Leadership Studies, Inc. v. ReadyToManage, Inc. et al

Filing 92

MINUTES (IN CHAMBERS) - PLAINTIFF LEADERSHIP STUDIES' NOTICE OF FAILURE TO COMPLY WITH COURT ORDER TO SHOW CAUSE WHY DEFAULT JUDGMENT SHOULD NOT BE ENTERED AND REQUEST FOR ENTRY OF DEFAULT JUDGMENT by Judge Christina A. Snyder: On 3/29/2017, pla intiff filed a notice that Defendants ReadyToManage, Inc., Team Publications, and Jon Warner (collectively "moving defendants") failed to show cause why a default judgment should be entered against them 90 . Given the moving defendants 9; failure to comply with Court's 1/17 and 3/9/2017 orders, the Court DIRECTS the Clerk of Court to re-enter default against the moving defendants. The Court GRANTS plaintiff's motion for default judgment with respect to plaintiff's cl aims for trademark infringement, copyright infringement, unfair competition, declaratory relief, and injunctive relief against the moving defendants. The Court DENIES plaintiff's motion for default judgment with respect to plaintiff's claim for accounting. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that judgment be entered in favor of plaintiff on its claims for trademark infringement, copyright infringement, unfair competition, injunctive relief, and declaratory relief. All defendant s Jon Warner, ReadyToManage, Inc., Team Publications, Worldwide Center for Organizational Development, LLC, and Profiles-R-Us.com, Pty. Ltd. shall be jointly and severally liable to plaintiff in the amount of $1,128,930.89, which is comprised of : (a) $1,100,000 in statutory damages for trademark and copyright infringement; (b) $25,600 in attorneys' fees; and (c) $3,330.89 in costs. Plaintiff shall submit a Proposed Judgment in accordance with this order. IT IS FURTHER OR DERED that this Court retains jurisdiction over any matter pertaining to this judgment. Plaintiff shall submit forthwith to the Clerk of Court a request identifying the taxable costs it has incurred. (Made JS-6. Case Terminated.) Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

Present: The Honorable 
Catherine Jeang 
Deputy Clerk 

CHRISTINA A. SNYDER 

N/A 

Tape No.

Attorneys Present for Defendants: 

Not Present 
Court Reporter / Recorder

Attorneys Present for Plaintiffs: 

Not Present 
Not Present 
(IN CHAMBERS) - PLAINTIFF LEADERSHIP STUDIES’
Proceedings:  
NOTICE OF FAILURE TO COMPLY WITH COURT ORDER TO
SHOW CAUSE WHY DEFAULT JUDGMENT SHOULD NOT BE
ENTERED AND REQUEST FOR ENTRY OF DEFAULT
JUDGMENT (Dkt. 90, filed March 29, 2017)
I.

INTRODUCTION AND BACKGROUND

On December 8, 2015, plaintiff Leadership Studies, Inc. filed this action for
trademark infringement, copyright infringement, unfair competition, accounting, and
declaratory relief against Jon Warner; ReadyToManage, Inc. (“RTM”); Team
Publications (“TP”); Worldwide Center for Organizational Development, LLC
(“WCOD”); and Profiles-R-Us.com, Pty. Ltd (“PRU”). Dkt. 2 (“Compl.”). Plaintiff
provides leadership training services and materials for major corporations in the United
States and through worldwide affiliates. See generally id. Plaintiff owns numerous
trademarks, most notably its “Situational Leadership® Model,” as well as numerous
copyrighted works. Id. at ¶ 5. Warner is involved with several entities that publish and
offer for sale leadership training materials directed toward businesses. Four of those
entities––defendants RTM, TP, WCOD, and PRU––are named as defendants in this
action.
On August 16, 2016, the Court granted the motion—filed by RTM, TP, and
Warner (“moving defendants”)—to set aside the Clerk’s entry of default against them,
conditioned upon the moving defendants’ payment to plaintiff of associated, reasonable
costs. Dkt. 75. WCOD and PRU did not join the moving defendants’ application to set
aside the default or the opposition to plaintiff’s motion for the default judgment. As a
result, the Court granted default judgment as against WCOD and PRU, but reserved its
decision regarding the calculation of damages until the matter was adjudicated as to all
defendants. Id. at 14.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 1 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

