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Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page1 of 20

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Judith B. Jennison, Bar No. 165929


JJennison@perkinscoie.com
PERKINS COIE LLP
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
Telephone: 206.359.8000
Facsimile: 206.359.9000
Attorneys for Plaintiff
Facebook, Inc.

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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FACEBOOK, INC.,

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Case No. 3:14-cv-02323-WHA


Plaintiff,

v.
MARTIN GRUNIN,
Defendant.

FACEBOOKS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
AND MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT THEREOF
[Fed. R. Civ. P. 55(b)]
Judge:
Location:

Hon. William H. Alsup


Courtroom 8 - 19th Floor

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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
(Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page2 of 20

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NOTICE OF MOTION AND MOTION FOR DEFAULT JUDGMENT


TO MARTIN GRUNIN:
PLEASE TAKE NOTICE THAT on January 8, 2015 at 8:00 a.m., or as soon thereafter

as the matter may be heard, in the courtroom of the Honorable William H. Alsup, United States

District Court, 450 Golden Gate Avenue, San Francisco, CA 94102, 19th Floor, Courtroom 8,

Plaintiff Facebook, Inc., by and through its counsel Perkins Coie LLP, will and hereby does move

for Entry of Default Judgment against Defendant Martin Grunin.

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This motion is made pursuant to Fed. R. Civ. P. 55(b) and as directed by the Courts
October 30, 2014 Order Denying [the Defendants] Motion to Set Aside Default (Dkt. 65), on the

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grounds that Grunin has failed to respond to Facebooks Complaint and is currently in default

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(Dkt. 22).

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Facebooks request for default judgment is based on this motion and the attached

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Memorandum of Points and Authorities, default entered by the Clerk of the Court (Dkt. 22),

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Facebooks Complaint (Dkt. 1), and all other pleadings and documents on file in this action.

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DATED: November 20, 2014

PERKINS COIE LLP

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By: /s/ Judith B. Jennison
Judith B. Jennison, Bar No. 165929
JJennison@perkinscoie.com

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Attorneys for Plaintiff


Facebook, Inc.

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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
(Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page3 of 20

TABLE OF CONTENTS

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Page
I.
II.

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III.

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IV.

INTRODUCTION .............................................................................................................. 1
STATEMENT OF FACTS ................................................................................................. 1
A.
Facebook Background............................................................................................. 1
B.
Summary of Grunins Illegal Activities.................................................................. 2
C.
Harm to Facebook ................................................................................................... 5
D.
Grunin Has Failed to Answer and Has Abused the Judicial Process by
Filing Threatening and Nonsensical Documents With the Court ........................... 5
LEGAL ARGUMENT ........................................................................................................ 6
A.
Facebook Is Entitled to Default Judgment for Grunins Unlawful Activities ........ 6
1.
Each of Facebooks Claims Is Well Grounded ........................................... 6
a.
Grunins Breach of Contract ........................................................... 6
b.
Grunins Violation of the Computer Fraud and Abuse Act ............ 7
c.
Grunins Violation of the California Comprehensive
Computer Data Access and Fraud Act ............................................ 8
d.
Grunins Fraud on Facebook........................................................... 9
2.
Facebook Has Met the Legal Standard for Entry of Default
Judgment ................................................................................................... 11
a.
Possibility of Prejudice ................................................................. 11
b.
Merits of Facebooks Substantive Claims..................................... 12
c.
Sufficiency of the Complaint and the Possibility of Dispute
Concerning Material Facts ............................................................ 12
d.
Amount of Money at Stake ........................................................... 12
e.
Whether Default Was Due to Excusable Neglect ......................... 13
f.
Policy in Favor of Decisions on the Merits................................... 13
B.
Facebook Is Entitled to Damages Caused by Grunins Illegal Behavior, to
Punitive Damages For His Fraudulent Activities, and to Attorneys Fees
Pursuant to Cal. Penal Code 502........................................................................ 13
C.
Grunin Should Be Permanently Enjoined from Accessing and Abusing
Facebooks Services.............................................................................................. 14
CONCLUSION ................................................................................................................. 15

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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
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TABLE OF AUTHORITIES

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Page
Federal Cases
APL Co. Pte., Ltd. v. CNJ Intl, Inc., No. C 12-04758 WHA, 2013 WL 622357
(N.D. Cal. Feb. 14, 2013) .........................................................................................................13
A.V. ex rel. Vanderhye v. iParadigms, LLC,
562 F.3d 630 (4th Cir. 2009).....................................................................................................14
Bennett v. Am. Med. Response, Inc.,
226 F. Appx 725 (9th Cir. 2007) .............................................................................................13
Craigslist, Inc. v. Naturemarket, Inc.,
694 F. Supp. 2d 1039 (N.D. Cal. 2010) ....................................................................................11
Creative Computing v. Getloaded.com LLC,
386 F.3d 930 (9th Cir. 2004).....................................................................................................15
Eitel v. McCool,
782 F.2d 1470 (9th Cir. 1986)...................................................................................................11
Facebook, Inc. v. Power Ventures, Inc.,
844 F. Supp. 2d 1025 (N.D. Cal. 2012) ..................................................................................8, 9
Facebook, Inc. v. Power Ventures, Inc.,
No. 08-CV-5780-LHK, 2013 WL 5372341 (N.D. Cal. Sept. 25, 2013)...................................15

