1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CATHERINE SEVERS, Case No. 22-cv-04413-DMR
8 Plaintiff, REQUEST FOR REASSIGNMENT; 9 v. REPORT AND RECOMMENDATION RE MOTION FOR DEFAULT 10 HYP3R INC., JUDGMENT 11 Defendant. Re: Dkt. No. 14
12 13 Plaintiff Catherine Severs filed this action against Hyp3r Inc. (“Hyp3r) seeking recognition 14 of a foreign money judgment pursuant to the Uniform Foreign-Country Money Judgments 15 Recognition Act (“UFCMJRA”), California Code of Civil Procedure section 1713 et seq. [Docket 16 No. 1 (“Compl.”).] Severs seeks recognition of a judgment by the Supreme Court of British 17 Columbia in the amount of $24,921,378 Canadian Dollars (“CAD”) plus interest. After Hyp3R 18 failed to appear or otherwise respond to the complaint within the time prescribed by the Federal 19 Rules of Civil Procedure, the clerk entered its default on August 23, 2022. [Docket No. 10.] 20 Severs now moves the court pursuant to Federal Rule of Civil Procedure 55(b)(2) for default 21 judgment against Hyp3r. [Docket No. 14 (“Mot.”).] The court held a hearing on March 23, 2023 22 and ordered supplemental briefing for the reasons explained below. 23 Hyp3r has not filed a declination or consent to the jurisdiction of a magistrate judge 24 pursuant to 28 U.S.C. § 636(c). Therefore, the court issues this Report and Recommendation and 25 reassigns this case to a district judge for final disposition, with the recommendation that Plaintiff’s 26 motion be GRANTED. 27 I. BACKGROUND 1 initiated a class action in the Supreme Court of British Columbia against Hyp3r, alleging that it 2 breached the privacy of “all persons in Canada (excluding Quebec) who were users of Instagram 3 with profile setting set to public at any time between April 4, 2018 and November 22, 2021.” Id. 4 ¶¶ 1, 12. Hyp3r was served with the complaint in accordance with the Rules of the Supreme Court 5 of British Columbia on June 10, 2020, and on September 18, 2020, the Registrar of the Supreme 6 Court entered a default order against Hyp3r. Id. ¶¶ 13, 15. On January 13, 2021, Severs was 7 ordered to serve Hyp3r with its application to assess damages. Id. ¶ 16. Hyp3r was subsequently 8 served with the notice of application and all supporting evidence on January 14, 2021. Id. 9 The Supreme Court of British Columbia rendered judgment on Severs’ application on 10 November 22, 2021, awarding monetary damages against Hyp3r in the amount of $24,921,378 11 CAD. Compl. ¶ 18, Ex. 1 (British Columbia Judgment dated July 28, 2022). The Supreme Court 12 also authorized Severs to enforce the monetary judgment on behalf of the class. Id. ¶ 20, Ex. 2 13 (British Columbia Order dated November 22, 2021 and entered on July 11, 2022). Pursuant to 14 British Columbia law, post-judgment interest started accruing on November 23, 2021. As of July 15 28, 2022, (the day before this lawsuit was filed) the total judgment including accrued interest 16 amounted to $25,335,100.11 CAD, or $19,974,061.90 USD.1 Id. ¶ 23. 17 In the complaint, Severs alleges two claims for relief: 1) recognition of the British 18 Columbia judgment under California’s UFCMJRA; and 2) recognition of the judgment under 19 “traditional principles of international comity.” Compl. ¶¶ 11-30. Severs appears to have 20 abandoned the second claim for relief in her motion for default judgment. See Mot. at 4. She also 21 no longer seeks attorneys’ fees and costs except for costs permitted under Federal Rule of Civil 22 Procedure 54. Id. 23 II. LEGAL STANDARDS 24 Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case 25 following a defendant’s default. Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 26 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court’s discretion. 27 1 Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (“A defendant’s 2 default does not automatically entitle the plaintiff to a court-ordered judgment.” (citing Draper v. 3 Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986))). 4 Before assessing the merits of a default judgment, a court must ensure the adequacy of 5 service on the defendant, as well as confirm that it has subject matter jurisdiction over the case and 6 personal jurisdiction over the parties. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the 7 court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to 8 determine whether it should grant a default judgment:
9 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 10 the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due 11 to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decision on the merits. 12 13 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). In this analysis, “the 14 well-pleaded allegations of the complaint relating to a defendant’s liability are taken as true.” 15 Pepsico, Inc., 238 F. Supp. 2d at 1175 (citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 16 917-18 (9th Cir. 1987)). Nevertheless, default does not compensate for essential facts not within 17 the pleadings and those legally insufficient to prove a claim. Cripps v. Life Ins. Co. of N. Am., 980 18 F.2d 1261, 1267 (9th Cir. 1992). 19 III. ANALYSIS 20 A. Jurisdiction 21 Before entering default judgment, a federal court has an “affirmative duty to look into its 22 jurisdiction over both the subject matter and the parties.” In re Tuli v. Rep. of Iraq, 172 F.3d 707, 23 712 (9th Cir. 1999). In the present matter, the court has subject matter jurisdiction and personal 24 jurisdiction over the parties. 25 1. Subject Matter Jurisdiction 26 Severs asserts that this court has subject matter jurisdiction over this action pursuant to 28 27 U.S.C. § 1332. A district court has diversity jurisdiction where the parties are diverse and “the 1 U.S.C. § 1332. Parties are diverse when they are citizens of a state and citizens of a foreign state. 2 Id. § 1332(a)(2). A corporation is considered a citizen of both the state in which it is incorporated 3 and the state where it has its principal place of business. Id. § 1332(c)(1). Here, Severs resides in 4 British Columbia, Canada. Compl. ¶ 7. Hyp3r is a corporation formed under the laws of the state 5 of Delaware with its alleged principal place of business in San Francisco, California, as further 6 explained below. Id. ¶ 8. The amount in controversy exceeds $75,000 USD. Accordingly, this 7 court has subject matter jurisdiction over this case. 8 2. Personal Jurisdiction 9 The court next examines whether it has personal jurisdiction over Hyp3r. Personal 10 jurisdiction may be either general or specific. Bristol-Myers Squibb Co. v. Sup. Ct. Cal., San 11 Francisco Cty., 137 S. Ct. 1773, 1780) (2017). 12 “With respect to a corporation, the place of incorporation and principal place of business 13 are ‘paradig[m] . . . bases for general jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 137 14 (2014) (quoting A General Look at General Jurisdiction, 66 Texas L. Rev. 721, 728 (1988)). 15 Either basis is sufficient for the exercise of general jurisdiction over corporations. AM Tr. v. UBS 16 AG, 681 F. App’x 587, 588 (9th Cir. 2017) (“[A] corporation is typically subject to general 17 personal jurisdiction only in a forum where it is incorporated or where it maintains its principal 18 place of business.” (emphasis added). 19 Severs alleges that “at the material times” Hyp3r was authorized to do business from its 20 principal place of business in San Francisco. Compl. ¶ 8. She submits evidence that Hyp3r 21 registered as a corporation in California on June 28, 2016. [Docket No. 14-4 (Kevin McLaren 22 Decl., Feb. 1, 2023), Ex. B (Hyp3r’s registration with the California Secretary of State).] 23 However, Hyp3r’s registration appears to have been “forfeited,” showing an inactive date of 24 January 25, 2022. Id. 25 “It is well-established that the jurisdiction of the court depends upon the state of things at 26 the time of the action brought.” In re Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1236 (9th 27 Cir. 2008) (quotation and citation omitted)). Here, the complaint was filed on July 29, 2022, about 1 six months after Hyp3r lost its active status in California.2 Severs originally did not address the 2 issue of Hyp3r’s lapsed registration status, so the court ordered supplemental briefing on this 3 point. 4 In its supplemental briefing, Severs continues to maintain that the court has general 5 jurisdiction over Hyp3r. [Docket No. 18 (“Supp. Brief.”) at 3.] In the alternative, she contends 6 that the court has specific jurisdiction. 