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Shell v. Swallow

United States District Court, D. Colorado

January 15, 2016

SUZANNE SHELL, Plaintiff,
v.
BRENDA SWALLOW, Defendant.

OPINION AND ORDER DENYING DEFAULT JUDGMENT

Marcia S. Krieger Chief United States District Judge

THIS MATTER comes before the Court pursuant to a hearing under Fed.R.Civ.P. 55(b) to determine whether the Plaintiff, Ms. Shell, is entitled to a default judgment against the Defendant, Ms. Swallow.

FACTS

The Court recites primarily procedural facts here and addresses the substantive facts in its discussion. Ms. Shell, proceeding pro se, commenced this action against a broad array of Defendants, all of whom were, at one point or another, members of an online community that shared resources and information relating to “family advocacy.” That term loosely refers to issues confronting parents and caregivers who are investigated or charged by state and municipal child protective services agencies. The online family advocacy community in question in this case acrimoniously dissolved in or about 2005, when members began to publicly accuse each other of incompetence, dishonesty, malfeasance, and even outright criminal behavior. Ms. Shell was initially an active and prominent participant in this online community before it unraveled. She prepared material, presented live seminars, and frequently commented online with advice and strategies for other community members. Although Ms. Shell left the online community before it unraveled, her stature and her ongoing associations with others who remained in it made her a continued target of accusations and criticism.

Ms. Shell’s claims against most of the Defendants are for unauthorized reproduction or posting of her copyrighted material on internet message boards. In addition, she asserted claims against certain Defendants who made false assertions made about her and her work. Eventually, all of Ms. Shell’s claims resolved except those against Ms. Swallow.

Ms. Swallow was also a participant in the online community. Ms. Shell alleges that in 2005, Ms. Swallow attended a seminar at which Ms. Shell was a presenter. Ms. Shell alleges that in violation of her copyright and the terms of a contract governing seminar attendees, Ms. Swallow gave the seminar materials to a third party who then posted them online. Ms. Shell’s claims against Ms. Swallow are: (i) copyright infringement, in violation of the Copyright Act, 17 U.S.C. § 101 et seq.; (ii) misappropriation of trade secrets in violation of the Colorado Uniform Trade Secrets Act (“CUTSA”), C.R.S. § 7-74-101 et seq.; and (iii) common-law breach of contract.

The Court scheduled a jury trial on these claims for September 30, 2013, but Ms. Swallow did not appear. Accordingly, the Court entered default against Ms. Swallow under Rule 55(a). The Court proceeded to conduct a hearing as to whether Ms. Shell was entitled to a default judgment against Ms. Swallow under Rule 55(b). Ms. Shell put on testimonial evidence from three witnesses, Karen (Kay) Henson, Christine Korn, and Gregory Hession. She also offered her own testimony, submitted various documents, and argued in favor of entry of a default judgment against Ms. Swallow. On October 1, 2013, the Court made oral findings of fact and conclusions of law, finding that Ms. Swallow had failed to show that Ms. Swallow had, in fact, disseminated the seminar materials. Thus, the Court entered judgment in favor of Ms. Swallow.

Ms. Shell appealed that ruling (and others) to the Tenth Circuit Court of Appeals. On August 7, 2015, the Court of Appeals vacated this Court’s judgment and findings, concluding that the Court had failed to give Ms. Shell adequate notice that it was requiring her to put on evidence sufficient to establish each of her claims. Shell v. Henderson, ___Fed.Appx. ____, 2015 WL 4665701 (10th Cir., Aug. 7, 2015). The Court of Appeals remanded the matter to this Court to either: (i) grant Ms. Shell a default judgment against Ms. Swallow, limiting its Rule 55(b) hearing to the question of damages; or (ii) upon proper notice to Ms. Shell, conduct a Rule 55(b) hearing that required Ms. Shell to establish both her entitlement to relief against Ms. Swallow and the appropriate quantification of damages. Id. In a November 6, 2015 Order (# 1267), this Court took the latter path, setting a continued Rule 55(b) hearing for December 30, 2015 and advising Ms. Shell that the purpose of the hearing was to both “determine the sufficiency of Ms. Shell’s substantive claims against Ms. Swallow and to determine the appropriate amount of damages to award to Ms. Shell on any claims found to be sufficient.”

