Cabinet Discounters, Inc. v. Serkisian et al

Filing 18

MEMORANDUM OPINION AND ORDER granting 16 Motion for Attorney's fees;entering JUDGMENT on behalf of Plaintiff's against Defendants in the amount of $20,030.00 in attorney's fees and $2,302.79 in costs and Statutory damages in the amount of $312,000.00 ; directing clerk to close case. Signed by Judge Paul W. Grimm on 7/10/2017. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
CABINET DISCOUNTERS, INC,

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Plaintiff,

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v.

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ALEXANDER SERKISIAN d/b/a
KITCHEN, BATH & FLOORS, et al.,

Civil Case No.: PWG-16-1887

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Defendants.
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MEMORANDUM OPINION AND ORDER
Plaintiff Cabinet Discounters filed this action against Defendants Alexander Serkisian,
d/b/a Kitchen, Bath & Floors, and Cabinets Discounters, Inc. under the Lanham Act, 15 U.S.C.
§§ 1114, 1125, and Maryland law for injunctive relief and statutory damages, alleging that
Defendants used the name “Cabinets Discounters” in commerce, when Plaintiff holds the
registered trademark for the name “Cabinet Discounters.” ECF No. 1 (emphasis added to
distinguish names). Defendants did not answer or otherwise respond, and I granted in part
Plaintiff’s Motion for Default Judgment. Judgment 1, ECF No. 15.

I found that Plaintiff

established Defendants’ liability under the Lanham Act for trademark counterfeiting, trademark
infringement, unfair competition, false designation of origin, and false advertising, as well as
their liability under Maryland law for unfair competition and passing off.
I also found, however, that while Plaintiff is entitled to statutory damages pursuant to 15
U.S.C. § 1117(c)(2), they failed to show entitlement to the $1 million in statutory damages

requested. I denied that request without prejudice to filing an additional memorandum that
included factual and legal support for the amount requested.

Plaintiff timely filed a

memorandum to support its request for $1 million in statutory damages, Pl.’s Suppl. Mem., ECF
No. 17, and a Motion for Attorney’s Fees and Costs, with exhibits showing its billing records in
this case, ECF Nos. 16, 16-1. I find that Plaintiff’s request for $22,332.79 in attorney’s fees and
costs is reasonable, but that $1 million in statutory damages would result in an excessive award
to the Plaintiff and must be reduced.
I.

Statutory Damages
The Lanham Act provides for statutory damages for willful use of a counterfeit mark, in

the amount 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). Pursuant to
this provision, “the Court has broad discretion to fashion a statutory award based on the
particular facts of the case and general principles of fairness.” Chanel, Inc. v. Banks, 2011 WL
121700, at *7 (quoting Larsen v. Terk Tech. Corp., 151 F.3d 140, 149–50 (4th Cir. 1998)).
These damages “are intended to deter wrongful conduct, and may be particularly appropriate in
cases of default judgment because of non-disclosure by the infringer.” Union of Orthodox Jewish
Congregations of Am. v. The Wilder Spice Co., No. CCB-07-3122, 2008 WL 4372012, at *1 (D.
Md. Sept. 10, 2008) (citations omitted).
“While the Court accepts as true all well-pleaded factual allegations of the Complaint, it
does not accept plaintiff’s calculation of damages.” Chanel, 2011 WL 121700, at *14 (citing
Charles A. Wright, et al., 10A Fed. Prac. & Proc. § 2688, at 58–59). The factors that the Court
considers in performing its own calculation of statutory damages include, “inter alia: the
defendant’s profits, the plaintiff’s lost profits, the defendant’s willfulness, the size of defendant’s