7 Severs makes a factual and a legal argument to support the existence of general 8 jurisdiction. As to the factual argument, Severs points to evidence demonstrating that Hyp3r’s 9 principal place of business was in California at some point, and may continue to be located in 10 California to this day. See Docket No. 18-1 (Kevin McLaren Supp. Decl., April 11, 2023) ¶ 8, Ex. 11 E (article posted on Hyp3r’s website claiming that Hyp3r is “a tech company headquartered in San 12 Francisco”); ¶ 9, Ex. F (article posted on Hyp3r’s website stating that Hyp3r is a “little company 13 in the heart of San Francisco); ¶ 10, Ex. G. (article posted on Hyp3r’s website, noting “HYP3R, 14 one of Fast Company’s Most Innovative Companies, is based in San Francisco”); ¶ 11, Ex. H 15 (press release issued by Hyp3r stating that Hyp3r “was founded in 2015 and is based in San 16 Francisco); ¶ 12, Ex. I (Hyp3r’s LinkedIn page, showing its headquarters in San Francisco, 17 California); ¶ 13, Ex. J (Hyp3r’s Twitter account, listing its location as “San Francisco, CA”). 18 According to Severs, the fact that Hyp3r’s registration with the California Secretary of 19 State is marked as “inactive” is not conclusive evidence that it is no longer active in California. In 20 support, Severs points to Hyp3r’s continued “Good” standing with the California Franchise Tax 21 Board. Supp. Brief at 8; see McLaren Decl., Ex. B (printout from California Secretary of State 22 website)). Severs also highlights evidence that after Hyp3r’s registration with the California 23 Secretary of State was marked as inactive, Hyp3r represented to the United States Patent and 24 Trademark Office (“USPTO”) that it was a resident of San Francisco, California. See McLaren 25 Supp. Decl. ¶ 17, Ex. M (USPTO “Issue Fee Transmittal Form” dated June 18, 2022, filed by 26 Hyp3r with the USPTO). One of Hypr3r’s applications with the USPTO indicates that the 27 1 company was in San Francisco even after the complaint was filed. Id. ¶ 18, Ex. N (printout of 2 USPTO data dated April 9, 2023 for application number 17/381,097). Severs claims this evidence 3 is particularly compelling because Hyp3r’s residence has not changed on the USPTO’s website, 4 even though Hyp3r had multiple communications with the USPTO between July 20, 2021 and 5 March 3, 2023. Supp. Brief. At 9; see McLaren Supp. Decl. ¶ 18, Ex. O (printout of USPTO 6 documents and transactions history page dated April 9, 2023). 7 The court need not determine whether Hyp3r is currently operating as an active California 8 corporation. This is because Severs’ second argument is persuasive. Severs asserts that even if 9 Hyp3r is now defunct in California, the case law supports a finding that Hyp3r is nevertheless a 10 citizen of California for purposes of establishing general jurisdiction. Supp. Brief. at 10. The 11 Ninth Circuit has yet to provide a test for determining the citizenship of a defunct or inactive 12 corporation for the purpose of analyzing personal jurisdiction, and there is a three-way split on the 13 issue:
14 Some courts look to both to the state of incorporation and to the state of the corporation's last business activity. * * * Some courts hold an 15 inactive corporation has no “place of business” and therefore is a citizen only of its state of incorporation. * * * Other courts adopt a 16 case-by-case approach: i.e., if the corporation has been inactive for a substantial period of time (e g, 5 years), it is a citizen only of the 17 state where it is incorporated. Otherwise, the court must examine the company’s activities as it was closing its doors and determine whether 18 its business had a continuing impact in that locale. If so, the place of its last business activity would be relevant to (but not dispositive of) 19 the determination of its “principal place of business.” 20 Patel v. Sugen, Inc., 354 F. Supp. 2d 1098, 1111-12 (N.D. Cal. 2005) (quoting Schwarzer, 21 Tashima & Wagstaffe, Cal. Practice Guide: Federal Civil Procedure Before Trial at ¶ 2:321.5-7 22 (2004) (analyzing citizenship of a defunct or inactive corporation for diversity jurisdiction 23 purposes)); see also Norsworthy v. Mystik Transp., Inc., 430 F. Supp. 2d 631, 634 (E.D. Tex. 24 2006) (reviewing same split on the proper test for determining the citizenship of a defunct or 25 inactive corporation for personal jurisdiction purposes). 