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Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp. 2d 916 (C.D. Cal. 2010).........11, 12, 13

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Multiven, Inc. v. Cisco Sys., Inc.,


725 F. Supp. 2d 887 (N.D. Cal. 2010) ..................................................................................9, 14

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NCMIC Fin. Corp. v. Artino,


638 F. Supp. 2d 1042 (S.D. Iowa 2009)....................................................................................14

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PepsiCo, Inc. v. Triunfo-Mex, Inc.,


189 F.R.D. 431 (C.D. Cal. 1999) ..............................................................................................11

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PepsiCo Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) .............................13

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Perez-Encinas v. Amerus Life Ins. Co.,


468 F. Supp. 2d 1127 (N.D. Cal. 2006) ......................................................................................6

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Phillip Morris USA Inc. v. Castworld Prods., Inc., 219 F.R.D. 494 (C.D. Cal.
2003) ...................................................................................................................................12, 13

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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
(Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page5 of 20

TABLE OF AUTHORITIES
(continued)

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Page
Schenker, Inc. v. Predator Mogulwear, Inc., No. C 07-01795 WHA, 2007 WL
4556915 (N.D. Cal. Dec. 20, 2007) ....................................................................................12, 13
TeleVideo Sys., Inc. v. Heidenthal,
826 F.2d 915 (9th Cir. 1987).................................................................................................6, 13
State Cases

Agosta v. Astor,
15 Cal. Rptr. 3d 565 (Cal. Ct. App. 2004) ..................................................................................9

Federal Statutes

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18 U.S.C. 1030 ...............................................................................................................................7

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18 U.S.C. 1030(a)(2)......................................................................................................................7

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18 U.S.C. 1030(a)(4)......................................................................................................................7
18 U.S.C. 1030(e)(2)......................................................................................................................8
18 U.S.C. 1030(g) ........................................................................................................................15
State Statutes
Cal. Civ. Code 3294 .....................................................................................................................14
Cal. Civil Code 1709....................................................................................................................13
Cal. Civil Code 3300....................................................................................................................13

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Cal. Penal Code 502...........................................................................................................9, 13, 15

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Cal. Penal Code 502(c) ..................................................................................................................8

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Cal. Penal Code 502(e) ................................................................................................................14

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Cal. Penal Code 502(e)(1)..................................................................................................9, 13, 15

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Cal. Penal Code 502(e)(2)............................................................................................................14

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Rules

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Fed. R. Civ. P. 4(e)(2)(A) .................................................................................................................5


Fed. R. Civ. P. 12(a)(1) .....................................................................................................................5

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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
(Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page6 of 20

MEMORANDUM OF POINTS AND AUTHORITIES


I.

Defendant Martin Grunin has repeatedly and systematically misused Facebooks platform

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INTRODUCTION

and services for his own benefit. His actions fall into three categories:

Grunin impersonated representatives of Facebooks legitimate commercial

advertising customers in order to convince Facebook to increase the credit limits

on those accounts. He then ran his own deceptive advertising campaigns using the

compromised accounts, gaining referral fees from third parties for each user

clicking on his misleading ads.

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Grunin sold fraudulently obtained advertising accounts to third parties for his own
gain.

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Grunin repeatedly accessed Facebook after being banned.

Facebook requests entry of default judgment against Grunin on its claims for breach of

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contract, fraud, and violations of the Computer Fraud and Abuse Act and the California

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Comprehensive Computer Data Access and Fraud Act. Facebook seeks compensatory damages,

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punitive damages, attorneys fees, and a permanent injunction. Facebook understands from the

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Courts Notice Regarding Default and Default Judgment that [i]f and when default judgment is

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entered, the undersigned judge will invite declarations as to damages flowing from the well-pled

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allegations in the operative complaint and in some instances will hold a prove-up evidentiary

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hearing to establish damages. (Dkt. 61 at 2.) Accordingly, Facebook has not attempted to

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establish the amount of its damage in this Motion.

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II.
A.

STATEMENT OF FACTS

Facebook Background
Facebook offers an online service that enables people to connect and share. Facebook

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facilitates the sharing of information through the social grapha digital mapping of users real-

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world social connections. Compl. 11. More than one billion people use Facebook each month.

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Compl. 11. To use Facebook, a person must create a Facebook account by providing his or her

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name, a valid email address, or a verified mobile telephone number and agree to the terms of
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PLAINTIFFS NOTICE OF MOTION AND


MOTION FOR DEFAULT JUDGMENT
(Case No. 14-cv-02323-WHA)

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service in Facebooks Statement of Rights and Responsibilities (Facebooks Terms). Compl.

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Facebook generates a portion of its revenue by selling ads that it displays to users when

they use Facebooks websites or mobile applications. Compl. 13. Advertisers typically

purchase ads directly through Facebooks online tool, and they may also interact with Facebook

sales representatives for assistance with their accounts. Compl. 14. All Facebook advertisers

must open an advertising account. Facebook permits advertisers to create multiple advertising

accounts. Compl. 17. Facebook typically imposes spending limits on advertising accounts to

ensure that advertisers do not run up more advertising costs than they are able to pay. Facebook

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bills some advertisers once per day, while settling other accounts by invoicing the advertisers on a

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monthly or periodic basis, where the advertisers have a proven track record of reliability. Compl.

