Case 3:15-cv-01614-BAS-DHB Document 29 Filed 05/16/16 Page 1 of 10

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Clay D. Renick, Esq. Sbn no. 179531
Email: clayrenick@gmail.com
7040 Avenida Encinas, Suite 104-285
Carlsbad, CA 92011
Attorney for Defendant,
Michael Ahmari

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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DALLAS BUYERS CLUB,

No. 3:15-cv-01614-BAS-DHB

Plaintiff,

MEMORANDUM OF AUTHORITIES IN
SUPPORT MOTION TO SET ASIDE
DEFAULT UNDER FRCP 55(c)

v.
MICHAEL AHMARI,

NO ORAL ARGUMENT UNLESS
REQUESTED BY THE COURT

Defendant.

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Hearing Date: June 20, 2016
Hearing Time:
Judge: Hon. Cynthia Bashant

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MEMORANDUM OF POINTS AND AUTHORITIES

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I.

INTRODUCTION

The Court should set aside aside entry of default against Defendant pursuant
to Fed. R. Civ. P. 55(c) because there is good cause for Defendant’s delay in
appearing in this action.
II.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

Plaintiff filed this lawsuit against plaintiff on or about March 5, 2016.

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MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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Defendant was apparently served on or about April 6, 2016. On or about April 20,

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2016 defendant’s counsel contacted plaintiff’s counsel, James Davis to inquire as to

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why plaintiff named defendant. Mr. Davis could provide no basis other than the

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fact that defendant was a subscriber to an ip address that he believed was connected

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to copyright infringement. On April 21, 2016 plaintiff’s counsel sent his first of an

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ongoing series of demands for settlement.

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counsel, her requested $10,800.00 to settle the case. This was flatly denied as

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defendant has never been involved in any activity as alleged in the complaint.

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Defendant requested an additional 14 days to respond to the complaint, however

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plaintiff’s counsel stated he would allow defendant an additional 7 days. The

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plaintiff then began a series of demands to defendant more fully described below.

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After a series of actions constituting bad faith tactics, plaintiff entered a default

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against defendant on May 5, 2016. Prior to the Courts Entry of Default, Defendant

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notified plaintiff of its intent to appear in the action, requested Plaintiff’s stipulation

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to set aside the default and thereafter filed an objection to the entry of default and

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notice of intent to appear in the case on May 6, 2016.

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III. STANDARD OF REVIEW - THE COURT MAY SET ASIDE A
ENTRY OF DEFAULT FOR GOOD CAUSE

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In this first salvo from plaintiff’s

Defendant previously objected to entry of default in this matter as it contends

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that plaintiff was operating in bad faith to attempt defendant to pay him for what

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defendant contends amounts to extortion by plaintiff's counsel. Trial court has the

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authority to set aside the entry of default “for good cause” under rule FRCP 55(c).

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Most courts hold that the “good cause” required for relief form entry of default

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under Rule 55(c) is a more lenient standard. [Johnson v. Dayton Elec. Mfg. Co. (8th

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Cir. 1998) 140 F3d 781, 783.]

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In determining whether “good cause” exists, the most important factors
usually are:
- whether the defendant’s culpable conduct led to the default was; whether
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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the defendant has a meritorious defense, and whether setting the default aside

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would prejudice the plaintiff. Franchise Holding II, LLC v. Huntington Rests.

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Group, Inc. 375 F.3d 922, 925 (9th Cir. 2004).

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Other Factors, however may also be relevant, including:

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− the nature of defendant’s explanation for the default;

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− the amount of money involved; and

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− the promptness of defendant’s motion to set aside entry of default.

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Indigo America, Inc. v. Big Impressions, LLC 597 F3d 1, 3, (1st Cir. 2010)

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In addition, “the law does not favor defaults,” and “therefore, any doubts as

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to whether a party is in default should be decided in favor of the defaulting party.”

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Bonita Packing Co. v. O’Sullivan, 165 F.R.D. 610, 614 (C.D. Cal. 1995).

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II. BAD FAITH OF PLAINTIFF’S COUNSEL

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Plaintiff's counsel has repeatedly demanded that plaintiff pay him in lieu of

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responding to his complaint. When asked for a shred of evidence to substantiate

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the fact that defendant was somehow liable for infringement none was forthcoming.