26 Severs asks the court to apply the third, or “functional approach,” in determining the 27 citizenship of Hyp3r by examining the length of the period of its inactivity. See Supp. Brief. at 10 1 functional approach on the ground that it “best equips the court to carry out the intent of 2 Congress.” See Homestead Lead Co. v. Doe Run Resources Corp., 282 F. Supp. 2d 1131, 1137 3 (N.D. Cal. 2003); Sellers v. Kohlberg & Co., LLC, No. C 01-01365 WHA, 2001 WL 761187, at *3 4 (N.D. Cal. Jun. 29, 2001); Patel, 354 F. Supp. 2d. at 1112; Parker v. Moore, No. C 08-1896 PJH, 5 2008 WL 2220613, at *1 (N.D. Cal. May 27, 2008); Sports Shinko Co. v. QK Hotel, LLC, 486 F. 6 Supp. 2d 1168, 1178 (D. Haw. 2007). 7 The court agrees with the reasoning of these cases and applies the functional approach 8 here. Under that test, “[w]hen a substantial period of time has lapsed since a corporation was 9 active, its citizenship reverts to include only its state of incorporation. See Homestead, 282 F. 10 Supp. 2d at 1136 (emphasis added) ((citing Athena Auto., Inc. v. DiGregorio, 166 F.3d 288, 291- 11 92 (4th Cir. 1999) (three-year period of inactivity in Maryland rendered it an out-of-state 12 corporation), and Harris v. Black Clawson Co., 961 F.2d 547, 551 (5th Cir. 1992) (five-year 13 period of inactivity is a substantial period of time)). 14 Here, the operative date for determining personal jurisdiction is July 29, 2022, the date 15 Severs filed the complaint in this case. Hyp3r became inactive on the California Secretary of State 16 website on January 25, 2022. Accordingly, Hyp3r had been a defunct corporation for just over six 17 months at the time Severs commenced this action. Severs further notes that Hyp3r represented to 18 the USPTO that it was located in San Francisco, California as late as June 28, 2022, when it filed 19 its patent application. Between one and six months of inactivity does not amount to a substantial 20 period of time. Compare Sellers, 2001 WL 761187, at *4 (“less than two years of inactivity is not 21 sufficient enough of time for it to be removed from local interests...”) and Patel, 354 F. Supp. 2d 22 at 1113 (six month period of inactivity is not a substantial period of time), with Homestead, 282 F. 23 Supp. 2d at 1137 (13 years is substantial), and Ibrahim v. Fiat Chrysler Automobiles, No. 24 CV1910744MWFPLAX, 2020 WL 7094066, at *1 (C.D. Cal. Oct. 28, 2020) (three years is a 25 substantial period of inactivity). 26 Applying the functional approach, the court concludes that, even assuming Hyp3r became 27 an inactive California corporation as of January 25, 2022, Hyp3r was a citizen of California for 1 the time this case was filed. Because the court finds that it has general jurisdiction over Hyp3r, it 2 does not analyze the question of specific jurisdiction. 3 B. Adequacy of Service 4 The court must also assess the adequacy of service of the summons and complaint on 5 Hyp3r before evaluating the merits of the motion for default judgment. Federal Rule of Civil 6 Procedure 4(h)(1) authorizes service upon a domestic corporation “in the manner prescribed by 7 Rule 4(e)(1) for serving an individual,” which, in turn, allows for service “following state law for 8 serving a summons in an action brought in courts of general jurisdiction in the state where the 9 district court is located or where service is made.” Fed. R. Civ. P. 4(e)(1). Pursuant to Rule 10 4(h)(1), service of a corporation can be effectuated by following state law for serving a summons 11 in the state where the district court is located. 12 Under California law, a corporation may be served by delivering a copy of the summons 13 and complaint (1) to the person designated as an agent for service of process under certain 14 provisions of the California Corporations Code, or (2) to the “president, chief executive officer, or 15 other head of the corporation, a vice president, a secretary or assistant general, or a person 16 authorized by the corporation to receive service of process.” Cal. Civ. Proc. Code § 416.10(a), 17 (b). 