AFL Telecommunications LLC v. Fiberoptic Hardware LLC et al
Filing
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ORDER granting 62 Plaintiff's motion for default judgment. Default judgment will be entered in favor of Plaintiff AFL Telecommunications LLC and against Defendant Fiberoptic Hardware, LLC in the amount of $217,341. Plaintiff's motion for reconsideration and request for leave to file an amended complaint [62, at 8] are denied. Default judgment will be entered in favor of Plaintiff on Defendant's counterclaims 54 . The Court will enter judgment in a separate order. Plaintiff may file a motion for attorneys' fees and costs on or before 6/8/12. Signed by Judge David G Campbell on 5/31/12.(TLJ)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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AFL Telecommunications LLC,
Plaintiff,
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ORDER
v.
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No. CV11-01081-PHX-DGC
Fiberoptic Hardware, LLC,
Defendant.
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Pursuant to the Court’s April 26, 2012 order (Doc. 61) and Federal Rule of Civil
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Procedure 55(b)(2), Plaintiff AFL Telecommunications LLC (“AFL”) has filed a motion
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for entry of default judgment against Defendant Fiberoptic Hardware, LLC (“FOH”),
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including an award of damages, costs, and attorneys’ fees, and entry of a permanent
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injunction. Doc. 62. The Court will grant the motion.
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I.
Procedural Background.
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AFL filed its original complaint on May 31, 2011, against Defendants Fiberoptic
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Hardware, LLC (“FOH”) and George Kyrias, alleging four claims: federal unfair
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competition, false description, and false designation of origin under 15 U.S.C. § 1125(a),
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federal false advertising under 15 U.S.C. § 1125(a), common law unfair competition, and
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copyright infringement. Doc. 1. AFL moved for a preliminary injunction. Doc. 6. On
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September 20, 2011, the Court dismissed the claims against Mr. Kyrias for lack of
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personal jurisdiction, dismissed the copyright infringement claim pursuant to Federal
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Rule of Civil Procedure 12(b)(6) for failure to state a claim to relief, and granted a
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preliminary injunction with respect to the Lanham Act claims. Doc. 30. The preliminary
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injunction was entered on October 5, 2011.
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On January 17, 2012, the parties stipulated to the filing of AFL’s first amended
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complaint. Doc. 51. The Court granted AFL leave to amend on January 26, 2012
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(Doc. 52), and AFL filed its amended complaint on January 31, 2012. Doc. 53. In its
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amended answer, FOH asserted three counterclaims: intentional interference with
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contracts and business expectancies, declaratory judgment of trademark invalidity, and
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federal false advertising. Doc. 54, at 9-11. AFL filed an answer to the counterclaims.
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Doc. 55.
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On April 3, 2012, FOH moved for partial summary judgment with respect to
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AFL’s claims for monetary damages and attorneys’ fees. Doc. 56. On April 23, 2012,
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FOH filed a motion to withdraw counsel. Doc. 60. Following the Court’s April 26, 2012
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telephonic conference with the parties, the Court denied the motion for partial summary
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judgment as moot (Doc. 56), granted the motion to withdraw attorney (Doc. 60), and
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entered default against FOH. Doc. 61.
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II.
Legal Standard.
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Federal Rule of Civil Procedure 55(a) provides that “[w]hen a party against whom
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a judgment for affirmative relief is sought has failed to plead or otherwise defend as
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provided by these rules . . . the clerk shall enter the party’s default.” After a default has
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been entered and the defendant fails to appear or move to set aside the default, the Court
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may, on the plaintiff’s motion, enter a default judgment. Fed. R. Civ. P. 55(b)(2).
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Granting default judgment is within the Court’s sound discretion. See Aldabe v.
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Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court should consider in
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deciding whether to grant default judgment include: (1) the possibility of prejudice to the
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plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the
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complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute
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concerning material facts, (6) whether the default was due to excusable neglect, and
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(7) the strong policy favoring decisions on the merits.
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F.2d 1470, 1471-72 (9th Cir. 1986). In considering these factors, all factual allegations in
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See Eitel v. McCool, 782
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plaintiff’s complaint are taken as true, except those relating to damages. TeleVideo Sys.,
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Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).
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III.
Discussion.
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Pursuant to Rule 55(b)(2), AFL seeks the following default judgment against
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FOH: (1) a permanent injunction on the Lanham Act claims, under 15 U.S.C. § 1116(a),
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that enjoins FOH from importing, buying, selling, or otherwise trafficking in Fujikura
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fusion splicers unless those splicers can be shown to be authorized for sale in the United
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States; (2) damages on the Lanham Act claims, under 15 U.S.C. § 1117(a), in the amount
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of $217,341; (3) costs on the Lanham Act claims, under 15 U.S.C. § 1117(a), in an
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amount to be determined by the Court;1 and (4) attorneys’ fees on the Lanham Act
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claims, under 15 U.S.C. § 1117(a), in an amount to be determined by the Court. Doc. 62,
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at 7-11.
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Having considered AFL’s motion for entry of default judgment, which addresses
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each Eitel factor (Doc. 62, at 11-12), the Court concludes that default judgment is
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appropriate. AFL will be prejudiced if default is not entered because, absent judgment, it
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will be without recourse for recovery. Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d
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1172, 1177 (C.D. Cal. 2002).
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A review of AFL’s complaint shows that it has sufficiently set forth meritorious
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claims for relief. While the Court dismissed the copyright infringement claim under
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Rule 12(b)(6), the Lanham Act claims in the original complaint (Doc. 1), restated in the
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amended complaint (Doc. 53), were sufficient to justify a preliminary injunction. See
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Doc. 30. Given the sufficiency of the amended complaint and FOH’s default, there is no
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dispute concerning any material facts.
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With respect to the amount at stake, AFL seeks $217,341 in damages for its
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Lanham Act claims. This figure is properly documented, contractually justified, and
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reasonably proportionate to the harm caused by FOH’s actions. See Bd. of Trustees of
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AFL requests an award of costs in an amount to be shown in a bill of costs, to be
submitted within 14 days of entry of judgment. Doc. 62, at 10.
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Cal. Metal Trades v. Pitchometer Propeller, No. C-97-2661-VRW, 1997 WL 797922,
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at *1 (N.D. Cal. Dec. 15, 1997). FOH’s interrogatory response indicates that it may have
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sold as many as 32 Fujikura FSM-60R and FSM-60S splicers, which it has identified by
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serial number. Doc. 62, at 9; Doc. 62-12, at 2-3. Fujikura has confirmed that, based on
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the serial numbers, only one of these splicers could have been authorized for sale in the
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United States. Doc. 62, at 9. Twenty-eight of the remaining 31 splicers had to have been
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FSM-60S splicers, because there are no FSM-60R splicers with those numbers. Id. at 9-
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10. With respect to two of the remaining three splicers, neither an FSM-60R or FSM-60S
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splicer bearing that number was originally sold in North America. Id. at 10. Given that
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28 of 31 are known to have been 60S models, AFL assumes that the one remaining unit
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was also an FSM-60S, in which case it would not have been originally sold in North
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America. Id. AFL is able to pay the fixed costs related to the sale of the splicers with the
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sales it has actually made. Id. The variable costs that AFL incurs on the sale of a
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Fujikura splicer consist of the cost of the splicer itself, commissions paid to sales
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personnel, and shipping costs. Doc. 62-2, at 6 (Althoff Decl. ¶ 17). When those variable
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costs that AFL would have incurred on the sale of an FSM-60S or FSM-60R splicer are
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deducted from the typical sales price it would have received, AFL’s monetary loss on
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each sale lost to a gray market seller is approximately $7,011 per unit for an FSM-60S
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splicer and $8,001 for an FSM-60R splicer. Id. Assuming that all 31 of the splicers sold
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by FOH were FSM-60S splicers, the total loss to AFL is $217,341. Id.
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With respect to the remaining Eitel factors, FOH was aware that withdrawal of its
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counsel would result in default judgment, so the default did not result from excusable
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neglect. While cases should be decided on their merits whenever reasonably possible,
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Eitel, 782 F.2d at 1472, the existence of Rule 55(b) indicates that this preference alone is
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not dispositive, Kloepping v. Fireman’s Fund, No. C 94-2684 TEH, 1996 WL 75314, at
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*3 (N.D. Cal. Feb. 13, 1996). FOH’s default makes a decision on the merits “impractical,
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if not impossible.” Pepsico, 238 F. Supp. 2d at 1177.
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III.
Motion to Reconsider and Request for Leave to Amend.
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AFL asks the Court to reconsider its previous decision (Doc. 30) that it lacks
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personal jurisdiction over George Kyrias. Doc. 62 at 8. In support, AFL argues that
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Mr. Kyrias is engaged in a “shell game” to protect his assets from the liability arising in
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this case.
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incorporation for a new company called Fiberoptic Resale, and that, like FOH, Fiberoptic
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Resale is engaged in the purchase and sale of electronics equipment. Doc. 62, at 6. AFL
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alleges that the new company is operating out of the same Arizona and New Hampshire
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business addresses as FOH, and is effectively continuing the FOH business. These facts,
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however, do not address Mr. Kyrias’s direct personal contacts with Arizona, and do not
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provide a basis for reconsidering the Court’s earlier jurisdictional decision.
Doc. 62, at 5.
AFL alleges that Kyrias has recently filed articles of
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AFL also asks the Court to grant leave to amend the complaint to name Kyrias,
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Fiberoptic Resale Corp., and Granite State Electronics, LLC as Defendants. Doc. 62 at 8.
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The request does not comply with LRCiv 15.1 and therefore will be denied. In addition,
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this case has proceeded to the judgment stage. The Court concludes, in its discretion, that
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amendment of the complaint would be untimely and would prolong completion of a case
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that has been pending for one year. If AFL wishes to sue these entities, it must do so in a
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new case.
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The proposed permanent injunction submitted by AFL includes George Kyrias,
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Fiberoptic Resale Corp., and Granite State Electronics, LLC. Doc. 62-1. Because these
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individuals and entities are not parties to this litigation, the Court will not include them in
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the injunction. The injunction will be limited to the persons and entities identified in
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Rule 65(d)(2).
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IT IS ORDERED:
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1.
Plaintiff’s motion for default judgment (Doc. 62) is granted.
Default
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judgment will be entered in favor of Plaintiff AFL Telecommunications LLC and against
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Defendant Fiberoptic Hardware, LLC in the amount of $217,341.
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2.
Plaintiff’s motion for reconsideration and request for leave to file an
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amended complaint (Doc. 62, at 8) are denied.
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Default judgment will be entered in favor of Plaintiff on Defendant’s
counterclaims (Doc. 54).
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The Court will enter judgment in a separate order.
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Plaintiff may file a motion for attorneys’ fees and costs on or before
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June 8, 2012.
Dated this 31st day of May, 2012.
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