FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DENNIS DREITH, in his capacity as
Administrator, Film Musicians
Secondary Market Fund; THE FILM
MUSICIANS SECONDARY MARKETS
FUND,
Plaintiffs-Appellees,
v.
NU IMAGE, INC., a California
corporation; MILLENNIUM FILMS,
INC., a Delaware corporation; No. 10-55172
BREAKSTREET PRODUCTIONS, INC., a D.C. No.
California Corporation; DOG 2:05-cv-04146-
WATCH PRODUCTIONS, INC., a SVW-MAN
California Corporation, OPINION
Defendants-Appellants,
and
PHOENICIAN FILMS, INC., a
California corporation; KOW KNUT
PRODUCTIONS, INC., a California
corporation; SAD INCORPORATED, a
New York Corporation; LUNAR
COP PRODUCTIONS, an entity of
unknown incorporation; TSE TSE FLY
9833
9834 DREITH v. NU IMAGE, INC.
PRODUCTIONS, a California Limited
Liability Company; FLY
PRODUCTIONS, INC., a California
Corporation; BIG TRUCK
PRODUCTIONS, INC., a California
Corporation; CHASE THE MOON,
INC., a California Corporation;
SCARRED PRODUCTIONS, INC., a New
York corporation,
Defendants.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted
June 9, 2011—Pasadena, California
Filed July 19, 2011
Before: Robert R. Beezer, Stephen S. Trott, and
Pamela Ann Rymer, Circuit Judges.
Opinion by Judge Trott
DREITH v. NU IMAGE, INC. 9837
COUNSEL
Elizabeth Chilton and Patricia Glaser, Glaser, Weil, Fink,
Jacobs, Howard & Shapiro LLP, Los Angeles, California, for
the appellants.
Barbara Ravitz, Greines, Martin, Stein & Richland LLP, Los
Angeles, California, for the appellee.
OPINION
TROTT, Circuit Judge:
The Defendants below, Appellants here, engaged in discov-
ery misconduct that was sufficiently egregious to cause the
district court to enter an order of default against them.
Although they now contend for a variety of reasons that the
default order was erroneous, the Defendants did not challenge
the order of default by way of Federal Rule of Civil Procedure
55(c) or 60(b). Six months later, at the Plaintiffs’ request, the
district court entered default judgment against them with
respect only to liability, but deferred ruling on damages pend-
ing further briefing and evidentiary submissions. In their
9838 DREITH v. NU IMAGE, INC.
papers opposing this request, the Defendants chose not to
attack the default order, opting instead to argue that a default
judgment was not appropriate. They asserted that “the court
should exercise its discretion to deny Plaintiff’s application
for default judgment.”
In ruling against them, the district court revisited the pro-
priety of the order of default and concluded, in light of
Malone v. United States Postal Service, 833 F.2d 128, 130
(9th Cir. 1987), that the order was appropriate. The district
court also issued a precisely detailed disclosure order to the
Defendants requiring them to produce information the court
needed to calculate damages. When they appeared to fail to
comply with this disclosure order, the district court assigned
the matter to a magistrate judge to determine if in fact the dis-
closure order had gone unheeded.
The magistrate judge held that the Defendants indeed had
not complied. When the district court finally had all the infor-
mation it needed, it conducted a full, contested, and compre-
hensive hearing on damages and entered judgment on behalf
of the Plaintiffs in the amount of $1.1 million. During this
process, the district court commented that “Defendants are
trying to evade the requirements of the [Collective Bargaining
Agreement] which, of course, is consistent with Defendants’
general approach to this litigation.”
The Defendants timely appeal, challenging only the legal
validity of the district court’s original order of default, but not
the ensuing default judgment on liability itself or the denial of
their motion for summary judgment on that issue. Nor do they
challenge the district court’s careful and thorough decision
with respect to damages. We affirm.
I
According to the unchallenged declaration of James R.
