Opinion
CV 14-05828 RSWL (AJWx)
02-09-2016
WRITERS GUILD OF AMERICA, WEST, INC.; MARK DISTEFANO; and GUINEVERE TURNER, Plaintiffs, v. BTG PRODUCTIONS, LLC, Defendant.
ORDER re: JUDGMENT CREDITORS' MOTION TO ADD MYRIAD PICTURES AND KIRK D'AMICO AS JUDGMENT DEBTORS [24]
Currently before the Court is Plaintiffs' Motion to Add Myriad Pictures and Kirk D'Amico as Judgment Debtors [24], filed October 21, 2015. This Action stems from a dispute over an arbitration award between Plaintiff Writers Guild of America West, Inc. ("Guild") and Defendant BTG Productions, LLC ("Defendant"). Currently before the Court is Plaintiffs the Guild, Mark DiStefano ("Stefano"), and Guinevere Turner's ("Turner") (collectively "Plaintiffs") Motion to Add Myriad Pictures and Kirk D'Amico as Judgment Debtors [24] ("Motion").
In the present Motion, the Guild seeks to add judgment debtors so that it can collect on its Judgment against Defendant, which was awarded as a result of default in a prior arbitration proceeding. Upon consideration of all relevant papers before this Court, this Court should DENY Plaintiffs' Motion [24]. For the reasons discussed below, this Court DENIES Plaintiffs' Motion.
I. BACKGROUND
A. Factual Background
Plaintiff the Guild is a labor organization within the meaning of 29 U.S.C. § 152(5), with its principal place of business in Los Angeles, California. Compl. ¶ 1. Plaintiffs Stefano and Turner are members of the Guild. Id. Defendant is a California corporation and an employer within the meaning of 29 U.S.C. § 152(a). Id. at ¶¶ 4-6. Third Party Myriad Pictures ("Myriad") is an organization of unknown entity type. Third Party Kirk D'Amico ("D'Amico") is an individual and producer of the motion picture at issue, titled "Breaking the Girl" (the "Film").
At all relevant times, the Guild and Defendant have been parties to the Writers Guild of America Theatrical and Television Basic Agreement ("MBA"), an industry-wide collective bargaining agreement between the Guild and various employers in the motion picture and television industry. Id. at ¶ 9. Article 10 of the MBA calls for the submission of disputes to arbitration, including disputes over failure to pay compensation due to credited writers and to make required contributions on behalf of writers to the Writers Guild-Industry Health Fund and the Producer-Writers Guild of America Pension Plan (collectively "the Plans"). Id. at ¶ 10.
In 2012, a dispute arose between Plaintiffs and Defendant concerning Defendant's failure to pay compensation owed in connection with the Picture to writers DiStefano and Turner (collectively the "Writers"). Id. at ¶ 11. On June 6, 2013, the Guild served Defendant with a Notice of Claim Submitted to Arbitration and Claim, outlining the allegations supporting the claim that Defendant failed to pay certain compensation owed to the Writers and failed to make the attendant contributions to the Plans. Id. at ¶ 12. The arbitration hearing was held on February 12, 2014. Id. at ¶ 15. Defendant failed to appear at the hearing and had advised counsel for the Guild by phone a few days before the hearing that it did not intend to appear. Id. On February 12, 2014, the arbitrator entered the Award and judgment against Defendant, requiring Defendant to pay Plaintiffs over $300,000 relating to credit bonus provisions in writers' contracts for the Picture. Id. at ¶ 16. On February 14, 2014, the Guild served the Award on Defendant, which has refused and continues to refuse to comply with the terms of the Award. Id. at ¶ 17.
On July 25, 2014, Plaintiffs filed a Complaint to confirm an arbitration award against Defendant [1]. On February 3, 2015, this Court confirmed the Award and entered judgment against Defendant [23]. Defendant has since failed to pay on the judgment entered against it. Mot. 3:7-8. The Guild now seeks to add judgment debtors Myriad and D'Amico, pursuant to alter ego and piercing the corporate veil doctrines, to collect on its judgment against Defendant. Id. at 3:9-12. B. Procedural Background
On July 25, 2014, Plaintiffs filed a Complaint [1] against Defendant to confirm the arbitration award. On September 2, 2014, this Court issued an Order to Show Cause as to why the case should not be dismissed for lack of prosecution [9]. On September 9, 2014, Plaintiffs filed an application for Clerk to Enter Default [11] against Defendant. On September 12, 2014, Default [14] was entered. On October 30, 2014, Plaintiffs filed a Motion for Default Judgment [17] against Defendant. On February 3, 2015, this Court issued a Judgment [23], granting Plaintiffs' request for default judgment accordingly to the terms set forth in the Award. On October 21, 2015, Plaintiffs filed their Motion to Add Judgment Debtors [24]. D'Amico's Opposition [27], Myriad's Opposition [29], and Plaintiffs' Reply [33] were timely filed.