On January 17, 2017, the Court concluded that plaintiff’s request for fees and costs
was reasonable and, therefore, granted plaintiff’s request for $154,689.50 in attorneys’
fees and $3,330.89 in costs from the moving defendants, for a total of $158,020.39. Dkt.
84. The Court ordered defendants to comply within 45 days. Id.
On March 7, 2017, plaintiff filed a notice that the moving defendants had failed to
comply with the Court’s January 17, 2017 order. Dkt. 88.
On March 9, 2017, the Court ordered the moving defendants to show cause on or
before March 24, 2017, why a default judgment should not be entered against them. Dkt.
89.
On March 29, 2017, plaintiff filed a notice that the moving defendants failed to
show cause why a default judgment should be entered against them. Dkt. 90. Plaintiff
reiterated its request that a default judgment be entered against the moving defendants
and that the Court award full remedies, including statutory damages, costs, and attorneys’
fees as against all defendants. Id.
Given the moving defendants’ failure to comply with Court’s January 17 and
March 9, 2017 orders, the Court DIRECTS the Clerk of Court to re-enter default against
the moving defendants.
Furthermore, proceeding on the papers previously filed on plaintiff’s motion for
default judgment, see dkts. 50 (“MDJ”), 69, 70, the Court finds that entry of default
judgment against the moving defendants is appropriate under Eitel v. McCool, 782 F.2d
1470 (9th Cir. 1986) (directing courts to consider seven factors in deciding whether to
enter default judgment).
II.

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 55, when a party against whom a
judgment for affirmative relief is sought has failed to plead or otherwise defend, and the
plaintiff does not seek a sum certain, the plaintiff must apply to the court for a default
judgment. Fed. R. Civ. P. 55.
As a general rule, cases should be decided on the merits as opposed to by default,
and, therefore, “any doubts as to the propriety of a default are usually resolved against the
party seeking a default judgment.” Judge William W. Schwarzer et al., California

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 2 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

Practice Guide: Federal Civil Procedure Before Trial ¶ 6:11 (The Rutter Group 2015)
(citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). Granting
or denying a motion for default judgment is a matter within the court’s discretion.
Elektra Entm’t Grp. Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005); see also
Sony Music Entertainment, Inc. v. Elias, 2004 WL 141959, *3 (C.D. Cal. Jan. 20, 2004).
The Ninth Circuit has directed that courts consider the following factors in
deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiff;
(2) the merits of plaintiff’s substantive claims; (3) the sufficiency of the complaint;
(4) the sum of money at stake in the action; (5) the possibility of a dispute concerning the
material facts; (6) whether defendant’s default was the product of excusable neglect; and
(7) the strong policy favoring decisions on the merits. See Eitel, 782 F.2d at 1471–72;
see also Elektra, 226 F.R.D. at 392.
III.

DISCUSSION
A.

Eitel Factors
1.

Possibility of Prejudice to Plaintiff

The first Eitel factor considers whether a plaintiff will suffer prejudice if a default
judgment is not entered. PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172,
1177 (C.D. Cal. 2002); see also Eitel, 782 F.2d at 1471–72. Courts have concluded that a
plaintiff is prejudiced if the plaintiff would be “without other recourse for recovery”
because the defendant failed to appear or defend against the suit. Pepsi, 238 F. Supp. 2d
at 1177; see also Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494,
499 (C.D. Cal. 2003). Given the moving defendants’ failure properly to respond and
defend this suit, plaintiff would be prejudiced if denied a remedy against the moving
defendants. As a result, the first Eitel factor weighs in favor of the entry of default
judgment.
2.

Substantive Merits and Sufficiency of the Claim

Courts often consider the second and third Eitel factors together. See PepsiCo, 238
F. Supp. 2d at 1175; HTS, Inc. v. Boley, 954 F. Supp. 2d 927, 941 (D. Ariz. 2013). The
second and third Eitel factors assess the substantive merit of the movant’s claims and the
sufficiency of its pleadings, which “require that a [movant] state a claim on which [it]
may recover.” PepsiCo, 238 F. Supp. 2d at 1177 (quotation marks omitted); see also

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 3 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (stating that the issue is whether
the allegations in the pleading state a claim upon which plaintiff can recover).
a.

