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Sindhi v. Raina

United States District Court, N.D. Texas, Dallas Division

September 20, 2017

SALIM I. SINDHI, Plaintiff,
v.
KUNAL R. RAINA, Defendant.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         Plaintiff Salim I. Sindhi (“Sindhi”) moves for modification of an interlocutory permanent injunction and for entry of final judgment, and for an order to show cause why defendant Kunal R. Raina (“Raina”) should not be held in contempt. Raina moves to overturn the default judgment in this case and for admission of evidence or clarification of prerequisites for admission. For the reasons that follow, the court denies Raina's motion to overturn the default judgment, grants Sindhi's motion for an order to show cause, and defers a ruling on Sindhi's motion for modification of the permanent injunction and for entry of final judgment until the court conducts an evidentiary hearing. The court denies as moot Raina's motion for admission of evidence or clarification of prerequisites for admission.

         I

         This is an action by Sindhi against Raina for copyright infringement under 17 U.S.C. §§ 501-505, and for violating the Texas Uniform Trade Secrets Act (“TUTSA”), Tex. Civ. Prac. & Rem. Code Ann. §§ 134A.002-005 (West Supp. 2016). Sindhi formerly employed Raina as a manager for his online newspaper content management system (“CMS”) business, bulletlink.com. Sindhi alleges that Raina stole bulletlink.com CMS source code, trade secrets, and other confidential information to create a substantially similar competing CMS called “TechCruiser.” TechCruiser's business is described as a “software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted.” D. Mot. Overturn Default Judg. 4-5. TechCruiser's website is interactive and includes a “Buy Now” page, which allows customers to sign up to license Raina's software, without any apparent restrictions based on geography. Raina maintains in his motion to overturn default judgment that “Defendant Raina's company TechCruiser Solutions has clients from all over the globe including some from Texas.” Id. at 5. Sindhi alleges, and Raina does not dispute, that Raina licensed TechCruiser software to two Dallas-based online newspapers, White Rock Lake Weekly News and Katy Trail Weekly, for at least 43 months and 29 months, respectively.[1] Sindhi filed a copyright registration for bulletlink.com CMS source code with the U.S. Copyright Office on September 21, 2015. Raina, an Indian national and permanent resident of India, was served with this lawsuit through Hague Service Convention on June 2, 2016.

         On June 21, 2016 Raina filed a motion to dismiss for lack of jurisdiction. On September 29, 2016 the court issued two orders. One stated that Raina's counsel had not been admitted to practice before the court and required that his counsel apply for admission to the Bar or for admission pro hac vice within 21 days. The other stated that Raina must provide the clerk of court a certificate of interested persons within 21 days. Raina failed to comply with both orders.

         On October 24, 2016 the court filed two more orders. One order stated that, if Raina failed to file the required certificate of interested persons within 14 calendar days, the court would strike Raina's responsive pleadings and enter a default judgment without additional prior notice. The other stated that, if Raina did not comply with the court's September 29, 2016 order regarding counsel, the court would strike his responsive pleadings and enter a default judgment without additional prior notice. Raina failed to comply with these two orders.

         On November 8, 2016 the court filed an order striking Raina's responsive pleadings, including his motion to dismiss for lack of personal jurisdiction, on the basis that he had “repeatedly failed to comply with orders of this court after having been advised of the consequences of such failure.” Nov. 8, 2016 Order at 1. The court in the same order entered an interlocutory default judgment against Raina. On November 21, 2016 the court entered a permanent injunction against Raina, [2] but the permanent injunction did not address all the relief that Sindhi seeks in this case, and was therefore an interlocutory, not final, judgment.

         No further proceedings took place in this court until April 4, 2017, when Sindhi moved to modify the permanent injunction and for entry of a final judgment. He seeks damages in the sum of $1, 469, 494.00 and attorney's fees in the sum of $56, 255.17.[3] Sindhi asks the court to modify the permanent injunction, inter alia, to clarify the injunction's applicability to various third parties providing services to Raina based on Sindhi's trade secrets.

         On April 24, 2017 Raina filed a motion to overturn the default judgment. Raina seeks to overturn the interlocutory default judgment under Fed.R.Civ.P. 60(b)(4)[4] on the basis that it is void for lack of personal jurisdiction. He maintains that he does not have constitutionally sufficient minimum contacts with the forum state, and that Sindhi is estopped from showing that this court has personal jurisdiction over him because Sindhi has previously represented to Indian courts that his cause of action arose in India. On April 30, 2017 Sindhi filed a motion for order to show cause why Raina should not be held in contempt. On August 9, 2017 Raina filed a motion for admission of evidence or clarification of prerequisites for admission.

         II

         The court turns first to Raina's motion to overturn the default judgment under Rule 60(b)(4).

         A

         The court will treat Raina's motion as one to set aside the November 8, 2016 order entering an interlocutory default judgment. The interlocutory permanent injunction entered on November 21, 2016 did not purport to be a final judgment, and even Sindhi, by moving now for entry of a final judgment, seems to recognize that the court has not as yet entered a final judgment in this case. See P. Mot. for Modification of Permanent Inj. and Entry of Final J. at 14 (“Sindhi asks the Court to enter the Proposed Modified Permanent Injunction and to enter the Proposed Final Judgment.”).

         B

         Under Rule 60(b)(4), a judgment can be set aside if it is void. “[R]elief from judgment is available if the district court lacked subject matter or personal jurisdiction, or if the court acted in a manner inconsistent with due process of law.” Salazar v. Owens-Ill. Salary Emp. Welfare Benefits Plan, 2010 WL 454900, at *1 (N.D. Tex. Jan. 26) (Sanderson, J.) (citing Callon Petrol. Co. v. Frontier Ins. Co., 351 F.3d 204, 208 (5th Cir. 2003)), rec. adopted, (N.D. Tex. Feb. 10, 2010) (Fitzwater, C.J.).

         The Fifth Circuit has not resolved the question of which party bears the burden of proof on a Rule 60(b)(4) motion. See Jackson v. FIE Corp., 302 F.3d 515, 521 n.6 (5th Cir. 2002) (declining to “choose a side in the split of authority on this question”); compare Bally Export Corp. v. Balicar, Ltd., 804 F.2d 398, 401 (7th Cir. 1986) (holding defendant with notice who elects to suffer default judgment must bear burden of showing lack of personal jurisdiction), with Rockwell Int'l Corp. v. KND Corp., 83 F.R.D. 556, 559 (N.D. Tex. 1979) (Porter, J.) (placing burden on plaintiff because no reason exists to “reverse the normal placement when a party challenges the existence of In personam jurisdiction through a Rule 12 motion to dismiss”). Here, regardless who has the burden of proof, Raina cannot succeed on his Rule 60(b)(4) motion to overturn the default judgment because the evidence preponderates in favor of the finding that the court has personal jurisdiction over him.

         C

         The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite. See Ham v. La Cienega Music, Co., 4 F.3d 413, 415 (5th Cir. 1993). The court first decides whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant.[5] If it does, the court next resolves whether the exercise of personal jurisdiction is consistent with due process under the United States Constitution. See Mink v. AAAA Dev., LLC, 190 F.3d 333, 335 (5th Cir. 1999).

         Because the Texas long-arm statute extends to the limits of due process, the court need only consider whether exercising jurisdiction over Raina would be consistent with the Due Process Clause of the Fourteenth Amendment. See id.; ...


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