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Webb v. Trailer City, Inc

United States District Court, D. Oregon

April 9, 2018

VINCENT L. WEBB, a resident of the State of Nevada, Plaintiffs,
v.
TRAILER CITY, INC., an Oregon corporation; DAN E. WALKER, a resident of Oregon; and CHANGZHOU NANXIASHU TOOL CO., LTD., a foreign corporation, Defendants.

          STEPHEN J. JONCUS, Joncus Law LLC P.O. Attorney for Plaintiff

          KRISTEN G. HILTON Sussman Shank, LLP, PAUL S. MARKS, Neufeld Marks, PC, Attorneys for Defendant Changzhou Nanxiashu Tool Co., Ltd.

          OPINION AND ORDER

          ANNA J. BROWN UNITED STATES SENIOR DISTRICT JUDGE.

         This matter comes before the Court on Defendant Changzhou Nanziahsu Tool Co.'s Motion (#45) to Vacate Default, Default Judgment and Supplemental Judgment and for Dismissal Based on Lack of Jurisdiction.

         For the reasons that follow, the Court DENIES Defendant's Motion.

         BACKGROUND

         On June 20, 2011, Plaintiff filed this action against Defendant Changzhou Nanxiashu Tools[1] for trademark and copyright infringement, unfair competition, and unfair business practices. Defendant was the Chinese manufacturer of Plaintiff's patented utility trailers. Plaintiff sought damages and injunctive relief.

         On July 8, 2011, Plaintiff filed Proof of Service (#5) and stated Defendant had been served on Jun 29, 2011, by serving Marc Friedman, corporate counsel for Central Purchasing, Inc. Defendant did not file an appearance or response to Plaintiff's Complaint within the time required.

         On August 11, 2011, Plaintiff filed a Motion (#11) for Default Judgment against Defendant. In a Declaration (#12) filed in support of the Motion, Plaintiff stated Defendant was served on June 29, 2011, by serving Central Purchasing, Inc., Defendant's registered agent for service of process in the United States. Plaintiff also stated he had obtained the registered agent's name from the U.S. Department of Transportation, National Highway Traffic Safety Administration, which identified Central Purchasing as Defendant's agent pursuant to 49 U.S.C. § 30164 and 49 C.F.R. Part 551, Subpart D.

         On August 19, 2011, the Court entered a Default Judgment and Permanent Injunction (#16) against Defendant. The Judgment did not specify any money damages, but it included (1) a permanent injunction for the return of Plaintiff's property, including designs, blueprints, tools, dies, manuals, photographs, written materials, and computer files used to manufacture Plaintiff's trailers and (2) prohibited Defendant from continuing to manufacture, to export, or to sell in the United States trailers that infringed on Plaintiff's designs.

         On September 14, 2016, Plaintiff filed a Motion (#18) to Reopen Case and [for] an Order to Show Cause Why Defendant Should Not Be Held in Contempt for failure to comply with the requirements of the permanent injunction. Plaintiff also sought monetary damages.

         On September 16, 2016, the Court ordered (#21) Defendant to file a response to Plaintiff's Motion (#18) by October 3, 2016. On September 16, 2016, Plaintiff served a copy of the Court's Order on Defendant by email; by Federal Express to Defendant's office in China; and by priority mail to Defendant's agent, Central Purchasing. Defendant did not file a response to Plaintiff's Motion.

         On October 12, 2017, the Court issued an Order to Show Cause (#24) in which it set a hearing for November 3, 2017, and required Defendant to appear and to show cause why it should not be held in contempt. On October 17, 2016, Plaintiff served a copy of the Court's Order on Defendant by email; by Federal Express to Defendant's office in China; and by priority mail to Defendant's agent, Central Purchasing.

         On November 3, 2017, the Court held the contempt hearing. No one appeared on behalf of Defendant. The Court found Defendant in contempt and directed Plaintiff to submit further briefing on the issue of damages. On March 3, 2017, Plaintiff filed a Supplemental Memo (#36) in support of his request for $11, 947, 505 in damages.

         On May 18, 2017, the Court entered a Supplemental Judgment (#38) against Defendant for damages in the amount of $6, 399, 540.

         On February 6, 2018, Defendant filed an Emergency Motion (#40) for Stay of Enforcement of the Judgment.

         On February 7, 2018, Defendant filed its Motion (#45) to Vacate Default, Default Judgment and Supplemental Judgment and for Dismissal Based on Lack of Jurisdiction.

         On February 20, 2018, the Court heard oral argument on Defendant's Emergency Motion (#40) for Stay and denied Defendant's request.

         On March 7, 2018, the Court heard oral argument on Defendant's Motion (#45) to Vacate. Following oral argument the Court allowed the parties to file supplemental memos regarding the issue of statutory construction related to § 30164.

         On April 2, 2018, the Court took Defendant's Motion to Vacate under advisement.

         STANDARDS

         Fed. R. Civ. P. 60(b) provides:

Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party . . . from a final judgment . . . for the following reasons: . . . (4) the judgment is void; . . ..

         A motion to vacate a judgment under Rule 60(b)(4) does not have a time limit and, therefore, “may be made at any time.” S.E.C. v. Internet Solutions for Bus., Inc., 509 F.3d 1161, 1165 (9th Cir. 2007). A final judgment is void and may be set aside “only if the court that considered it lacked jurisdiction . . . over the parties to be bound.” Id. (citing United States v. Berke, 170 F.3d 862, 883 (9th Cir. 1999)). A court lacks jurisdiction when there has been insufficient service of process. Id. See also Travelers Cas. and Sur. Co. of Am. v. Brenneke, 551 F.3d 1132, 1135 (9th Cir. 2009)(holding federal court is without personal jurisdiction over a defendant unless the defendant has been properly served).

         The defendant bears the burden of proving the existence of a justification for relief under Rule 60(b). Cassidy v. Tenorio, 856 F.2d 1412, 1415 (9th Cir. 1988)(citing Atchison, Topeka and Santa Fe Railway Co. v. Barrett, 246 F.2d 846, 849 (9th Cir. 1957)).

         Generally if service of process is challenged before entry of default, the plaintiff bears the burden of establishing the validity of service. Capsugel Belgium NV v. Bright Pharma Caps, Inc., No. 3:15-cv-321, 2015 WL 7185463, at *2 (D. Or. Nov. 13, 2015). When, however, the defendant delayed in bringing the motion to vacate until after entry of default judgment, the defendant bears the burden to prove that service did not occur. Internet Solutions, 509 F.3d at 1163.

         DISCUSSION

         Defendant contends the Judgments should be vacated on the grounds that: (1) the Judgments are void ab initio for ineffective service of process, (2) service of process did not conform to Oregon service rules, and (3) this Court lacks personal jurisdiction over Defendant because Defendant does not have sufficient minimum contacts with this forum. Defendant also asserts the Court should dismiss Plaintiff's Complaint on the ground that Defendant has a meritorious defense to each of Plaintiff's claims.

         Plaintiff, in turn, contends he has properly served Defendant with Summons and Complaint by service on its registered agent, Defendant had actual notice of this lawsuit, service under Oregon rules was accomplished, and Defendant has sufficient contacts with this forum to establish the Court's personal jurisdiction over Defendant.

         I. Personal Jurisdiction (Minimum Contacts)

         As noted, Defendant contends it does not have sufficient minimum contacts with this forum to subject it to the personal jurisdiction of this Court, the Judgments are void, and the Court should dismiss this action.

         Plaintiff, however, contends the allegations in his Complaint establish Defendant's activities were directed to Oregon and are sufficient to ...


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