civil Procedure.
When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has the affirmative duty to determine whether it has jurisdiction over the subject matter and the parties. In re Tuli, 172 F.3d 707, 712 (9th Cir.1999). Subject matter jurisdiction is proper under 28 U.S.C. § 1331 because Plaintiffs' claim arises under the DMCA, a federal statute. Plaintiffs allege that Defendant is subject to personal jurisdiction on two independently sufficient bases: (1) consent by agreement to the WordPress Terms of Service, and (2) specific jurisdiction through minimum contacts with the State of California.
Plaintiffs present evidence that Defendant consented to personal jurisdiction when he accepted the WordPress Terms of Service in order to file his takedown notice. Plaintiffs state that Defendant's second and third takedown notices show that Defendant was logged in as a WordPress.com user. Sieminski Decl. ¶ 12; Gratz Decl., Exs. C, D. Plaintiffs further state that Defendant could not have become a WordPress.com user without accepting the WordPress.com terms of service. Id.
Plaintiffs present evidence that WordPress's terms of service include a forum-selection clause identifying "state and federal courts located in San Francisco County, California" as the "proper venue for disputes arising" from use of WordPress. Gratz Decl., Ex. A ¶ 20. Plaintiffs argue that acceptance of a forum-selection clause is evidence of consent to personal jurisdiction in that forum, and the Court may therefore properly exercise jurisdiction over the Defendant. Mot. at 7.
Here, Defendant's conduct of accepting the terms of service is sufficient to constitute consent to personal jurisdiction in California. See Ross, 504 F.3d 1130; Craigslist, Inc. v. Naturemarket, Inc., No. C 08-5065 PJH, 694 F.Supp.2d 1039, 1052-53 (N.D.Cal.2010) ("the [c]ourt may properly exercise personal jurisdiction over Defendants based on their consent to the forum selection clause in the [terms of use agreement]"). In becoming a user of WordPress, Defendant accepted terms of service that read, "[b]y accessing or using any part of the web site, you agree to become bound by the terms and conditions of this agreement." See Gratz Decl., Ex. A at 2. The terms of service include a forum selection clause selecting this forum. Under Ross, this constitutes sufficient evidence that Defendant has consented to jurisdiction in this forum. Ross, 504 F.3d at 1149.
Plaintiffs also argue that the Court's exercise of personal jurisdiction over Defendant is proper because the Defendant has sufficient minimum contacts in California. Mot. at 8. Plaintiffs argue that Defendant purposefully directed his activities toward California in filing a takedown notice pursuant to the DMCA, a United States law, against Plaintiff Automattic, a California-based company. Id. Plaintiffs contend that their claim arises out of Defendant's action in California because he sent his allegedly fraudulent takedown notice to Automattic, and Automattic is located in California. Id. Plaintiffs argue that because Defendant invoked the laws of the United States to allegedly commit fraud upon Automattic in California, it is reasonable to exercise jurisdiction over the Defendant. Id. at 9.
"Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Dole Food Company, Inc. v. Watts, 303 F.3d 1104, 1110 (9th Cir.2002) (citing Cal. Code Civ. Proc. § 410.10)). The exercise of specific jurisdiction over a nonresident defendant requires the satisfaction of the three following factors:
"The first prong of the specific jurisdiction test refers to both purposeful direction and purposeful availment." Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, 1228 (9th Cir.2011). In cases involving tortious conduct, "purposeful direction is the proper analytical framework." Id. (internal quotation omitted). Here, purposeful direction is the proper analytical framework to analyze the first prong of the specific jurisdiction test because the claim of misrepresentation under the DMCA is a "tort-like cause of action." See id. (claim of copyright infringement is "tort-like cause of action" to invoke purposeful direction framework of analysis for specific jurisdiction).
To determine whether a defendant "purposefully directs his activities at a forum state," courts apply the "effects" test from the Supreme Court's decision in Calder v. Jones. 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). The "effects" test requires that "the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir.2010) (quotations omitted).
In the Ninth Circuit, the intentional act element requires "an intent to perform an actual, physical act in the real world, rather than an intent to accomplish a result or consequence of that act." Brayton, 606 F.3d at 1128. Here, the intentional act element is satisfied because Defendant acted intentionally when he sent takedown notices to Automattic. See id. at 1128-29 (creating and posting infringing material to a website is an intentional act); Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1088 (9th Cir.2000) (sending a letter was an intentional act). Further, Plaintiffs allege that Defendant intentionally misrepresented that Hotham's use of content contained in the Press Statement was unauthorized. See Dole Food, 303 F.3d at 1111 ("Because it is clear that [Plaintiff] has sufficiently alleged that [defendants] acted intentionally, we skip to the `express aiming requirement.'").