II. DISCUSSION
A. Legal Standards
1. Motion to Add Judgment Debtors
Federal Rules of Civil Procedure, Rule 69(a) authorizes federal courts to enforce a money judgment by a writ of execution, unless the court directs otherwise. The procedure on execution follows the procedure of the state where the state is located, but a federal statute governs to the extent it applies. See Fed. R. Civ. Proc. 69(a); see also Agit Global, Inc. v. Wham-O, Inc., 2014 WL 1365200 (C.D. Cal. Apr. 7, 2014); Bank of Montreal v. SK Foods, LLC, 476 B.R. 588, 597 (N.D. Cal. 2012). The Ninth Circuit has held that Rule 69(a) "empowers federal courts to rely on state law to add judgment-debtors under Rule 69(a), which 'permits judgment creditors to use any execution method consistent with the practice and procedure of the state in which the district court sits.'" In re Levander, 180 F.3d 1114, 1120-21 (9thCir. 1999) (citing Cigna Property & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 421 (9th Cir. 1998)).
California Code of Civil Procedure section 187 grants courts the authority to amend a judgment to add judgment debtors under the alter ego and veil piercing doctrines. Misik v. D'Arco, 197 Cal. App. 4th 1065, 1071 (2011) (citing Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal. App. 4th 1551, 1555 (2008)). This Court has jurisdiction to enforce an arbitration award issued in accordance with a collective bargaining agreement pursuant to Section 301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a). Sheet Metal Workers' Int'l Ass'n Local Union No. 359 v. Madison Indus., Inc., of Ariz., 84 F.3d 1186, 1190 (9th Cir. 1996); Textile Worker v. Lincoln Mills, 353 U.S. 448, 456 (1957). B. Analysis
California Code of Civil Procedure section 187 is the catch-all provision that gives the court jurisdiction to use any suitable process or mode of proceeding in order to carry out its jurisdiction, even if such means are not specifically provided for in the Code of Civil Procedure or any statute. This section is often used to amend judgments to add judgment debtors on the ground that they are an alter ego of the original judgment debtor. NEC Electronics, Inc. v. Hurt, 208 Cal. App. 3d 772, 778-779 (1989). "This is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant." Id. at 778.
1. Evidentiary Objections
Both Plaintiffs and third parties D'Amico and Myriad make evidentiary objections, asserting various portions of proffered declarations are inadmissible evidence on the grounds of irrelevance, lack of foundation, the best evidence rule, hearsay, and speculation, amongst other grounds. Judgment Creditors' Evid. Objections, ECF No. 34; Myriad's Evid. Objections, ECF No. 30; Third Party Kirk D'Amico's Evid. Objections, ECF No. 28.
Plaintiffs object to the Declaration of Kevin Forester ("Forester Decl.") and the Declaration of Kirk D'Amico ("D'Amico Decl."), submitted in support of Myriad and D'Amico's Oppositions to the present Motion. This Court finds that "[t]o the extent that the Court relied on objected-to evidence, [the Court] relied only on admissible evidence" and therefore, this Court OVERRULES Plaintiffs' objections [34]. Caldwell v. City of Selma, No. 1:13-cv-004 65-SAB, 2015 WL 1897806, at *2 n.2 (E.D. Cal. Apr. 16, 2015); see also Capital Records, LLC v. BlueBeat, Inc., 765 F. Supp. 2d 1198, 1200 n.1 (C.D. Cal. 2010).
Myriad and D'Amico proffered almost identical evidentiary objections in which the parties object to the Declaration of Heather Pearson ("Pearson Decl.") and the Declaration of Valerie Kordisch ("Kordisch Decl."). As to Myriad and D'Amico's objections, this Court finds that the statements objected to are independently evidenced by the accompanying exhibits, and therefore the Court need not rely on the statements proffered. Because the Court need not rely on the statements in the Pearson and Kordisch Declarations to determine the present matter, but can instead refer to the accompanying exhibits, D'Amico and Myriad's objections are denied as MOOT. See Henson Beverage Co. v. Vital Pharm., Inc., No. 08-CV-1545-IEG (POR), 2010 WL 1734960, at *3 (S.D. Cal. Apr. 27, 2010).
