Usens, Inc. v. Chongqing Junma New Energy Automobile Co., Ltd.

Background

Usens sued Chongqing Junma New Energy Automobile Co. Ltd., Chongqing ZhongGan WeiShi Electronics Technology Co. Ltd., Chongqing Bruder Science & Technology Co. Ltd., Xiaofei Wu, and Anyu Cheng for allegedly misappropriating Usens’s trade secrets. These defendants did not appear in the case. Usens had also sued Chi Shi and six other engineers. Usens voluntarily dismissed the claims against the six engineers without prejudice, and later settled and dismissed its claims against Shi, leaving the five nonappearing defendants.

The court had asked Usens to file a motion for default judgment against those remaining defendants. Usens’s motion sought ¥36,000,000 in compensatory damages, ¥1,456,767 in prejudgment interest plus ¥6,904 per day from July 31, 2021, until judgment, and ¥72,000,000 in exemplary damages. Usens supported the damages request with a declaration from Yue Fei, its chief executive officer.

Legal standard

After a defendant fails to plead or otherwise defend, Federal Rule of Civil Procedure 55 permits a court to enter default judgment. The decision is discretionary. Before entering judgment, the court must determine that it has jurisdiction over the case and the defendant and that the defendant was properly served. The court must also consider the factors identified by the Ninth Circuit in Eitel v. McCool.

Although default generally means that the complaint’s factual allegations are treated as true, damages are not automatically established. A plaintiff seeking money must provide admissible evidence supporting its damages calculations. A default judgment also cannot award a different type or greater amount of relief than the pleadings requested.

Analysis

The court found that Fei’s declaration did not sufficiently prove the damages requested in Usens’s motion. Usens did not provide exhibits supporting, for example, the sale price or profit margin of the hand-gesture control system. It also did not provide evidentiary support for the assertion that the defaulting defendants sold the trade secrets to another Chinese company for ¥11,000,000.

The court stated that it could not enter a default judgment—particularly one seeking almost $17 million—without sufficient admissible evidence proving the requested amounts. The court did not enter judgment for Usens on the damages request.

Order

Judge Beth Labson Freeman denied Usens’s motion for default judgment without prejudice. The court stated that Usens could file a renewed motion with additional evidence supporting the actual damages claimed in Fei’s declaration and ordered that any renewed motion be filed by September 24, 2021.