The second element of the "effects" test requires "something more" than a "foreign act with foreseeable effects in the forum state" to justify the assertion of personal jurisdiction. Bancroft, 223 F.3d 1082, at 1087. Courts routinely interpret that "something more" to be satisfied when conduct is "expressly aimed" at the forum state. Id. ("We now conclude that `something more' is what the Supreme Court described as `express aiming' at the forum state.") The "express aiming" requirement "is satisfied when the defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state." Id.; see also Dole Food, 303 F.3d at 1112 ("Because [defendants] knew that Dole's principal place of business was in California, and communicated directly with those California decision makers, we conclude that their actions were `expressly aimed' at the forum state."); Data Disc,
In Bancroft, the defendant sent a letter to the Virginia headquarters of plaintiff, a California-based corporation, requiring that plaintiff sue defendant or lose rights to their domain name. Bancroft, 223 F.3d at 1087. The defendant knew that the plaintiff held the domain name, and that the letter would have legal implications for the plaintiff. Id. at 1088. In considering whether California had specific jurisdiction over defendant, the court found it irrelevant that the letter was sent to Virginia, rather emphasized that in sending the letter, the defendant's conduct had the purpose to affect or "individually target[ed]" the plaintiff. Id. at 1087-88. By "individually targeting" the plaintiff, who was a resident of California, the defendant's conduct demonstrated "something more" than a mere "foreign act with foreseeable effects in the forum state." Id.; see also Panavision Intern, L.P. v. Toeppen, 141 F.3d 1316, 1321 (9th Cir.1998) ("deliberate choice of plaintiff's trademark, and his subsequent attempts to extort compensation for [] conveyance of [a] domain name, targeted that individual plaintiff."); Metro. Life Ins. Co. v. Neaves, 912 F.2d 1062, 1065 (9th Cir.1990) ("critical factor" in sending a letter misrepresenting entitlement to insurance payment was that defendant "was purposefully defrauding [plaintiff] in California.").
Here, the Court finds that Defendant's sending the takedown notice to Automattic with the knowledge and purpose that it would induce Automattic to remove content from Wordpress "individually targeted" Automattic and thus constituted conduct "expressly aimed" at California. The plain text of each takedown notice demonstrates that Defendant emailed each directly to Automattic with the purpose of forcing Automattic to remove content from Wordpress. See Gratz Decl. Exs. B, C, D. The first takedown notice contained the subject line "Digital Millennium Copyright Act—Removal Request." Id. Ex. A. The body of the request identified specific "posts and or images" hosted by Wordpress and expressly requested Automattic promptly remove them or face potential "liability under the DMCA." Id. The subsequent takedown notices similarly requested Automattic remove specific content or face legal liability. See id. Exs. C, D. Like the letter sent to plaintiff in Bancroft, Defendant's clear attempt to force action by Automattic or face legal consequences "individually targeted" Automattic, and thus constituted "something more" than an act with merely foreseeable effects in California. See Bancroft, 223 F.3d at 1087. Thus, Defendant's conduct with the purpose of forcing Automattic to act constituted "individualized targeting" to satisfy "express aiming" at the forum state to justify specific jurisdiction over the Defendant.
The final element of the Calder "effects" test is satisfied if Plaintiff can show that "a jurisdictionally sufficient amount of harm is suffered in the forum state." Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1210 (9th Cir.2006) (en banc) (overruling prior decisions which required "the `brunt' of the harm" to be suffered in the forum state). The Ninth Circuit has relied on a corporation's principal place of business in determining the location of its economic injury. See Dole Food, 303 F.3d at 1114. "[W]hen a forum in which a plaintiff corporation has its principal place of business is in the same forum toward which defendants expressly aim their acts, the
Having found that Plaintiffs have met their burden in establishing the first prong of specific personal jurisdiction, the Court considers whether the claim is "one which arises out of or relates to the defendant's forum-related activities." Dole Food, 303 F.3d at 1111. Here, the claim for misrepresentation under § 512(f) directly relates to the takedown notices sent by Defendant to Automattic in California. Accordingly, the second prong for specific personal jurisdiction is also satisfied.