2. Plaintiffs' Motion is Timely
a. The statutes of limitations cited by Myriad and D'Amico are inapplicable to the present Action.
This Court finds that the six-month statute of limitations period derived from the National Labor Relations Act ("NLRA") section 10(b), cited by D'Amico and Myriad in their respective Oppositions, is inapplicable in the present case. Myriad Opp. 10:18-11:3; D'Amico Opp. 2:17-3:8.
The Supreme Court has held that the six-month NLRA § 10(b) statute of limitations applies when the claim at issue "has no close analogy in state law." DelCostello v. International Broth. of Teamsters, 462 U.S. 151, 169-170 (1983). The Supreme Court noted, however, that a state statute of limitations may instead apply "if state law were the only source reasonably available for borrowing, as it often is." Id. at 169. The Court further noted: "We stress that our holding today should not be taken as a departure from propr practice in borrowing limitations periods for federal causes of action, in labor law or elsewhere. We do not mean to suggest that federal courts should eschew use of state limitations period anytime state law fails to provide a perfect analogy." Id. at 171.
The question in DelCostello was what limitation period should apply to a federal action against a union for breach of the duty of fair representation. Id. The Court found that a duty of fair representation claim "has no close analogy in state law," and thus held that it was appropriate to "borrow" the six-month limitations period under NLRA section 10(b).
In the present case, state law provides the grounds for Plaintiffs' claim, and additionally provides the applicable statute of limitations. Plaintiffs seek to add Myriad and D'Amico as judgment debtors. Pursuant to Federal Rule of Civil Procedure Rule 69(a), a federal court must utilize state procedures regarding the execution of judgments when available. Here, California Code of Civil Procedure section 187 is the applicable state law for executing a money judgment, and it is accompanied by a statute of limitations. Section 187 permits courts to amend a judgment to add additional judgment debtors "within a reasonable time." In re Levander, 180 F.3d 1114, n.10 (9th Cir. 1999). Thus, in the present case, Plaintiffs' claim is governed by the statute of limitations provided by California Code of Civil Procedure section 182, not NLRA section 10(b).
See Fed. R. Civ. Proc. 69(a) (providing, in part: "A money judgment is enforced by a writ of execution . . . . The procedure on execution - and in proceedings supplementary to and in aid of judgment or execution - must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.")
b. Plaintiffs' moved to add judgment debtors within a "reasonable" time.
As discussed above, a motion to add a judgment debtor governed by Rule 69(a) and section 187 must be made "within a reasonable time." In re Levander, 180 F.3d 1114, n.10. The Ninth Circuit has found that a similar period of delay, after which a party moved to add judgment debtors, was "reasonable." In Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., the Ninth Circuit confirmed that a seven and one-half month delay between the relevant court order and the motion to add judgment debtors was "reasonable." 159 F.3d 412, 421 (9th Cir. 1998).
In the present case, Plaintiffs waited eight months after the arbitrator's entry of Judgment before bringing this Motion. This Court entered Judgment against Defendant on February 3, 2015 [23]. In October 2015, when it became clear the moving parties would not receive payment, Plaintiffs filed the present Motion to add Myriad and D'Amico as judgment debtors. Given the facts presented, this Court finds that Plaintiffs' eight month delay in bringing this Motion is "reasonable" under the Ninth Circuit's standard, and is thus timely.
c. Plaintiffs' Motion is timely in Accordance with the MBA.
Article 10.A.2 of the Writers Guild of America 2011 Minimum Basic Agreement ("MBA") states, in part: "Proceedings for grievance (or arbitration, to the extent a party is required to initiate arbitration without invoking a grievance proceeding) of a claim . . . shall be commenced no later than eighteen (18) months after the party bringing the grievance or arbitration proceeding . . . has obtained knowledge of the facts upon which the claim is based." Forester Decl. ¶ 10, Ex. A.