Copyright Infringement

“To establish a prima facie case of copyright infringement, a plaintiff must show
(1) ownership of a valid copyright and (2) violation by the alleged infringer of at least
one of the exclusive rights granted to copyright owners by the Copyright Act[.]” UMG
Recordings, Inc. v. Augusto, 628 F.3d 1175, 1178 (9th Cir. 2011). “[A]n infringer of
copyright is liable for either — (1) the copyright owner’s actual damages and any
additional profits of the infringer, as provided by subsection (b); or (2) statutory damages,
as provided by subsection (c).” 17 U.S.C. § 504(a). Because defendants have not
participated in these proceedings, plaintiff has not obtained evidence to allow it to
calculate its actual damages or defendants’ profits; as a result, plaintiff elects judgment
based on statutory damages. MDJ at 19. Under the Copyright Act, a copyright owner
may recover statutory damages “with respect to any one work . . . a sum of not less than
$750 or more than $30,000 as the court considers just.” 17 U.S.C. § 504(c)(1). “[W]here
the copyright owner sustains the burden of proving, and the court finds, that infringement
was committed willfully, the court in its discretion may increase the award of statutory
damages to a sum of not more than $150,000.” Id. § 504(c)(2). “To prove ‘willfulness’
under the Copyright Act, the plaintiff must show (1) that the defendant was actually
aware of the infringing activity, or (2) that the defendant’s actions were the result of
‘reckless disregard’ for, or ‘willful blindness’ to, the copyright holder’s rights.” Louis
Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936, 944 (9th Cir. 2011)
(quotation marks omitted).
Here, plaintiff has alleged a prima facie case of copyright infringement. See
Compl. ¶¶ 37–122; 138–44. Furthermore, there appears to be evidence to support a
finding of willful infringement. See dkt. 48, Declaration of Glenna Withem (“Withem
Decl.”) ¶¶ 11–12, 31–61 & Exs. (the RTM website contained infringing materials as of
September 2015, even though plaintiff had requested the removal of such materials in
2008 and Warner agreed to remove them). Accordingly, plaintiff requests that the Court
enter default judgment on its claims for copyright infringement against defendants,
jointly and severally, based upon the 31 materials that infringe one or more of plaintiff’s
copyrights, in the amount of $50,000 per infringement, which amounts to $1,550,000, a
sum that is one-third of the maximum for willful infringements. MDJ at 20. However,
courts do not calculate statutory damages based on the number of defendants’ materials

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 4 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

that infringe on plaintiff’s copyrights. Rather, “under the Copyright Act,
each work infringed may form the basis of one award.” Columbia Pictures Television,
Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1193 (9th Cir. 2001)
(quotation marks omitted). Accordingly, courts award statutory damages based on the
number of plaintiff’s copyrighted works that have been infringed. See, e.g., Nintendo of
Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 1010 (9th Cir. 1994) (affirming the district
court’s award of “$5000 for each of the thirteen copyrighted works infringed by
[defendant]”); Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1238 (E.D. Cal. 2008)
(awarding statutory damages in the amount of $100,000 for each of seven trademarks
infringed and $30,000 for each of nine copyrights infringed); Microsoft Corp. v. Ricketts,
No. 06-cv-06712-WHA, 2007 WL 1520965, at *4 (N.D. Cal. May 24, 2007) (awarding
statutory damages for each copyright infringed).
Plaintiff alleges that it owns the rights in and that defendants have infringed upon
twelve copyrighted original literary works: (1) “Leadership and Adaptability
Description”; (2) “Meeting Effectiveness Inventory Self Report”; (3) Meeting
Effectiveness Inventory Other Report”; (4) “Essentials of Situational Leadership Leaders’
Guide”; (5) “Essentials of Situational Leadership Leader's Guide One” (6) “The Situational
Leader,”; (7) “Situational Selling”; (8) “Management of Organizational Behavior: Leading
Human Resources” (9) “Situational Leadership®: The Core Leader’s Guide,”
(10) “Situational 23 Leadership®: The Core Participant Workbook”; (11) "Problem-Solving
Decision-Making Style Inventory – Self”; and (12) “Problem-Solving Decision-Making
Style Inventory – Other.” Compl. ¶¶ 37–64. Because plaintiff seeks $50,000 for each
copyright infringement, plaintiff is entitled to $600,000 in statutory damages for
copyright infringement.
b.

