Professional Documents
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LegalZoom Case
LegalZoom Case
3d (2014)
prejudgment interest through March 10, 2014. (See Compl. v. NuImage, Inc., 648 F.3d 779, 788 (9th Cir.2011). Before
¶ 17; Mot. 16:12–17.) doing so, however, a court must consider the following five
factors: (1) the public's interest in expeditious resolution of
*2 Immediately after filing the Complaint, LegalZoom litigation; (2) the court's need to manage its docket; (3) the risk
sought a writ of attachment against MBL and Jacoby of prejudice to the other party; (4) the public policy favoring
Bankruptcy. (ECF Nos. 9, 39.) LegalZoom did not seek the disposition of cases on their merits; and (5) the availability
a writ of attachment against MBLH. On December 18, of less drastic sanctions. Adriana Intern. Corp., 913 F.2d at
2013, the Magistrate Judge assigned to this action granted 1412.
LegalZoom's request for a writ of attachment against
MBL, finding that LegalZoom had established the probable Once default is entered, a district court has discretion whether
validity of the breach-ofcontract claim. (ECF Nos. 42, to enter default judgment. Aldabe v. Aldabe, 616 F.2d 1089,
43.) The Magistrate Judge denied the writ against Jacoby 1092 (9th Cir.1980). The defendant's liability generally is
Bankruptcy without prejudice, granting LegalZoom's request conclusively established upon default and the well-pleaded
to conduct limited discovery on the relationship between factual allegations in the complaint are accepted as true.
MBL and Jacoby Bankruptcy. (Id.) MBL filed objections to Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–19 (9th
the Magistrate Judge's ruling in this Court pursuant to Federal Cir.1987) (per curiam) (citing Geddes v. United Fin. Grp., 559
Rule of Civil Procedure 72(a), which this Court overruled on F.2d 557, 560 (9th Cir.1977)). But in exercising its discretion,
December 20, 2013. (ECF No. 56.) a court must consider several factors: (1) the possibility of
prejudice to plaintiff; (2) the merits of plaintiff's substantive
On December 13, 2013, while the writ of attachment claim; (3) the sufficiency of the complaint; (4) the sum of
was being considered, MBL and Jacoby Bankruptcy also money at stake; (5) the possibility of dispute concerning
answered the Complaint. (ECF Nos. 35, 36.) An Amended material facts; (6) whether the defendants default was due
Answer and Counterclaim was subsequently filed by MBL to excusable neglect; and (7) the strong policy underlying
on December 27, 2013. (ECF No. 55.) Instead of answering the Federal Rules of Civil Procedure favoring decisions on
the Complaint, MBLH filed a Motion to Dismiss for Lack the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th
of Personal Jurisdiction, which this Court ultimately denied. Cir.1986).
(ECF Nos. 37, 91.)
The Court first addresses the instant Motion with respect *4 While the Court finds that default judgment is “perfectly
to MBL and Jacoby Bankruptcy. Both of these Defendants appropriate” in this case, High Country Broad., 3 F.3d at 1245,
have answered the Complaint and MBL has also filed a the Court briefly addresses the Eitel factors with respect to
counterclaim. MBL and Jacoby Bankruptcy.
In most cases, this drastic measure is taken as a sanction The sixth Eitel factor-whether Defendants' default was due to
for serious and repeated discovery violations under Rule 37. excusable neglect-clearly favors LegalZoom in this Motion.
See, e.g ., Adriana Intern., 913 F.2d at 1412–14; Dreith, Defendants were given ample opportunity to obtain new
648 F.3d at 788. But at least one Ninth Circuit opinion has counsel and have received notice of this Court's intention to
held that striking an answer and entering default judgment is enter default judgment. Defendants have been radio silent.
appropriate against a defendant who failed to retain counsel
after answering the complaint. See High Country Broad., As to the final Eitel factor-the public policy favoring
3 F.3d at 1245. Thus, the Court finds that striking MBL decisions on the merits-the Court notes again that this factor
and Jacoby Bankruptcy's answers and entering default is an weighs against default judgment. But with no other options
appropriate sanction for their failure to retain new counsel. available to LegalZoom to pursue its claims, the Court finds
that default judgment is the appropriate form of relief with
respect to MBL and Jacoby Bankruptcy.
2. Default Judgment
Footnotes
1 Jacoby & Meyers is not to be confused with Defendant Jacoby Bankruptcy.
2 MBL and MBLH are both professional corporations. (ECF Nos. 36, 37.) Jacoby Bankruptcy is a limited liability partnership.
(ECF No. 35.)
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