18 Sever’s initial evidentiary support for proper service was confusing. The proof of service 19 for the summons and complaint indicates that the documents were served on “Heather Howie, 20 Front Desk Coordinator, who is designated by law to accept service of process on behalf of 21 HYP3R INC. served at 1013 Centre Road, Suite 403-B, Wilmington, DE, 19805.” [Docket No. 22 7.] Hyp3r was served with court documents in the British Columbia case at the same address. 23 McLaren Decl., Exs. D, E (affidavits of service). Severs explained that the address corresponds to 24 Hyp3r’s registered agent’s office in Delaware. Mot. at 6. However, Hyp3r’s registration on the 25 State of Delaware website identifies its registered agent as VCORP SERVICES, LLC, located at 26 108 W. 13th Street Suite 100 in Wilmington, Delaware. See McLaren Decl., Ex. A. In addition, 27 the proof of service for the instant motion for default judgment indicates that the documents were 1 W. 13th Street / Suite 100 / Wilmington, DE 19801.” [Docket No. 15 (Affidavit of Service for 2 Motion for Default Judgment served on Registered Office on February 3, 2023).] 3 In the requested supplemental briefing, Severs clarifies that both addresses were correct on 4 the respective dates of service. Supp. Brief. at 2. The summons and complaint were served on 5 August 1, 2022, when Hyp3r’s address was listed as 1013 Centre Rd, Suite 403-B, Wilmington, 6 DE on the Delaware Division of Corporations website. See McLaren Supp. Decl. ¶¶ 4-5, Exs. A- 7 B. Severs’ motion for entry of default judgment was served on February 3, 2023. The address for 8 service was obtained a day earlier, on February 2, 2023, from the same website. At that time, 9 Hyp3r’s address was listed as 108 W. 13th Street, Suite 100, Wilmington, DE 19801. McLaren 10 Supp. Decl. ¶¶ 6-7, Exs. C-D. 11 In light of Severs’ supplemental evidence, the court finds that service of the summons and 12 complaint was properly effectuated on Hyp3r. 13 C. Application of the Eitel Factors 14 The court now turns to the Eitel factors to determine whether default judgment should be 15 granted. Turning to the first Eitel factor, Severs will suffer prejudice if the court does not enter a 16 default judgment against Hyp3r because Severs otherwise has no means to recover the damages to 17 which she is entitled under British Columbia law. See Walters v. Shaw/Guehnemann Corp., No. C 18 02-04058 WHA, 2004 WL 1465721, at *2 (N.D. Cal. Apr. 15, 2004) (“To deny plaintiff’s motion 19 [for default judgment] would leave them without a remedy.”). Thus, the first factor weighs in 20 favor of entering default judgment. 21 The second and third Eitel factors—the merits of Severs’ substantive claim and the 22 sufficiency of the complaint—also weigh in favor of default judgment. Severs’ complaint pleads 23 the elements of a claim on which she can recover. Severs seeks recognition of the British 24 Columbia judgment under the UFCMJRA. 25 In Yahoo! Inc. v. La Ligue Contre Le Racisme et L’Antisemitisme, 433 F.3d 1199, 1212–13 26 (9th Cir. 2006), the Ninth Circuit noted that no federal statute governs the recognition of foreign 27 judgments, leaving courts to look to the law of the state in which enforcement is sought to 1 recognized under California Code of Civil Procedure section 1713 et seq. and applies to the 2 present request for a “sum of money” judgment. See Cal. Code Civ. Proc. § 1715. 3 A foreign-country money judgment may be enforced under California law if the judgment 4 (1) grants recovery of a sum of money; (2) is final, conclusive, and enforceable under the law of 5 the country where it was rendered; and (3) is not a judgment for taxes, a fine, or other penalty, or a 6 judgment arising from domestic relations. Cal. Civ. Proc. Code § 1715; see also Grundig 7 Multimedia AG v. Eton Corp., No. 20-CV-05206-NC, 2021 WL 411237, at *2 (N.D. Cal. Feb. 5, 8 2021). The party seeking recognition of a foreign-country money judgment has the burden to 9 establish these statutory requirements, while the party resisting recognition has the burden of 10 establishing a specified ground for non-recognition. Cal. Civ. Proc. Code §§ 1715(c), 1716. 11 Unless one of the specified defenses applies, the court “shall recognize a foreign-country judgment 12 to which [the UFCMJRA applies].” Cal. Civ. Proc. Code § 1716(a). 