Cope, the effective beneficiaries of this action are musicians
DREITH v. NU IMAGE, INC. 9839
who have banded together in an entity known as the Film
Musicians Secondary Markets Fund (“Musicians Fund” or
“Fund”). These musicians are contractually entitled to
deferred wages derived from revenues earned in the second-
ary market of the films they helped create. These monies,
known as residuals, come from the distribution of films after
the films have been initially released.
The Musicians Fund is the creation of master collective
bargaining agreements between the motion picture industry
and the American Federation of Musicians of the United
States and Canada. Distilled to its essence, this agreement
(“CBA”) requires motion picture companies to keep records
on subsequent releases of films and to report on and pass to
the Musicians Fund all monies owed to it, a sum which is cal-
culated according to a fixed formula in the CBA. The Musi-
cians Fund in turn distributes these residuals to the musicians
to whom they are owing.
The various producers and secondary market distributors of
these films are typically covered, as illustrated by this case, by
Assumption Agreements, which make the films subject to the
CBA. Signatories agree expressly for the benefit of the Musi-
cians Fund to make the payments required, and “that the
[Musicians Fund] shall be entitled to seek injunctive relief
and damages.” Moreover, a signatory “agrees to keep or have
access to complete books and records showing the income . . .
and the Administrator of the [Musicians Fund] shall have the
right at all reasonable times to examine and inspect such
books and records.”
The films in this case are subject to those rules regarding
inspection, as set forth in the relevant Assumption Agree-
ments and other documents. Needless to point out, this
arrangement puts the Musicians Fund and the musicians at the
mercy of the film companies’ (collectively, the “Companies”)
willing compliance with their obligations under the CBA,
obligations which the Companies appear to have ignored.
9840 DREITH v. NU IMAGE, INC.
II
The Musicians Fund started informally to attempt to
enforce its rights under the CBA in 1998, writing to the com-
panies seeking information and payment. Then, the problems
began, as evidenced by Nu Image’s lawyer’s irrelevant claims
that it was “not a signatory to the CBA,” a denial which
ignored the Assumption Agreements. Eventually, the Musi-
cians Fund attorney wrote to Nu Image in 2004 stating the
following:
I understand that subsequent to my letter of last
year to you, Nu Image, et al. and Mr. Cope have had
discussions concerning the films and that Nu Image,
et al. have expressed a wish to work with the Fund
to research and resolve the matter. I further under-
stand that there have been delays caused by the diffi-
culty in researching some of the matters and by a
personal tragedy. The Fund has, of course, accom-
modated these delays, but must now ask that the
matter be brought to an overdue conclusion.
By Monday, July 12, 2004, please therefore call or
write either Mr. Cope . . . or me, to resolve this mat-
ter promptly without the necessity of a lawsuit. Oth-
erwise, the Fund will file an action in the United
States District Court seeking full payment, interest,
liquidated damages and cost of enforcement (includ-
ing the Fund’s attorneys’ fees).
We previously forwarded a courtesy copy of a
form of draft Complaint. In light of Nu Image’s pre-
vious indication that it would resolve the matter, the
Fund has not yet filed a lawsuit. Based on recent
information, we will file an expanded action. We
hope to avoid litigation, but will pursue the matter
through judgment and collection if you do not take
this final opportunity. Please call with any comments
DREITH v. NU IMAGE, INC. 9841
or question, or if we may provide further informa-
tion.
(emphasis added). Nu Image did not respond. Counsel wrote
again on April 27, 2005, saying delay would no longer be
accommodated. No response. Accordingly, the Musicians
Fund was forced to resort to legal action and to file this law-
suit.
III
On June 8, 2005, Dennis Dreith sued several of the offend-
ing movie production companies in his capacity as adminis-
trator of the Musicians Fund. The suit alleged at its core that
the Companies had failed to pay owed residuals to musicians
who performed film soundtracks, in violation of the CBA.