The Court, not the arbitrator, has the ability to add judgment debtors. Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd., 41 Cal. App. 4th 1551, 1555 (1996). An arbitrator is foreclosed from doing so. Id. As such, Plaintiffs could not have moved to add judgment debtors until the conclusion of the arbitration proceeding, after learning that Defendant would not fulfill the arbitrator's Judgment, and upon motion to this Court. An eight month period is well within the eighteen months allowed for in the MBA. Accordingly, the Court finds Plaintiffs' Motion is timely and properly filed in accordance with Article 10.A.2 of the MBA.
d. Plaintiffs' Motion is not barred by laches.
"Laches is an equitable time limitation on a party's right to bring suit," which is "derived from the maxim that those who sleep on their rights, lose them." Kling v. Hallmark Cards, Inc., 225 F.3d 1030, 1036 (9th Cir. 2000). "The question of laches does not depend, as does the statute of limitation, upon the fact that a certain definite time has elapsed since the cause of action accrued, but whether, under all the circumstances of the particular case, plaintiff is chargeable with a want of due diligence in failing to institute proceedings before he did." Townsend v. Vanderwerker, 160 U.S. 171, 186 (1895). To prevail on a defense of laches, a defendant must prove both: (1) an unreasonable delay by plaintiff in bringing suit, and (2) prejudice to himself. See Couveau v. American Airlines, Inc., 218 F.3d 1078 (9th Cir. 2000). In considering whether a plaintiff's delay was unreasonable, courts consider: (1) the length of the delay, measured from the time the plaintiff knew or should have known about his or her potential cause of action, and (2) whether the plaintiff's delay was reasonable, including whether the plaintiff has proffered a legitimate excuse for the delay. See Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 838 (9th Cir. 2002).
This Court finds that Plaintiffs' Motion is not barred by laches. Based on the evidence proffered by D'Amico and Myriad in their respective Oppositions, it is not apparent to this Court that Plaintiffs engaged in any unreasonable delay in bringing this Motion. As to the matter of any resulting prejudice, Myriad merely contends that requiring it to pay the Judgment, with its accruing interest, would be "highly prejudicial" as "Plaintiffs have not offered any legitimate excuse for their delay in filing suit." Myriad Opp. 11:11-21. The Court finds this argument unconvincing. In fact, Plaintiffs have proffered a legitimate excuse for their eight month delay. As mentioned above, Plaintiffs waited eight months from this Court's entry of Judgment to file the present Motion because only at this time did Plaintiffs learn that Defendant would be unable to fulfill the Judgment against them. Plaintiffs waited until the resolution of the arbitration rather than after the final writing of the credit determination for the Picture because Plaintiffs and Defendant were parties to an arbitration agreement, and thus Plaintiffs were mandated to arbitrate their claim against Defendant only. Further, as discussed above, only courts, not arbitrators can confirm and amend judgments to add additional judgment debtors. Accordingly, the Court finds that Plaintiffs' Motion is not barred by laches.
3. Plaintiffs' claim for "alter ego" liability against Myriad fails.
Under California law, the amendment of a judgment to add additional judgment debtors is an equitable procedure that binds new individual defendants where it can be demonstrated that, in their capacity as alter egos of the corporation, they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit. California Code of Civil Procedure § 187 permits judgments to be amended to add additional judgment debtors if two requirements are met: "(1) [] the new party is the alter ego of the old party and (2) [] the new party had controlled the [earlier] litigation, thereby having had the opportunity to litigate, in order to satisfy due process concerns." Katzir's Floor and Home Design, Inc. v. M-MLS.com, 394 F.3d 1143, 1148 (9th Cir. 2004) (citing In re Levander, 180 F.3d 1114, 1121 (9th Cir. 1999)); see also Triplett v. Farmers Ins. Exchange, 24 Cal. App. 4th 1415, 1421 (1994)(noting that due process considerations are in addition to, not in lieu of, threshold alter ego issues). "Section 187 is premised on the notion that the amendment 'is merely inserting the correct name of the real defendant,' such that adding a party to a judgment after the fact does not present due process concerns." Id. The alter ego doctrine has developed under federal labor law "to prevent employers from escaping their collective bargaining obligations . . . ." UA Local 343, United Ass'n of Journeymen & Apprentices v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994).