13 Here, Severs has established that the statutory requirements are satisfied for recognition of 14 the British Columbia judgment. She has presented evidence that the British Columbia court issued 15 a judgment in her favor granting recovery of a sum of money. See McLaren Decl. ¶¶ 12-13, Exs. 16 F (reasons for judgment), G (formal court order from the supreme court of British Columbia). The 17 judgment is final, conclusive, and enforceable under the laws of British Columbia. See McLaren 18 Decl. ¶ 14, Ex. H (formal certificate issued and sealed by the Supreme Court of British Columbia 19 and endorsed by the Court of Appeal confirming there are no pending appeals). The British 20 Columbia judgment is a “compensatory award between civil litigants” and therefore is not a “fine 21 or penalty” for purposes of the UFCMJRA. See Moersch v. Zahedi, 724 F. App’x 583, 584 (9th 22 Cir. 2018). In addition, post-judgment interest requested by Severs is not generally considered a 23 penalty because “upon entry of a sister state money judgment, that judgment includes the amount 24 of interest accrued on the judgment computed at the rate of interest applicable to the judgment 25 under the law of the sister state.” Anyang Xinyi Elec. Glass Co. v. B & F Int’l (USA), Inc., No. 26 CV1500862BROAJWX, 2015 WL 12859716, at *5 (C.D. Cal. Nov. 24, 2015) (quoting Hyundai 27 Sec. Co. v. Lee, 232 Cal. App. 4th 1379, 1390 (2015)). 1 establishing grounds for non-recognition. See Cal. Civ. Proc. Code § 1716 (“If the party seeking 2 recognition of a foreign-country judgment has met its burden of establishing recognition of the 3 foreign-country judgment . . . a party resisting recognition of a foreign-country judgment has the 4 burden of establishing that a ground for nonrecognition exists.”). In light of these factual 5 allegations and the pertinent law, Plaintiffs have sufficiently stated a legal claim for relief that 6 appears to have merit. 7 The fourth Eitel factor focuses on the amount of money at issue in the action. “[C]ourts 8 should be hesitant to enter default judgment in matters involving large sums of money.” Yelp Inc. 9 v. Catron, 70 F. Supp. 3d 1082, 1099-1100 (N.D. Cal. 2014). “When the money at stake in the 10 litigation is substantial or unreasonable, default judgment is discouraged.” Bd. of Tr. v. Core 11 Concrete Const., Inc., No. C-11-02532-LB, 2012 WL 380304, at *1, *4 (N.D. Cal. Jan. 7, 2012). 12 However, when “the sum of money at stake is tailored to the specific misconduct of the defendant, 13 default judgment may be appropriate.” Id. The total amount of money Severs seeks is 14 $25,878,932.73 CAD or $20,402,816.72 USD, plus post-judgment interest at a rate of 6.45% from 15 February 3, 2023 to the date of the district court’s order, and post-judgment interest pursuant to 28 16 U.S.C. § 1961(a).3 Supp. Brief. at 15-16. This factor weighs in favor of granting default 17 judgment because the amount sought is specifically tailored to the judgment previously awarded 18 by the British Columbia court plus interest. 19 The fifth and sixth factors—“the possibility of a dispute concerning material facts” and 20 whether the default was due to excusable neglect—weigh in favor of default judgment. Eitel, 782 21 F.2d at 1471-72. Hyp3r has not appeared or filed any responsive pleading in this action, let alone 22 contested any of Severs’ material facts. That the British Columbia court previously entered 23 judgment in Severs’ favor suggests that her claim is supported by sufficient evidence. Nothing in 24 the record indicates that Hyp3r’s default was due to excusable neglect. Severs served Hyp3r with 25 the summons and complaint and has continued serving it with submissions relating to the case 26
27 3 Severs also asks the court to find that she is entitled to costs for this action after judgment is 1 throughout the pendency of this action. [Docket Nos. 7, 15, 19.] See Shanghai Automation 2 Instrument Co., 194 F. Supp. 2d at 1005 (finding no excusable neglect because defendant was 3 properly served with the complaint and subsequent submissions relating to the case). 4 Examining these facts in the aggregate, the court finds that the first six Eitel factors 5 outweigh the seventh Eitel factor—that the Federal Rules of Civil Procedure favor decisions on 6 the merits. See Transamerican Life Ins. Co. v. Estate of Ward, CIV S-11-0433 JAM EFB, 2011 7 WL 5241257, at *4 (E.D. Cal. Oct. 31, 2011) (finding that the policy favoring decisions on the 8 merits does not by itself preclude entry of default judgment). The court therefore recommends 9 that Severs’ motion for default judgment be granted. 