Lighting & Supplies, Inc. v. Sunlite USA Corporation
Filing
84
MEMORANDUM & OPINION. The parties stipulate entry of a preliminary injunction. Defendants' motion [at 30 ] for a bond is denied. Defendant Mikail's 70 motion to vacate the default judgment against him is granted. Plaintiff' ;s 58 motion for an entry of the default judgment is denied. Defendant Mikail's 83 untimely answer is accepted. On October 8, 2014, plaintiff filed a 19 second amended complaint. A motion to amend the pleadings to substitute the real party of interest is granted on consent. The pleadings are amended to add Spotlite USA Corporation as a defendant. The case caption shall be amended to reflect this change. Plaintiff's 69 motion to dismiss defendant Sunlite USA w ithout prejudice is denied. Defendants deny all elements of the second amended complaint. Completion of discovery is respectfully referred to the magistrate judge. Discovery shall be expedited. The magistrate judge shall engage the parties in settlement discussions. The magistrate shall oversee settlement over 1) the terms of a final injunction; and 2) any possible damages. Trial on any damages shall commence on August 11, 2015 at 10:00 a.m. in Courtroom l OB South. Jury selection will occur on August 10, 2015 at 10:00 a.m. in Courtroom lOB South. At the request of plaintiff, the court shall select the jury. Argument on in limine motions will be heard on August 3, 2015 at 10:00 a.m. in Courtroom 1OB South. Representatives from plaintiff and defendant, as well as defendant Mikail, shall appear in person at the in limine hearing. By July 27, 2015 at 10:00 a.m., the parties shall submit prop osed jury charges with verdict sheets, in limine motions, and supporting briefs. They shall exchange and docket: (1) lists of pre-marked exhibits proposed for use at trial and stipulations regarding admissibility; (2) lists of poten tial witnesses together with brief summaries of proposed testimony; (3) stipulations with respect to all undisputed facts; and (4) proposed voir dire. Copies shall be provided to the court. All expert reports shall be exchanged by July 27, 2015. Damages shall be calculated up to the first day of trial. The jury shall determine damages. Ordered by Judge Jack B. Weinstein on 6/16/2015. (Barrett, C)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MEMORANDUM & OPINION
LIGHTING & SUPPLIES, INC.,
14-CV-4344
Plaintiff,
V.
IN QLO ~ KIR
SUNLITE USA CORPORATION,
SPOTLITE USA CORPORATION, and
HALSTON MIKAIL,
U.S. DISTRIA00 T
* JUN 17 20151*
BROOKLYN OFFICE
Defendants.
Parties
Appearances
Mendel Zilberberg
Mendel Zilberberg & Associates, PC
Lighting & Supplies, Inc.
6619 13th Avenue
Brooklyn, NY 11219
(718) 256-2000
Fax: (718) 256-7900
Email: mzamalgamail.com
Samuel Karpel
Mendel Zilberberg & Associates, PC
6619 13th Avenue
Brooklyn, NY 11219
(718) 249-2202
Fax: (718) 256-7900
Email: skarpelamalgamail.com
Bernard Malina
Malina & Associates, PLLC
305 Madison Avenue
Suite 1420
New York, NY 10165
(212) 986-7410
Fax: (212) 983-8421
Email: bmalina@malinalaw.com
1
Sunlite USA Corporation
Jay R. McDaniel
McDaniel Law Firm PC
54 Main Street
Hackensack, NJ 07601
(201) 845-3232
Fax: (201) 845-3777
Email: jrmcdanielmcdlawpc.com
Spotlite USA Corporation
Jay R. McDaniel
(See above for address)
Haiston Mikail
Jay R. McDaniel
(See above for address)
2
JACK B. WEINSTEIN, Senior United States District Judge:
Table of Contents
Introduction.........................................................................................................................
I
Pleadings..............................................................................................................................
II
First Motion for Preliminary Injunction.............................................................................. 5
III.
Second Motion for Preliminary Injunction.......................................................................... 5
IV.
Propriety of Issuance of a Bond .......................................................................................... 5
V.
