Opinion
No. 2:00-CV-00217 PGC
April 22, 2004
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO AMEND JUDGMENT AND MOTION TO STAY JUDGMENT AND INJUNCTION
This case is before the court on defendant MBC Enterprises, L.C.'s ("MBC") Rule 59(a) Motion to Amend Judgment and Rule 62 Motion to Stay Judgment and Injunction, filed pursuant to the Federal Rules of Civil Procedure. Plaintiff Microsoft Corporation ("Microsoft") opposes both motions. Having carefully considered the parties' arguments, the law, and the record in this case, the court DENIES both motions in large part, but GRANTS the motions with respect to amending paragraph six (6) of the permanent injunction order.
Doc. 239-1.
Doc. 243-1.
BACKGROUND
Plaintiff Microsoft brought this case for copyright and trademark infringement against defendants MBC, James Craghead, Steve Blackburn, and Marianne Blackburn in March of 2000. After considerable discovery, the parties eventually filed cross-motions for summary judgment in the summer of 2003. On December 30, 2003, the court entered an order denying defendants' motion for summary judgment and granting in part Microsoft's motion for summary judgment based on undisputed facts showing that defendants had engaged in copyright and trademark infringement of Microsoft products. The court awarded Microsoft statutory trademark and copyright damages, attorneys fees and costs (based on the Copyright Act), and a permanent injunction — all of which is reflected in the court's Judgment, dated January 9, 2004. On January 23, 2004, the MBC defendants filed a timely Rule 59(a) Motion to Amend the Judgment and a Rule 62 Motion to Stay Judgment and Injunction.
Doc. No. 235-1.
Doc. No. 234-2.
Doc. No. 238-1.
The court declines to amend the judgment or stay judgment in this matter; however, the court finds that it appropriate to make a minor amendment to the permanent injunction in this case, as outlined below.
RULE 59 MOTION TO AMEND OR ALTER JUDGMENT
The court construes defendants' Rule 59(a) motion as a Rule 59(e) motion since Rule 59(a) relates only to new trials. Rule 59(e) of the Federal Rules of Civil Procedure allows a party to file a motion to amend or alter judgment within 10 days after entry of judgment; however, such motion "should only be granted to correct manifest errors of law or to present newly discovered evidence." According to the Tenth Circuit, "Rule 59(e) provides a means `to support reconsideration of matters properly encompassed in a decision on the merits.' Rule 59(e) cannot be used to expand a judgment to encompass new issues which could have been raised prior to issuance of the judgment," Defendants' Rule 59 motion challenges both the permanent injunction and the court's damage award. The court addresses each in turn.
Adams v. Reliance Standard Life Ins. Co., 225 F.3d 1179, 1186 n. 5 (10th Cir. 2000) (citing Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997) (quotations omitted)).
Steele v. Young, 11 F.3d 1518, 1520 n. 1 (10th Cir. 1993) (citations omitted).
Permanent Injunction Order
In the Rule 59 motion to amend, the defendants argue the permanent injunction is impermissibly broad given the circumstances of this case. Virtually identical arguments were raised and briefed at the summary judgment stage, and the court considered them in making its decision. The court sees no basis for general reconsideration on this point. While the permanent injunction ultimately entered by the court is arguably more broad than the injunctive relief originally sought in Microsoft's complaint, Microsoft's proposed permanent injunction order was submitted to the record on October 21, 2003, thereby giving defendants ample notice and opportunity to address the injunction's propriety. And defendants did so by supplemental memorandum.
See Defendants' Supplemental Memorandum in Opposition to Plaintiff's Motion for Summary Judgment Re: Statutory Damages, Attorney's Fees, Permanent Injunction, and Personal Liability at 15 (Doc. No. 224-1).
In addition to defendants' general overbreadth arguments, defendants argue more specifically that the permanent injunction violates the Fourth and First Amendments to the federal constitution and improperly restrains trade. To the extent these arguments were not raised at the summary judgment stage they are deemed waived and the court will not consider them at this post-judgment stage. Nevertheless, defendants' Fourth Amendment argument gives the court pause. The court is troubled by paragraph 6 of the injunction:
To monitor Defendants' compliance with this Order, Microsoft may, without notice during normal business hours, conduct reasonable inspections of Defendants' inventory of Microsoft programs and items and Defendants' books and records including those in electronic form and those Defendants must maintain pursuant to paragraph five of this Order up to six times per year. At Microsoft's request, Defendants shall immediately identify all locations where any of their Microsoft software or components are stored an allow access to Microsoft to enable it to inspect Defendants' inventory of Microsoft software and components.