The district court issued a case notice admonishing counsel,
inter alia, that non-compliance with the local rules and Fed-
eral Rules of Civil Procedure “MAY LEAD TO THE IMPO-
SITION OF SANCTIONS WHICH MAY INCLUDE THE
STRIKING OF PLEADINGS AND ENTRY OF JUDG-
MENT OR DISMISSAL OF THE ACTION.” This notice
ordered the parties — as contemplated by Federal Rule of
Civil Procedure 26(a)(1) — to schedule an initial meeting and
file a joint report thereon. The Companies immediately
responded to the order not with compliance, but with motions
to dismiss and for a more definite statement. The Companies
refused to meet or file the requisite joint report, arguing that
they were excused from so doing because they had filed
motions to dismiss and for a more definite statement. Thus,
the “proposed discovery plan” which they were required in
good faith to attempt to develop pursuant to Rule 26 could not
be accomplished, and no joint report could be filed.
Two of the Companies, “Dog Watch” and “Breakstreet,”
failed to appear, precipitating the entry of default against
them. Those defaults were vacated by joint stipulation subse-
quent to their appearance on October 7, 2005. The district
9842 DREITH v. NU IMAGE, INC.
court then denied the Companies’ motions to dismiss and for
a more definite statement. In January 2006, the parties, citing
settlement negotiations, agreed to continue the pretrial confer-
ence and trial date by three weeks. The Fund alleges that the
Companies agreed to furnish discovery by March 24, 2006.
On March 24, 2006, still having provided no formal discov-
ery, the Companies, disclaiming liability, moved for summary
judgment. The Fund opposed summary judgment based on its
allegation that the Companies had (1) failed to provide any
documents, (2) failed to provide any responses to written
interrogatories or requests for admission and production, and
(3) in two cases had failed to make any disclosures under Fed-
eral Rule of Civil Procedure 26. The Companies responded
that the motions could not be denied for any alleged failure
to provide discovery, and that numerous documents had been
produced informally during settlement negotiations.
On April 7, 2006, the Companies moved, ex parte, to post-
pone pretrial production, due on April 10, until after their
summary judgment motions were heard. The ex parte motion
was denied on April 10, 2006. In its order, the district court
directed the Defendants to “return to Plaintiff an electronic
copy of the Joint Stipulation re Discovery, with signature”
and shortened the time in which it would hear the Fund’s
forthcoming discovery motion. Also on April 10, the Fund
filed a motion in limine seeking exclusion of the Companies’
evidence based on lack of disclosure. The Companies
opposed the motion, arguing that the requested discovery had
been provided during settlement negotiations, and that pend-
ing discovery, not including initial disclosures, had been
stayed. They did not comply with the order regarding the
Joint Stipulation re Discovery.
On April 14, 2006, the Fund moved to compel discovery,
seeking depositions, responses to its interrogatories, requests
for admission, and production. The parties filed a joint status
stipulation outlining the basis of the Companies’ dispute with
DREITH v. NU IMAGE, INC. 9843
the Fund’s motion to compel, as required by the local rules.
The Companies stated that if their summary judgment
motions were denied they would provide supplemental
responses by April 21, 2006. The Companies alleged, how-
ever, that they were unable to comply with the court’s pretrial
production deadline of April 10, the extension of which was
unsuccessfully sought in the ex parte motion of April 7,
because “Defendants’ counsel was preoccupied with drafting
the lengthy summary judgment papers, filing pre-trial disclo-
sures, filing a motion in limine, noticing Plaintiff’s expert
depositions, and providing Defendants’ portion for this Joint
Stipulation.”
The district court denied the Companies’ motions for sum-
mary judgment at a hearing on April 17, 2006. The next day,
April 18, the district court adopted the Fund’s proposed order
denying the Companies’ summary judgment motions and
ordering the Companies to provide initial disclosures, respond
to written discovery, and schedule depositions. The order
stated:
None of the defendants produced any documents as
part of the initial disclosures. [Two of the Compa-
nies] provided no initial disclosure in any form.
None of the defendants have provided any answers,
as opposed to objections, to written discovery.
Defendants are ORDERED within five (5) days of
the date of this Order [April 23, 2006] to provide
documents in connection with the initial disclosure,
and provide responsive answers to the written dis-
covery.
(emphasis added).