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Plaintiff's counsel stated that he had done extensive investigation and spent

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upwards of $15,000 to investigate. When asked how he could have possibly spent

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such money to investigate, plaintiff's counsel stated he sent out a couple of letters to

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the former address of defendant and that he had spoken to defendant’s father, who

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denied his son's involvement and did not help with plaintiff's investigation.

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Defendant is a recently graduated college student who does not have the money to

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spend thousands of dollars on a lawsuit wherein the plaintiff has no information

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other than an ip address.

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Plaintiff's counsel then presented defendant with a spreadsheet showing that

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the ip address of defendant was allegedly used to infringe the copyright of his

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client. It is uncontroverted that the sole basis of plaintiff's lawsuit was that

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defendant was a subscriber to the ip address of which a movie was supposedly

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downloaded.
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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III. GOOD CAUSE - PLAINTIFF'S COUNSEL HAS ACTED IN BAD

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FAITH IN DEMANDING A POLYGRAPH AND THEN WITHDRAWING

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SUCH OFFER WHEN IT BECAME APPARENT DEFENDANT WOULD

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AGREE

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Plaintiff demanded that defendant take a polygraph examination in

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exchange for a dismissal of the case. Plaintiff's counsel disingenuously stated that

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he would bear all the costs for such a polygraph test. When plaintiff's counsel then

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agreed to take such a test with the proviso that defense costs and attorney fees be

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covered, plaintiff then refused to pay costs and revoked his offer to conduct a

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polygraph.

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IV. PLAINTIFF OFFERED TO DISMISS IF DEFENDANT WOULD

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ASSIST HIS DISCOVERY EFFORTS AND THEN CHANGED HIS MIND

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AFTER RECEIVING A DECLARATION FROM DEFENDANT UNDER

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PENALTY OF PERJURY

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Plaintiff’s counsel, James Davis, advised defendant’s counsel, Clay Renick,

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that he would not file a default in this matter if defendant would provide him with a

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declaration that he was not involved and indicating another person that may have

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been the actual infringing party. In response to such offer, defendant made a

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declaration that he was not involved and indicated that a new roommate may have

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been responsible based on the supposed timing asserted by plaintiff's counsel. (See

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declaration of Defendant Michael Ahmari). Defendant was one of many parties

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that lived in the apartment residence at San Diego State University that had access

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to the web through the ip address.

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District court’s across the nation have dismissed these cases:

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Southern District of California Judge Barry Moskowitz has found that an IP

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address, alone, is insufficient to support a complaint for copyright infringement.
Washington District Judge Robert Lasnik stated in his dismissal of a
similar action that, “Simply identifying the account holder associated with an IP
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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address tells us very little about who actually downloaded ‘Elf-Man’ using that IP

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address,” and “While it is possible that the subscriber is the one who participated…

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it is also possible that a family member, guest, or freeloader engaged in the

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infringing conduct.”

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District Court Judge Ursula Ungaro, in the Southern District of Florida,

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stated, ““There is nothing that links the IP address location to the identity of the

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person actually downloading and viewing Plaintiff’s videos, and establishing

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whether that person lives in this district,” and ““Even if this IP address is located

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within a residence, the geolocation software cannot identify who has access to that

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residence’s computer and who would actually be using it to infringe Plaintiff’s

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copyright,”

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Plaintiff’s counsel has demanded that defendant pay him $10,000, agree that

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he committed copyright infringement, and stipulate to an injunction against further

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infringement. It appears that plaintiff’s counsel named Defendant without proof

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because he was, rightly so, being pressured by the court to either name a party or

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dismiss. Defendant’s counsel requested that Mr. Davis inform him of even on

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thing, other than the fact that defendant was a subscriber, that indicated that

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Defendant was involved in the alleged infringement.

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Plaintiff’s counsel is aware that many individuals had access to this ip

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address. Plaintiff’s counsel has supposedly spoken to other roommates of

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defendant about these allegations to no avail. Defendant should not be forced to

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spend thousands of dollars to satisfy the fishing expedition of plaintiff’s counsel.