Because Plaintiffs have satisfied the first two prongs of the specific jurisdiction analysis, "the burden then shifts to the defendant to `present a compelling case' that the exercise of jurisdiction would not be reasonable." Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Defendant has not appeared in this action, and therefore, has made no "compelling case" against the exercise of personal jurisdiction on grounds of reasonableness. Accordingly, there is personal jurisdiction over Defendant in this case.
As a final point, Plaintiffs correctly distinguish the instant case from Geller, where the Northern District declined to exercise specific personal jurisdiction over a foreign defendant who sent a DMCA takedown notice to a California-based company. See Geller, 533 F.Supp.2d 996. In Geller, the plaintiff, a resident of Pennsylvania, alleged that defendants, both residents of England, sent a takedown notice to YouTube that "knowingly materially misrepresent[ed]" that material infringed a copyright in violation of § 512(f). Id. at 1003; 17 U.S.C. § 512(f). The court declined to exercise personal jurisdiction over the defendants because the plaintiffs did not sufficiently allege how the act of removing the video in California by YouTube, not a party to the dispute, demonstrated injury to plaintiff in California rather than in plaintiff's residence state of Pennsylvania. Id. at 1006. Unlike the Pennsylvania-based plaintiff in Geller unlikely to sustain injury in California, Plaintiff Automattic has its principal place of business and alleges economic and reputational damages in California. Compl. ¶ 3; Mot. at 10, 11.
After default has been entered against a party, a court may grant default judgment in its discretion. If the court is satisfied that jurisdiction is proper and that service of process upon the defendant was adequate, courts are instructed to consider several factors in determining whether to grant default judgment:
Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986). In making its decision, the court takes all factual allegations in the complaint, except those relating to damages, as true. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir.1977)). The scope of relief "must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c).
In considering the sufficiency of the complaint, the Court looks to the Plaintiffs' allegations to determine whether they "state a claim on which the [plaintiff] may recover." See Kloepping v. Fireman's Fund, No. 94-2684 TEH, 1996 WL 75314, at *2 (N.D.Cal. Feb. 13, 1996) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978)). Section 512(f) provides:
17 U.S.C. § 512(f) (emphasis added). Thus, to state a claim for misrepresentation under § 512(f), Plaintiffs must allege that Defendant "knowingly and materially misrepresent[ed]" that copyright infringement has occurred, that Automattic "relied" on such misrepresentations, and that Plaintiffs have been "injured" as a result. See Online Policy Grp. v. Diebold, Inc., 337 F.Supp.2d 1195, 1204 (N.D.Cal.2004) (Fogel, J.) (noting that "the statutory language [of § 512(f)] is sufficiently clear on its face and does not require importation of standards from other legal contexts.").
"[K]nowingly means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations." Diebold, Inc., 337 F.Supp.2d at 1204 (citing Black's Law Dictionary (8th ed. 2004) (definitions of "knowledge," in particular, "actual" and "constructive" knowledge)). In Diebold, the court found that the defendant made a knowing misrepresentation because "[n]o reasonable copyright holder could have believed that the portions of the email archive. . . were protected by copyright," and because the defendant specifically intended the takedown notice to result in the prevention of publication of certain content. Diebold, Inc., 337 F.Supp.2d at 1204. Similarly, here, the Court finds that Defendant knowingly misrepresented that Hotham violated his copyright because Defendant could not have reasonably believed that the Press Release he sent to Hotham was protected under copyright. Moreover, there can be no dispute that Defendant knew, and indeed, specifically intended,
Defendant's misrepresentations must have also been "material," which means that the misrepresentation affected Automattic's response to the takedown notices. Diebold, Inc., 337 F.Supp.2d at 1204. In Diebold, the court found materiality by the fact the misrepresentations "resulted in the removal of the content from websites and the initiation of the present lawsuit." Diebold, Inc., 337 F.Supp.2d at 1204. Plaintiffs allege that Defendant's misrepresentations induced Automattic to disable Hotham's article. Compl. ¶ 35. This is sufficient to satisfy the element of materiality.
Plaintiffs also allege that Automattic relied on Defendant's misrepresentations, and that they have been injured as a result. See Compl. ¶¶ 36-40. These allegations are presumed true on a motion for default judgment. Accordingly, the Court finds the Complaint to be sufficient, and that this factor weighs in favor of default judgment.
The fact Defendant made his misrepresentations in London and not in the United States may present a challenge to the merits of Plaintiffs' § 512(f) claim. "It is a `longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (quoting EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991)). "This principle represents a canon of construction, or a presumption about a statute's meaning," and "rests on the perception that Congress ordinarily legislates with respect to domestic, not foreign matters." Id. (citations omitted). "When a statute gives no clear indication of an extraterritorial application, it has none." Id.