Final Injunction.................................................................................................................... 6
VI
VII. Motion for Voluntary Dismissal of Defendant Sunlite....................................................... 6
VIII. Motion to Vacate the Default Judgment.............................................................................. 7
A Facts..................................................................................................................................... 7
B Law......................................................................................................................................
C. Application of Law to Facts.............................................................................................. 10
Motion for Entry of Default Judgment.............................................................................. 10
IX.
Referral to the Magistrate Judge ......................................................................................... 11
X.
Trial ................................................................................................................................... .11
XI
Calculation of Damages..................................................................................................... 11
XII
XIII Conclusion ......................................................................................................................... 12
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I.
Introduction
Plaintiff Lighting & Supplies, Inc. manufactures and distributes over 3000 lighting
products under the SUNLITE mark. Pl.'s Mem. of Law in Supp. of its Mot. for Prelim. Inj. 8,
Nov. 14, 2014, ECF No. 27 ("Pl.'s Mem. Prelim. Inj."). It brought suit against defendant Sunlite
USA Corporation ("Sunlite") and defendant Halston Mikail ("Mikail"), the sole owner of
Sunlite, for violations of sections 32 and 43 of the Lanham Act, 15 U.S.C. §§ 1114(1), 1116-18,
1121 (Trademark Infringement); 15 U.S.C. § 1125(a) (False Designation of Origin, Unfair
Competition); Deceptive Trade Practices under New York General Business Law § 349;
common law unfair competition; and common law trademark infringement. Pl.'s 2d Am.
Compl.
TT 19-34, Oct. 8, 2014, ECF No. 19.
The parties bring a myriad of motions. Each is addressed in turn below.
II.
Pleadings
On October 8, 2014, plaintiff filed a second amended complaint. Id.; see also P1-'s 2d
Am. Compl., ECF No. 18, Oct. 7, 2014.
A motion to amend the pleadings to substitute the real party of interest is granted on
consent. The pleadings are amended to add Spotlite USA Corporation as a defendant. Hr'g Tr9:23-25, June 4, 2015. The case caption shall be amended to reflect this change. All defendants
are deemed to have denied all claims in the second amended complaint, including those for
damages up to the time of trial. Id. at 19:24-25.
Defendant Mikail's answer shall be filed. See McDaniel Decl. in Supp. of Def.'s Mot. to
Vacate Default ("McDaniel Decl.") Ex. E, ECF No. 70-7. Its untimeliness is excused. Hr'g Tr.
20:1-4, June 4, 2015.
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III.
First Motion for Preliminary Injunction
On December 9, 2014, the court received evidence and heard oral argument on plaintiffs
first motion for a preliminary injunction. See Hr'g Tr., Dec. 9, 2014. The motion was denied
because plaintiff failed to establish a "continuing harm which cannot be adequately redressed by
final relief on the merits and for which money damages cannot provide adequate compensation."
Ct. Order Den. Pl.'s Mot. for Prelim. Inj. and Den. Defs.' Mot. to Dismiss for Lack of Personal
Jurisdiction, Dec. 9, 2014, ECF No. 45 ("Ct. Order Den. Mots.") (citation omitted); cf. Hr'g Tr.,
Dec. 9, 2014. Relied on were defendant Mikail's representations to the court that any
infringement and other adverse actions had ceased and would not occur in the future. Cf. Hr'g
Tr. 18-23, Dec. 9, 2014.
Also denied was defendants' motion to dismiss for lack of personal jurisdiction. See
Hr'g Tr. 12:9-14:8, Dec. 9, 2014; Ct. Order Den. Mots.
IV.
Second Motion for Preliminary Injunction
At oral argument on June 4, 2015, the parties conceded that plaintiff's rights were
violated. Hr'g Tr. 7:22-23. Based on this concession and the December 9, 2014 hearing, the
court finds that a preliminary injunction is appropriate. Id. at 7:24-8:3.
V.
Propriety of Issuance of a Bond
In light of the preliminary injunction, defendants seek a bond from plaintiff. Dccl. in
Opp'n to Pl.'s Mot. for Prelim. Inj. and in Supp. of Defs.' Cross-Mot. to Dismiss the Compl.