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18.

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To standardize and protect the Facebook experience for the people who use its service,

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Facebook requires that all ads comply with Facebooks Advertising Guidelines. For example, the

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Advertising Guidelines prohibit (1) false, misleading, fraudulent, or deceptive claims or content,

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and (2) ads that contain adult content or activities that are overly suggestive or sexually

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provocative. The Advertising Guidelines require that products and services promoted in the ad

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copy must be clearly represented on the destination page and that the destination site may not

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offer or link to any prohibited product or service. Compl. 15. Facebooks Terms incorporate

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Facebooks Advertising Guidelines. Advertisers also agree to the Advertising Guidelines when

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they create Facebook ads. Compl. 16.

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B.

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Summary of Grunins Illegal Activities


Beginning in early 2011, Grunin placed ads on Facebook that contained sexually

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provocative content. These ads purported to offer casual dating services and included a picture of

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a woman with a sexually explicit and profane caption. Compl. 21. When users clicked on the

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ads, they were redirected to third-party websites that paid Grunin for the referral traffic. Compl.

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22. Both the sexually explicit nature of Grunins advertising and the deceptive methods he used

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to bait users into clicking on his ads violate Facebooks Terms. When Facebook discovered this
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PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page8 of 20

activity, it sent Grunin a cease-and-desist letter demanding that he and anyone working with him

immediately stop accessing Facebook and revoking his authorization to access Facebook.

Compl. 25. Facebook also took technical measures to block Grunins access to Facebook by,

among other things, disabling Grunins personal account and advertising accounts. Compl. 23.

Grunin confirmed receipt of the demand letter and responded with two words: I comply.

Compl. 26.

But, Grunin did not comply with Facebooks demands; instead he created new user

accounts under fictitious names in violation of numerous provisions of Facebooks Terms,

including that Facebook users provide their real names and information, that they not provide any

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false personal information on Facebook or create an account for anyone other than themselves

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without permission, and that they not create new accounts after their accounts have been disabled.

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Compl. 24. Grunin also sold unauthorized access to Facebook advertising accounts to

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individuals who intended to run ads without paying for them. Compl. 30. Grunin targeted

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buyers who could not otherwise obtain Facebook advertising accounts because Facebook had

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previously banned them or because they did not have adequate credit for the accounts they

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sought. Compl. 2830. This conduct, too, violates Facebooks Terms.

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In 2012, Grunin took his illegal activity on Facebook to the next level, impersonating

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legitimate Facebook advertising customers so that he could run his own advertisements on their

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dimes. For example, in November 2012, Grunin used the alias Kayla Stewart to pose as an

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employee of Marketing Drive, one of Facebooks legitimate advertising customers, to defraud

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Facebook into creating new lines of advertising accounts with high spending limits for a

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Marketing Drive subsidiary called Thinkmodo. Compl. 31. Because Marketing Drive was on a

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monthly billing cycle, Grunin was able to run a large number of ads without paying for them

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before Facebook and Marketing Drive discovered the fraud. Compl. 33. By the time Facebook

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discovered the fraud, Grunin had purchased $40,712.91 worth of ads, which were charged to

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Thinkmodos account, including misleading ads that appeared to be endorsed by celebrities

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Jennifer Lopez and Dr. Oz. Compl. 37. Facebook has never been paid for these ads. Compl.

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38.
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FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

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Grunins fraud continued in February 2013, when he used the alias Colan Neilson to

contact a Facebook sales representative by email, claiming that Neilsons employer, Imprezzio

Marketing (another one of Facebooks legitimate advertising customers), was expanding into the

Canadian market and needed ten new advertising accounts and a line of credit. Compl. 39.

Grunin then posed as the purported President of Imprezzio Marketing, Felix Ward, to support

Neilsons request for additional advertising accounts and a line of credit. Facebooks sales

representative requested that Ward have one of his U.S. colleagues contact Facebook. Compl.

41. Soon thereafter, the same Facebook representative received an email purportedly from Joy

Hawkins, the Search Engine Optimization Director of Imprezzio Marketing, using the email

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joy@imprezziomarketing.com. The email stated: Felix requested that I send this email to you.

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He will contact you in the next 15 minutes. Compl. 43. Facebook requested supporting

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documentation to establish the credit, whereupon Grunin sent falsified bank statements that

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purported to show Imprezzio Marketings finances. Compl. 45. But when Facebook contacted

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Imprezzio Marketing about the ads and the charges, Imprezzio Marketings representatives stated

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that no one named Felix Ward worked at Imprezzio Marketing, and that the bank statements

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had been falsified. Compl. 47. Grunin had either hijacked Hawkinss email account to send the

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email or spoofed the from line of his email to make it appear that it came from Hawkins.

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Compl. 44.

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Relying on Wards and Neilsons representations, the email from Joy Hawkins, and

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the falsified bank statements, Facebook provided advertising accounts and a credit line billed to

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Imprezzio Marketing. Grunin then used the account to run at least $300,000 worth of deceptive

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ads that violated Facebooks Terms. Compl. 46. To date, Facebook has not been paid for the

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ads it served for the unauthorized Imprezzio Marketing accounts, and Grunin likely earned

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significant sums of money in commission payments from his unauthorized campaigns. Compl.