In Morrison, the Supreme Court considered whether section 10(b) of the Securities and Exchange Act of 1934 applied extraterritorially. Morrison, 561 U.S. at 255, 130 S.Ct. 2869. The plaintiffs, all Australian nationals, had purchased stock in an Australian bank on an Australian stock exchange. Id. at 251, 130 S.Ct. 2869. Plaintiffs alleged that representatives of the bank's American subsidiary in the United States made fraudulent statements making some of the subsidiary's assets to appear more valuable than they actually were. Id. at 253, 130 S.Ct. 2869.
Emphasizing the presumption against extraterritorial application of domestic laws, the Court found that the plaintiffs did not have a cause of action under section 10(b). Id. at 273, 130 S.Ct. 2869. The Court stated that "[w]hen a statute gives no clear indication of an extraterritorial application, it has none." Id. at 255, 130 S.Ct. 2869. Looking to the language of the Exchange Act, the Court concluded that the "objects of the statute's solicitude" were "transactions in securities listed on domestic exchanges, and domestic transactions in other securities" and that it was "those transactions" and "parties to those transactions that the statute seeks to regulate." Id. at 267, 130 S.Ct. 2869. Importantly, the Court held that the "focus of the Exchange Act [was] not upon the place where the deception originated, but upon purchases and sales of securities in the United States." Id. at 266, 130 S.Ct. 2869.
A court from the Central District of California considered the application of Morrison in the context of a statute prohibiting the trafficking of people into the United States. See Tanedo v. E. Baton Rouge Parish Sch. Bd., C-10-1172 JAK, 2012 WL 5378742 (C.D.Cal. Aug. 27, 2012). In Tanedo, the court considered the scope
In line with Morrison and Tanedo, the focus of § 512(f) is not where the fraudulent misrepresentation originated, rather where the reliance, wrongful removal, and the resulting injury occurred. The text of § 512(f) specifically provides remedy for the party "who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it." 17 U.S.C. § 512(f). The object of § 512(f), titled "Limitations on liability relating to material online[,]" is to not only regulate the removal of digital content, but also to protect the liability of web service providers. See id.
Here, the object of § 512(f) involves Automattic's removal of the article from WordPress, or potential threat of legal liability under the DMCA, both which occurred or would have occurred in California. Like in Tanedo, the application of the statute is not extraterritorial because the object of § 512(f) of the DMCA, the prohibition on misrepresentations to effect the removal and liability relating to digital material, is present. Moreover, key elements of the cause of action were performed in California. The material at issue was hosted by Automattic, a California corporation, and Defendant's takedown notice was directed to Automattic in the California. Automattic's reliance on Defendant's misrepresentation and resulting injury also both occurred in California.
Further, this reasoning is consistent with Crunchyroll, where this Court held that copyright infringement that commenced abroad but was complete in the United States was not wholly extraterritorial, and thus, the Copyright Act covered the defendant's conduct. See Crunchyroll, 2014 WL 1347492, at *17. Because the object of the Copyright Act is to protect copyrighted material that is published, and because the material at issue in that case was published in the United States, the infringement was not wholly extraterritorial. Id.; see also Shropshire v. Canning, 809 F.Supp.2d 1139, 1146 (N.D.Cal.2011) (copyright laws apply where alleged infringement commenced abroad but culminated in the United States through YouTube servers in California).
Having found that the sufficiency of the complaint and merits of the § 512(f) claim weigh in favor of default judgment, the Court considers the remaining Eitel factors. Because Defendant has failed to respond to the complaint or otherwise appear in this action, Plaintiffs will be left without a remedy, and therefore prejudiced, if default judgment is not granted. The sum of money at stake, while not insignificant, is justified by the evidence proffered by Plaintiffs establishing damages, as discussed further below. Defendant was properly served, and there is no indication that default is due to excusable neglect. Defendant could conceivably dispute some of the material facts if he were to appear, but he has failed to do so, and the communications between Plaintiffs and
Section 512(f) provides that any person who makes knowing, material misrepresentations in filing a DMCA takedown notice "shall be liable for any damages, including costs and attorneys' fees[] incurred by the alleged infringer . . . or by a service provider. . . ." 17 U.S.C. § 512(f). The Court previously determined that Plaintiffs proof of damages was insufficient and requested supplemental evidence. Plaintiffs have filed supplemental declarations supporting their claims to damages under § 512(f), including: (1) time and resources expended in dealing with the takedown notice; (2) damages for reputational harm; (3) damages for Hotham's emotional harm; (4) damages for Hotham's chilled speech; and (5) costs and attorneys' fees incurred by Automattic. Hotham requests $4,960 for lost time, reputational harm, emotional distress, and chilled speech. Hotham Supp'l Decl. (Dkt. 27) ¶ 16; Compl. ¶ 40. Automattic requests $8,860 for lost time, costs of media relations, and reputational harm. Sieminski Supp'l Decl. ¶ 28. Plaintiffs also request $22,264 for attorneys' fees. Gratz Supp'l Decl. (Dkt. 26) ¶ 13.
