Tapatio Foods, LLC v. Ingrid Veronica Ponce et al

Filing 30

MINUTES (IN CHAMBERS) ORDER GRANTING MOTION FOR ENTRY OF DEFAULT JUDGMENT AGAINST DEFENDANTS INGRID VERONICA PONCE, MARIO MENDIZABAL, AND DORIAN HUERTA AND PERMANENT INJUNCTION 27 by Judge Michael W. Fitzgerald. The Application is GRANTED as to D efendants Mendizabal and Huerta only. Although this action, for the time being, remains pending against Defendant Ponce, the Court finds no just reason to delay entry of judgment against Defendants Mendizabal and Huerta. A separate judgment will the refore issue against Mendizabal and Huerta. The Clerk's entry of default against Defendant Ponce (Docket No. 21 ) is VACATED. Ponce shall answer the Complaint by March 12, 2018. If Ponce does not answer the Complaint by that date, Tapatio shall again request that the Clerk enter default against Ponce, and file a proposed amended judgment that applies to Ponce. (iv)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge
Relief Deputy Clerk:
Cheryl Wynn

Court Reporter:
Not Reported

Attorneys Present for Plaintiff:
None Present

Attorneys Present for Defendant:
None Present

Proceedings (In Chambers): ORDER GRANTING MOTION FOR ENTRY OF
DEFAULT JUDGMENT AGAINST DEFENDANTS
INGRID VERONICA PONCE, MARIO
MENDIZABAL, AND DORIAN HUERTA AND
PERMANENT INJUNCTION [27]
Before the Court is Plaintiff Tapatio Foods, LLC.’s (“Tapatio”) Motion for
Entry of Default Judgment against Defendants Ingrid Veronica Ponce, Mario
Mendizabal, and Dorian Huerta and Permanent Injunction, filed on January 17, 2018.
(the “Motion”) (Docket No. 27). The Court has read and considered the Complaint and
the papers filed in connection with the Motion and held a hearing on February 26,
2018.
For the reasons set forth below, the Application is GRANTED as to Defendants
Mendizabal and Huerta only. Tapatio has satisfied all procedural and substantive
requirements for a default judgment against those Defendants. In light of the fact that
Defendant Ponce appeared at the hearing, the Court declines to enter default judgment
against her at this time. To the extent Ponce wishes to participate in this lawsuit and
avoid a default judgment being entered against her, she must answer the Complaint by
no later than March 12, 2018.

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CIVIL MINUTES—GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
I.

BACKGROUND

The Complaint contains the following allegations, which are accepted as true for
purposes of the Application. See Fed. R. Civ. P. 8(b)(6); NewGen, LLC v. Safe Cig,
LLC, 840 F.3d 606, 617 (9th Cir. 2016) (“[U]pon default the factual allegations of the
complaint, except those relating to the amount of damages, will be taken as true.”)
(internal quotation marks and citations omitted).
Tapatio is a California limited liability company with its principal place of
business in Vernon, California. (Complaint ¶ 1). Tapatio is in the business of making,
selling, and distributing hot sauce. (Id. ¶ 14). The United States Patent and Trademark
Office (“USPTO”) has issued to Tapatio at least 3 trademark registrations covering
their name, seasonings, and other products (collectively, the “Tapatio Marks”). (Id. ¶
9-12). Tapatio has expended significant time, effort, and money marketing,
advertising, and promoting the Tapatio Marks throughout the United States. (Id. ¶ 1417). Through these efforts, Tapatio has established significant name recognition and
goodwill among consumers. (Id.).
Below is an image of the design for one of the Tapatio Marks:

(Id. ¶ 12).
Defendants are California residents. (Id. ¶ 2-4). Defendants started
manufacturing, selling, advertising, and distributing their own hot sauce and other
related products bearing confusingly similar marks to the Tapatio Marks. (Id. ¶ 18).
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CIVIL MINUTES—GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
Defendants’ hot sauce bears the label “Trapatio.” (Id. ¶ 21). The font that Defendants
use for their hot sauce labels is also very similar to the font use in the Tapatio Marks.
(Id. ¶ 24). The images featured on Defendants’ hot sauce labels are also confusingly
similar to the images in the Tapatio’s Marks. (Id. ¶ 26).
Below is an image of the label that Defendants affix to their products:

(Id. ¶ 18).
As suggested on the label, Defendants’ hot sauce is infused with cannabis and
contains THC. (Id. ¶ 32). Given that THC is a Schedule 1 drug under federal law,
Tapatio claims that Defendants tarnish Tapatio’s reputation by using logos, names, and
lettering that is confusingly similar to that used in the Tapatio Marks. (Id. ¶¶ 32-40).
Defendants’ actions are likely cause consumers to mistakenly believe that there is
some affiliation between Tapatio and Defendants’ hot sauce. (Id.). Defendants have
interfered with Tapatio’s ability to ensure the quality of its products and consumers’
experience, and have harmed Tapatio’s goodwill among consumers. (Id.).
Tapatio alleges that Mendizabal advertises and sells the “Trapatio” sauce on
social media platforms, that Huerta is one of the distributors, and that Ponce applied to
trademark the “Trapatio” mark in July 2017. (Id. ¶¶ 30-37).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
Tapatio asserts four claims against the Defendants: (1) willful trademark
infringement, 15 U.S.C. § 1114; (2) unfair competition under the Lanham Act, 15
U.S.C. § 1125; (3) violation of California’s Unfair Competition Law (“UCL”), Cal.
Civ. Code § 17200; and (4) dilution by tarnishment under the Lanham Act, 15 U.S.C
§1125(c)(2)(C)). (Id. ¶¶ 41-61).
II.

DISCUSSION
A.

Service and Other Procedural Requirements

Having reviewed the filings in this action, the Court is satisfied that Tapatio has
met all procedural requirements for obtaining a default judgment against the
Defendants.
Tapatio served the Summons and Complaint upon Ponce, Huerta, and
Mendizabal in accordance with Federal Rule of Civil Procedure 4(e)(1) and section
415.20 of the California Code of Civil Procedure. (Docket Nos. 11, 12, 14).
Specifically, on October 18, 2017, Tapatio personally served Ponce and Huerta at their
homes. On November 2, 2017, Tapatio served an adult occupant at Mendizabal’s
home address and subsequently mailed the Summons and Complaint to the same
address.
As a matter of discretion, the Court also requires that a plaintiff serve a motion
for default judgment on the relevant defendant(s). The Court does not require service
under Rule 4, but does require that the service is reasonably likely to provide notice to
the defendants. Annexed to each of the Motion papers is proof of service indicating
that, on January 17, 2018, Tapatio mailed copies of the Motion papers to Ponce,
Mendizabal, and Huerta at the same addresses that it served the Summons and
Complaint. (Docket No. 27). The Court is satisfied that Defendants received
sufficient notice of the Motion.
Federal Rule of Civil Procedure 55(b) permits a court-ordered default judgment
following the entry of default by the clerk under Rule 55(a). Upon review of the
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CIVIL MINUTES—GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
record and the documents filed in connection with the Motion, all five of the
procedural requirements imposed by Federal Rule of Civil Procedure 55 and Local
Rule 55-1 are met: (1) the Clerk entered default against the Defendants on November
30, 2017 and December 22, 2017; (2) Defendants failed to respond to the Complaint;
(3) Tapatio has served Defendants with notice of the Motion and supporting papers in a
manner deemed appropriate by the Court; (4) Defendants are not infants or
incompetent persons; and (5) Defendants are not in the military, so the Service
Members Civil Relief Act does not apply. (See Docket Nos. 21, 25, 27, 28; First
Amended Declaration of Drew Wilson in Support of Tapatio Foods, LLC’s Motion for
Entry of Default Against Defendants and Permanent Injunction (Docket No. 28), ¶¶ 911).
Accordingly, Plaintiff has satisfied the procedural requirements for obtaining
entry of a default judgment.
However, in light of the fact that Ponce appeared at the hearing, the Court is
giving her until March 12, 2018 to answer the Complaint, and therefore will not enter
default judgment against her at this time.
B.