Permanent Injunction ¶ 6 (pp. 8-9) (Doc. No. 243-1).
This provision appears to grant Microsoft with a self-help remedy of making random ad hoc inspections of MBC inventory several times a year. Without reaching the issue of whether the provision violates the Fourth Amendment, the court is inclined to modify the provision to make it less sweeping. Paragraph 6 of the permanent injunction is therefore AMENDED to read as follows:
To monitor Defendants' compliance with this Order, Microsoft may, with leave of court and for good cause shown, conduct reasonable inspections of Defendants' inventory of Microsoft programs and items and Defendants' books and records, including those in electronic form and those Defendants must maintain pursuant to paragraph five of this Order. Upon order of the court, Defendants shall immediately identify all locations where any of their Microsoft software or components are stored an allow access to Microsoft to enable it to inspect Defendants' inventory of Microsoft software and components.
Court Award of Statutory Damages
Emphasis added for clarity.
Defendants' also argue that the court's damage award at the summary judgment stage violates the defendants' Seventh Amendment right to trial by jury. This argument was carefully considered previously, and the court specifically discussed the issue on page nine of its order granting summary judgment. The court sees no basis for reconsideration at this time.
See Order Granting in Part Microsoft's Motion for Summary Judgment at 9 (Doc. No. 235-1).
RULE 62 MOTION TO STAY INJUNCTION AND JUDGMENT
Given the court's amendment to the permanent injunction, the court declines to stay the permanent injunction pending appeal in this case. The court finds that defendants' have not met and cannot meet their required burden of showing (1) likelihood of success on the merits, (2) irreparable injury absent stay, (3) no substantial injury to other parties, and (4) public interest favoring stay.
See Hilton v. Braunskill, 481 U.S. 770, 776 (U.S. 1987); Battle v. Anderson, 564 F.2d 388, 397 (10th Cir. 1977).
The court declines to stay judgment in this case under the discretionary provisions of Rule 62(b) and Rule 62(c). The court finds that no good cause for a stay has been shown under these provisions.
The court also declines to stay judgment under Rule 62(f) because defendants have failed to show that Utah law requires issuance of a stay. To the contrary, defendants argue only that "under Rule 62(f), the stay may be issued." Again, no good cause for a stay has been shown.
Memorandum in Support of Defendant's Rule 62 Motion to Stay Judgment and Injunction at 5 (Doc. No. 244-1).
Finally, Rule 62(d) provides: "When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay [of judgment] . . . effective when the supersedeas bond is approved by the court." Defendants' argue that the money judgment should be stayed without the posting of a supersedeas bond because "MBC does not have the ability to post the bond."
Memorandum in Support of Defendant's Rule 62 Motion to Stay Judgment and Injunction at 5 (Doc. No. 244-1).
Mere inability to post the supersedeas bond, however, does not require the court to waive the requirement under either the Paynter or Poplar Grove cases cited by defendants. At most, those cases give the court discretion to partially waive the requirement under extraordinary circumstances.
Miami Internat'l realty Co. v. Paynter, 807 F.2d 871 (10th Cir. 1986).
Poplar Grove Planting Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189 (5th Cir. 1979).
In Paynter, the Tenth Circuit affirmed the district court's decision to waive the bond posting requirement on a $2,100,000 judgment in a legal malpractice case where the judgement debtor had no ability to post the bond but the full policy limit of insurance proceeds ($500,000) was paid into an interest bearing escrow account and the debtor was forbidden from transferring assets and was subjected to Rule 69 discovery. Similarly, in Poplar Grove, the Fifth Circuit upheld the district court's waiver of the bond requirement, finding that the court is "free to exercise discretion to fashion some other arrangement for substitute security through an appropriate restraint on the judgment debtor's financial dealings, which would furnish equal protection to the judgment creditor."
Paynter, 807 F.2d at 872-874.
Poplar Grove, 600 F.2d at 1191.
In this case, defendants have asked that the bond posting requirement be completely waived based on the bare bones affidavit of defendant Craghead stating that MBC's assets cannot satisfy the judgment. Microsoft correctly points out that this assertion says nothing regarding the assets of the individual defendants who are personally liable. Furthermore, defendants have proposed no alternate means of security, like those proposed in Paynter or Poplar Grove. The court finds that under these circumstances, waiver of the standard bond posting requirement is not appropriate.
CONCLUSION
Based on the foregoing, the defendants' Rule 59(a) Motion to Amend Judgment and Rule 62 Motion to Stay Judgment and Injunction are DENIED except with respect to the above amendment of the permanent injunction.
Doc. 239-1.
Doc. 243-1.
SO ORDERED.