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46.

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Grunins violations of Facebooks Terms and his hijacking of legitimate advertising

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accounts were calculated and willful. Each time Facebook implemented technical measures to

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disable one of Grunins user accounts (all but the first of which were created in violation of
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FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

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Facebooks Terms), Grunin, to avoid detection and circumvent Facebooks technical measures,

adjusted his behavior before creating, obtaining, or using new accounts to resume his placement

of noncompliant Facebook ads. Since 2011, Facebook has disabled at least 70 accounts linked to

Grunin for violations of Facebooks Terms. Compl. 56.

C.

Harm to Facebook
Facebook has not been paid for more than $340,000 worth of ads purchased by Grunin

through unlawfully created or acquired accounts. Compl. 53. Furthermore, Grunins unlawful

marketing activities have tainted the Facebook experience for Facebook users and especially for

the advertisers whose accounts he hijacked. Compl. 54. As a direct and proximate cause of

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Grunins deceptive advertising and fraudulent advertising accounts, Facebook has suffered and

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continues to suffer harm to its reputation and goodwill. Compl. 55. Facebook spent significant

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engineering and other employee resources investigating, blocking, and documenting Grunins

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activities in order to prevent further harm. Compl. 56. Facebook will submit declarations

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detailing its harm after judgment has been entered pursuant to the Courts October 22, 2014

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Order. (Dkt. 61.)

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D.

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Grunin Has Failed to Answer and Has Abused the Judicial Process by Filing
Threatening and Nonsensical Documents With the Court
Facebook personally served Grunin with the Complaint and Summons on May 22, 2014,

in accordance with Fed. R. Civ. P. 4(e)(2)(A). (Dkt. 13.) Grunins responsive pleading was due
on June 12, 2014. Fed. R. Civ. P. 12(a)(1). Grunin did not file a responsive pleading by June 12,
2014, or anytime thereafter, and the Court entered Default in the case on June 23, 2014. (Dkt.
22.).
Instead of filing responsive pleadings, Grunin filed numerous documents that ignore the
Courts rules and procedures and make baseless demands of Facebook, its counsel, and the Court,
including, for example, that Facebook pay him $1 million for the unauthorized use of his name
in pleadings (Dkt. 8) and that the Court be fined $500,000 for issuing rulings adverse to Grunin or
otherwise intervening in this case (Dkt. 27). In total, Grunin filed fourteen documents with the

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FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

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Court, each of which violates the Courts rules and ignores the legitimacy and seriousness of this

lawsuit. See Dkts. 8, 10, 17, 23, 26, 27, 30, 31, 32, 35, 36, 37, 38, 39.

Sometime in July, Grunin hired counsel who was authorized to practice in California, and

filed a Motion to Set Aside Entry of Default (Dkt. 44) on August 8, 2014. Grunin did not

personally appear at the hearing to consider the motion. The Court denied that motion on October

30, 2014, but gave Grunin one last chance to move to set aside entry of default if he agreed to

file, by noon on November 13, 2014, a declaration agreeing, under penalty of perjury, to pay in

advance all of Facebooks reasonable attorneys fees and expenses incurred in response to Mr.

Grunins improper filings to date, promises to cease making such filings, and establishes factual

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innocence of the allegations in the complaint. (Dkt. 65.) Since that hearing, Grunin has not filed

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anything, and the November 13, 2014 deadline has passed.

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The above is a brief summary of the facts. Facebook incorporates all other facts and
allegations in its Complaint.

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III.
A.

LEGAL ARGUMENT

Facebook Is Entitled to Default Judgment for Grunins Unlawful Activities


After the court clerk enters a defendants default, the well-pleaded factual allegations of

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the complaint are taken as true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 91718 (9th

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Cir. 1987). Here, as set forth below, Facebook is entitled to judgment on each of its four claims

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for relief.

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1.

Each of Facebooks Claims Is Well Grounded


a.

Grunins Breach of Contract

Under California law, the elements of a breach of contract claim are: (1) the existence of

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a contract; (2) the plaintiffs performance of the contract . . .; (3) the defendants breach; and (4)

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the resulting harm to the plaintiff. Perez-Encinas v. Amerus Life Ins. Co., 468 F. Supp. 2d 1127,

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1137 (N.D. Cal. 2006).

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Access to and use of Facebooks websites and services are governed by and subject to

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Facebooks Terms, which Grunin accepted and which were binding on him at all times relevant to

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Facebooks Complaint. Compl. 5960. Facebook performed all conditions, covenants, and
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FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

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promises required of it in accordance with Facebooks Terms. Compl. 61. Grunin knowingly,

willfully, repeatedly, and systematically breached Facebooks Terms by, among other things,

running deceptive ads, transferring accounts without Facebooks permission, providing false

information to Facebook, continuing to access Facebook after revocation of his access privileges,

and failing to pay for advertisements. Compl. 63. Grunins breaches directly and proximately

caused and continue to cause irreparable harm and injury to Facebook by, among other things,

damaging Facebooks reputation with its legitimate advertisers, and preventing Facebook from

collecting advertising revenue for ads shown to Facebook users. Compl. 64.

