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Facebook v. Grunin - Default Judgment Order PDF
Facebook v. Grunin - Default Judgment Order PDF
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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FACEBOOK, INC.,
Plaintiff,
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For the Northern District of California
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v.
MARTIN GRUNIN,
Defendant.
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ORDER GRANTING
MOTION FOR
DEFAULT JUDGMENT AND
PERMANENT INJUNCTION
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INTRODUCTION
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In this action involving alleged computer fraud and abuse, plaintiff moves for default
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judgment and a permanent injunction. For the reasons stated herein, plaintiffs motion is
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GRANTED. A copy of this order will also be referred to the Office of the United States Attorney.
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STATEMENT
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Prior orders recounted the history of this action so it will not be repeated herein
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(Dkt. Nos. 33, 65). In brief, Martin Grunin, the only defendant, was personally served with the
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summons and operative complaint on May 22, 2014 (Dkt. Nos. 13, 20). No responsive pleading
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Instead, Grunin, an adult, larded the record with a hodgepodge of documents. Here are
some details:
Grunin also filed a copy of the summons and complaint with the following
handwritten note:
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I DO NOT ACCEPT THIS OFFER TO CONTRACT and
I DO NOT CONSENT TO THESE PROCEEDINGS.
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He also filed a notice of offer to settle, stating that he was tendering a check for
$250 to settle the matter. He further stated that failure to honor the contract
would result in a penalty of $50,000 and all phone call(s) are two thousand
($2000.00) dollars, per call (Dkt. Nos. 23, 27).
Default was registered against Grunin on June 23, 2014 (Dkt. No. 22).
In July 2014, Grunin filed a notice, stating that if Facebook wished to enter into
a contractual relationship it must pay $100,000 (Dkt. No. 26).
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For the Northern District of California
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A week later, Attorneys Andrew Gordon (Gordon Law Group, located in Illinois) and
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Seth Weinstein (Law Offices of Seth Weinstein, located in Sherman Oaks) appeared on behalf of
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defendant Grunin (Dkt. Nos. 42, 45). Defense counsel then moved to set aside the default.
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Grunins declaration, however, never stated innocence and failed to specifically identify any
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defenses.
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Grunins motion to set aside the default. Nevertheless, Grunin was given one more chance to
move to lift the default on the condition that he agree to pay Facebooks reasonable attorneys
fees and expenses incurred from his improper filings. Also, he was given another opportunity to
and a permanent injunction. No opposition was timely filed. Grunin was then given one more
chance to oppose the motion. He filed a statement of non-opposition via counsel (Dkt. No. 70).
Grunin then stated he wanted to proceed pro se and consented to the withdrawal of his attorneys
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For the Northern District of California
No declaration or renewed motion was filed. Facebook then moved for default judgment
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After full briefing and oral argument by both sides, an October 2014 order denied
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default. This request was denied because (1) it was untimely; (2) Grunin had been given a prior
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opportunity to file a renewed motion to lift the default (subject to the aforementioned reasonable
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condition) and he did not avail himself to that opportunity; (3) he never stated innocence and
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there is no evidence in the record that proceeding on the merits would be productive; and
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(4) he had filed a litany of inappropriate documents in this case. This order follows full briefing,
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ANALYSIS
It is undisputed that (1) Grunin was personally served with the summons and operative
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complaint in May 2014; (2) he failed to timely file a responsive pleading; (3) default was
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registered against Grunin in June 2014; (4) he never identified any specific meritorious defenses
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backed by a sworn declaration; and (5) he filed a statement of non-opposition to the instant
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motion (even though he later made an untimely oral request to lift the default).
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The operative complaint alleged the following claims for relief: (1) breach of contract,
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(2) fraud, (3) violation of the Computer Fraud and Abuse Act, 18 U.S.C. 1030, et seq., and
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(4) violation of the California Comprehensive Computer Data Access and Fraud Act, California
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Penal Code 502. Facebook seeks damages in excess of $340,000, reasonable attorneys fees,
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and a permanent injunction. If default judgment is entered, Facebook seeks leave to file briefs
Upon registration of default, all well-pled factual allegations in the complaint, except as to
damages, are taken as true. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 91718
(9th Cir. 1987). In considering whether a default judgment is appropriate, the following factors
are considered:
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At this point, it would be futile to proceed on the merits because (1) Grunin never filed a
For the Northern District of California
appended to and incorporated by reference in the complaint. Grunin agreed to Facebooks Terms
when he created a Facebook account and accessed Facebooks services. In pertinent part, Grunin
agreed not to post content that contains nudity or graphic or gratuitous violence, agreed not to
provide any false personal information on Facebook, agreed not to create an account for anyone
other than [himself] without permission, agreed not to create another account without
Facebooks permission if his account was disabled, and so forth (Exh. A). Nevertheless, he
breached Facebooks Terms by placing ads containing sexually provocative content, running
deceptive ads, transferring accounts without Facebooks permission, providing false information
to Facebook, continuing to access Facebook after revocation, and failing to pay for
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advertisements. Since 2011, Facebook has disabled at least 70 accounts linked to Grunin.