The Ninth Circuit applies a two-step analysis to establish alter ego liability under LMRA § 301. See Carpenters v. Stevens, 743 F.2d 1271, 1276 (9th Cir. 1984). To prevail on a claim of alter ego liability against Myriad, Plaintiffs must first show that there is such a "unity of interest" between Myriad and Defendant that the separate personalities of the corporations no longer exist. Katzir's, 394 F.3d at 1149. Second, the Plaintiff must show that inequitable results will follow if the corporate separateness is respected. Id. Broadly, the court must consider whether treating the acts as those of the corporation alone will sanction a fraud, promote injustice, or cause an inequitable result." Misik v. D'Arco, 197 Cal. App. 4th 1065, 1071 (2011). "Conclusory allegations of 'alter ego' status are insufficient to state a claim. A plaintiff must allege specifically both of the elements of alter ego liability, as well as facts supporting each." Neilson v. Union Bank of California, N.A., 209 F. Supp. 2d 1101, 1116 (C.D. Cal. 2003).
Among the factors to be considered in determining alter ego liability are: (1) commingling of funds and other assets of the two entities, (2) the holding out by one entity that it is liable for the debts of the other, (3) identical equitable ownership in the two entities, (4) use of the same offices and employees, and (5) use of one as a mere shell or conduit for the affairs of the other. Wady v. Provident Life and Accident Ins. Co. of America, 216 F.Supp.2d 1060, 1066 (C.D. Cal. 2002).
"No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied." Sonora Diamond Corp v. Superior Court, 83 Cal.App.4th 523, 539 (2000). However, "the mere fact of sole ownership and control does not eviscerate the separate corporate identify that is the foundation of corporate law." Katzir's, 394 F.3d at 1149. Finally, "[a]lter ego is an extreme remedy, sparingly used." Sonora, 83 Cal. App. 4th at 539. The alter ego doctrine "focuses on whether there is an attempt to avoid the obligations of a collective bargaining agreement through a sham transaction or a technical change in operation. . . The alter ego doctrine applies in circumstances in which the bargaining unit of the signatory company is effectively the same as that of the non-signatory company." Id. at 1277.
a. Plaintiffs failed to establish a sufficient "unity of interest" between Myriad and Defendant.
i. Commingling of funds
This Court finds that Plaintiffs have not shown such a "unity of interest" between Myriad and Defendant so as to find that the separate personalities of the corporations no longer exist. Katzir's, 394 F.3d at 1149. First, upon review of the record, Plaintiff has not proffered any evidence to show that there was a commingling of Myriad and Defendant's funds. In fact, Myriad's Chief Financial Officer ("CFO") Kevin Forester ("Forester") contends in his declaration, "Myriad and [Defendant] maintain separate corporate funds, records, and assets. There has never been any commingling of funds or assets between Myriad and [Defendant]." Forester Decl. ¶ 4.
ii. Shared liability
This Court finds Plaintiffs have failed to put forth any evidence showing that Myriad ever held itself out as liable for the obligations of Defendant. On the contrary, Forester declares: "Myriad has never personally guaranteed any of [Defendant's] obligations." Id. This Court finds that although Myriad was heavily involved in producing the Film, "Myriad was not the employer for [the Film]. [Defendant] was responsible for all employment matters, costs, and revenues related to the Picture. Myriad also did not contribute any costs in connection with [the Film]." Id. at ¶ 5. Myriad's involvement in the Film stems from an agreement with Defendant to provide various services relating to the Film, including post production accounting, legal services, and "to act as a sales representative for the Picture in the worldwide marketplace." Id. at ¶ 6. It is clear from the proffered declarations that such services were specifically agreed to as part of a bidding process. This Court should find that it does not necessarily follow that, in providing these previously agreed to services, Myriad held itself out as liable for Defendant's obligations generally. In fact, Plaintiffs concede that D'Amico "chose not to sign Myriad as a Guild company . . . and he refused to provide a standard guarantee that would obligate him to take responsibility for [Defendant's] obligations." Mot. 10:7-10.