10 D. Remedies 11 Although the factual contentions of the operative complaint are accepted as true when 12 determining the liability of a defaulting defendant, this rule does not apply to statements regarding 13 damages. See TeleVideo, 826 F.2d at 917-18. To recover damages after securing a default 14 judgment, a plaintiff must prove the relief it seeks through testimony or written affidavit. Bd. of 15 Trs. of the Boilermaker Vacation Trust v. Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 16 2005); see PepsiCo, Inc., 238 F. Supp. 2d at 1175 (citing Televideo Sys., Inc., 826 F.2d at 917-18). 17 On November 22, 2021, the British Columbia court awarded Severs and the class members 18 a monetary judgment in the amount of $24,921,378 CAD. McLaren Decl. ¶ 14. Under the British 19 Columbia Court Order Interest Act, RBSC 1996, chapter 79 (the “Court Order Interest Act”), 20 interest on that judgment accrued at a prescribed rate. Id. ¶ 26. From November 23, 2021 to July 21 28, 2022, (the day before this case was filed) post-judgment interest amounted to $413,722.11 22 CAD. McLaren Decl. ¶¶ 14. This amount was reflected in the Supreme Court of British 23 Columbia’s order dated July 28, 2022. See McLaren Decl., Ex. H (formal certificate issued and 24 sealed by the Supreme Court of British Columbia for monetary judgment). 25 1. Post-Judgment Interest under British Columbia Law 26 Plaintiff also seeks accrued interest based on prescribed British Columbia interest rates 27 under the Court Order Interest Act from July 29, 2022 through February 2, 2023, the date Plaintiff 1 from January 1, 2023 to February 2, 2023). Mot. at 21; McLaren Decl. ¶¶ 26 (explaining that 2 under the Court Order Interest Act, post-judgment interest is payable at an “annual simple interest 3 rate that is equal to the prime lending rate of the banker to the government”); see also McLaren 4 Supp. Decl. ¶¶ 22-25, Exs. R (Court Order Interest Act), S (summary from the British Columbia 5 Courthouse Library Website explaining the operation of the Court Order Interest Act); [Docket 6 No. 14-2 (Simon Lin Decl., Feb. 2, 2023) ¶ 6, Ex. A (Court Order Interest Rates from the Supreme 7 Court of British Columbia Website listing applicable interest rates from 1991 to the present).]4 In 8 addition, Plaintiff seeks an interest rate of 6.45% for the period February 3, 2023 to the date of this 9 order. Mot. at 21; see also Supp. Brief at 16. “Section 1719, subdivision (a) [of the UFCMJRA] 10 provides that recognition of a foreign-country money judgment has the same conclusive effect as 11 does entry of a sister state judgment. Upon entry of a sister state money judgment, that judgment 12 includes the amount of interest accrued on the judgment ‘computed at the rate of interest 13 applicable to the judgment under the law of the sister state.’” Hyundai Sec. Co., 232 Cal. App. 4th 14 at 1390 (quoting § 1710.25(a)(2)). Plaintiff argues that “by operation of British Columbia law, the 15 interest continues to accrue until the judgment is fully paid.” See Supp. Brief. at 18 (citing 16 McLaren Supp. Decl. ¶¶ 22-25, British Columbia Court Order Interest Act, Summary from the 17 British Columbia Courthouse Library Website). Under section 9 of British Columbia’s Court 18 Order Interest Act, post-judgment interest is deemed to be included in the court’s judgment for 19 enforcement purposes. See McLaren Supp. Decl. ¶ 24, Court Order Interest Act. From February 20 3, 2023 to the date of this order, the applicable post-judgment interest rate in British Columbia 21 4 Between July 29, 2022 and December 31, 2022, the prescribed interest rate under the Court 22 Order Interest Act was 3.7 percent. See Court Order Interest Rates from the Supreme Court of British Columbia Website; see also McLaren Decl. ¶ 26 (stating that the prescribed rate for this 23 period was 3.7%). As a result, the accrued interest during that period totaled $394,099.68 CAD. Id. ¶ 27 (calculating daily post-judgment interest of $2,526.28 CAD for 156 days); see also Supp. 24 Brief. at 15 (calculating 156 days at the rate of 3.7 percent).