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This amounts to willful extortion of innocent individuals.

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Defendant has categorically denied that he was in any way associated with

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these alleged infringing activities. Defendant has provided Mr. Davis with a

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declaration stating that he was not involved with these activities and directing

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plaintiff’s counsel to a possible person that may be involved on the basis of when

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these alleged acts occurred.
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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V. GOOD CAUSE - DEFENDANT ACTED IMMEDIATELY TO INSURE
NO ACTUAL DEFAULT JUDGMENT WOULD BE ENTERED
When it became apparent that plaintiff's counsel had gone ahead with his

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threat to file a default rather than to dismiss, defendant acted immediately to ensure

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that a swift default judgment would not be entered. Prejudice is determined by

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whether a party will be hindered in pursuing its claim. See Knoebber, 244 F.3d at

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701. The fact that a party may be denied a quick victory is not sufficient to deny

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relief from default judgment. Bateman v. United States Postal Service, 231 F.3d

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1220, 1225 (9th Cir. 2000). “The delay must result in tangible harm such as loss of

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evidence, increased difficulties of discovery, or greater opportunity for fraud or

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collusion.” Audio Toys, 2007 U.S. Dist. LEXIS at *9.

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Defense counsel immediately contacted plaintiff's counsel and requested

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plaintiff's counsel's stipulation to set aside the default prior to moving forward with

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any default judgment. Plaintiff's counsel responded in what has already become

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typical by demanding yet more money from defendant.

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Defendant promptly filed an objection to entry of default to put the court on

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notice that defendant would be filing a motion to set aside the default if plaintiff

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would not sign a stipulation.

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“Any other response indicating an intent to defend prevents entry of default.”

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[See deAntonio v. Solomon (D MA 1967) 42 FRD 320, 322]. Defendant plans to

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immediately file a rule 12(b) motion for more definite statement, based on the

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grounds that defendant has been named in this lawsuit solely in the basis of his

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being that subscriber to an ip address. Attached hereto is the declaration of Clay

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Renick, Esq., confirming the actions of Mr. Davis that led to this entry of default

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and the declaration of defendant, Michael Ahmari.

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VI. GOOD CAUSE EXISTS AS PLAINTIFF’S COUNSEL ACTIONS
WERE CONTRADICTORY AND UNFAIR TO DEFENDANT
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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It is primarily the reasons of the apparent bad faith of plaintiff's

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counsel, as more fully explained below, that defendant chose not to file an

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immediate responsive pleading. (See Declaration of Defendant’s Counsel, Clay

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Renick)

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However, plaintiff will undoubtedly argue that it was defendant's culpable for

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its decision not to respond. Defendant's counsel requested that plaintiff confer with

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his client prior to filing any motion for default and stated that he was not filing

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because of plaintiff counsel's verbal promise to dismiss the action upon receiving a

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declaration from defendant. It was solely the perceived bad faith by plaintiff's

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counsel and the immediate ongoings in the prior days in offering and retracting a

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polygraph and then offering and refusing to file a dismissal after receiving a

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declaration, that led to the refusal to file an immediate response by defense counsel.

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The Court in TCI Group Life Ins. Plan v. Knoebbler (9th Cir. 2001) 244 F3d 691,

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697, has stated that “even a conscious decision not to respond may be excusable if

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supported by credible reasons.”

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Although defendants felt the immediate filing of default was unfair given the

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circumstances, defendant acted swiftly to remedy the situation and to remove any

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possibility of any perceived prejudice by its contacting defendant and agreeing to

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go ahead and file a responsive pleading without delay.