The Eitel Factors

The choice as to whether a default judgment should be entered is at the sole
discretion of the trial court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).
The Ninth Circuit has determined that a court should consider seven discretionary
factors before rendering a decision on motion for default judgment. Eitel v. McCool,
782 F.2d 1470, 1471–72 (9th Cir. 1986).
The seven factors are: (1) the possibility of prejudice to the plaintiff, (2) the
merits of the plaintiff’s substantive claim, (3) the sufficiency of the Complaint, (4) the
sum of money at stake in the action, (5) the possibility of a dispute concerning material
facts, (6) whether the default was due to excusable neglect, and (7) the strong policy
underlying the Federal Rules of Civil Procedure favoring a decision on the merits. Id.
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CIVIL MINUTES—GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
If the Court determines that default judgment is appropriate, it may consider
extrinsic evidence or conduct an evidentiary hearing in determining the amount of
damages. Fed. R. Civ. P. 55(b)(2).
The Court determines that, with the exception of the strong policy favoring a
decision on the merits, which is not dispositive, the Eitel factors weigh in favor of
granting the Motion.
In light of the fact that Tapatio has stated a viable trademark infringement claim
under 15 U.S.C. § 1114, Tapatio is entitled to the injunctive relief it seeks. The Court
thus has no occasion to reach the merits of Tapatio’s trademark infringement claim
under 15 U.S.C. § 1125 or its UCL claim.
B.

Remedies

Tapatio requests entry of a permanent injunction. “Under the Lanham Act, ‘the
district court has the power to grant injunctions according to principles of equity and
upon such terms as the court may deem reasonable, to prevent the violation of any
right of the trademark owner.’” Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d
1072, 1083 (C.D. Cal. 2012)(quoting Reno Air Racing Ass’n v. McCord, 452 F.3d
1126, 1137 (9th Cir. 2006)). Indeed, “[i]njunctive relief is the remedy of choice for
trademark and unfair competition cases, since there is no adequate remedy at law for
the injury caused by a defendant’s continuing infringement.” Century 21 Real Estate
Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988).
Tapatio requests entry of a permanent injunction requiring Defendants to:
(1) Permanently cease using and refrain from adopting for any product or
service, or in any marketing material:
(a) any trademarks containing the words Tapatio, Trapatio, or any
marks confusingly similar to Tapatio;
(b) the Trapatio Salsa Picante Mark and Design Mark;
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
(c) the Trapatio Mark; or
(d) any trademarks that bear an image of a Charro (meaning a
traditional horseman from Mexico);
(2) Recall and destroy any of its marketing material, letterhead, business
cards, signs, banners, clothing, or other media whether physical or digital
bearing the trademarks identified above;
(3) Change any username, under its control, for all social media and email
accounts to one that does not contain the phrase “Trapatio” and/or
“Tapatio” or ay marks confusingly similar to Tapatio;
(4) Refrain from telling any customer, vendor, distributor or other person
or business that they are in any way related to or affiliated with Tapatio.
Tapatio has demonstrated that, absent entry of a permanent injunction, it is
possible that Defendants or their affiliates will continue to attempt to sell infringing
products. “Failure to grant the injunction would needlessly expose [Tapatio] to the risk
of continuing irreparable harm.” Philip Morris USA, Inc. v. Castworld Prods., Inc.,
219 F.R.D. 494, 502 (C.D. Cal. 2003). The Court finds that the above terms are
reasonable.
Accordingly, Tapatio’s request for entry of a permanent injunction is
GRANTED.

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CIVIL MINUTES—GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-17-7530-MWF (MRWx)
Date: February 27, 2018
Title:
Tapatio Foods, LLC. v. Ingrid Veronica Ponce, et al.
III.

CONCLUSION

For the foregoing reasons, the Application is GRANTED as to Defendants
Mendizabal and Huerta only. Although this action, for the time being, remains
pending against Defendant Ponce, the Court finds no just reason to delay entry of
judgment against Defendants Mendizabal and Huerta. See Fed. R. Civ. P. 54(b) (court
may enter default judgment against some defendants where action is still pending
against other defendants “if the court expressly determines that there is no just reason
for delay”); In re First T.D. & Inv., Inc., 253 F.3d 520, 531-32 (9th Cir. 2001) (same).
A separate judgment will therefore issue against Mendizabal and Huerta.
The Clerk’s entry of default against Defendant Ponce (Docket No. 21) is
VACATED. Ponce shall answer the Complaint by March 12, 2018. If Ponce does
not answer the Complaint by that date, Tapatio shall again request that the Clerk enter
default against Ponce, and file a proposed amended judgment that applies to Ponce.
IT IS SO ORDERED.

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CIVIL MINUTES—GENERAL
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