¶ 15, Nov. 26, 2014, ECF No. 30. Federal Rule of Civil Procedure 65(c) provides:
The court may issue a preliminary injunction or a temporary restraining
order only if the movant gives security in an amount that the court
considers proper to pay the costs and damages sustained by any party
found to have been wrongfully enjoined or restrained. The United States,
its officers, and its agencies are not required to give security.
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Fed. R. Civ. P. 65(c).
While the language of the Rule is mandatory, the court has "wide discretion" to
determine whether a bond is appropriate. Doctor's Assocs., Inc. v. Stuart, 85 F.3d 975, 985 (2d
Cir. 1996) (citation omitted) (denying issuance of bond where defendants failed to show "that
they will likely suffer harm absent the posting of a bond by [plaintiff]"); DeWitt Stern Grp., Inc.
v. Eisenberg, 13-CV-3060, 2013 WL 2420835, at *6 (S.D.N.Y. June 4, 2013) (denying issuance
of bond where defendant "failed to establish that he is likely to suffer any harm absent the
posting of a bond and as such the bond requirement is unnecessary").
Where the likelihood of success on the merits is overwhelming, courts have denied a
bond. See New York City Triathlon, L. L. C. v. NYC Triathlon Club, Inc.,
704 F. Supp. 2d 305,
345 (S.D.N.Y. 2010) (denying bond where defendant "has not demonstrated it will likely suffer
any harm absent the posting of a bond, and the likelihood of success on the merits is
overwhelming").
Here, the likelihood of success is overwhelming. The probability of harm to defendants
is negligible. Cf. Hr'g Tr. 15:1-7, Dec. 9, 2014; 9:5-7, June 4, 2015. The request for issuance
of a bond is denied.
VI.
Final Injunction
The court is prepared to grant a final injunction. Hr'g Tr. 13:11-14, June 4, 2015; cf.
Consent J. for Permanent Inj., ECF No. 79 (proposed).
VII.
Motion for Voluntary Dismissal of Defendant Sunlite
Plaintiff moves to voluntarily dismiss defendant Sunlite without prejudice. Pl.'s Mot. for
Voluntary Dismissal of Def. Sunlite USA without Prejudice, Mar. 11, 2015, ECF No. 69; Pl.'s
Mem. of Law in Supp. of its Mot. for Voluntary Dismissal of Def. Sunlite USA without
Prejudice, Mar. 11, 2015, ECF No. 69-2 ("Pl.'s Mem. Supp. Voluntary Dismissal"); Pl.'s Reply
Mem. of Law in Supp. of its Mot. for Voluntary Dismissal of Def. Sunlite USA without
Prejudice, Apr. 2, 2015, ECF No. 69-4.
Defendants oppose. Defs.' Mem. of Law in Opp'n to Pl.'s Mot. Dismiss Def. Sunlite
USA without Prejudice, Mar. 19, 2015, ECF No. 69-3.
For the reasons stated orally on the record, the motion is denied. See Hr'g Tr. 19:15-16,
June 4, 2015. The corporate defendant, Sunlite, may have assets or have life and liability.
VIII. Motion to Vacate the Default Judgment
Defendant Mikail moves, pursuant to Federal Rule of Civil Procedure 55(c), to vacate the
default judgment. Fed. R. Civ. P. 55(c); see Def.'s Mem. of Law in Supp. of its Mot. to Vacate
Default, ECF No. 70-1 ("Def. Mem. Vacate Default"). The motion is granted. Hr'g Tr. 6:1924, June 4, 2015. Default was inadvertent.
A. Facts
On November 14, 2014, plaintiff moved for a preliminary injunction. Pl.'s Mot. for
Prelim. Inj., Nov. 14, 2014, ECF No. 24; Kohn Decl. in Supp. of Pl.'s Mot. for Prelim. Inj., Nov.
13, 2014, ECF No. 25; Gross Deci. in Supp. of Pl.'s Mot. for Prelim. Inj., Nov. 13, 2014, ECF
No. 26; PL's Mem. Prelim. Inj.; Bennet's Aff. of Service for Notice of Mot. for Prelim. Inj., Nov.
21, 2015, ECF No. 28.