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counterfeiting operation, the efforts to mislead and conceal, and the need to deter the defendant
and others.” Id. at *12. In Chanel, to calculate statutory damages, the plaintiff attempted to
establish a “baseline figure” that approximated actual damages and then trebled that amount. See
id. at *7–8 (noting that treble damages, which are mandatory except under extenuating
circumstances, “compensate plaintiffs for financial loss and damage to their goodwill, as well as
. . . deter and punish defendants”); see also 15 U.S.C. § 1117(b)(1) (providing for treble damages
for intentional use). This approach reflects the fact that “a statutory damages award should
‘bear[ ] some relation’ to what a plaintiff may have gotten based on an actual damages
calculation whenever possible.” Chanel, 2011 WL 121700, at *8 (quoting Bly v. Banbury Books,
638 F. Supp. 983, 987 (E.D. Pa. 1986)). “[T]he Court must never use its broad discretion in
fashioning a statutory remedy to result in a windfall for the plaintiff.” Id. at *10.
In Chanel, this Court “appreciate[d] that [the] defendant’s failure to respond to the
lawsuit . . . deprived plaintiff of information regarding plaintiff’s actual damages or defendant’s
profits,” but found that “plaintiff’s $6,638.33 substitute marker,” arrived at “by calculating the
potential gross sales revenue of defendant’s entire inventory,” was “too speculative and
imprecise to be credited.” Id. at *9. The Court reasoned that, “[w]ithout information on the
price of similar Chanel goods—and even with the price of similar goods—it is impossible to
know what actual damages Chanel incurred as a result of defendant’s counterfeit sales,” as “not
even gross revenue sales” were known. Id. It also observed that the plaintiff had “presented no
evidence regarding gross sales and only advocate[d] an assumption that the defendant sold all of
her inventory over the period of her business.” Id. at *13.
Plaintiff has cited three cases from other districts in support of its request for substantial
statutory damages. Pl.’s Suppl. Mem. 3-4. In Illinois Tool Works, Inc. v. Hybrid Conversions,

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Inc., the defendants were selling counterfeit welding torches that were a safety hazard, unlike the
plaintiff’s products, because they leaked gas and started fires. 817 F. Supp. 2d 1351, 1354 (N.D.
Ga. Aug. 29, 2011). The court denied the plaintiff’s request for $2 million in statutory damages
for each of the two infringed marks, reasoning that “[a] statutory maximum damages award
should be reserved for trademark infringement that is particularly egregious, involves large
amounts of counterfeit goods, or is otherwise exceptional,” and “[a]lthough egregious, th[e] case
[before it] involved only a relatively small number of counterfeit sales,” which did “not justify a
maximum statutory damages award.”

Id. at 1356.

The court did “find, however, that a

significant statutory damages award [was] warranted,” and awarded statutory damages of $1.5
million, emphasizing the fact that the defendants were selling a counterfeit product that was
potentially dangerous to the public. Id. (“Moreover, and most importantly, defendants marketed
and sold counterfeit items that posed a risk to public safety. . . . Not only does the risk inherent
in such goods pose an even greater threat to the goodwill associated with the trademark
registrant’s mark, it also threatens the public with physical harm.”). Though the infringement in
the case pending before me was willful, it did not amount to the egregiousness shown in Illinois
Tool Works, given that there was no danger to the public here. See id.
Plaintiff also cites Citigroup, Inc v. Chen Bao Shui, 611 F. Supp. 2d 507, 509 (E.D. Va.
Feb. 24, 2009), which involved a provision of the Lanham Act that is not implicated here, 15
U.S.C. § 1117(d). There, the plaintiff claimed that the defendant used a domain name that was
identical to or confusingly similar to its own famous trademarks. 611 F. Supp. 2d at 509–10.
The plaintiff sought statutory damages under § 1117(d), applicable to use of trademarks in
domain names, which has a statutory maximum that is one-tenth ($100,000) the amount Plaintiff
asks the Court to award in this case. Id. The court concluded that the “Defendant’s violative use

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ha[d] been established as sufficiently willful, deliberate, and performed in bad faith to merit the
maximum statutory award of $100,000 and an award of attorneys’ fees.” Id. at 513. Given that
the maximum statutory award here is ten times greater, I am not persuaded that Citigroup
supports a substantial statutory damages award of the magnitude sought by Plaintiff in this case.
See id.
In Kobe Japanese Steak House of Florida, Inc. v. XU, Inc., the plaintiffs sought
$2 million in statutory damages for trademark infringement. No. 14-490-T-23MAP, 2014 WL
6608967, at *4 (M.D. Fla. Nov. 20, 2014). The court observed that the facts did not “involve[e]
a large trademark counterfeiting operation that would warrant a statutory award near the
maximum end of the applicable range,” but the defendant had infringed willfully and “ha[d]
chosen to default rather than to cooperate in providing records from which Plaintiff and the
Court [could] assess the extent of the infringement.” Id. at *5. Yet, the plaintiff failed to submit
evidence regarding any of the other factors the court used to determine statutory damages, such
as the defendant’s savings and profits by virtue of infringing, the plaintiff’s lost revenue, and the
value of the trademark. Id. Consequently, the court was forced to fashion a damages award
from plaintiff’s estimated advertising expenditures. Id. at *5–6. In order to do this, the court
accepted the estimate of $1 million dollars spent on advertising over 30 years of business and
calculated that the plaintiff spent approximately $640 on advertising each week.

