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J2 Cloud Services Inc. v. Fax 87

United States District Court, D. Idaho

March 23, 2017

J2 CLOUD SERVICES, INC., and ADVANCED MESSAGING TECHNOLOGIES, INC., Plaintiffs,
v.
FAX 87, FARJAD FANI, MATT JOHNSON FINANCE, INC., ELNAZ FANI, ONE VOIX, MIRALUNA CABERTE YARDAN, STEVEN THONG WAY SEN, ROBERT BEAULIEU, CHARLES MONTGOMERY, ONLINEFAXES, SOLIDFAX, FAXVISION, EFAX4LESS, MYPHONEFAX, RESELLFAX, AND DOES 1-10, Defendants.

          MEMORANDUM DECISION AND ORDER

          Honorable Candy W. Dale United States Magistrate Judge.

         INTRODUCTION

         On March 17, 2017, Defendant MyPhoneFax (MPF) filed a motion for protective order pursuant to Fed. Rule Civ. P. 26 regarding the scheduling by Plaintiffs j2 Cloud Services, Inc., and Advanced Messaging Technologies, Inc., of a Rule 45 deposition of non-party witness Derek Layton. Plaintiffs served a notice of deposition on March 20, 2017, and the deposition is set for March 24, 2017, in Boise, Idaho.

         This matter was filed as a miscellaneous action here in the District of Idaho, and is related to ongoing litigation in the United States District Court for the Central District of California, 2:13-cv-05353-DDP-AJW, pending before Judge Pregerson.[1] MPF's protective order seeks to vacate the deposition, and requests that it be postponed until Judge Pregerson rules on a pending motion to vacate default judgment, which was entered against MPF in the California action. That motion is scheduled for oral argument on Monday, March 27, 2017.

         On March 22, 2017, Layton filed a motion to quash the third party subpoena and requested a stay. Like MPF, Layton requested the deposition be stayed until a ruling is issued on MPF's motion to vacate default judgment.

         Because the deposition is set for March 24, 2017, the Court conducted a telephonic hearing with the parties on March 22, 2017, at 4:00 p.m. After carefully considering the parties' respective arguments, the relevant authorities, and reviewing the docket and related filings in the underlying California litigation, the Court will deny both motions. The deposition may proceed as scheduled, for the reasons explained below.

         BACKGROUND

         Plaintiff j2 provides Internet fax services to customers in the United States and around the world.[2] On March 29, 2011, j2 sued defendants Farjad Fani, Fax87, and Matt Johnson Finance, Inc. (“MJF”), for infringing two patents related to Plaintiff's internet fax services. (Dkt. No. 1). Mr. Fani was the President, Vice President, Secretary and sole officer and director of MJF, which was doing business as Fax87 and selling internet fax services. (Dkt. No. 156-2, F. Fani Response to RFA Nos. 32-33, 35).

         The parties later settled the 2011 lawsuit. (Dkt. Nos. 43-15, 43-16). Defendants promised to make quarterly payments and provide royalty reports; accordingly, j2 dismissed the 2011 litigation and granted the defendants a license. (Dkt. No. 43-16, License Agreement).

         The present lawsuit arose when Defendants stopped making payments and providing royalty reports after the fourth quarter of 2012, and committed several other alleged breaches of the license agreement. In 2013, Mr. Fani informed j2 that he/Defendant MJF “sold Fax87.com on December 31, 2012, and have nothing to do with Fax87.com since then.” (Dkt. No. 168-2). He did not identify the purported buyer.

         j2 filed this second lawsuit on July 24, 2013, in the United States District Court for the Central District of California, (the California action), initially naming as defendants Fax87.com, Mr. Fani, MJF and Does 1 & 2. (Dkt. No. 1). With the court's permission, j2 filed the First Amended and Supplemental Complaint (“FAC”) on April 15, 2016, adding various claims and related parties, including Defendant MyPhoneFax (MPF), that were identified through j2's extensive investigation efforts. (Dkt. No. 43). j2 served all defendants with the FAC. (Dkt. Nos. 46, 48-50, 80). MPF was served at what Plaintiffs believed to be its principal place of business in the Philippines. (Dkt. No. 80).

         The court granted Plaintiffs j2 Cloud Services, Inc.'s and Advanced Messaging Technologies, Inc.'s motion for default judgment against MPF on December 15, 2016, and issued a judgment that same day. (Dkt. 196, 197.) On December 19, 2016, MPF (noted by MPF to have been sued incorrectly as MYPHONEFAX.COM) entered a special appearance for the limited purpose of challenging jurisdiction and the entry of default judgment against MPF. (Dkt. 198.) MPF claimed to be the entity that purchased Fax87's assets.

         On December 21, 2016, MPF filed an ex parte application to stay the case pending enforcement of a default judgment. (Dkt. 206.) On December 28, 2016, MPF filed a motion to vacate the default judgment. (Dkt. 212.) The motion to vacate is predicated upon lack of service of legal process on MPF. In support of both motions, MPF included a declaration from Mr. Joffe. (Dkt. Nos. 206-2, 212-1). Upon consideration of the motions, on December 29, 2016, the court granted MPF's motion for stay of execution on the default judgment. (Dkt. 215.) MPF's motion to vacate the default judgment is scheduled to be heard before District Judge Pregerson on Monday, March 27, 2017.

         In filings with the court, Mr. Joffe claims to be “the individual with signing authority for [MyPhoneFax] in [his] capacity as president of International Company Management Services Ltd., the manager of [MyPhoneFax].” (Dkt. No 206-2 ¶ 2). Mr. Joffe testified also that “MPF's principal place of business is located in Colombia.” (Dkt. No. 212-1 ¶ 2). He contends MPF does not have any facilities in the Philippines. (Id. ¶ 8). Among other things, his declarations and court filings provide information as to MPF's customer base, the alleged irreparable harm that the company would suffer from an injunction, as well as an explanation about how to port fax numbers. (See generally Dkt. ...


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