Facebook has established each element of its breach of contract claim. It is therefore

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entitled to default judgment on the claim. See, e.g., Andrew Smith Co. v. Pauls Pak, Inc., 754 F.

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Supp. 2d 1120 (N.D. Cal. 2010) (party sufficiently alleged claim for breach of contract where it

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established each element).

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b.

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Grunins Violation of the Computer Fraud and Abuse Act

Grunin has violated two prongs of the Computer Fraud and Abuse Act (18 U.S.C. 1030
(CFAA)): 1030(a)(2) and 1030(a)(4).

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The elements of a cause of action under 1030(a)(2) of the CFAA are that the defendant

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(1) intentionally accessed a computer, (2) without authorization or exceeding authorized access,

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and that he (3) thereby obtained information (4) from any protected computer (if the conduct

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involved an interstate or foreign communication), and (5) there was loss to one or more persons

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during any one-year period aggregating at least $5,000 in value. Grunin violated 1030(a)(2) by

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accessing Facebooks protected computers without authorization after his license to access

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Facebook was revoked and obtaining information about the advertising accounts of other users

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that he had hijacked from Facebooks protected computers, causing a loss to Facebook. Compl.

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67.

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The elements of a cause of action under 1030(a)(4) are that the defendant: (1) accessed a

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protected computer, (2) without authorization, or exceeding authorization, (3) knowingly and

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with intent to defraud, and by doing so (4) furthered the intended fraud and obtained something

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of value, causing (5) a loss to one or more persons during any one-year period aggregating at least
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FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

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$5,000 in value. 18 U.S.C. 1030(a)(4), (g). Grunin violated 1030(a)(4) by accessing

Facebooks protected computers1 after his access had been revoked and, knowingly, and with

intent to defraud, impersonating agents of legitimate companies to obtain credit to run deceptive

ads. Compl. 68. Through his unauthorized access, Grunin obtained things of value, including

the ability to run advertising that he would not otherwise have been able to run, and also credit

and payment for referral traffic and other advertising accounts, and caused a loss to Facebook.

Compl. 68.

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Grunins activities caused irreparable and incalculable harm and injuries to Facebook, and
unless enjoined, his conduct will cause further irreparable and incalculable injury for which

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Facebook has no adequate remedy at law. Compl. 68. Facebook has verified damages of more

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than $340,000 during a one-year period resulting from Grunins unauthorized access and abuse of

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Facebooks protected computers. Compl. 70.

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Facebook has pleaded each of the elements of the CFAA under both 1030(a)(2) and

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(a)(4). Accordingly, Facebook is entitled to default judgment on its CFAA claims. See, e.g.,

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Power Ventures, Inc., 844 F. Supp. 2d at 103839 (defendants violated CFAA where they

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accessed Facebook without authorization by, inter alia, circumventing technical barriers to access

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Facebook, obtained information from the Facebook website, and damaged Facebook in excess of

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$5,000 in a one-year period).

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c.

Grunins Violation of the California Comprehensive Computer


Data Access and Fraud Act

The California Comprehensive Computer Data Access and Fraud Act, Cal. Penal Code
502(c), provides for a private right of action against anyone who does any one of the following:
(1) knowingly accesses and uses any computer without permission in order to defraud; (2)
knowingly accesses and uses any data from a computer network without permission; (3)
knowingly uses computer services without permission; or (4) knowingly accesses any computer
network without permission. Cal. Penal Code 502(c), (e)(1). Parties act without permission
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Facebooks computers are protected computers under 18 U.S.C. 1030(e)(2) because they are
used in and affect interstate and foreign commerce and communication. See, e.g., Facebook, Inc. v. Power
Ventures, Inc., 844 F. Supp. 2d 1025, 103839 (N.D. Cal. 2012).
-8-

PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page14 of 20

when they circumvent[ ] technical or code-based barriers in place to restrict or bar a users

access. Power Ventures, Inc., 844 F. Supp. 2d at 1036. The elements of 502 do not differ

materially from the necessary elements of the CFAA. Multiven, Inc. v. Cisco Sys., Inc., 725 F.

Supp. 2d 887, 895 (N.D. Cal. 2010).

After Facebook revoked his permission to access Facebook and took technical measures

to block his access, Grunin nevertheless circumvented those technical measures and intentionally

accessed Facebooks proprietary computers. Compl. 73. Grunin knowingly and without

permission used Facebooks proprietary computer systems to deceive Facebook and to obtain

unauthorized advertising accounts by fraud. Compl. 74. Grunin did this by impersonating

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agents of legitimate companies and obtaining credit to run his deceptive ads as if they were

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posted, and would be paid for, by someone else. Compl. 74. Grunins actions have directly,

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proximately, and irreparably harmed Facebook by, among other things, causing Facebook to

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place ads for which Grunin did not pay and by requiring Facebook to expend resources to

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investigate his unauthorized access to and abuse of Facebook and to prevent such access or abuse

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from recurring. Compl. 75. Grunin caused irreparable harm and injuries to Facebook, and

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unless enjoined, his conduct will continue to cause such injury for which Facebook has no

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adequate remedy at law. Compl. 76.

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Facebook has established the elements of the California Comprehensive Computer Data

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Access and Fraud Act. Accordingly, Facebook requests that judgment be entered in its favor on

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this claim. See Power Ventures, Inc., 844 F. Supp. 2d at 103638 (defendants violated 502

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where they circumvented technical barriers to access Facebook without permission).