Trademark Infringement

A trademark is a “word, name, symbol, or device” that is intended “to identify and
distinguish [the mark holder’s] goods, including a unique product, from those
manufactured or sold by others and to indicate the source of the goods.” 15 U.S.C.
§ 1127. Plaintiff alleges trademark infringement under 15 U.S.C. § 1114(1)(a) of the
Lanham Act, which imposes liability on a person who uses a registered mark without the
consent of the registrant and “such use is likely to cause confusion, or to cause mistake or
deceive[.]” Thus, to prevail on a claim for trademark infringement under the Lanham
Act, a plaintiff must prove: (1) ownership of a valid trademark; (2) use of the mark
without its consent; and (3) that such use is likely to cause confusion. Credit One Corp.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 5 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

v. Credit One Financial, Inc., 661 F. Supp. 2d 1134, 1137 (C.D. Cal. 2009); see also
Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1202 (9th Cir. 2012) (“To
prevail on its Lanham Act trademark claim, a plaintiff must prove: (1) that it has a
protectible ownership interest in the mark; and (2) that the defendant’s use of the mark is
likely to cause consumer confusion.” (quotation marks omitted)).
Under the Lanham Act, a plaintiff may recover statutory damages “not less than
$1,000 or more than $200,000 per counterfeit mark per type of goods or services sold,
offered for sale, or distributed, as the court considers just.” 15 U.S.C. § 1117(c)(1). In
addition, where a defendant’s conduct has been willful, the court may grant enhanced
statutory damages of “not more than $2,000,000 per counterfeit mark per type of goods
or services sold, offered for sale, or distributed, as the court considers just.” 15 U.S.C.
§ 1117(c)(2). “Willfulness requires a connection between the defendant’s awareness of
its competitors and the defendant’s actions at those competitors’ expense.” Otter
Products, LLC v. Berrios, No. 13-cv-4384-RSWL-AGR, 2013 WL 5575070, at *9 (C.D.
Cal. Oct. 10, 2015). Furthermore, “[a] plaintiff may be awarded statutory damages under
both the Copyright Act and the Lanham Act where the defendant’s act simultaneously
infringed the plaintiff’s copyright and its trademark. . . . This is permitted because the
two statutory schemes serve different public policies, and protect against and remedy
different injuries.” Nop, 549 F. Supp. 2d at 1238 (citing Nintendo of America, Inc. v.
Dragon Pacific Int’l, 40 F.3d 1007, 1010–11 (9th Cir. 1994)). “Several courts have found
statutory damages are appropriate in default judgment cases because the information
needed to prove actual damages is within the infringers’ control and is not disclosed.”
Nop, 549 F. Supp. 2d at 1238.
Here, plaintiff has alleged a prima facie case of trademark infringement. See
Compl. ¶¶ 28–36, 66–67, 73–122, 124–32. Furthermore, there appears to be evidence to
support a finding of willful infringement. See, e.g., Withem Decl. ¶¶ 11–12, 31–61 &
Exs. (the RTM website contained infringing materials as of September 2015, even though
plaintiff had requested the removal of such materials in 2008 and Warner agreed to
remove them). Furthermore, “the failure of a party to defend itself against allegations of
trademark counterfeiting is indicative of willful trademark infringement.” Nop, 549 F.
Supp. 2d at 1238; see also Sennheiser Elec. Corp. v. Eichler, No. 12-cv-10809-MMMPLA, 2013 WL 3811775, at *5 (C.D. Cal. July 19, 2013) (“An allegation of willful
trademark infringement is deemed true when the defendant defaults.”). Accordingly,
plaintiff requests $100,000 for each of the 52 materials that allegedly infringe on one or
more of plaintiff’s trademarks, for a total of $5,200,000, a number that is within the range

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 6 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

for non-willful infringement, and one-twentieth of the maximum for willful infringement.
MDJ at 22. However, courts do not calculate statutory damages based on the number of
defendants’ materials that infringe on plaintiff’s trademarks. Like the copyright context,
courts award statutory damages based on the number of plaintiff’s trademarks that have
been infringed. See Louis Vuitton Malletier, 658 F.3d at 946–47 (“With respect to
copyright, when statutory damages are assessed . . . , each work infringed may form the
basis of only one award, regardless of the number of separate infringements of that work.
. . . With respect to damages for contributory trademark infringement, logic compels the
same result.” (quotation marks omitted)); Philip Morris, 219 F.R.D. at 500 (awarding
damages for infringement of two of plaintiff’s trademarks in the amount of twice the
statutory limit); Sennheiser, 2013 WL 3811775, at *5 (awarding statutory damages “per
mark [defendant] infringed”).
Plaintiff alleges that it owns the rights in and that defendants have infringed upon
six trademarked works: (1) the “Situational Leadership®” mark; (2) the “Quadrant”
mark; (3) the “Performance Readiness®” mark; (4) the “Situational Coaching®” mark; and
the (5) “Situational Selling®” mark. Compl. ¶¶ 28–35. Because plaintiff seeks $100,000
for each infringement, plaintiff is entitled to $500,000 in statutory damages for trademark
infringement.
c.