Rather, Plaintiffs make the following general allegations: "The operations of [Defendant] and Myriad are related, as they use the same street address, phone numbers, and email addresses . . . The companies also operated in concert to produce [the Film], with [Defendant] taking responsibility for employment of writers, and Myriad receiving production credit and holding ownership of the property." Mot. 9:17-21. --------
iii. Identical Equitable Ownership, Shared Offices and Employees, Use as a Shell Corporation
It is apparent from the record that Myriad and Defendant do not have identical equitable ownership. The record shows that D'Amico is the sole shareholder of Defendant. Kordisch Decl. ¶ 4, Exs. 6, 7. However, there is no indication that D'Amico is the sole shareholder of Myriad. D'Amico is however President of Myriad. Further, although Myriad and Defendant share the same mailing address, and some email addresses and phone numbers, Kordisch Decl. Ex. 6, Plaintiffs do not show that Defendant and Myriad share the same employees, besides sharing counsel on certain matters. Finally, Plaintiffs have not adequately shown this Court that Defendant is a shell corporation of Myriad. Plaintiffs merely allege, "Myriad is using [Defendant] to unjustly shield Myriad from having to pay labor costs," without providing convincing factual support for this contention. Mot. 9:27-28. Plaintiffs allege: "Myriad employees negotiated the first three disputes that the Guild brought regarding this movie, and coordinated payment to the Guild on those disputes. However, when they realized that paying the credit bonuses were going to add a significant expense to the project, and D'Amico nor counsel could convince the Guild to withdraw these claims, Myriad abandon[ed] [Defendant]. . . . Myriad's only chance to escape liability was to make the Guild try to collect from the empty shell of [Defendant]." Id. at 9:26-10:10. This Court finds that such conclusory allegations, without factual support, are not persuasive and do not sufficiently show Defendant was a shell for Myriad corporation.
b. Plaintiffs failed to show inequity would result if corporate separateness was respected.
This Court finds Plaintiffs put forth insufficient evidence to show inequity would result if the corporate separateness of Defendant and Myriad were respected. Plaintiffs simply argue they would be unable to collect their Judgment against Defendant. "The Guild should be able to collect its judgment from Myriad, because the facts above show it is the alter ego of [Defendant]. Mot. 10:11-12.
"California courts generally require some evidence of bad faith conduct on the part of defendants before concluding that an inequitable result justifies an alter ego finding." Neilson v. Union Bank of California, N.A., 290 F.Supp.2d 1101, 1117 (C.D. Cal. 2003)(citing Mid-Century Ins. Co. v. Gardner, 9 Cal. App. 4th 1205, 1213 (1992) ("The purpose of the doctrine is not to protect every unsatisfied creditor, but rather to afford him protection, where some conduct amounting to bad faith makes it inequitable, under the applicable rule above cited, for the equitable owner of a corporation to hide behind its corporate veil.")). As discussed above, Plaintiffs have made broad allegations of bad faith, but have not supported these allegations with fact. As noted above, "[c]onclusory allegations of 'alter ego' status are insufficient to state a claim. A plaintiff must allege specifically both of the elements of alter ego liability as well as facts supporting each." Neilson, 209 F. Supp. 2d at 1116. As Plaintiffs provide no further support for their contention that inequity would result, this Court finds Plaintiffs have not met their burden.
4. Myriad's due process rights would be violated by assigning "alter ego" status to it because it had no control over the proceeding litigation and arbitration.
Pursuant to California Code of Civil Procedure section 187, this Court must evaluate whether Myriad had sufficient control over the underlying arbitration, with the opportunity to contest the underlying judgment, before it is found to be the alter-ego of Defendant. See Triplett v. Farmers Ins. Exchange, 24 Cal. App. 4th 1415, 1421 (1994). Here, Myriad was not a party to the arbitration involving Defendant, nor did Myriad even receive notice of the arbitration. Forester Decl. ¶ 8. Myriad did not have any of its representatives at any hearings. Id. Although Myriad appears to have been aware of the arbitration, awareness is not sufficient to satisfy due process concerns, especially when Plaintiffs have not met their initial burden to show that the two corporations are identical. See NEC Electronics, Inc. v. Hurt, 208 Cal. App. 3d 772, 781 (1989). Finally, the record shows the arbitration award and judgment were reached by default. Thus, there was by definition no active defense of the underlying claim. As such, the due process concerns are even greater in the present case. Motores de Mexicali, S.A. v. Superior Court, 51 Cal.2d 172, 176 (1958)(declining to add individuals as judgment debtors to default judgment against bankrupt corporations because the "litigation was [not] carried through and subsidized by the dominant corporation.").
As the Judgment against Defendant was entered by default, and as this Court has determined that Myriad does not effectively share the same corporate identity as Defendant, it cannot be argued that Myriad had the opportunity to be heard, to present its defenses to Plaintiffs' claims, or to represent its interests in the underlying arbitration. In fact, considering the different involvement Defendant and Myriad had in producing the Film, it appears that Defendant and Myriad would likely have different interests in the arbitration. Accordingly, it would violate Myriad's due process rights to be added as a judgment debtor at this juncture. Katzir's, 394 F.3d at 1149-50. Plaintiffs have failed to meet their burdens in (1) showing alter ego liability, and (2) showing that Myriad had control over the proceeding arbitration. As such, this Court DENIES Plaintiffs' Motion as to Myriad.