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d.

Grunins Fraud on Facebook

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To prove fraud under California law, a litigant must establish: (a) a misrepresentation

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(false representation, concealment or nondisclosure); (b) knowledge of falsity . . . (c) intent to

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defraud, i.e. to induce reliance; (d) justifiable reliance; and (e) resulting damage. Agosta v.

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Astor, 15 Cal. Rptr. 3d 565, 569 (Cal. Ct. App. 2004) (internal quotation marks and citation

27

omitted).

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-9-

PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page15 of 20

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Grunins unlawful actions satisfy each of these elements. Grunin made


misrepresentations to Facebook that he knew were false by:

Using the false alias Kayla Stewart to pose as an employee of Marketing Drive

with intent to defraud Facebook into creating new lines of advertising accounts for

a Marketing Drive subsidiary called Thinkmodo, with high spending limits,

Compl. 31;

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email, claiming that Neilsons employer, Imprezzio Marketing, was expanding

into the Canadian market and needed ten new advertising accounts and a line of

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credit, Compl. 39;

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Using the false alias Colan Neilson to contact a Facebook sales representative by

Posing as the purported President of Imprezzio Marketing, Felix Ward, to

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support Neilsons request for additional advertising accounts and a line of credit,

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Compl. 41;

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Sending an email to Facebook purportedly from Joy Hawkins, the Search

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Engine Optimization Director of Imprezzio Marketing, using the email

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joy@imprezziomarketing.com, to verify Wards identity; and

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Sending falsified bank statements to Facebook that purported to show Imprezzio


Marketings finances, Compl. 45.

Grunin intended that Facebook would rely on his misrepresentations so that he could increase the
spending limits of Facebook advertising accounts that he had compromised and controlled.
Facebook acted in justifiable reliance on Grunins false representations by providing him with
new advertising accounts and increased credit on the advertising accounts he had hijacked.
Compl. 82. As a result of Facebooks reliance on Grunins intentionally false and deceptive
conduct, Facebook provided more than $340,000 worth of advertising on its site for which it has
not been paid. Facebook has also incurred expenses to identify Grunins fraud, his multiple
unauthorized accounts, and his deceptive ads. Compl. 83. Grunins intentionally false and
-10-

PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page16 of 20

deceptive conduct has tainted the Facebook experience for Facebook users, including those users

who were shown his deceptive ads, and the Facebook advertising customers whose accounts were

charged for ads that Grunin ran on them. Compl. 54; Facebook Decl. X. Facebook has

suffered and continues to suffer harm to its reputation and goodwill as a result. Compl. 83.

Grunin caused irreparable harm and injuries to Facebook and, unless enjoined, his conduct will

cause further irreparable injury for which Facebook has no adequate remedy at law. Compl. 84.

Facebook has established the elements of its fraud claim and is therefore entitled to judgment.

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2.

Facebook Has Met the Legal Standard for Entry of Default Judgment

The Ninth Circuit has enumerated seven factors to determine whether default judgment is

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appropriate: (a) the possibility of prejudice to the plaintiff if judgment is not entered, (b) the

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merits of the plaintiffs substantive claim, (c) the sufficiency of the complaint, (d) the sum of

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money at stake in the action, (e) the possibility of a dispute concerning material facts, (f) whether

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the default was due to excusable neglect, and (g) the strong policy underlying the Federal Rules

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of Civil Procedure favoring decisions on the merits. Craigslist, Inc. v. Naturemarket, Inc., 694 F.

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Supp. 2d 1039, 1051 (N.D. Cal. 2010) (citing and adopting the factors in Eitel v. McCool, 782

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F.2d 1470, 147172 (9th Cir. 1986)). In applying this discretionary standard, default judgments

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are more often granted than denied. PepsiCo, Inc. v. Triunfo-Mex, Inc., 189 F.R.D. 431, 432

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(C.D. Cal. 1999). In this case, each of the factors weighs heavily in favor of granting default

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judgment for Facebook.

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a.

Possibility of Prejudice

Without entry of judgment, Facebook would be without recourse for recovery against

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Grunin, and Grunin would unfairly profit from his illegal and fraudulent schemes against

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Facebook. Moreover, absent default judgment, Grunin would be allowed to benefit from his

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blatant disregard for this lawsuit and, more broadly, his rejection of our countrys legal system

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and the rule of law. See, e.g., Quinstreet, Inc. v. AdvisorWorld.com, Inc., No. C 10-04532 WHA,

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2011 WL 1636918 (N.D. Cal. Apr. 29, 2011) (Alsup, J.) (the first Eitel factor is satisfied where

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the plaintiff would be without a remedy absent a default judgment); Landstar Ranger, Inc. v.

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PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page17 of 20

Parth Enters., Inc., 725 F. Supp. 2d 916, 920 (C.D. Cal. 2010) (same); Phillip Morris USA Inc. v.

Castworld Prods., Inc., 219 F.R.D. 494, 499 (C.D. Cal. 2003) (same).

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b.