Hotham claims that he spent "substantial time corresponding" with Automattic representatives about his permission to publish the content in the Press Statement, and then regarding the counter-notice he filed in accordance with the DMCA. See Hotham Decl. (Dkt. 22-7) ¶ 6. General Counsel for Automattic, Paul Sieminski, states that the company "spent significant staff time and resources in reviewing [the] takedown notices, disabling access to the posts, notifying Hotham, reviewing Hotham's response, dealing with press inquiries surrounding the takedown and reinstating of the post, and ultimately pursuing this litigation." Sieminski Decl. ¶ 11. Plaintiffs contend that this use of time and resources in response to Defendant's knowing misrepresentation under § 512 entitles them to damages. Pls.' Mot. at 9.
This district construes damages under § 512(f) broadly, as the statute's use of "any damage" in its language "suggests strong Congressional intent that recovery be available for damages even if they do not amount to . . . substantial economic damages." Lenz v. Universal Music Corp., No. 5:07-cv-03783-JF, 2013 WL 271673, at *9 (N.D.Cal. Jan. 24, 2013) (quoting Lenz v. Universal Music Corp., No. C 07-3783 JF, 2010 WL 702466, at *10 (N.D.Cal. Feb. 25, 2010)). In Lenz, the plaintiff sought damages for an estimated ten hours spent obtaining counsel and sending notices from her own computer when her video was removed from YouTube due to a DMCA takedown notice. Id. In an order denying cross motions for summary judgment, the court acknowledged the apparent lack of authority "indicat[ing] definitively whether [the plaintiff] may recover for the time and resources that she herself expended in attempting to have her video reinstated under the DMCA's procedures[,]" but noted that permitting such recovery would be consistent with the construction of damages under the statute contemplated by Congress. Id. The court went on to suggest that the minimal expenses in "electricity to power her computer, internet and phone bills,
Here, Plaintiffs' recovery of damages for time and resources incurred in dealing with Defendant's takedown notices is consistent with the Lenz court's interpretation of § 512(f). Like in Lenz, Plaintiffs expended time researching and working on their computers and telephones, and thus incurred at least minimal expenses in "bills, and the like." Id. Recovery of damages for lost time and resources is also consistent with the legislative intent of § 512(f) in deterring knowingly false allegations of infringement because it gives wrongfully accused internet users the incentive to bring a claim. Id. at *10.
Plaintiffs' initial evidence regarding the expenditure of resources, however, was too general and ambiguous. Instead of attempting to quantify the resources each Plaintiff actually expended in dealing with Defendant's takedown notices, Plaintiffs merely presented evidence that they spent "substantial" time and resources. Hotham Decl. ¶ 6; Sieminski Decl. ¶ 11. Plaintiffs did not attempt to estimate the amount of damages that should granted for the expenditure of resources, instead estimating aggregate values of damages for time, resources, reputational harm, and chilled speech. Hotham Decl. ¶ 15; Sieminski Decl. ¶ 11. At the July 11 hearing, the Court requested a more specific explanation of Plaintiffs' time and resources spent responding to Defendant's takedown notices.
Plaintiffs have each submitted supplemental declarations regarding their damages. Hotham declares that he spent approximately sixteen hours researching the validity of the takedown notice, determining how to proceed, and responding to media inquiries
Automattic submitted a supplemental declaration of its general counsel, Paul Sieminski. Automattic seeks to recover for
Automattic also seeks to recover for time spent by its outside public relations firm, Brew Media Relations ("Brew"). See id. ¶¶ 17-22. Automattic pays Brew a monthly retainer rather than on an hourly basis. Id. ¶¶ 19. Steiner's Supplemental Declaration provides the approximate amount of time that Brew spends per month on issues for Automattic, and the approximate amount of time Brew's employees spent as a result of Defendant's takedown notices. Id. ¶ 20. Based on these estimates, Automattic seeks damages equal to a percentage of the monthly retainer (submitted under seal) that it pays Brew. Without more detail regarding Brew's work and billing arrangements, however, it is not clear that the time Brew spent on the takedown notices represents any loss to Automattic. But for Defendant's takedown notices, would Brew have provided other benefits to Automattic instead of dealing with the fallout of Defendant's notices? Would Automattic have paid less, or been able to reduce its retainer for future billing cycles? The evidence Automattic has submitted leaves these questions unanswered. The damages Automattic claims for Brew's time are therefore speculative and should be denied.