5. This Court will not pierce the corporate veil to reach D'Amico.
LMRA § 301 allows liability to be assessed against a non-signatory under the doctrine of piercing the corporate veil. Under this doctrine, if there has been an abuse of corporate form, shareholders may be held individually liable for the corporate debts. Nor-Cal, 48 F.3e at 1475. In determining whether to pierce the corporate veil, the court examines three factors: (1) "the amount of respect given to the separate identity of the corporation by its shareholders," (2) "the fraudulent intent of the incorporators," and (3) "the degree of injustice visited on litigants by recognition of the corporate entity." Laborers Clean-Up Contract Admin. Trust Fund v. Uriarte Clean-Up Service, Inc., 736 F.2d 516, 524 (9th Cir. 1984).
a. Separate identity of Defendant.
This Court finds that D'Amico gave sufficient respect to the separate identity of Defendant so as to deny Plaintiffs' request to pierce the corporate veil and reach D'Amico's assets. The record shows that although Defendant was 100% owned by D'Amico, Defendant was not under his complete control. In fact, D'Amico was not the sole officer of Defendant. "Rather, the company had three different individuals acting as officers on its own behalf, in addition to a designated registered agent as indicated above as well as an organizer." D'Amico Decl. ¶ 14. Further, at all relevant times, the record shows that D'Amico personally maintained a separate bank account from Defendant and did not ever personally advance money or fund production expenditures to or on behalf of Defendant. Id. at ¶ 17. Additionally, D'Amico declares "there was never any co-mingling of [his] personal assets or liabilities with those of [Defendant] . . . ." Id. at ¶ 19.
Plaintiffs argue that D'Amico has not respected the separate corporate identity of Defendant because D'Amico is Defendant's 100% shareholder, D'Amico signed all documents submitted to the Guild relating to the Film, and D'Amico personally tried to talk the Guild into abandoning their case against Defendant. While these allegations are evidenced by Plaintiffs' supporting declarations, they are insufficient to warrant the extreme measure of piercing the corporate veil. These allegations do not support a finding that D'Amico disrespected the separateness of Defendant as a corporate entity.
b. Fraudulent intent of D'Amico.
Plaintiffs have proffered no evidence that suggests D'Amico had fraudulent intent in its dealings with Defendant. Plaintiffs merely argue that D'Amico was the publicly credited producer of the Film, yet he never signed papers agreeing to be bound to the Guild's collective bargaining agreement. Mot. 11:4-10. Plaintiffs maintain, "he created other companies, like Dryad and [Defendant], to be bound by MBA, even when Myriad had control of the literary material. D'Amico himself refused to provide a personal guarantee to the Guild, likely anticipating the company might later seek to evade them." Mot. 11:4-10. While the above facts are evidenced in the record, D'Amico's alleged fraudulent intent is not. Plaintiffs infer from D'Amico's decision to not sign the collective bargaining agreement that he intended to defraud Plaintiffs, if a dispute were to arise with the Guild, by hiding behind the shield of Defendant corporation. Plaintiffs do not support these inferences with fact or evidence. Accordingly, this Court finds the record provides no indication of fraudulent intent on behalf of D'Amico.
c. Degree of injustice to Plaintiffs
While the Court recognizes that Plaintiffs have faced difficulty in collecting on their Judgment against Defendant, it does not follow that this difficulty constitutes an injustice if the Court does not pierce Defendant's corporate veil to reach the assets of D'Amico. As discussed above, the record neither shows that D'Amico disrespected the separate corporate identity of Defendant, nor that D'Amico had fraudulent intent, such as to warrant this extreme measure. Plaintiffs have provided no further examples of injustice they would encounter if this Court were to decline to pierce Defendant's corporate veil.
Upon consideration of the appropriate factors, specifically the amount of respect given to the separate identity of Defendant, D'Amico's fraudulent intent, and injustices Plaintiffs may face, this Court DENIES Plaintiffs' Motion as to third party D'Amico.
III. CONCLUSION
For the reasons stated above, this Court DENIES Plaintiffs' Motion to Add Myriad Pictures and Kirk D'Amico as Judgment Debtors [24] in its entirety.
IT IS SO ORDERED.
DATED: February 9, 2016
/s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge