E-Hose Technologies LLC et al v. Primeco Wholesale, Inc. et al

Filing 38

ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANTS BOSS WHOLESALE CORPORATION AND J&L WHOLESALE DISTRIBUTORS by Judge Manuel L. Real: IT IS HEREBY ORDERED that Plaintiffs' Motion for Default Judgment 36 is GRANTED a gainst Defendants Boss Wholesale Corporation and J&L Wholesale Distributors for damages, attorney's fees, and injunctive relief. This Court awards Plaintiffs $1,000,000 in statutory damages, and $23,600 in attorneys' fees. This Court orders Plaintiffs to resubmit a request for prejudgment interest applying the appropriate federal interest rate. Defendants are enjoined from infringing, in any matter, Plaintiffs' licensed trademarks. (MD JS-6. Case Terminated) (gk)

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JS-6

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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E-HOSE TECHNOLOGIES, LLC, a
California Limited Liability Company; and
PhD MARKETING, Inc., a California
Corporation,

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Plaintiffs,
v.
PRIMECO WHOLESALE, INC., a California
Corporation; NOR KHALIL HADDAD, an
individual; BOSS WHOLESALE
CORPORATION; a New Jersey Corporation;
J&L WHOLESALE DISTRIBUTORS, a
Pennsylvania Corporation, and DOES 1-10,
inclusive,
Defendants.

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CASE NO. CV 14-8600-R
ORDER GRANTING PLAINTIFFS’
MOTION FOR DEFAULT JUDGMENT
AGAINST DEFENDANTS BOSS
WHOLESALE CORPORATION AND
J&L WHOLESALE DISTRIBUTORS

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Before the Court is Plaintiffs’ Motion for Default Judgment against Defendants Boss

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Wholesale Corporation and J&L Wholesale Distributors, which was filed on June 16, 2015. This

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Court took the matter under submission on July 27, 2015.

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Plaintiffs seek the entry of default judgment against Defendants J&L Wholesale

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Distributors and Boss Wholesale Corporation. Plaintiffs personally served Defendant J&L with

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copies of the Summons and First Amended Complaint on January 8, 2015, and personally served

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Defendant Boss with the same on January 26, 2015. Defendants did not appear in this action, did

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not respond to the complaint, and had a clerk’s default entered against them on March 17, 2015.

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A court has the discretion to enter a default judgment against one who is not an

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unrepresented infant or other incompetent person where the claim is for an amount that is not

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certain on the face of the claim and where (a) the defendant has been served with the claim; (b) the

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defendant's default has been entered for failure to appear; (c) if the defendant has appeared in the

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action, the defendant has been served with written notice of the application at least three days

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before the hearing on the application; (d) the court has undertaken any necessary or proper

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investigation or hearing in order to enter judgment or carry it into effect; and (e) Plaintiff has filed

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a written affidavit addressing the current military status of the defendant. Fed.R.Civ.P. 55(b)(2);

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Alan Neuman Productions v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988).

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While the power to grant or deny relief upon an application for default judgment is within

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the Court's sound discretion, a plaintiff is required to state a claim upon which he may recover in

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order to grant the motion for a default judgment. Sony Music Entertainment v. Elias, 2004 WL

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141959 (C.D. Cal. Jan. 20, 2004); Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175

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(C.D. Cal. 2002). Upon default, the well-pleaded allegations of the complaint relating to liability

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are taken as true. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). On

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the other hand, a defendant is not held to admit facts that are not well-pleaded or to admit

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conclusions of law. Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d 1072 (C.D. Cal. 2012).

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Plaintiffs have complied with the procedural requirements of Federal Rule of Civil

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Procedure 55 and Local Rule 55-1. This Court has considered the factors enumerated in Eitel v.

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McCool, 782 F.2d 1470 (9th Cir. 1986) and concludes that these factors weigh in favor of granting

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the default judgment. The first of those factors is the sufficiency of the complaint. To assert a

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claim for trademark infringement, a plaintiff must show that a defendant commercially used

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plaintiff’s registered trademark in connection with the sale or advertising of a good or service that
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is likely to confuse or deceive customers. 15 U.S.C. § 1114(a); Brookfield Communications v.

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West Coast Entertainment, 174 F.3d 1036, 1046 (9th Cir. 1999). Plaintiffs’ First Amended

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Complaint alleges at least two different claims of trademark infringement. Plaintiffs provide the

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licenses and serial numbers for each trademark, as well as the date upon which the licenses were

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issued. Overall, the allegations of Plaintiffs’ First Amended Complaint, taken as true, are

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sufficient to state a claim for trademark infringement.