Unfair Competition

California’s Unfair Competition Law prohibits “unfair competition . . . ,
includ[ing] any unlawful, unfair or fraudulent business act or practice and unfair,
deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. “Each
prong of the UCL is a separate and distinct theory of liability.” Birdsong v. Apple, Inc.,
590 F.3d 955, 959 (9th Cir. 2009). “[A]n action based on [the UCL] to redress an
unlawful business practice ‘borrows’ violations of other laws and treats these violations .
. . as unlawful practices, independently actionable under section 17200 et seq. and subject
to the distinct remedies provided thereunder.” Farmers Ins. Exch. v. Super. Court, 826
P.2d 730, 734 (Cal. 1992) (quotation marks omitted); Chabner v. United Omaha Life Ins.
Co., 225 F.3d 1042, 1048 (9th Cir. 2000). Plaintiff appears to rest its UCL claim on
defendants’ alleged trademark infringement. See Compl. ¶¶ 149–50. A violation of
Lanham Act may support a claim under the UCL. See Cleary v. News Corp., 30 F.3d
1255, 1262–63 (9th Cir. 1994). Because the Court has concluded that plaintiff has
sufficiently stated a claim for trademark infringement, plaintiff has likewise adequately
stated a claim under the UCL.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 7 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

d.

Accounting

“An accounting may be brought to compel a defendant to account to a plaintiff for
money where (1) a fiduciary duty exists; or (2) where no fiduciary duty exists, the
accounts are so complicated that an ordinary legal action demanding a fixed sum is
impracticable.” Wise v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047, 1055 (C.D. Cal.
2012); see also Civic W. Corp. v. Zila Indus., Inc., 66 Cal. App. 3d 1, 14 (1977) (“A suit
for an accounting will not lie where it appears from the complaint that none is necessary
or that there is an adequate remedy at law.”). “A claim for an accounting may be decided
on a motion for default judgment.” Brown v. Stroud, No. 08-cv-02348-JSW-NC, 2014
WL 1308342, at *21 (N.D. Cal. Mar. 31, 2014), report and recommendation adopted, No.
08-cv-02348-JSW, 2014 WL 12639917 (N.D. Cal. July 11, 2014).
Plaintiff does not allege that defendants owe it a fiduciary duty. Furthermore,
plaintiff seeks the following relief: (a) statutory damages—i.e., fixed sums—for its
trademark and copyright claims; (b) injunctive relief for its UCL claim; and
(c) declaratory relief for its declaratory judgment claim. Accordingly, the Court finds
that plaintiff’s claims are not “so complicated” such that “ordinary legal action
demanding a fixed sum is impracticable.” See Wise, 850 F. Supp. 2d at 1055. The Court
therefore concludes that plaintiff has not adequately alleged its accounting claim. See
Solomon v. Jacobson, No. 15-cv-01453-VAP-JPR, 2016 WL 6023821, at *10 (C.D. Cal.
July 6, 2016) (denying default judgment on an accounting claim where plaintiff sought a
fixed sum).
e.

Declaratory Relief

Under the Declaratory Judgment Act, this Court has authority to “declare the rights
and other legal relations of any interested party seeking such declaration.” 28 U.S.C.
§ 2201(a); see also Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222 (9th
Cir. 1998). In order to fall within the Declaratory Judgment Act, a plaintiff must raise “a
case of actual controversy within [the court’s] jurisdiction.” 28 U.S.C. § 2201(a). “The
controversy must be definite and concrete, touch the legal relations of parties having
adverse legal interests. It must be a real and substantial controversy admitting of specific
relief through a decree of a conclusive character, as distinguished from an opinion
advising what the law would be upon a hypothetical state of facts.” Aetna Life Ins. Co.
of Hartford, Conn. v. Haworth, 300 U.S. 227, 240–41 (1937) (citations omitted).
Plaintiff seeks a decree declaring that:

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 8 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

(a) The Material prepared, published, marketed, and/or sold by Defendants,
or any of them, and identified by Plaintiff that include any or all of
Plaintiff’s Marks infringe upon Plaintiff’s Marks.
(b) The Material prepared, published, marketed, and/or sold by Defendants,
or any of them, and identified by Plaintiff’s that [sic] infringe on Plaintiff’s
copyrights.
Compl. ¶ 162. In this case, plaintiff has presented a concrete legal controversy that is real
and not hypothetical and that affects plaintiff in a concrete and substantial manner.
Moreover, plaintiff alleges facts that demonstrate that it is entitled to the declaratory
relief sought because defendants have infringed on plaintiffs trademarks and copyrights.
Accordingly, the Court finds that plaintiff’s claim for declaratory relief has substantive
merit.
f.

Injunctive Relief

In connection with plaintiff’s claims for trademark and copyright infringement,
plaintiff seeks preliminary and permanent injunctive relief.
The Lanham Act and the Copyright Act explicitly permit injunctive relief. See 15
U.S.C. § 1116(a); 17 U.S.C. § 502(a). While defendants’ statutory violations create the
possibility for injunctive relief, the plaintiff’s claims must nonetheless satisfy the
equitable requirements for a permanent injunction. See eBay, Inc. v. MercExchange,
LLC, 547 U.S. 388, 394 (2006) (requiring application of “traditional four-factor
framework that governs the award of injunctive relief” to a copyright infringement
claim); Herb Reed Enterprises, LLC v. Florida Entertainment Management Inc., 736 F.3d
1239, 1249 (9th Cir. 2013) (“Following eBay and Winter, we held . . . that actual
irreparable harm must be demonstrated to obtain a permanent injunction in a trademark
infringement action.”). “According to well-established principles of equity, a plaintiff
seeking a permanent injunction must satisfy a four-factor test before a court may grant
such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are inadequate to
compensate for that injury; (3) that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest
would not be disserved by a permanent injunction.” eBay, 547 U.S. at 391.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 9 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

“[W]hen a plaintiff establishes in a trademark infringement or unfair competition
action a likelihood of confusion, it is generally presumed that the plaintiff will suffer
irreparable harm if an injunction is not granted.” Otter Prod., 2013 WL 5575070, at *11.
Furthermore, “[e]vidence of threatened loss of prospective customers or goodwill
certainly supports a finding of the possibility of irreparable harm.” Stuhlbarg Int’l Sales
Co., Inc. v. John D. Brush and Co., Inc., 240 F.3d 832, 841 (9th Cir. 2001). Plaintiff’s
well-pled facts have shown a likelihood of confusion as to the origin of the infringing
products, and thus a potential loss of prospective customers, as well as harm to reputation
and goodwill if the products are inferior. Therefore, the Court finds that plaintiff will be
irreparably harmed by defendants’ continued use and infringement of plaintiff’s
trademarks and copyrights.
Plaintiff has also satisfied the second element concerning inadequate legal remedy.
“Damage to reputation and loss of customers are intangible harms not adequately
compensable through monetary damages.” Car-Freshner Corp. v. Valio, LLC, No. 2:14cv-01471-RFB-GWF, 2016 WL 7246073, at *8 (D. Nev. Dec. 15, 2016). Furthermore,
plaintiff alleges that unless enjoined, defendants will continue to infringe upon plaintiff’s
trademarks and copyrights. For example, many of defendants’ infringing products were
still available online as of June 3, 2016 – approximately three months after defendants
were served. See, e.g., Withem Decl. ¶¶ 40, 42. Warner previously agreed to stop selling
and distributing infringing property in 2008, but this product “reappeared” on RTM’s
website in 2015. Id. ¶¶ 11–14. In addition, on information and belief, plaintiff alleges
that defendants “continue to violate both Leadership Studies’ trademarks and
copyrights.” Compl. ¶ 73. Although an award of money damages may remedy
defendants’ past wrongful acts, it will not adequately compensate for defendants’ future
acts. Thus, the second element is satisfied.
The third element requiring a balance of hardships favors plaintiff because if the
injunction does not issue, defendants are more likely to continue violating plaintiff’s
rights, imposing a hardship on plaintiff. See Otter Prod., 2013 WL 5575070, at *12.
With respect to the fourth element, requiring a consideration of the public interest,
the Lanham Act and the Copyright Act explicitly invoke the possibility of injunctive
relief, which would serve the public interest of vindicating these laws which are intended
to encourage innovation. See 15 U.S.C. § 1116(a); 17 U.S.C. § 502(a). There are no
exceptional facts at issue that show that an injunction would be against the public
interest.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 10 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