Subsequently, the Court advised (# 1271) Ms. Shell that it would consider all of the evidence she had previously presented at the September 30, 2013 hearing and that, at the December 2015 hearing, Ms. Shell needed only to present whatever additional witnesses and exhibits she thought necessary. Prior to the hearing, Ms. Shell requested a jury trial as to any damages awardable for copyright violation. At the December 30, 2015 hearing, the Court bifurcated the question of liability from damages in order to preserve any jury trial right Ms. Shell had on the question of damages. The Court advised Ms. Shell that in the event she was entitled to judgment against Ms. Swallow on the copyright claim, a jury trial would be scheduled for consideration of statutory damages.

At the hearing, Ms. Shell initially stated that she had no new evidence to present, but then offered her own testimony and tendered additional exhibits, marked as Exhibits 1001 to 1323.[1]She made a closing argument and the Court engaged her in further colloquy, particularly with regard to whether any losses she sustained were due to Ms. Swallow’s actions or due to the demise of the online group.

The Court has considered all of the evidence presented at the two hearings and Ms. Shell’s arguments and is now prepared to rule.

ANALYSIS

A. Standard of review

Rule 55(b)(2) provides that, once default has been entered against a defendant, the plaintiff “must apply to the court for a default judgment.” The Court may conduct such hearings as are necessary to determine whether to enter such a judgment, including hearings to “establish the truth of any allegation by evidence” or to “investigate any other matter.” Id. at(b)(2)(C), (D). Given the conclusory nature of Ms. Shell’s pro se pleadings and the absence of meaningful factual development of the claims against Ms. Swallow through dispositive motions, the Court found it appropriate to look beyond the Amended Complaint and require Ms. Shell to adduce evidence that would establish her claims against Ms. Swallow.

Ms. Swallow is deemed to have conceded any “well-pled” facts asserted by Ms. Shell, but does not admit conclusory assertions or contentions of law. Shell, 2015 WL 4665701; see also Wright & Miller, et al., Federal Practice and Procedure, Civil § 2688 (“Even after default, however, it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action”). Where the Court requires evidentiary proof under Rule 55(b)(2)(C), this would suggest that the Court applies a standard is akin to that employed by the Court for purposes of evaluating summary judgment motions: Ms. Shell must come forward with colorable and admissible evidence sufficient to establish each element of her claim(s), but the Court construes such evidence in the light most favorable to Ms. Shell and draws reasonable inferences in her favor.

The Court is also cognizant of Ms. Shell’s pro se status and thus liberally construes her pleadings. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, such status does not relieve her of her substantive obligations of proving each claim with competent evidence. See McNeil v. U.S., 508 U.S. 106, 113 (1993); Ogden v. San Juan County, 32 F.3d 452, 455 (10th Cir. 1994).

B. Findings of fact

Based on the evidence produced at the two hearings, the Court makes the following findings of fact.[2]

Ms. Shell has spent many years in the field of “family advocacy” - that is, advising and assisting parents, guardians, and children who are the subject of investigations or allegations by governmental child protective services agencies. Ms. Shell conducted research into various aspects of family advocacy, authored books and materials to be used by families, attorneys, mental health professionals and others involved in such proceedings, gave presentations and seminars on the subject, and appeared as an expert witness in legal and administrative proceedings in this field. Ms. Shell testified about recognition she received for the quality of her work, and Gregory Hession, an attorney practicing in the field of family law, also praised Ms. Shell’s thoroughness and effectiveness. Ms. Shell derived significant income from appearance fees, publishing, and other activities in conjunction with this work.