Hotham states that Defendant's fraudulent takedown notice has been "substantially harmful to [his] reputation for journalistic integrity[,]" that it comes during his "formative time as a journalist[,]" and that as a result, it has been "more difficult to find work." Hotham Decl. ¶¶ 12, 14. Automattic also alleges that the removal of lawful content compelled by Defendant's fraudulent takedown notice caused "damages to [Automattic's] reputation for allowing its users to use WordPress.com for any lawful purpose." Sieminski Decl. ¶ 15.
Plaintiffs make no real effort to justify the values they have assigned to this purported reputational harm. They are, based on the evidence submitted, speculative. Such damages are therefore unavailable.
Hotham's Supplemental Declaration estimates "the emotional harm from this debacle to be $2000," because "[t]his whole process has been incredibly upsetting and demoralizing." Hotham Supp'l Decl. ¶¶ 8, 11. While the Court sympathizes with Hotham's undoubtedly unpleasant experience, the Court is aware of no authority holding that emotional distress damages are available under § 512(f).
Hotham alleges that Defendant's fraudulent takedown notices were an abuse of the
Plaintiffs attempt to distinguish Lenz by noting that the plaintiff "did not care" that YouTube did not want to host her video, and therefore, did not show that her speech had been chilled. Mot. at 13; see id. Plaintiffs' distinction is insufficient. Because all parties in the instant case are private actors, Hotham's claim for chilled speech is analogous to Lenz. Thus, Hotham is not entitled under the DMCA to damages for his chilled speech as a result of Defendant's takedown notices.
Automattic is entitled to recover a reasonable award of attorneys' fees under the DMCA. 17 U.S.C. § 512(f). To determine a reasonable award of attorneys' fees, courts employ the "lodestar" figure, which is calculated by multiplying the number of hours reasonably expended on the litigation by the reasonable hourly rate. Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir.2013) (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)).
To determine the number of hours reasonably expended on the litigation, courts must consider whether "the time could reasonably have been billed to a private client." Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir.2008). The party seeking fees "has the burden of submitting billing records to establish that the number of hours it has requested [is] reasonable." Gonzalez, 729 F.3d at 1202; see also Hensley, 461 U.S. at 437, 103 S.Ct. 1933 ("the fee applicant bears the burden of ... documenting the appropriate hours expended").
"Once the district court sets the compensable hours, it must determine a reasonable hourly rate considering the experience, skill, and reputation of the attorney requesting fees." Schwarz v. Sec'y of Health & Human Servs., 73 F.3d 895, 908 (9th Cir.1995) (internal quotations omitted). Courts "should be guided by the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation." Id. "Importantly, the fee applicant has the burden of producing `satisfactory evidence' that the rates he requests meet these standards." Gonzalez, 729 F.3d at 1206 (citations omitted).
The evidence initially submitted in support of Automattic's request for attorneys' fees was insufficient. Automattic relied solely on the chart presented by its counsel, Joseph Gratz, outlining "major tasks" performed in connection to Plaintiffs' case, but failing to indicate which attorney worked on each task. Gratz Decl. ¶ 8. At the July 11 hearing, the Court requested more detailed justification of Automattic's requested award of fees.
Automattic has now submitted a more comprehensive explanation of its attorneys' fees, including billing records for the three attorneys who worked on this case. See Gratz Supp'l Decl. Ex. C. The Court has reviewed these records and finds that the time spent prosecuting this action was reasonable.
For the foregoing reasons, it is recommended that the Motion for Default Judgment be GRANTED, and that judgment be entered for Plaintiffs. The undersigned recommends awarding damages of $960 for Hotham's lost work and time, $1,860 for time spent by Automattic's employees, and $22,264 for Automattic's attorneys' fees, for a total of $25,084. This case shall be reassigned to a United States District Court judge. Any objections to this Report and Recommendation shall be filed within fourteen (14) days.
Dated: October 6, 2014
