Cox v. Shut Up And Laugh Publishing, LLC

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

ERNEST JOE COX,

Plaintiff,

v. No. 4:23-cv-0063-P

SHUT UP AND LAUGH PUBLISHING, LLC,

ET AL.,

Defendants.

MEMORANDUM OPINION & ORDER

Before the Court is Plaintiff’s Motion for Default Judgment

(“Motion”). ECF No. 12. Having considered the Motion, relevant docket

entries, supporting documentation, and the applicable law, the Court

concludes that the Motion should be, and it is hereby, GRANTED. The

Court therefore ORDERS that a default judgment be entered against

Defendants.

BACKGROUND

Plaintiff Ernest Joe Cox authored a fictional short story entitled “Cat

Man Do” about the life of an anthropomorphic cat. Plaintiff alleges that

this work consists of original and creative material fixed in a tangible

medium of expression and was, therefore, copyrightable subject matter.

Defendant Shut Up & Laugh Publishing, LLC, (“SULP”) is a publishing

company formed in Texas by Defendant Jennifer Haney, an officer of the

company. Plaintiff contracted with Defendants to publish “Cat Man Do”

in exchange for 50% of the royalties from sales of the work and any

merchandise sold in connection with it. Plaintiff provided the original

paper copy of the work to Defendants to facilitate its publishing.

Defendants prepared, published, distributed, and sold “Cat Man Do” as

well as a derivative work entitled “Katmandoo the Story of Little Buddy

as Told by Little Buddy” (“Infringing Work”) in electronic and paperback

forms. Defendants also sold merchandise connected to the work, such as

“Katmandoo” t-shirts.

Plaintiff alleges that Defendants provided no payments in connection

their sale of the Infringing Work. However, Plaintiff also alleges that

Defendant continues to reproduce and distribute the Infringing Work

for profit and without authorization. Plaintiff sent Defendants a cease-

and-desist letter in November 2022, demanding that they stop selling

the Infringing Work. But Defendants continued to sell it after

acknowledging the letter. In December 2022, Plaintiff demanded the

return of the original paper copy of “Cat Man Do,” but Defendants

refused. Plaintiff alleges that Defendants continue to use, reproduce,

distribute, and sell the Infringing Work with full knowledge of their

infringement.

Plaintiff sued Defendants for breach of contract, theft by conversion,

copyright infringement, and violation of the Texas Theft Liability Act.

On January 27, Defendants were served with the lawsuit and the

deadline for Defendants’ response was February 17, 2023.

On March 13, 2023, Plaintiff requested that the Clerk of the Court

enter a default against Defendants, which the Clerk did the same day.

Plaintiff filed this motion for default judgment against Defendants. The

Court thus considers the motion.

LEGAL STANDARD

A plaintiff may move for default judgment under Federal Rule of

Civil Procedure 55. FED. R. CIV. P. 55(A). Courts use a three-step analysis

to determine whether a party can secure a default judgment. See N.Y.

Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). First, a party

must fail to respond or otherwise defend against an action. Id. Second,

an entry of default must be entered when the default is established by

affidavit or otherwise. Id. Third, a party must apply to the court for a

default judgment after the clerk’s entry of default. Id.

ANALYSIS

Plaintiff meets all three requirements to qualify for a default

judgment. Defendants failed to answer or otherwise respond against

Plaintiff’s Complaint. An entry of default was entered by the Clerk of

the Court, and the request was properly supported by affidavits. ECF

No. 10-2. Plaintiff has applied to the Court for a default judgment after

the Clerk’s entry of default. ECF No. 12. The decision to enter a default

judgement is discretionary, and the Court will resolve any doubt in favor

of the defaulting party. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th

Cir. 1998).

In exercising its discretion, the Court should consider whether:

(1) default judgment is procedurally warranted; (2) there is a sufficient

factual basis in the complaint that would entitle to the plaintiff to

judgment, and (3) the specific dollar amount of damages can be

determined with mathematical calculation by using information in the

pleadings and supporting documents. James v. Frame, 6 F.3d 307, 310

(5th Cir. 1993). The Court addresses each in turn.

A. Procedural Requirements

In determining whether a default is procedurally warranted, the

Court considers whether: (1) there is an issue of material fact;

(2) substantial prejudice is present; (3) proper grounds for default are

clearly established; (4) the defaulting party made a good faith mistake

or committed excusable neglect; (5) default judgment would be a harsh

remedial measure; and (6) the Court would feel obligated to set aside

default upon a defendant’s motion. Davis v. Parkhill-Goodloe Co., Inc.,

302 F.2d 489, 495 (5th Cir. 1962).

First, Plaintiff filed a well-pleaded complaint alleging facts that raise

a right to relief. Because Defendants have failed to answer or otherwise

respond, they admit Plaintiff’s non-conclusory allegations, except those

relating to the amount of damages. See Jackson v. FIE Corp., 302 F.3d

515, 525 n. 29 (5th. 2002). Second, Defendants’ failure to answer or

otherwise respond to the complaint brought the adversarial process to a

halt, causing substantial prejudice to Plaintiff and his claims.

Defendants have had ample opportunity to answer or otherwise respond

and, in fact, have indicated their intent to not answer. There is no

substantial prejudice present. Third, Defendants’ continued failure to

participate in this litigation establishes the requisite grounds for

default. Fourth, there is no reason to believe that Defendants are acting

under a good-faith mistake or excusable neglect. This is particularly

true because they have indicated that they are not willing to engage with

the lawsuit. Fifth, a default judgment is not harsh because it is the exact

procedural device that is necessary for the Court to maintain the

efficiency of its docket. See Merrill Lynch Mortg. Corp. v. Narayan, 908

F.2d 246, 253 (7th Cir. 1990). Plaintiff properly served Defendants,

Defendants have failed to appear, and Defendants are in default. Such

circumstances warrant a default judgment under Rule 55(b)(2). Sixth,

nothing in the record suggests that Court would set aside its putative

default against Defendants if they were to move for such relief.

Based on these factors, the Court concludes that a default judgment

is procedurally warranted.

B. Entitlement to Judgement

The Court next assesses whether the factual content of the pleadings

provide a sufficient basis for default judgment. See Lindsey, 161 F.3d at

886. Although defendants in default are considered to have conceded the

allegations stated in the plaintiff’s complaint upon entry of default, the

Court must evaluate the pleadings to ensure the sufficiency of the

complaint. Nishimatsu Const. Co. v. Hous. Nat. Bank, 515 F.2d 1200,

1201 (5th Cir. 1975).

In the Fifth Circuit, district courts refer to Federal Rule of Civil

Procedure 8 to determine the adequacy of pleadings. Wooten v.

McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015)

(recognizing that a pleading complying with Rule 8 is sufficient for

default judgment under Rule 55). Under Rule 8(a)(2), a pleading must

provide a short and plain statement of the claim showing that the

pleader is entitled to relief. FED. R. CIV. P. 8(A)(2). The pleadings must

ultimately give Defendants sufficient notice of the claims alleged

against them and their underlying bases. Wooten, 788 F.3d at 498. While

the factual allegations need not be exhaustive, they must raise a right

to relief beyond mere speculation and offer more than unsubstantiated

accusations. Id.

Plaintiff contends he is entitled to relief because of Defendants’

infringement of his copyrighted original work “Cat Man Do.” A

defendant may be held liable for copyright infringement either directly

or secondarily. UMG Recordings, Inc. v. Grande Commc’ns Networks,

LLC, No. A-17-CA-365-LY, 2018 WL 1096871, at *2 (W.D. Tex. Feb. 28,

2018). Plaintiff only alleges Defendants directly infringed his work. To

establish direct infringement, a plaintiff must demonstrate: (1) legal

ownership of a valid copyright; and (2) copying of the copyrighted

material that contains substantial similarity between the copyrighted

work and the alleged infringing work. Batiste v. Lewis, 976 F.3d 493,

502 (5th Cir. 2020).

As to the first element, Plaintiff owns a valid copyright in “Cat Man

Do.” Valid Copyright ownership exists when the work is original, a work

of authorship, and is fixed in any tangible medium of expression. See 17

U.S.C. § 102(a). Plaintiff authored the fictional story “Cat Man Do,”

depicting a tale of an anthropomorphic cat. It contains original and

creative content that has been fixed in a tangible medium of expression

(i.e., a novel). Plaintiff has thus satisfied the first prong of copyright

infringement by proving his ownership of a copyright for “Cat Man Do.”

To establish copying, Plaintiff must allege that Defendants had

access to the material and that there is a substantial similarity between

the two works. Lakedreams v. Taylor, 932 F.2d 1103, 1107 (5th Cir.

1991). Plaintiff shows that Defendants accessed, copied, and publicly

sold their derivative work “Katmandoo” on their website. ECF No. 13 at

17. Further, Plaintiff also proves that substantial similarity exists

through Defendants’ copying of Plaintiff’s story with a slightly altered

title of the book. Thus, Plaintiff has sufficiently pled ownership and

copying.

Since Plaintiff has proven these two elements, the Court determines

that he has pled enough factual content to determine that he is entitled

to a default judgment as to Defendants’ liability for copyright

infringement.

C. Entitlement to Damages

The Copyright Act confers broad discretion to district courts in

determining which form of recovery is more equitable—one based on

actual damages and profits, or one based on a reasonable estimate of

damages within the boundaries of the statute. F.W. Woolworth Co. v.

Contemporary Arts, 344 U.S. 228, 224–25 (1952). In other words, the

district court’s conception of what is fair given the totality of

circumstances serves as a framework for the damages awarded. L.A.

Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106–07 (1919).

1. Statutory Damages

Plaintiff has chosen to pursue statutory damages rather than actual

damages. As authorized by 17 U.S.C. § 504(c)(1), the Court has the

power to award statutory damages of “not less than $750 or more than

$30,000 as the court considers just” for each infringed work. Mason v.

Montgomery Data, Inc., 967 F.2d 135, 143 (5th Cir. 1992).

Furthermore, the Court may increase this amount up to $150,000 per

infringed work if it determines that a defendant acted willfully. See 17

U.S.C. § 504(c)(2). A defendant has acted willfully if it knowingly

engaged in the infringing conduct. Id.

Although a district court has the discretion to decide whether to hold

an evidentiary hearing to determine damages, it is not necessary when

the amount claimed is a liquidated sum or is capable of mathematical

calculation. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). Statutory

damages are intended to compensate for profits or injuries and

discourage wrongful conduct. Mouse On Tha Track LLC v. Parg Mgmt,

LLC, No. 3:18-CV-2980-S-BH, 2019 WL 6970946, at *7 (N.D. Tex. Nov.

13, 2019) (Ramirez, Mag. J.), report and recommendation adopted, 2019

WL 6915726 (N.D. Tex. Dec. 18, 2019) (Scholer, J.).

Plaintiff seeks the maximum statutory damages of $150,000. ECF

No. at 17–18. Plaintiff bases this on the fact that Defendants have not

appeared in this action and asks the Court to grant the maximum relief

available without holding a hearing. But an award of the cap on

statutory damages available is excessive given the facts here. Thus, the

Court concludes that Plaintiff is entitled to $10,000 of total relief. This

amount is representative of Plaintiff’s statutory damages award, but not

his requested attorneys’ fees since he did not provide proper

documentation supporting his request in his Motion. Id. at 20. The

amount is sufficient but not greater than necessary to discourage

Defendants’ infringing conduct while providing Plaintiff with sufficient

compensation for his injuries. Also, because it provides sufficient relief,

the Court chooses not to award statutory damages under the Texas

Theft Liability Act, or his additional request for attorneys’ fees.

2. Injunctive Relief

To obtain injunctive relief, the movant must prove four elements: (1)

likelihood of success on the merits; (2) irreparable injury absent the

injunction; (3) the harm suffered outweighs any harm the opposing

party may experience from the injunction; and (4) the injunction will not

impair public interest. Enrique Bernat F., S.A. v. Guadalajara, Inc., 210

F.3d 439, 442 (5th Cir. 2000).

Plaintiff proves his case on all four factors: (1) enough factual content

is present to infer that Plaintiff would succeed on the merits; (2) Plaintiff

would continue to suffer financial harm if his copyrightable material

continues to be sold, along with harm to his interest in his intellectual

property; (3) Defendants will suffer no harm because the copyrightable

material was never their own; (4) an injunction would further the

public’s interest in the integrity and security of copyrighted material.

CONCLUSION

For all these reasons, the Court GRANTS Plaintiff’s Motion for

Default (ECF No. 12) and awards $10,000 of statutory damages to

Plaintiff.

The Court further ORDERS that Defendants are permanently

enjoined from continuing their infringing use of “Cat Man Do,”

“Katmandoo,” or any material associated with Plaintiff’s intellectual

property. The Court also ORDERS Defendants to return Plaintiff’s

original paper copy of “Cat Man Do” to him within thirty days of the

entry date of this Order.

SO ORDERED on this 7th day of August 2023.