In 2003, Ms. Shell began organizing and presenting seminars on family advocacy topics in various states. In preparation for these seminars, she prepared a lengthy set of materials that included historical information, summaries of regulatory provisions and caselaw, and strategic considerations and advice. As pertinent here, Ms. Shell made presentations in Florida in 2004. Karen (Kay) Henson, a legal assistant at a law firm focusing on divorce and family law matters, was the organizer of the conferences and Ms. Shell was the presenter. At some conferences, Ms. Henson was assisted by Ms. Swallow, who was sometimes identified as a person for prospective attendees to contact for more information.

Attendance at the seminars was conditioned on attendees signing a contractual agreement with Ms. Shell. The contract appears to have two parts. First, attendees signed a one-page agreement (Exhibit 1001) containing nine enumerated provisions. Among other things, the provisions recited that “the content of this seminar is copyrighted” and that Ms. Shell was the owner of such copyright; that attendees would not “create, own, copy or distribute any written handout” from the seminar “except upon pre-paying a license fee” of $ 300, 000 to Ms. Shell; that attendees would not “disseminate any of the information presented in this seminar to” employees of any federal, state, or municipal agency; and that attendees who did not agree with the terms of the contract would be required to leave the seminar. The contract also incorporated by reference a one-page document entitled “Copyright Notice/Security Agreement” (Exhibit 1009, p. 2). This document, thick with impenetrable legalese, appears to primarily require that attendees agree not to use the seminar handouts for “commercial/financial gain” without first obtaining Ms. Shell’s consent.[3] (The notice appears to expressly permit “personal, non-commercial use” of the information, however.) The notice defined the term “commercial/financial gain” to include using the seminar materials “to forward and/or enhance the [attendee’s] claims in . . . any public or private venue in any manner which is inconsistent with promoting and protecting the fundamental human right to family association”; to use the materials “in an effort to violate anyone’s procedural, constitutionally or statutorily protected rights”; to use the materials to “obtain any personal, commercial, financial, professional, or other non-tangible benefit for the [attendee]”; or to use the materials to “inflict harm” upon Ms. Shell.

The claims against Ms. Swallow arise from a seminar in Fort Lauderdale, Florida in March 2005. Ms. Swallow attended that seminar. Ms. Shell concedes that she cannot produce a contract signed by Ms. Swallow from this seminar but she offers two explanations.

First, she contends that Ms. Swallow formally signed the contract, then later “stole” her own signed contract back. In support of this contention, Ms. Shell relies upon Ms. Henson’s testimony that Ms. Henson manned the table that attendees had to pass in order to enter the seminar room, that Ms. Henson required everyone to sign the contract, and that no one refused to sign the contract. (Ms. Henson did not testify to a specific recollection of Ms. Swallow signing, however.) Ms. Henson testified that she then took all of the signed contracts, placed them in a manila envelope, and left them in a box beneath the projector in the seminar room. Ms. Shell speculates that Ms. Swallow was somehow able to access that envelope and removed her own signed contract, although no witness testified about having observed Ms. Swallow doing so. (Ms. Shell concludes that this is what occurred, because several years later, Ms. Swallow taunted Ms. Shell in an internet message board post, stating that “Mrs. [Shell] will tell you she has NO SIGNED CONTRACT FROM ME LOL Cause I’m sitting here looking at it.”)

Ms. Shell’s second explanation for the absence of a contract signed by Ms. Swallow is that Ms. Swallow read the contract and manifested her acceptance of the terms by attending the entirety of the seminar. Both Ms. Shell and Ms. Henson testified that they observed Ms. Shell reading a copy of the contract posted on the wall of the hallway outside the seminar room, and that thereafter, Ms. Swallow proceeded to attend the entirety of the seminar.

In or about July or August 2005, when the disintegration of the family advocacy community was underway, Ms. Swallow had a falling out with Ms. Henson and/or Ms. Shell. Ms. Henson requested that Ms. Swallow return the seminar ...


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