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Facebook has not been paid for at least $340,000 worth of ads purchased by or for Grunin
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Fraud: To plead a fraud claim, the complaint must allege sufficient facts to show:
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(1) a misrepresentation; (2) knowledge of the falsity; (3) intent to induce anothers reliance on the
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misrepresentation; (4) justifiable reliance; and (5) resulting damages. Fraud claims must meet the
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particularity requirement in Rule 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103
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(9th Cir. 2003). The complaint alleged that Grunin intentionally defrauded Facebook into
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providing him advertising accounts and increased advertising credit by impersonating others.
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woman with a sexually explicit and profane caption, Facebook took technical measures to
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After receipt of the cease-and-desist letter, Grunin began using unauthorized means to
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obtain and sell access to Facebook advertising accounts that were unaffiliated with him.
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In November 2012, for example, Grunin sent emails under the name Kayla Stewart, purporting
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was able to run approximately $40,000 worth of deceptive ads (Compl. 3137). In February
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and March 2013, Grunin sent emails under the names Colan Neilson, Felix Ward, and Joy
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Grunin sent Facebook bank statements purportedly from Imprezzio. Based on these
representations, Facebook provided Grunin with an advertising credit line, which Grunin used to
run approximately $300,000 worth of ads. The real Imprezzios representatives later denied
opening these accounts and stated that the bank statements Grunin provided Facebook were
falsified (Compl. 3947). In short, Grunin intentionally provided Facebook false information
so that he could obtain advertising accounts without paying for them. Grunins deceptive
advertising and fraudulent advertising accounts have caused Facebook to provide at least
$340,000 in unpaid ads, have tainted the Facebook experience for Facebook users and
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advertisers, and have caused harm to [Facebooks] reputation and goodwill (Compl. 5355,
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78, 83).
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Computer Fraud and Abuse Act: The Computer Fraud and Abuse Act, 18 U.S.C. 1030,
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et seq., was enacted to enhance the governments ability to prosecute computer crimes and to
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target hackers who accessed computers to steal information or to disrupt or destroy computer
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functionality, as well as criminals who possessed the capacity to access and control high
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technology processes vital to our everyday lives. LVRC Holdings LLC v. Brekka,
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581 F.3d 1127, 1130 (9th Cir. 2009) (internal quotation marks omitted). Facebooks complaint
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To bring a Section 1030(a)(4) claim, Facebook must allege that Grunin:
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The complaint also invoked the California Comprehensive Computer Data Access and
Fraud Act, California Penal Code Section 502, which criminalizes nine categories of acts
regarding knowingly accessing and using without permission a computer or data from a
computer. Private civil rights of action are allowed for claims brought under Section 1030(a) and
No decision from our court of appeals is squarely on point. Both United States v. Nosal,
676 F.3d 854, 856, 86364 (9th Cir. 2012) (en banc), and LVRC Holdings LLC v. Brekka,
581 F.3d 1127, 113435 (9th Cir. 2009), involved former employees and violations of use
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restrictions. Nosal held that the phrase exceeds authorized access in the Computer Fraud and
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Abuse Act was limited to violations of restrictions on access to information, and not restrictions
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on its use. 676 F.3d at 864 (emphasis in original). Because the defendants accomplices his
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former colleagues still working for the company had permission to access the companys
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information, the Section 1030(a)(4) counts were properly dismissed. Similarly, in Brekka,
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summary judgment for a former employee was appropriate, in part, because the former employee
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was authorized to use his former employers computers while still employed by the company.
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Our dispute, unlike those in Nosal and Brekka, involves a violation of a restriction on
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access to information. The operative pleading alleged that after Facebook sent two cease-and-
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desist letters to Grunin and after Facebook took technical measures to block Grunins access to
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Facebooks site and services, Grunin nonetheless continued to access Facebooks site and
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services. Indeed, two days after Facebooks first cease-and-desist letter, Grunin confirmed
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receipt thereof by stating I comply. He then proceeded to acquire more fraudulent accounts and
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run more deceptive ads (Compl. 23, 25, 51, 56, 67, 73). Several specific examples of conduct
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by Grunin were detailed in the complaint. For example, in March 2013, after his access was
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terminated, Grunin impersonated another to obtain a new Facebook account and to secure a
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Facebook credit line based on falsified bank statements. Based on these representations,
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Grunin was provided with an account and credit line which he then used to run hundreds of
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thousands of dollars of ads. Each time Facebook implemented technical measures to disable one
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of Grunins accounts, Grunin created more accounts to run more ads. Facebook consequently
incurred damages attributable to its efforts identifying, investigating, and removing over seventy
accounts associated with Grunin, and Facebook was never paid for more than $340,000 worth of
advertising provided to Grunin (Compl. 30, 37, 45, 46, 56, 67, 68, 83).