It then

multiplied $640 by the number of weeks that the defendant willfully infringed upon the
plaintiff’s trademark (63), and reached an amount of $40,320. Id. at *6. The court then
increased this award to $100,000 and found that amount sufficient to compensate plaintiffs as
well as “to deter future misconduct.” Id.

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Here, as in Kobe, Defendants’ willfulness has been established, their refusal to participate
has prevented Plaintiff from developing information necessary to calculate its damages
accurately, and there is a significant need to deter Defendants and others from similar conduct in
the future. In Plaintiff’s view, because “the amount of [Plaintiff’s] customer expenditures and
size of Plaintiff’s business are non-trivial,” an award of $1 million is proper in this case. Pl’s
Suppl. Mem. 1–2. Plaintiff also argues that, given “Defendants’ size and the relatively large per
customer spending,” based on a price quote, website prices, and an advertisement, “the amounts
involved are not trivial.” Id. at 2. However, online price quotes are not indicative of actual sales
or revenues.
While “courts have discretion to accept indirect or circumstantial evidence of sales
volume where the infringing party fails to provide evidence of its actual sales volume,” here, as
in Chanel, “not even gross sales revenues are known.” See Chanel, 2011 WL 121700, at *9.
Rather, Plaintiff estimates that Defendants may have diverted twenty-five of its customers each
year, each of which would have spent approximately $7,000. See Pl.’s Suppl. Mem. 2. On this
basis, Plaintiff asserts that it suffered a gross revenue loss of $175,000. Plaintiff provided
evidence that “typically Plaintiff’s profits from sales meet or exceed 30%,” such that a gross
revenue loss of $175,000 amounts to an annual profit loss of $52,000. See Mikk Aff. ¶ 6. Thus,
based purely on evidence of its own profits, Plaintiff may have lost profits of $104,000 over the
two years that Defendants willfully infringed on Plaintiff’s trademarks, due to Defendants’
diversion of its customers. See Pl.’s Suppl. Mem. 2. This calculation, even when trebled to
$312,000 pursuant to 15 U.S.C. § 1117(b), does not approach $1 million in damages. And, like
the damages calculation in Chanel, it is “speculative and imprecise.” 2011 WL 121700, at *9.

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Nonetheless, Plaintiff has done more than “calculat[e] the potential gross sales revenue of
defendant’s entire inventory,” which this Court concluded was “too speculative and imprecise to
be credited.”

See id.

Given that Plaintiff has attempted to estimate its lost profits and,

significantly, that Defendants willfully infringed and then refused to participate in this lawsuit
for the Court to have any actual figures on which to base its damages calculation, I will accept
Plaintiff’s measure of damages, and I will treble it for a statutory damages award of $312,000.
This significant amount, while not the maximum statutory award possible, nonetheless should
compensate Plaintiff while punishing and deterring Defendants and deterring others from similar
conduct. See Kobe, 2014 WL 6608967, at *6; Illinois Tool Works, 817 F. Supp. 2d at 1356;
Chanel, 2011 WL 121700, at *8–13.
II.