Merits of Facebooks Substantive Claims

As set forth in detail above, Facebook has pleaded facts to establish all the elements of

each of its claims. See, e.g., Schenker, Inc. v. Predator Mogulwear Inc., No. C 07-01795 WHA,

2007 WL 4556915, at *2 (N.D. Cal. Dec. 20, 2007) (Alsup, J.) (well-pleaded allegations in the

complaint regarding liability are deemed true (except for the amount of damages)); Landstar

Ranger, Inc., 725 F. Supp. 2d at 921 (second Eitel factor satisfied where plaintiffs complaint

adequately alleges all elements of claims).

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c.

Sufficiency of the Complaint and the Possibility of Dispute


Concerning Material Facts

Facebooks Complaint sets forth detailed facts about Grunins unlawful activities, and
Grunin has produced no credible evidence to dispute them. In fact, the Court expressly invited
Grunin to tender a meritorious defense in its latest Order, provided that such a defense was
specific and under oath (see Dkt. 65 at 5), but Grunin declined to do so. This is simply not a case
of an absentee litigant; Grunin has filed numerous documents and moved to set aside entry of
Default. But, in the end, his refusal to file a declaration on November 13, 2014 demonstrates that
he cannot, under oath, deny the facts alleged in Facebooks Complaint. Accordingly, there is no
factual dispute. See, e.g., Schenker, Inc. 2007 WL 4556915, at *2; Landstar Ranger, Inc., 725 F.
Supp. 2d at 92122 (no factual disputes exist where plaintiff supports its claim and defendant has
made no attempt to challenge the accuracy of the allegations set forth in the complaint); Phillip
Morris USA Inc., 219 F.R.D. at 500 (same).
d.

Amount of Money at Stake

This factor appears less relevant at this stage because the Court has indicated that it will
consider the amount of permissible damage at a later date (pursuant to Dkt. 61). In any event,
Facebook seeks damages that are directly related to the harm caused by Grunins unlawful
activity. Where the recovery sought is proportional to the harm caused by the defendant, this

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PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page18 of 20

factor supports default judgment. Bennett v. Am. Med. Response, Inc., 226 F. Appx 725, 728

(9th Cir. 2007); Landstar Ranger, Inc., 725 F. Supp. 2d at 921.

e.

Whether Default Was Due to Excusable Neglect

There can be no question that this factor is satisfied. As set forth above, Grunin was well

aware of the existence of this lawsuit, chose to hire a nonlawyer to represent him and

repeatedly rejected the Courts authority. Clearly his default was not the result of excusable

neglect. See Schenker, Inc., 2007 WL 4556915, at *2 (factor satisfied where defendant engaged

in delaying tactics and disregarded a court order to obtain counsel); Phillip Morris USA Inc., 219

F.R.D. at 501 (same).

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f.

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Policy in Favor of Decisions on the Merits

The Court has held that although federal policy certainly favors decisions on the merits,

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default judgment is proper where the defendant refuses to litigate. APL Co. Pte., Ltd. v. CNJ

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Intl, Inc., No. C 12-04758 WHA, 2013 WL 622357, at *2 (N.D. Cal. Feb. 14, 2013) (Alsup, J.);

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PepsiCo Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) (same). Facebooks

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Complaint contained specific and detailed facts to support Facebooks allegations, and Grunin

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simply refused to participateeven after he was given multiple warnings and chances to do so,

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including the Courts most recent invitation to submit a meritorious defense. (Dkt. 65 at 5.)

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Grunins behavior both against Facebook and the Court itself supports and justifies granting

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Facebooks Motion for Default Judgment.

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In conclusion, after weighing each of these factors, Facebook is entitled to default


judgment. See Cal Sec. Cans, 238 F. Supp. 2d at 117478.

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B.

Facebook Is Entitled to Damages Caused by Grunins Illegal Behavior, to Punitive


Damages For His Fraudulent Activities, and to Attorneys Fees Pursuant to Cal.
Penal Code 502

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Where the factual allegations of the complaint provide sufficient legal basis for entry of a

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default judgment, the court then conducts an inquiry to ascertain the amount of damages.

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TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 91718 (9th Cir. 1987). As explained above,

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Facebook has suffered damage in excess of $340,000. Facebook is also entitled to punitive

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PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page19 of 20

damages for Grunins fraud. See Cal. Civ. Code 3294. Facebook will submit declarations to

support the amount of its damages, in accordance with the Courts October 22, 2014 Order (Dkt.

61), when judgment is entered.

Finally, Facebook is entitled to its reasonable attorneys fees. The California

Comprehensive Computer Data Access and Fraud Act, Cal. Penal Code 502(e)(2), provides that

in any private action brought under Section 502(e) of the statute, the court may award reasonable

attorneys fees. Attorneys fees are also available for CFAA claims. See NCMIC Fin. Corp. v.

Artino, 638 F. Supp. 2d 1042, 106566 (S.D. Iowa 2009) (Although attorneys fees in

prosecuting a CFAA action do not count toward the $5000 statutory threshold, attorneys fees

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incurred responding to the actual CFAA violation to place the plaintiff in their ex ante position

11

are permissible as costs incurred as part of the response to a CFAA violation, including the

12

investigation of an offense. (citation omitted)) (quoting A.V. ex rel. Vanderhye v. iParadigms,

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LLC, 562 F.3d 630, 646 (4th Cir. 2009)); cf. Multiven, Inc., 725 F. Supp. 2d at 895. At the

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Courts invitation, Facebook will submit evidence of its attorneys fees in this action.