On November 28, 2014, defendant Mikail and Sunlite filed a cross motion to dismiss for
lack of personal jurisdiction. Defs.' Cross-Mot. to Dismiss for Lack of Personal Jurisdiction,
Nov. 28, 2014, ECF No. 29.
Both motions were denied on Dec. 9, 2014. Ct. Order Den. Mots. On December 9, 2014,
the magistrate judge held a settlement conference with the parties. Mm. Order by Mag. Judge
VA
Orenstein, ECF No. 43. The parties engaged in serious negotiations. By December 16, 2014, the
parties had circulated a draft of a settlement agreement. See Lehman Deci. in Supp. of Def. '5
Mot. to Vacate Default ¶ 3, Mar. 9, 2015, ECF No. 70-3 ("Lehman Decl.").
Defendant Mikail's answer to plaintiff's second amended complaint was due in late
December 2014. See Fed. R. Civ. P. 12(a)(4)(A) ("if the court denies the motion or postpones its
disposition until trial, the responsive pleading must be served within 14 days after notice of the
court's action") (fourteen days from December 9, 2014). The parties agree that Sunlite had
already timely filed its answer. See Pl.'s Mem. Supp. Voluntary Dismissal 5; Def. Mem. Vacate
Default 5; Def. Sunlite's Answer to Pl.'s 2d Am. Compi., Nov. 4, 2014, ECF No. 22.
The negotiations continued and, on February 3, 2015, counsel for plaintiff emailed
counsel for defendant asking when he would send the signed agreement. Lehman Decl. Ex. B, at
10, Apr. 4, 2015, ECF No. 70-3. The next day, counsel for defendant responded that defendant
Mikail had executed the agreement but that defense counsel had yet to sign the agreement. Id.
On February 6, 2015, the magistrate judge ordered counsel to appear for a settlement
conference on February 19, 2015, unless a settlement had been executed by all parties. Mm.
Order by Mag. Judge Orenstein, ECF No. 50.
On February 10, 2015, counsel for defendant emailed counsel for plaintiff stating the
settlement agreement was signed, but would only be sent to counsel for plaintiff if plaintiff
withdrew its application for a default judgment. Lehman Deci. Ex. D, at 29, Apr. 4, 2015, ECF
No. 70-3. Plaintiff's counsel refused to withdraw the application until the settlement agreement
was received. Id. at 28.
On that same day, plaintiff sought an entry of default. It was received the next day. Req.
for Certificate of Default Against Def. Mikail, Feb. 10, 2015, ECF No. 51; Karpel Aff. in Supp.
of Req. for Certificate of Default Against Def. Mikail, Feb. 10, 2015, ECF No. 52; Certificate of
Default, Feb. 11, 2015, ECF No. 53.
On February 19, 2015, before Magistrate Judge Orenstein, defense counsel explained
why no answer had been filed:
THE COURT:
And you chose not to file [an answer] in any event because whether you
had reason to expect it or not, you knew that there was a deadline but you
thought your efforts were better used pursuing the settlement.
MR. LEHMAN:
I wouldn't even say I went through that mental process, your Honor.
THE COURT:
No need to file the answer if you've got a settlement.
MR. LEHMAN:
We're all working towards settlement.
THE COURT:
Okay.
MR. LEHMAN:
We've agreed in principle. We're documenting...
Hr'g Tr. 8:13-25, Feb. 19, 2015, ECF No. 55.
B. Law
Federal Rule of Civil Procedure 5 5(c) provides that "[t]he court may set aside an entry of
default for good cause, and it may set aside a default judgment under Rule 60(b)." Fed. R. Civ.
P. 55(c).
In determining whether to set aside a default judgment, "courts must assess (1) whether
the default was willful; (2) whether setting aside the default would prejudice the adversary; and
(3) whether a meritorious defense is presented, as well as other relevant equitable factors such as
whether the failure to follow a rule of procedure was a mistake made in good faith and whether
the entry of default would bring about a harsh or unfair result." Palmieri v. Town of Babylon,
277 F. App'x 72, 74 (2d Cir. 2008) (summary order) (internal quotation marks omitted) (quoting
Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993) (holding that the district court's
failure to vacate the default judgment was an abuse of discretion)). See MD Produce Corp. v.