The Companies did not comply with this order either. The
Fund had received no additional discovery from the Compa-
nies when it filed its requisite final pretrial order on April 24,
2006. The pretrial order was to be filed jointly, but the Com-
9844 DREITH v. NU IMAGE, INC.
panies, after exchanging drafts with the Fund, decided to file
an independent pretrial order on April 25.
The Fund received supplemental discovery from the Com-
panies on April 25, 2006. The Fund alleged that the Compa-
nies partially answered only four of the twenty-four
propounded interrogatories, objecting entirely to the rest. The
Fund further alleged that the four responses were undecipher-
able, as it was unclear to which specific Company a given
response applied.
The May 1, 2006, pretrial conference was short. Scheduled
to be heard were both parties’ motions in limine and the
Fund’s motion to compel. The district court asked the Compa-
nies’ counsel why the Companies had not produced discovery
related to the summary judgment motions. Counsel replied
that the documents previously could not be located, but had
subsequently been found in storage. The district court charac-
terized the objections to twenty of the twenty-four interroga-
tories as “silly . . . absolutely silly objections.” The district
court continued: “I told you guys not to do what you are
doing. I told you to start trying this case and not play games,
and you didn’t do it.” The district court then entered default
against the Companies. The district court’s May 1, 2006 min-
ute order stated:
The Court finds that defendants have deliberately
and willfully carried out discovery abuse and
attempted to stall and block the progress of this
action, and deliberately and willfully disobeyed the
orders of this Court in so doing. The Court sanctions
defendants and ORDERS the answers of the defen-
dants hereby STRICKEN and the DEFAULT of
each of the previously answering defendants is now
ENTERED . . .
Plaintiff’s motion for order compelling responses to
interrogatories, admissions and requests for produc-
DREITH v. NU IMAGE, INC. 9845
tion is GRANTED. The defendants are ORDERED
to produce all the documents requested of them by
the plaintiffs forthwith.
The motions in limine and pretrial conference were stricken.
The Companies were directed, in connection with damages, to
produce “all records and books within their custody . . . show-
ing or evidencing receipt of money or other consideration by
defendants from or in connection with the movies within five
(5) days of this Order.” The Companies’ default was entered
on May 5, 2006.
On May 26, 2006, the Fund moved for an order, effectively
a motion to compel, regarding the Companies’ failure to pro-
duce necessary documents identified in the orders of May 1
and 3, and to compel disclosure in compliance therewith. In
response to this motion, and well after the court’s deadline,
the Companies produced some documents and stated that they
did not have any additional documents sought by the Fund.
The district court granted the Fund’s motion to compel on
June 19, 2006, stating “I’ve had enough now. The next time
you come to this court somebody is going to jail. Now get
those documents. Get them before June 23rd.”
Notwithstanding their earlier protestations on May 26,
2006, that they did not have any additional documents, the
Companies discovered 1,500 pages of discovery on June 23,
2006. On June 29, 2006, the district court entered a written
order captioned “Order re: Defaulted Defendants’ Continuing
Breaches of the Court’s Orders,” stating that the Companies
“have deliberately and willfully disobeyed the Court’s Orders
of May 1, 2006, and May 3, 2006.” The district court ordered
the Companies to produce “forthwith” the specified discov-
ery, indicating that it would assist the court in, among other
things, a “calculation of the amount of residuals owed to the
Fund . . .”
The Companies substituted counsel on July 24, 2006, caus-
ing Judge Real to recuse himself due to a relationship with
9846 DREITH v. NU IMAGE, INC.
one of the Companies’ new attorneys. The case was reas-
signed to Judge Stephen Wilson.
The Fund moved for default judgment on October 23,
2006. Adhering to the rule that default does not entitle the
non-defaulting party to a default judgment as a matter of
right, Judge Wilson considered the issues and the Companies’
arguments and granted the Fund’s motion as to liability in an
order dated March 1, 2007. As previously indicated, his order
revisited Judge Real’s entry of default and concluded that it
was well-taken. Judge Wilson methodically went through the
five Malone factors (more on this later) and determined that
the Companies’ egregious behavior deserved default. How-
ever, because he was “unsatisfied” with the parties’ compet-
ing declarations on damages, Judge Wilson ordered the
Companies, no later than March 19, 2007, to produce “all of
the information upon which their underlying calculations are
based” for the purposes of assessing damages. The district
court also scheduled a status conference for March 26, 2007
for the main purpose of ensuring that the Companies’ disclo-
sure of information was complete.