Therefore, the Court finds that plaintiff has met the statutory and equitable
requirements for permanent injunctive relief as to the trademark and copyright violations
asserted in the complaint. See Adobe Sys., Inc. v. Tilley, No. 09-cv-1085-PJH, 2010 WL
309249, at *6 (N.D. Cal. Jan. 19, 2010) (granting a permanent injunction on a motion for
default judgment because, “[i]n light of Defendants’ past infringement and their failure to
appear in this action, injunctive relief is warranted”).
g.

Summary of the Substantive Merits and Sufficiency of the
Claim

The Court concludes that plaintiff has adequately stated claims for trademark
infringement, copyright infringement, unfair competition, injunctive relief, and
declaratory relief against the moving defendants. However, plaintiff has failed to
adequately state a claim for accounting.
3.

Sum of Money at Stake in the Action

Pursuant to the fourth Eitel factor, the Court balances “the amount of money at
stake in relation to the seriousness of the [defaulting party’s] conduct.” PepsiCo, 238 F.
Supp. 2d at 1176; see also Eitel, 782 F.2d at 1471–72. “This determination requires a
comparison of the recovery sought and the nature of defendant’s conduct to determine
whether the remedy is appropriate.” United States v. Broaster Kitchen, Inc., No. 2:14-cv09421-MMM-PJW, 2015 WL 4545360, at *6 (C.D. Cal. May 27, 2015); see also Walters
v. Statewide Concrete Barrier, Inc., No. 3:04-cv-02559-JSW, 2006 WL 2527776, *4
(N.D. Cal. Aug. 30, 2006) (“If the sum of money at issue is reasonably proportionate to
the harm caused by the defendant’s actions, then default judgment is warranted.”).
Plaintiff is entitled to $1,100,000 in statutory damages for copyright and trademark
infringement. “The damages that [plaintiff] seeks are thus within the allowable range set
by Congress. Since the district court has ‘wide discretion in determining the amount of
statutory damages to be awarded,’ the amount of money requested does not weigh against
the entry of default judgment.” Sennheiser, 2013 WL 3811775, at *5 (quoting LA News
Serv. v. Reuters Television Int’l, Ltd., 149 F.3d 987, 996 (9th Cir. 1998)); see also Philip
Morris, 219 F.R.D. at 500 (“Given Defendant’s infringing [conduct], the likelihood that
its conduct would cause confusion or mistake or otherwise deceive customers, and its
failure to comply with the judicial process or to participate in any way in the present
litigation, the Defendant has engaged in willful use of the counterfeit mark, which

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 11 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

justifies the imposition of a substantial monetary award.”). Where, as here, a plaintiff
seeks statutory damages “consistent with that to which Plaintiff is entitled by law . . . ,
while the amount of money at issue is substantial, this factor does not significantly weigh
against granting default judgment.” TVB Holdings (USA), Inc. v. eNom, Inc., No. 13cv-624-JLS-DFM, 2014 WL 3717889, at *3 (C.D. Cal. July 23, 2014); see also Nop, 549
F. Supp. 2d at 1238 (after default, awarding statutory damages of $100,000 for each of
seven trademarks at issue and $30,000 for each of nine copyrights at issue, for a total of
$710,000). The Court thus finds that $1,100,000 in statutory damages is reasonably
proportionate to the harm that defendants have caused.
4.

Possibility of Dispute

The fifth Eitel factor considers the possibility that material facts are disputed.
PepsiCo, 238 F. Supp. 2d at 1177; see also Eitel, 782 F.2d at 1471–72. “Upon entry of
default, all well-pleaded facts in the complaint are taken as true, except those relating to
damages.” PepsiCo, 238 F. Supp. 2d at 1177. As discussed above, plaintiff’s complaint
is well pleaded and supported by evidence. Therefore, a dispute concerning material
facts is unlikely, and this factor weighs in favor of entering default judgment.
5.