Attorney’s Fees and Costs
Plaintiff is entitled to reasonable attorney’s fees and costs from Defendants pursuant to

15 U.S.C. § 1117(a). In calculating an award of attorney’s fees, the Court must determine the
lodestar amount, defined as a “reasonable hourly rate multiplied by hours reasonably expended.”
Grissom v. The Mills Corp., 549 F.3d 313, 320–21 (4th Cir. 2008). A trial court may exercise its
discretion in determining the lodestar amount because it possesses “superior understanding of the
litigation” and the matter is “essentially” factual. Thompson v. HUD, No. MGJ-95-309, 2002
WL 31777631, at *6 n.18 (D. Md. Nov. 21, 2002) (quoting Daly v. Hill, 790 F.2d 1071, 1078–79
(4th Cir. 1986)).
Here, Plaintiff seeks an award of $18,530 in attorney’s fees, $2,302.79 in costs and
expenses, plus an additional $1,500 in fees for filing a Motion for Attorneys’ Fees, for a total

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award of $22,332.79. 1 Pl.’s Mot. ¶¶ 8, 14. Plaintiff provides time and billing records that show
that he billed 36.28 hours at $400 per hour on this case. Cahn Aff. ¶ 8, 9 & Ex. 1. The records
show that a law clerk expended 35.25 hours on the litigation and a paralegal spent just under five
hours, both billing at a rate of $100 per hour. Appendix B to this Court’s Local Rules, Rules and
Guidance for Determining Attorneys’ Fees in Certain Cases, states that attorneys admitted to the
bar for twenty years or more may bill $300–475 per hour. Loc. R. App’x B, at 3. It also
provides that law clerks and paralegals may bill $95-150 per hour. Id.
Plaintiff’s counsel, Maurice U. Cahn, has been a member of the Maryland bar since 1982,
a period of more than 35 years. Cahn Aff. ¶ 2. Therefore, his proposed rate of $400 per hour is
reasonable. The proposed rate of $100 per hour for the work done by the law clerk and the
paralegal also is reasonable. Additionally, 76.53 hours is a reasonable amount of time to spend
investigating Plaintiff’s claims, exhausting administrative remedies, serving Defendants, drafting
pleadings, communicating with Plaintiff, and moving for default judgment. See Pl.’s Mot. 8;
Cahn Aff. Ex. 1. Therefore, I find that $18,530.00, plus $1,500.00 for the attorney’s fees motion,
is reasonable under the Local Rules Guidelines. See Loc. R. App’x B, at 1; Grissom, 549 F.3d at
320.
Finally, Appendix B provides that “[g]enerally, reasonable out-of-pocket expenses . . .
are compensable at actual cost.” Loc. R. App’x B, at 4. Here, Plaintiff seeks reimbursement of
$2,302.79 in expenses for filing fees, court fees, overnight shipping charges, and computerized
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Although Paragraph 9 of its supporting affidavit states that the attorney’s fees (excluding those
for the Motion for Attorneys’ Fees) are $18,527.34, see Cahn Aff. ¶ 9, Exhibit 1 to the affidavit
lists all individual charges, which total $18,530.00, the amount indicated in Plaintiff’s Motion
and Paragraph 8 of the supporting affidavit. Thus, it is apparent that Plaintiff seeks $18,530.00
in attorney’s fees, plus $1,500 for filing the Motion for Attorneys’ Fees. Additionally, the total
award Plaintiff seeks, $22,330.03, is neither the total of $18,530, $2,302.79, and $1,500 (which
total $22,332.79), nor $18,527.34, $2,302.79, and $1,500 (which total $22,330.13). I will
construe the request to be for the actual total of the fees and costs sought, that is, $22,332.79.
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online research. Cahn Aff. Ex. 1. These are reasonable out-of-pocket expenses that can be
compensated at actual cost.

See Loc. R. App’x B, at 4.

Having reviewed Plaintiff’s

memorandum, the attached affidavit, and counsel’s time and billing records, I find Plaintiff’s
attorney’s fees and expenses reasonable.
ORDER
Accordingly, it is, this 10th day of July, 2017, hereby ORDERED that
1. Statutory damages of $312,000 ARE AWARDED to Plaintiff pursuant to 15 U.S.C.
§ 1117(c)(2).
2. Plaintiff’s Motion for Attorney’s Fees, ECF No. 16, IS GRANTED;
3. Attorney’s fees of $20,030.00 and $2,302.79 in costs ARE AWARDED to Plaintiff;
and
4. The Clerk SHALL CLOSE this case.

/S/
Paul W. Grimm
United States District Judge

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