At the status conference on March 26, 2007, no one
appeared for the Companies because of a calendaring error by
the Companies’ trial counsel.
Due to the Companies’ apparent recalcitrance to provide
the requested discovery, Judge Wilson referred the matter to
Magistrate Judge Nagle, asking her to examine the Compa-
nies’ compliance with the March 1 order. On June 4, 2007
Judge Nagle granted the Fund’s motion to compel, (1) finding
that the Companies failed to comply with Judge Wilson’s
March 1 order, and (2) ordering production of the missing
material.
The district court held a formal damages hearing on March
3, 2008. The Fund’s disputed motion for damages was
granted on December 3, 2009, in a thorough, twenty-seven
DREITH v. NU IMAGE, INC. 9847
page order. The amount of damages was $1.1 million. Final
judgment was entered on January 8, 2010.
On appeal, the Companies raise only two issues: (1)
whether Judge Real lacked the power to impose default as a
sanction for discovery misconduct, and (2) assuming such
power, whether Judge Real abused his discretion by imposing
default rather than lesser sanctions. At oral argument, they
disclaimed any interest in other matters, telling us that “the
issue here is Judge Real’s entry of default.”
IV
In reviewing a district court’s imposition of a sanction, we
first engage in de novo review of whether the judge had the
power to impose the sanction. S.M. v. J.K., 262 F.3d 914, 917
(9th Cir. 2001), as amended by 315 F.3d 1058 (9th Cir. 2003).
“We review for an abuse of discretion the district court’s deci-
sion to enter a default judgment. That standard of review nec-
essarily encompasses the entry of default, because entry of
default alone does not constitute an appealable final order.”
Speiser, Krause & Madole P.C. v. Ortiz, 271 F.3d 884, 886
(9th Cir. 2001) (internal quotations and citations omitted).
V
A
[1] The district court possessed the power to impose
default as a sanction for the Companies’ discovery miscon-
duct. Under Federal Rule of Civil Procedure 37(b), a district
court may impose sanctions, including default, for failing to
comply with a court order. Rule 37(b) reads in relevant part
as follows:
If a party . . . fails to obey an order to provide or per-
mit discovery, including an order under Rule 26(f),
35, or 37(a), the court where the action is pending
9848 DREITH v. NU IMAGE, INC.
may issue further just orders. They may include . . .
dismissing the action or proceeding in whole or in
part; [and] rendering a default judgment against the
disobedient party.
Fed. R. Civ. P. 37(b)(2)(A)(v)-(vi).
[2] The Companies put forth two arguments regarding the
district court’s alleged lack of power to impose the sanction
of default: (1) the default did not result from any noticed
motion by the Fund, and (2) the court’s discovery order of
April 18 was invalid, and thus could not serve as a basis for
sanctions, because it was issued prior to a noticed motion to
compel.
[3] The Companies’ first argument fails. Though Judge
Real was decisive in the manner in which he imposed sanc-
tions, the plain language of Rule 37(b) contains no require-
ment mandating a noticed motion or opportunity to be heard
before sanctions — including default — may be imposed. “If
a party . . . fails to obey an order . . . the court may issue fur-
ther just orders.” Fed. R. Civ. P. 37(b)(2)(A) (emphasis
added).
[4] The Companies’ second argument is equally unavail-
ing. The Companies go to great lengths to argue that the April
18 order was invalid and thus could not serve as a basis for
Rule 37(b) sanctions because it was issued before the Fund’s
motion to compel was heard. Rule 37(b) sanctions, however,
may be issued if a party “fails to obey an order to provide or
permit discovery, including an order under Rule 26(f), 35, or
37(a).” “The definition of ‘order’ in Rule 37(b) has been read
broadly.” Unigard Sec. Ins. Co. v. Lakewood Eng’g & Mfg.