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C.

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Grunin Should Be Permanently Enjoined from Accessing and Abusing Facebooks


Services
Facebook is entitled to the entry of a permanent injunction against Grunin that prohibits

him from, at a minimum:


1. Accessing or using, or engaging, inducing, or encouraging third parties to access
or use, any Facebook-owned or -operated website, service, platform, or computer
system, including, but not limited to, Facebook, Instagram, and Whatsapp;
2. Engaging in any activity that violates Facebooks Terms; and
3. Engaging in any unlawful, misleading, or malicious activities directed at or
relating to Facebook-owned or -operated websites, services, platforms, or
computer systems.
The facts set forth in Facebooks Complaint, which are deemed admitted by Grunin, establish that
Facebook is entitled to this injunction under the federal CFAA, 18 U.S.C. 1030(g) (providing
for injunctive relief), and the California Comprehensive Computer Data Access and Fraud Act,
-14-

PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67 Filed11/20/14 Page20 of 20

Cal. Penal Code 502(e)(1) (providing for injunctive relief). See, e.g., Creative Computing v.

Getloaded.com LLC, 386 F.3d 930, 93738 (9th Cir. 2004) (upholding broad injunction entered

by trial court in action for violations of the CFAA); Facebook Inc. v. Power Ventures, Inc., No.

08-CV-5780-LHK, 2013 WL 5372341, at *1416 (N.D. Cal. Sept. 25, 2013) (granting injunctive

relief under, inter alia, the CFAA and 502). Facebook will provide additional briefing on the

scope and terms of an appropriate injunction once default judgment is entered.

IV.

CONCLUSION

For the reasons set forth above, Facebook respectfully requests that the Court (1) enter

default judgment against Grunin on each of Facebooks claims, (2) enter a permanent injunction

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preventing Grunin from accessing or using any Facebook-owned or -operated website, service,

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platform, or application, from advertising to Facebook users, and from contacting Facebook

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employees, and (3) consider briefing and declarations submitted by Facebook regarding the

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amount of damages Facebook seeks (see Dkt. 61), enter an order awarding Facebook

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compensatory and punitive damages and costs related to Facebooks internal expenses and

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attorneys fees spent investigating, remediating, and preventing Grunins unlawful activities.

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DATED: November 20, 2014

PERKINS COIE LLP

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By: /s/ Judith B. Jennison


Judith B. Jennison, Bar No. 165929
JJennison@perkinscoie.com

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Attorneys for Plaintiff


Facebook, Inc.

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LEGAL122899578.11

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-15-

PLAINTIFFS NOTICE OF MOTION AND MOTION


FOR DEFAULT JUDGMENT AGAINST DEFENDANT
MARTIN GRUNIN (Case No. 14-cv-02323-WHA)

Case3:14-cv-02323-WHA Document67-1 Filed11/20/14 Page1 of 2

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Judith B. Jennison, Bar No. 165929


JJennison@perkinscoie.com
PERKINS COIE LLP
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
Telephone: 206.359.8000
Facsimile: 206.359.9000
Attorneys for Plaintiff
Facebook, Inc.

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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FACEBOOK, INC.,

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Case No. 3:14-cv-02323-WHA


Plaintiff,

v.

[PROPOSED] ORDER GRANTING


FACEBOOK, INC.S MOTION FOR
DEFAULT JUDGMENT

MARTIN GRUNIN,

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Defendant.

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This matter has come before the Court on Facebooks Motion for Default Judgment.

19

After considering the papers and all evidence submitted and the arguments of counsel, if any, and

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for good cause appearing,

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IT IS THEREFORE ORDERED that Facebooks Motion for Default Judgment is

22

GRANTED, and that judgment will be entered against Martin Grunin for each of Facebooks

23

claims for relief after the Court has determined (1) the appropriate level of compensatory and

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punitive damages for each of the claims and (2) costs and attorneys fees related to the

25

investigation and remediation of Grunins activities. Facebook shall submit a brief with

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declarations to support any damages, costs, and attorneys fees flowing from the well-pled

27

allegations in the operative complaint. Such pleadings must be filed with the Court no later than

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[_____________, 2014].
LEGAL124255122.1

-1-

[PROPOSED] ORDER GRANTING


MOTION FOR DEFAULT JUDGMENT
3:14-cv-02323-WHA

Case3:14-cv-02323-WHA Document67-1 Filed11/20/14 Page2 of 2

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IT IS ALSO ORDERED that a permanent injunction will be entered against Defendant

Martin Grunin. Facebook shall submit a brief with declarations regarding the scope of such an

injunction and provide a proposed injunction. Facebooks additional submission must be filed

with the Court no later than [_____________, 2014].

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DATED: _____________, 2014

By: __________________________________
Hon. William H. Alsup

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Presented by:
/s/Judith B. Jennison
Judith B. Jennison, Bar No. 165929
JJennison@perkinscoie.com
PERKINS COIE LLP
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
Telephone: 206.359.8000
Facsimile: 206.359.9000
Attorneys for Plaintiff
Facebook, Inc.

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-2LEGAL124255122.1

[PROPOSED] ORDER GRANTING


MOTION FOR DEFAULT JUDGMENT
3:14-cv-02323-WHA

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