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The second Eitel factor considers the amount of money at stake in relation to the

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seriousness of a defendant’s conduct. Wecosign, Inc., 845 F. Supp. 2d at 1082. Default judgment

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is disfavored when a large amount of money is involved and is unreasonable in light of the

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potential loss caused by the defendant’s actions. Vogel v. Rite Aid Corp., 992 F. Supp. 2d 998,

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1012 (C.D. Cal. 2014). Plaintiffs request monetary damages of $1,000,000 for the infringement of

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two licensed trademarks, $23,600 in attorney’s fees and costs, $114,300.88 in prejudgment

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interest, and a permanent injunction to inhibit Defaulting Defendants from further infringing upon

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Plaintiffs’ trademarks. When balanced against Defendants’ actions, this Court concludes that the

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amount sought is neither too large nor unreasonable. Given Defendants’ failure to appear and

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defend, this Court finds that the damages and fees are needed. Accordingly, this factor weighs in

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favor of entry of default judgment.

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The third factor considers the possibility of prejudice to the plaintiff. Defendants have

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failed to appear and defend this action. Absent entry of default judgment, Plaintiffs will be

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without recourse against Defendants, and risk continuing infringement of Plaintiffs’ trademarked

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products. Therefore, this factor weighs in favor of the entry of default judgment.

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The fourth factor considers the possibility of a dispute concerning material facts. Here,

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Plaintiffs have adequately alleged trademark infringement in their First Amended Complaint.

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Plaintiffs personally served both Defendants in this matter in January 2015. Since then,

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Defendants have failed to comply, failed to appear in this matter, and have therefore admitted all

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material facts alleged in Plaintiffs’ pleading. Since Plaintiffs’ factual allegations are presumed

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true and Defendants have failed to oppose the motion, no factual disputes exist that would

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preclude the entry of default judgment. This factor, therefore, favors the entry of default judgment
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against Defendants.
The fifth factor is whether the default was due to excusable neglect. This factor favors

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default judgment when the defendant has been properly served or the plaintiff demonstrates that

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the defendant is aware of the lawsuit. Wecosign, Inc., 845 F. Supp. 2d at 1082. There is no

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indication that Defendants allowed the default to be taken as the result of excusable neglect. The

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record indicates that Defendants had adequate notice of this matter — both Defendants were

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properly served with the Summons and First Amended Complaint and the instant motion for

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default judgment. The Court finds it reasonable to infer that Defendants’ default was not the

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product of excusable neglect. Accordingly, this factor weighs in favor of the entry of default

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judgment.

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The final factor considers the strong policy underlying the Federal Rules of Civil

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Procedure favoring decisions on the merits. Although cases should be decided upon their merits

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whenever reasonably possible, Rule 55(a) allows a court to decide a case before the merits are

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heard if defendant fails to appear and defend. Wecosign, Inc., 845 F. Supp. 2d at 1083.

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Notwithstanding the strong policy presumption in favor of a decision on the merits, Defendants’

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failure to answer Plaintiffs’ First Amended Complaint makes a decision on the merits impractical.

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Since Defendants failed to appear and defend, this factor weights in favor of the entry of default

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judgment.
Having met the Eitel factors, Plaintiff is entitled to damages. Plaintiff has the burden of

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proving damages through testimony or written declaration or affidavit. Fed. R. Civ. Proc. 55(b)(2);

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Lotenero v. Cripps, 2012 U.S. Dist. LEXIS 19750 (E.D. Cal. Feb. 15, 2012). Rule 54(c) limits

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the relief that can be sought in a motion for entry of default judgment to that identified in the

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complaint. Fed. R. Civ. Proc. 54(c), Vogel, 992 F. Supp. 2d at 1013. Plaintiffs have submitted the

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Declaration of Jessica Covington, an attorney for Plaintiffs, who attests to the loss of revenue

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caused by Defendants. Plaintiffs seek statutory damages, attorneys’ fees and costs, and injunctive

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relief.

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Plaintiffs request $1,000,000 in statutory damages, or $500,000 per each counterfeit. The

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Trademark Act of 1946 provides that a plaintiff may receive an award of statutory damages up to
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$2,000,000 per counterfeit mark per each type of good or service that a defendant willfully sells,

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offers for sale, or distributes. 15 U.S.C. § 1117(c).