Corp., 982 F.2d 363, 368 (9th Cir. 1992). Sanctions may be
imposed even for violation of a court’s oral order, as long as
a party has “unequivocal notice that a court has asked that
certain documents be produced.” Id. (citing Henry v. Sneiders,
490 F.2d 315, 318 (9th Cir. 1974)). Though the April 18 order
DREITH v. NU IMAGE, INC. 9849
was not noticed, opposed, and heard in a formal manner, it
still constituted “an order to provide or permit discovery”
with which compliance was mandatory, in the same way an
oral order of a district court, though perhaps imposed quickly
at the conclusion of a hearing, is nonetheless binding on the
parties. As Rule 37(b) states, an order stemming from a
noticed motion to compel is but one example of an order
which may, upon violation thereof, result in sanctions.
[5] Furthermore, “Rule 16 of the Federal Rules of Civil
Procedure authorizes a district court to enter a scheduling
order that limits joinder of parties and amendment of the
pleadings. Fed. R. Civ. P. 16(b)(1). Violations of a scheduling
order may result in sanctions, including dismissal under Rule
37(b)(2)(C).” Atchison, Topeka and Santa Fe Ry. Co. v. Her-
cules Inc., 146 F.3d 1071, 1073 (9th Cir. 1998) (citing Fed.
R. Civ. P. 16(f)). See also In re Phenylpropanolamine (PPA)
Products Liab. Litig., 460 F.3d 1217, 1227 (9th Cir. 2006)
(“The goal [of Rule 16] is to get cases decided on the merits.
. . . Subsection (f) puts teeth into these objectives by permit-
ting the judge to make such orders as are just for a party’s
failure to obey a scheduling or pretrial order, including dis-
missal.”).
[6] Judge Real stated that the imposed sanction was precip-
itated not only by the Companies’ violation of the April 18
order, but also by their failure to adhere to scheduled dates for
initial disclosures: “defendants Breakstreet and Dogwatch did
not provide any initial disclosures whatsoever until plaintiff
filed its motion in limine.” The Companies also declined to
meet and confer or prepare a joint stipulation, as the pretrial
order required them to do. The pretrial order in this case
undisputedly warned that failure to comply could result in
sanctions including dismissal and entry of judgment. These
failures to comply with orders of the court provided Judge
Real with the power under Rule 37(b) to impose sanctions sua
sponte, up to and including default.
9850 DREITH v. NU IMAGE, INC.
Moreover, a district court has the inherent power to revisit
its non-final orders, and that power is not lost when the case
is assigned mid-stream to a second judge. Orders such as the
default in this case are “subject to reconsideration and revi-
sion either by the same judge, a successor judge or a different
judge to whom the case might be assigned.” United States v.
Desert Gold Mining Co., 433 F.2d 713, 715 (9th Cir. 1970).
As the Companies state in their opening brief, almost half of
Judge Wilson’s twenty-five page opinion “was spent revisit-
ing Judge Real’s entry of the Companies’ default.” Judge Wil-
son stepped into Judge Real’s shoes, and what he then did was
manifestly appropriate in revisiting previous orders of the
court. Effectively, Judge Wilson considered the matter as
though he had been presented with a motion pursuant to Rule
55(c) to set aside the default.
B
[7] Nor did Judge Wilson abuse his discretion by imposing
the sanction of default. Although dismissal is a harsh penalty
imposed only in extreme circumstances, Ferdik v. Bonzelet,
963 F.2d 1258, 1260 (9th Cir. 1992), we will overturn a dis-
missal sanction only if we have a “definite and firm convic-
tion that it was clearly outside the acceptable range of
sanctions,” Malone, 833 F.2d at 130.
We have identified five factors that a district court
must consider before dismissing a case or declaring
a default: “(1) the public’s interest in expeditious
resolution of litigation; (2) the court’s need to man-
age its docket; (3) the risk of prejudice to the other
party; (4) the public policy favoring the disposition
of cases on their merits; and (5) the availability of
less drastic sanctions.”
Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir.