Possibility of Excusable Neglect

The sixth Eitel factor considers whether defendants’ default may have been the
product of excusable neglect. PepsiCo, 238 F. Supp. 2d at 1177; see also Eitel, 782 F.2d
at 1471–72. The Court has already concluded that Warner (and the defendant-entities
over which Warner exerts or exerted control) have actual notice of this lawsuit, see dkt.
75, yet defendants have failed to show cause why a default judgment should not be
entered against them. Accordingly, this factor weighs in favor of entry of default
judgment.
6.

Policy in Favor of Decisions on the Merits

Pursuant to the seventh Eitel factor, the Court takes into account the strong policy
favoring decisions on the merits. While “‘this preference, standing alone, is not
dispositive,’” PepsiCo, 238 F. Supp. 2d at 1177, “[c]ases should be decided upon their
merits whenever reasonably possible,” Eitel, 782 F.2d at 1472. Thus, the seventh Eitel
factor weighs against entry of default judgment.

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 12 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

7.

Conclusion Regarding the Eitel Factors

Apart from the policy favoring decisions on the merits, all of the remaining Eitel
factors counsel in favor of default judgment, including the merits of the plaintiff’s claims
for trademark infringement, copyright infringement, unfair competition, declaratory
relief, and injunctive relief. See Federal Nat. Mortg. Ass’n v. George, No. 5:14-cv01679-VAP-SP, 2015 WL 4127958, *3 (C.D. Cal. July 7, 2015) (“The merits of the
plaintiff’s substantive claim and the sufficiency of the complaint are often treated by
courts as the most important Eitel factors.”) (citation omitted). Therefore, weighing all of
the Eitel factors, this Court finds that entry of the default judgment is appropriate on all
of plaintiff’s claims against the moving defendants, except its claim for accounting.
B.

Attorneys’ Fees and Costs

In addition to plaintiff’s request for a default judgment plaintiff also requests
attorneys’ fees and costs pursuant to the Copyright Act and the Lanham Act. See MDJ at
25. Local Rule 55-3 determines attorneys’ fees for a default judgment pursuant to a fixed
percentage schedule. C.D. Cal. L.R. 55-3. For a judgment of over $100,000, the
schedule of attorneys’ fees allows $5,600 plus 2% of the amount of damages awarded
over $100,000. Id. Accordingly, plaintiff’s counsel is entitled to $25,600 in attorneys’
fees—that is, $5,600 + $20,000 (i.e., 2% of $1,000,000). In addition, the Court may
order defendants to pay costs to plaintiff pursuant to Federal Rule of Civil Procedure
54(d). On August 29, 2016, plaintiff requested costs in the amount of $3,330.89. Dkt.
76. The Court found this request appropriate. Dkt. 84. Accordingly, the Court again
finds that plaintiff is entitled to $3,330.89 in costs.
IV.

CONCLUSION

In accordance with the foregoing, the Court GRANTS plaintiff’s motion for
default judgment with respect to plaintiff’s claims for trademark infringement, copyright
infringement, unfair competition, declaratory relief, and injunctive relief against the
moving defendants. The Court DENIES plaintiff’s motion for default judgment with
respect to plaintiff’s claim for accounting.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that judgment be
entered in favor of plaintiff on its claims for trademark infringement, copyright
infringement, unfair competition, injunctive relief, and declaratory relief. All defendants
shall be jointly and severally liable to plaintiff in the amount of $1,128,930.89, which is

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

Page 13 of 14 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:15-cv-09459-CAS(AJWx)
Date June 2, 2017
LEADERSHIP STUDIES, INC. v. READYTOMANAGE, INC. ET AL.

comprised of: (a) $1,100,000 in statutory damages for trademark and copyright
infringement; (b) $25,600 in attorneys’ fees; and (c) $3,330.89 in costs. Plaintiff shall
submit a Proposed Judgment in accordance with this order.
IT IS FURTHER ORDERED that this Court retains jurisdiction over any matter
pertaining to this judgment. Plaintiff shall submit forthwith to the Clerk of Court a
request identifying the taxable costs it has incurred. See C.D. Cal. L.R. 54-2.1.
IT IS SO ORDERED.
Initials of Preparer

CV-9459 (06/17)

CIVIL MINUTES - GENERAL

: 
00 
                   CMJ 

00 

Page 14 of 14