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Plaintiffs submitted a declaration that provides affirmative evidence that Plaintiffs

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personally served both Defendants with copies of the Summons and First Amended Complaint.

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Covington Decl. at 3 ¶¶ 7-8. Plaintiffs also served both Defendants with copies of the Motion for

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Default Judgment on June 12, 2015. Id. at 3 ¶ 14. Despite Plaintiffs’ efforts to notify Defendants

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in this matter, Defendants failed to reply to Plaintiffs’ pleadings. Plaintiffs provide evidence of at

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least two violations of the Trademark Act of 1946. See id. at 2-3 ¶¶ 4-6. Furthermore, Plaintiffs do

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not seek an award of maximum damages under the act, but a reduced award to remedy their

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injuries, as well as injunctive relief to permit Defendants to operate their respective businesses

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legally. An award of $500,000 per violation is appropriate. This award does not appear to be so

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high as to be unreasonable, particularly given the evidence of willful conduct on behalf of

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Defendants. Accordingly, this Court awards Plaintiffs $1,000,000 in statutory damages.

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Plaintiffs further request $23,600 in attorneys’ fees. Under Local Rule 55-3, when an

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applicable statute provides for the recovery of reasonable attorneys’ fees, fees are to be calculated

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pursuant to the schedule set forth in the rule. For a judgment over $100,000, the court is to award

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attorneys’ fees of $5,600 plus 2% of the amount over $100,000, exclusive of costs. See, Local

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Rule 55-3; Vogel, 992 F. Supp. 2d at 1016 (applying Rule 55-3 schedule to award fees in a default

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judgment context). Based on an entry of a $1,000,000 judgment under the Trademark Act of

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1946, an award of $23,600 in fees under Rule 55-3 is appropriate. Accordingly, this Court awards

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$23,600 in attorneys’ fees.

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Plaintiffs also seek permanent injunctive relief restraining defendants from infringing, in

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any manner, their licensed trademarks. The Trademark Act of 1946 gives courts the power to grant

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injunctions to prevent the violation of a trademark holder’s rights. 15 U.S.C. § 1116(a); Pepsico,

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Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). A plaintiff is not required to

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satisfy the other prerequisites generally needed for injunctive relief when an injunction is sought to

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prevent the violation of a federal statute, which specifically provides for injunctive relief. Vogel,

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992 F. Supp. 2d at 1015 (quoting Antoninetti v. Chipotle Mexican Grill, Inc., 643 F.3d 1165 (9th
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Cir. 2010)).
Plaintiffs served both Defendants in this matter with copies of the Summons, First

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Amended Complaint, and Motion for Default Judgment. Despite Defendants’ adequate notice,

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Defendants have failed to appear or defend. Under these circumstances, there is the threat of

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continuing violation of Plaintiffs’ licensed trademarks. Accordingly, Defendants are enjoined from

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infringing, in any matter, Plaintiffs’ licensed trademarks.

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Lastly, Plaintiffs seek prejudgment interest on their claims of trademark infringement,

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totaling $114,300.88. See 15 U.S.C. § 1117(b); Brighton Collectibles, Inc. v. Coldwater Creek,

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Inc., 2009 WL 160235, *5 (S.D. Cal. 2009). Plaintiffs request that this Court apply the 7%

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statutory rate applied in California courts. Cal. Const. Art. § 1; see Pacific-Southern Mortg. Trust

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Co. v. Ins. Co. of N. Am., 166 Cal. App. 3d 703, 716 (1985). This Court finds that the 7% statutory

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interest rate applied in the California courts is inappropriate. Plaintiffs should calculate any

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prejudgment interest that this Court should grant using the federal short-term interest rate

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prescribed in Title 26 U.S.C. § 6621(a)(2). See 15 U.S.C. § 1117(b). Accordingly, this Court

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orders Plaintiffs to resubmit a request for prejudgment interest applying the appropriate federal

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interest rate.

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IT IS HEREBY ORDERED that Plaintiffs’ Motion for Default Judgment is GRANTED

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against Defendants Boss Wholesale Corporation and J&L Wholesale Distributors for damages,

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attorney’s fees, and injunctive relief. (Dkt. No. 36)

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Dated: August 3, 2015

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______________________________
MANUEL L. REAL
UNITED STATES DISTRICT JUDGE

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