1990) (quoting Malone, 833 F.2d at 130). If the district court
fails to make explicit findings regarding each of these factors,
DREITH v. NU IMAGE, INC. 9851
we must review the record independently to determine
whether the dismissal was an abuse of discretion. Malone,
833 F.2d at 130. “We may affirm a dismissal where at least
four factors support dismissal, or where at least three factors
strongly support dismissal.” Yourish v. Cal. Amplifier, 191
F.3d 983, 990 (9th Cir. 1999) (internal quotation and ellipsis
omitted). In addition, in order to warrant a sanction of dis-
missal, the party’s violations of the court’s orders must be due
to wilfulness or bad faith. Wyle v. R.J. Reynolds Indus., Inc.,
709 F.2d 585, 589 (9th Cir. 1983).
Though the entry of default was an undeniably harsh sanc-
tion, the record before us does not leave us with the “definite
and firm conviction that it was clearly outside the acceptable
range of sanctions.” Malone, 833 F.2d at 130.
Judge Real did not make explicit his findings regarding the
Malone dismissal factors before imposing default, but Judge
Wilson did so within his authority after he assumed control of
the district court litigation.
[8] Regarding the first three factors, Judge Wilson found
that they “weightily” favored default. The Companies delayed
resolution of the case, interfered with the court’s management
of its docket in one of the busiest districts in the country, and
the actions of the Companies “made it impossible for Plaintiff
to adequately prepare itself for trial.”
The fourth factor, resolution of cases on their merits,
always weighs against dismissal. Adriana, 913 F.2d at 1412.
[9] The fifth factor, imposition of lesser sanctions, is diffi-
cult, but Judge Wilson found that it weighed in favor of dis-
missal. As Judge Wilson observed, the court’s April 18 order
represented a first, lesser sanction than default; the Compa-
nies were ordered to produce documents and answer interrog-
atories. Furthermore, Judge Wilson found the actions of the
Companies to be “egregious.” Under “egregious circum-
9852 DREITH v. NU IMAGE, INC.
stances . . . it is unnecessary (although still helpful) for a dis-
trict court to discuss why alternatives to dismissal are
infeasible.” Malone, 833 F.2d 132. We agree with his analy-
sis.
VI
[10] The Companies describe the imposition of default
alone as a “doomsday” sanction. We are left to wonder why
such sophisticated litigants, represented by counsel, failed to
avail themselves of the avenues for relief from default
afforded them by Federal Rule of Civil Procedure 55(c) and
60(b),1 particularly when a new judge was assigned to the
matter. Notwithstanding this arguable appellate jurisdictional
defect, we conclude both that the district court possessed the
power to impose the sanction of default and that the district
court did not abuse its discretion by so doing.
VII
[11] Now, we come to the bottom line. At the end of the
day the Companies conceded in the District Court, in connec-
tion with a fully litigated hearing on damages, that they owed
at least $94,917.23 in unpaid “residuals owing for the ten sub-
ject films,” plus $1,000 for “mathematical/clerical errors.”
Moreover, they proposed a “residuals calculation of
$131,835” based upon “amounts recently collected.” This
concession followed the Companies’ considered decision not
to challenge the adverse order of default.
1
Consorzio del Prosciutto di Parma v. Domain Name Clearing Co.,
LLC, 346 F.3d 1193, 1195 (9th Cir. 2003), mandates dismissal of an
appeal where a party has failed to avail itself of either Rule 55(c) or 60(b)
in the district court. Though neither motion was made in this case, we con-
sider the merits of this action, as both public policy and the policy of this
court dictate. “A default judgment entered pursuant to Rule 37 is an
appealable final order.” Britton v. Co-op Banking Group, 916 F.2d 1405,
1410 (9th Cir. 1990) (citing United States v. Proctor & Gamble, 356 U.S.
677, 679-80 (1958) and 8 Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 2006 (1970)).