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Notwithstanding the recalcitrance of plaintiff's counsel, it has been defense

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counsel's prior experience that it is a common courtesy that counsel will always

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stipulate to set aside a default if little time has past. This perhaps unspoken rule is

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more succinctly reference in the The Rutter Group, Federal Civil Procedure Before

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Trial, [6:207] PRACTICE POINTER ... “If you represent plaintiff, do not oppose

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defendant's motion for relief unless the matter is truly important and there are valid

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reasons for your opposition. Absent such reasons, your opposition makes you seem

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petty.” Schwarzer, Tashim & Wagstaffe, RUTTER GROUP PRAC. GUIDE

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FEDERAL CIV. PRO. BEFORE TRIAL (The Rutter Group 2016)
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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In light of plaintiff’s counsel demanding a settlement during every phone

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conversation, it appears that his protestations are more about recovering a

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settlement for his client regardless of the validity of his case than any actual

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reasonable basis for his failure to stipulate to set aside the default. Indeed on the

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day before this motion was filed, plaintiff’s counsel sent a further demand for

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settlement of “$11,500.00 and an agreement to an injunction.” (See Declaration of

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Clay Renick, Esq.)

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“The court has considerable flexibility and may set aside the default entry for
good cause. [FRCP 55(c); see JMB Mfg., Inc. v. Child Craft, LLC (7th Cir. 2015)

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799 F3d 780, 792 – “good cause” for relief is more lenient and “does not

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necessarily require a good excuse for the defendant's lapse”; FOC Fin'l Ltd.

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Partnership v. National City Comm'l Capital Corp. (D AZ 2009) 612 F.Supp.2d

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1080, 1083. [6:204-6:207]
VII. MERITS OF DEFENDANT’S PROPOSED DEFENSE

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A defense is considered meritorious if “there is some possibility that the

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outcome of the suit after a full trial will be contrary to the result achieved by the

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default.” Hawaii Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir.

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1986). All that is required is an assertion of “a factual or legal basis that is
sufficient to raise a particular defense; the question of whether a particular factual
allegation is true is resolved at a later stage.” Audio Toys, Inc. v. Smart AV Pty
Ltd., 2007 U.S. Dist. LEXIS 44078, *8 (N.D. Cal. June 6, 2007). Defendant has
offered to make himself available for a polygraph test, made a written declaration

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as to his lack of knowledge of any infringing activity and offered to turn over his

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personal computer. Defendant absolutely denies engaging in any infringing activity

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whatsoever. (See attached declaration of Michael Ahmari, Exhibit 1)

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///
///

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MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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VII. CONCLUSION

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Defendant finds himself involuntary dragged into the fishing expedition of

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plaintiff's counsel and forced to pay for plaintiff's discovery with his own money. It

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is the very costly process of defending this litigation that has led defendant to do

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everything possible to limit the costs of proceeding, including providing a

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declaration to plaintiff’s counsel upon his false promise to dismiss.

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Defendant therefore requests that the mere entry of default be set aside by

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order of the court and that defendant be permitted to file a rule 12(b) motion for a

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more definite statement, based on the following good cause reasons:

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1. Defendant acted promptly to notify the court and defendant of its
objection to defendant's action in filing an entry of default,
2. There is absolutely no prejudice to defendant as there was no delay in
moving for relief from default,
3. Plaintiff was provided with exculpatory evidence prior to his filing of a
default,
4. Plaintiff's counsel misrepresented his intent to file a dismissal if defendant
would aid him in identifying the possible infringer;
5. Defendant presents the absolute defense to this action that he was not the
person who participated in the alleged infringing activity, and;
6. Defendant acted in good faith, given the statements by plaintiff's counsel,

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offering to dismiss defendant based upon agreement to a polygraph test and

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providing a declaration of his innocence.

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7. Defendant was of the opinion that plaintiff’s counsel was unfair in that he

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told plaintiff’s counsel that he would not have to respond if he could get a

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declaration from defendant stating his innocence under penalty of perjury and

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directing him to a possible infringer, and therefore felt tricked upon receiving a

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demand to file an answer.

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8. The day prior to filing this motion, plaintiff’s counsel again tried to extort
MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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money out of defendant, even though defendant had provided a declaration of his

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innocence. “Mr. Davis stated he would accept $11,500.00 and an agreement to an

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injunction to resolve this matter.”

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Based on the above reasons, the Court should grant Defendant’s motion.
Dated this day of May 16, 2016

/s/ Clay Renick
Clay Renick, Esq.
California bar number 179531
clayrenick@gmail.com
Attorney for Defendant
Michael Ahmari

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MOTION FOR RELIEF FROM ENTRY OF DEFAULT
FRCP 55(c)

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