25 Between January 1, 2023 and February 2, 2023 (date of filing of the motion for default judgment), the prescribed interest rate was 6.45 percent. See Court Order Interest Rates from the 26 Supreme Court of British Columbia Website. As a result, the accrued interest during that period totaled $145,329.03 CAD. Compare Supp. Brief. at 15 (erroneously calculating daily post- 27 judgment interest of $4,403.91 CAD for 34 days instead of 33 days), with id. at 16 (requesting 1 was 6.45%. See Court Order Interest Rates from the Supreme Court of British Columbia Website. 2 Accordingly, the court recommends applying Plaintiff’s requested interest rates pursuant to 3 section 1710.25(a)(2). See also Anyang Xinyi Elec. Glass Co. v. B & F Int’l (USA), Inc., No. 4 CV1500862BROAJWX, 2015 WL 12859716, at *5 (C.D. Cal. Nov. 24, 2015) (applying a 6.4% 5 post-judgment interest rate on a judgment from China); Hyundai, 232 Cal. App. 4th at 1390-92 6 (applying a 20% post-judgment interest rate on a judgment from Korea). 7 2. Post-Judgment Interest under 28 U.S.C. § 1961 8 Separately, Plaintiff requests post-judgment interest as permitted under 28 U.S.C. § 9 1961(a).5 Supp. Brief. at 16-17. 10 “Interest shall be allowed on any money judgment in a civil case recovered in a district 11 court.” 28 U.S.C.A. § 1961(a); see also Air Separation, Inc. v. Underwriters at Lloyd's of London, 12 45 F.3d 288, 290 (9th Cir. 1995) (“[P]ostjudgment interest on a district court judgment is 13 mandatory.”). Post-judgment interest is “calculated from the date of the entry of the judgment, at 14 a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the 15 Board of Governors of the Federal Reserve System, for the calendar week preceding[ ] the date of 16 the judgment.” Id. 17 Accordingly, the court recommends awarding Plaintiff post-judgment interest at the rate 18 specified in 28 U.S.C. § 1961(a). See Society of Lloyd’s v. Reinhart, 402 F.3d 982, 1003–1005 19 (10th Cir. 2005) (applying federal post-judgment rate to an English judgment recognized by a 20 United States District Court under New Mexico’s Uniform Foreign-Money Judgments 21 Recognition Act); AIG Eur. S. A. v. McCaughey, No. CV 22-588-MWF (JEM), 2023 WL 22 3528453, at *7 (C.D. Cal. Mar. 7, 2023) (applying federal post-judgment rate to an Irish judgment 23 recognized under California’s Uniform Foreign-Money Judgments Recognition Act). 24
25 5 Post-judgment interest is determined by federal law. Northrop Corp. v. Triad Int’l Mktg., S.A., 842 F.2d 1154, 1155 (9th Cir. 1988). Indeed, once a claim is reduced to judgment in a federal 26 action, post-judgment interest must be calculated pursuant to section 1961 as opposed to the prescribed state rate. Madrigal v. Allstate Ins. Co., No. CV 14-4242-SS, 2016 WL 6694968, at *6 27 (C.D. Cal. May 19, 2016), aff’d sub nom. Madrigal v. Allstate Indem. Co., 697 F. App’x 905 (9th 1 In sum, the court recommends granting the following award: $24,921,378 CAD in 2 principal, plus $413,722.11 CAD in interest up to July 28, 2022, and $539,428.71 CAD in interest 3 between July 29, 2022 and February 2, 2023, for an aggregate amount of $25,874,528.82 CAD, or 4 $20,399,344.70 USD.6 In addition, the court recommends granting post-judgment interest at a rate 5 of 6.45% from February 3, 2023 to the date of the district court’s entry of judgment, as well as 6 interest pursuant to 28 U.S.C. § 1961(a) to begin accruing after the district court enters judgment 7 in this case. 8 IV. CONCLUSION 9 For the foregoing reasons, the court recommends that Severs’ motion for default judgment 10 be granted. The court further recommends that Plaintiff be entitled to recover a total of 11 $25,874,528.82 CAD or $20,399,344.70 USD, in addition to post-judgment interest at a rate of 12 6.45% from February 3, 2023 to the date of the district court’s order, and post-judgment interest 13 pursuant to 28 U.S.C. § 1961(a) to begin accruing from the date of entry of judgment in this case. 14 Not later than three days from the date of this report and recommendation, Severs shall 15 serve Hyp3r with a copy of the report and recommendation by any means reasonably calculated to 16 provide actual notice, and file proof of service to that effect. Any party may file objections to 17 this report and recommendation with the District Judge within 14 days of being served with a 18 copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(a); N.D. Civ. L.R. 72-2. 19 20 IT IS SO ORDERED. 21 Dated: August 11, 2023 22 ______________________________________ Donna M. Ryu 23 Chief Magistrate Judge 24 25 26
27 6 At the time the judgment was rendered, the applicable exchange rate was $1.2684 CAD/USD.