DREITH v. NU IMAGE, INC. 9853
[12] These concessions of liability notwithstanding, the
Companies in their opening brief ask us to reverse and
remand this case “so that it can be decided on its merits.” To
this request, our answer is that it was fully decided on its mer-
its by Judge Wilson after a complete hearing and a thorough
airing of every one of the parties’ disagreements. The district
court’s twenty-seven page order granting Plaintiffs’ applica-
tion for default judgment as to damages dated December 3,
2008, which was based on a full evidentiary record and brief-
ing plus input from both sides, addressed all the issues before
it; and it did so in the context of the Companies’ binding con-
cession of liability on the subject films, albeit while disputing
the amount. By that time, as counsel admitted during oral
argument, all the discovery material was finally in the record.
The district court meticulously adjudicated on the merits
every contested damages issue: residuals, liquidated damages,
pre-judgment and post-judgment interest, the Musicians
Fund’s accounting expenses, and attorneys’ fees. With respect
to the amount of residuals, the district court addressed all sub-
issues, i.e., supplemental market revenues, video cassette rev-
enues, mixed licenses, and non-refunded deposits. We repeat,
the result at this hearing and the merits adjudication of all
damages disputes in the contest of the Companies’ admissions
of liability on all ten films convinces us that the Companies’
basic prayer in their brief for a decision on the merits has been
answered, and nothing remains to be done. We are hard
pressed to understand how the Companies on remand could
successfully disclaim liability without repudiating their con-
cessions of liability during the damages trial. They admit that
if we were to remand this case, it would return to Judge Wil-
son. Were we for some reason to do so, all we can foresee for
the Companies is an increase in the Fund’s damages caused
by more attorneys’ fees to which they would be entitled.
In addition, by choosing in the district court not to avail
themselves of Rules 55(c) and 60(b), and electing in their
papers filed with Judge Wilson not to “re-argue the propriety
9854 DREITH v. NU IMAGE, INC.
of the default itself,” the Companies can be charged with
intentionally and tactically relinquishing known rights —
which is normally called “waiver” — with respect to the order
of default. Rarely do we entertain issues not raised or pre-
sented in the district court, and we see no reason to do so
here. The Companies have rolled the dice in an attempt to
freeze Judge Real’s order of default in time, but their gamble
has failed. Had Judge Wilson accepted their submissions and
arguments on damages, we seriously doubt they would be
here on appeal arguing about default.
VIII
Even were we to conclude that Judge Real’s actions were
improper, which we do not, Judge Wilson’s judicious han-
dling of the case gave the Companies everything to which
they were entitled, including their day in court on the issues
that mattered, i.e., the kind and amount of damages and attor-
neys’ fees for which they are liable. We note again that the
Companies’ opening brief does not challenge the district
court’s decisions regarding the calculation of damages, attor-
neys’ fees, interest, the amount of money awarded in the judg-
ment, or any other part of it. Nor do the Companies argue on
appeal that they are not liable for the damages.
Federal Rule of Civil Procedure 61 wisely says that we
must “disregard all errors and defects that do not affect any
party’s substantial rights.” We have scoured and scrubbed
every page of the record with particular emphasis on Judge
Wilson’s two orders, the first which granted default judgment
on liability and the second awarding damages. We conclude
when all is said and done that none of the actions of Judge
Real of which the Companies complain had any adverse
effect on those rights. See United States v. 191.07 Acres of
Land, 482 F.3d 1132, 1137 (9th Cir. 2007) (harmless error
where erroneous valuation methodology applied by district
court resulted in higher compensation than that which was
sought); Obrey v. Johnson, 400 F.3d 691, 699 (9th Cir. 2005)
DREITH v. NU IMAGE, INC. 9855
(“[I]n order to reverse, we must find that the error affected the
substantial rights of the appellant.”).
CONCLUSION
The Federal Rules of Civil Procedure exist to move a case
forward to disposition, and to do so promptly and expedi-
tiously. As Judge Wilson correctly noted, discovery too often
has become a desultory game of hide and seek. The Compa-
nies ignored their clear responsibilities under the CBA, and
now they must pay the piper. “At some point, litigation must
come to an end. That point has now been reached.” Facebook,
Inc. v. Pac. Nw. Software, Inc., 640 F.3d 1034, 1042 (9th Cir.
2011).
AFFIRMED.