This order holds that Facebook is entitled to default judgment on the Section 1030(a) and
Section 502(c) claims because the complaint alleged, inter alia, that after Grunins access was
terminated and after he received two cease-and-desist letters, Grunin intentionally accessed
Facebooks computers and servers to obtain account credentials, Facebook credit lines, Facebook
ads, and other information, causing more than $5,000 in losses to Facebook. Grunin intentionally
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Several decisions in our district have found liability under the statutes invoked here based
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on similar conduct. In Facebook, Inc. v. Power Ventures, Inc., 844 F. Supp. 2d 1025, 103639
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(N.D. Cal. 2012) (Judge James Ware), summary judgment was granted in favor of the plaintiff
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(Facebook) on the Section 502 and Section 1030(a)(2) claims, in part, because the defendants
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circumvented technical barriers designed to block their access to Facebook and the defendants
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admitted that they had obtained information from Facebooks website without authorization.
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See also Facebook, Inc. v. Power Ventures, Inc., No. 5:08-cv-05780-LHK, 2013 WL 5372341,
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at *14, 17 (N.D. Cal. Sept. 25, 2013) (Judge Lucy Koh). In Facebook, Inc. v. Fisher,
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No. 5:09-cv-05842-JF, 2011 WL 250395, at *1, 3 (N.D. Cal. Jan. 26, 2011) (Judge Jeremy
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Fogel), default judgment was entered against the defendant who allegedly obtained log-in
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credentials for more than 116,000 Facebook accounts without authorization and then sent more
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than 7.2 million spam messages. In craigslist, Inc. v. Kerbel, No. 3:11-cv-03309-EMC,
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2012 WL 3166798, at *12, 1518 (N.D. Cal. Aug. 2, 2012) (Judge Edward Chen), default
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judgment was entered against the defendant who allegedly created fraudulent accounts and
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offered services designed to enable craigslist customers to repeatedly auto-post ads to craigslist.
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More recently, two post-Nosal decisions from our district have declined to dismiss claims
based on similar conduct. In craigslist Inc. v. 3Taps Inc., 964 F. Supp. 2d 1178, 1187
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(N.D. Cal. 2013) (Judge Charles Breyer), a renewed motion to dismiss the Section 1030(a) and
Section 502(c) claims was denied. There, the plaintiff implemented a complete access
designed to cut-off defendants ability to view the site, but the defendants continued to use
(N.D. Cal. Jan. 3, 2014) (Magistrate Judge Paul Grewal), dismissal of the Sections 1030(a)(2) and
(4) claims was not warranted because the defendants allegedly had no access rights whatsoever
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Here too, Facebook implemented a complete access restriction by sending Grunin two
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cease-and-desist letters and by taking technical measures to block his access. Grunin nevertheless
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continued to access Facebooks site and services without authorization and to impersonate others,
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Injunction: Section 1030(g) and Section 502(e)(1) allow for injunctive relief. To obtain
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injunctive relief, plaintiff must demonstrate: (1) that it has suffered an irreparable injury;
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(2) that remedies available at law, such as monetary damages, are inadequate to compensate for
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that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a
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remedy in equity is warranted; and (4) that the public interest would not be disserved by a
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permanent injunction. eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).
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That showing has been made. Even after two cease-and-desist letters, Grunin continued to
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fraudulently obtain Facebook accounts and to access Facebooks services. Facebook has already
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terminated more than seventy accounts associated with Grunin and the public would not be
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disserved by prohibiting Grunin from posting sexually provocative and deceptive ads on
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Facebook.
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Facebooks proposal is too wordy, it has been revised as stated in the conclusion section.
CONCLUSION
For the reasons stated herein, Facebooks motion for default judgment and a permanent
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injunction is GRANTED. Grunin is HEREBY ENJOINED from accessing or using any Facebook
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To determine the amount of damages and any fees, by JANUARY 14 AT NOON, Facebook
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shall file a brief specifically identifying all of its claimed damages and fees with declarations,
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documents, and authorities supporting the sum requested. That submission must be promptly
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Grunin has until JANUARY 27, 2015 AT NOON to file a response. It will not be enough to
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simply attack Facebooks numbers. If contested, Grunin must set forth a specific counter-
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Facebook has until FEBRUARY 3 AT NOON to file a reply. The Court is likely to rule on
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the papers, but nevertheless, a prove-up hearing is hereby calendared for FEBRUARY 19 AT
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1:30 P.M. All parties and witnesses must appear in person (unless the hearing is vacated).
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In light of the serious nature of the allegations herein, the Clerk shall send a copy of this
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order to our United States Attorney for her consideration and possible investigation. The Court,
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of course, takes no position on whether the United States Attorneys Office should or should not
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IT IS SO ORDERED.
Dated: January 8, 2015.
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE
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