231 Food Corp., 304 F.R.D. 107 (E.D.N.Y. 2014) (vacating default judgment because the default
was not willful, a meritorious defense existed, and discarding the judgment would not prejudice
plaintiff); Gonzalez v. City of New York, 104 F. Supp. 2d 193 (S.D.N.Y. 2000) (same); but see
Labarbera v. Interstate Payroll Co., Inc., 07-CV-1 183, 2009 WL 1564381, at *2 (S.D.N.Y. June
2, 2009) (denying motion to vacate default judgment because of an improper format of motion);
Directv, Inc. v. Rosenberg, 02-CV-2241, 2004 WL 345523, at *2_3 (S.D.N.Y. Feb. 24, 2004)
(sustaining default judgment due to a party's repeated disregard for court proceedings).
C. Application of Law to Facts
First, the default was not willful. The parties were engaged in settlement discussions.
See MD Produce Corp., 304 F.R.D. at 110 (finding that default was not willful because of efforts
to resolve the dispute through settlement); Gonzalez, 104 F. Supp. 2d at 193 (holding that
engaging in settlement negotiations contributed to the finding that default was not willful).
Second, vacating the default judgment will not cause substantial prejudice to plaintiff.
No discovery has taken place.
Third, according to defense counsel, defendant Mikail has a meritorious defense and
appears to have acted in good faith. See Hr'g Tr. 6:20-24, June 4, 2015; MD Produce Corp.,
304 F.R.D. at 109 (default not willful where defendant maintained a good faith belief that the
dispute would be settled).
The default judgment is vacated. See Hr'g Tr. 6, June 4, 2015.
IX. Motion for Entry of Default Judgment
Plaintiff's motion for entry of a default judgment is denied as moot. See Pl.'s Mot. for
Entry of Default J. Against Def. Mikail, Feb. 25, 2015, ECF No. 58.
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X. Referral to the Magistrate Judge
Discovery was stayed. Mm. Order by Mag. Judge Orenstein, Feb. 26, 2015, ECF No. 66.
The stay on discovery is lifted. Hr'g Tr. 13:6-7, June 4, 2015. Completion of discovery is
respectfully referred to the magistrate judge. Id. at 16:9-12. Discovery shall be expedited. Id.
Settlement is encouraged. Id. at 18:9-10. The magistrate judge shall engage the parties
in settlement discussions. Id. at 20:23-24. The magistrate shall oversee settlement over 1) the
terms of a final injunction; and 2) any possible damages. Id. at 16: 9-12.
XL Trial
Trial on any damages shall commence on August 11, 2015 at 10:00 a.m. in Courtroom
lOB South. Jury selection will occur on August 10, 2015 at 10:00 a.m. in Courtroom lOB South.
At the request of plaintiff, the court shall select the jury. See id. at 17:13-16.
Argument on in limine motions will be heard on August 3, 2015 at 10:00 a.m. in
Courtroom 1 OB South. Representatives from plaintiff and defendant, as well as defendant
Mikail, shall appear in person at the in limine hearing.
By July 27, 2015 at 10:00 a.m., the parties shall submit proposed jury charges with
verdict sheets, in limine motions, and supporting briefs. They shall exchange and docket: (1)
lists of pre-marked exhibits proposed for use at trial and stipulations regarding admissibility; (2)
lists of potential witnesses together with brief summaries of proposed testimony; (3) stipulations
with respect to all undisputed facts; and (4) proposed voir dire. Copies shall be provided to the
court.
All expert reports shall be exchanged by July 27, 2015.
XII. Calculation of Damages
Damages shall be calculated up to the first day of trial. Id. at 19:8-12.
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The jury shall determine damages. See id. at 18:20-19:7.
XIII. Conclusion
The parties stipulate entry of a preliminary injunction.
Defendants' motion for a bond is denied.
Defendant Mikail's motion to vacate the default judgment against him is granted.
Plaintiff's motion for an entry of the default judgment is denied.
Defendant Mikail's untimely answer is accepted.
The complaint is amended to include Spotlite Corporation as a defendant.
Plaintiff's motion to dismiss defendant Sunlite USA without prejudice is denied.
Defendants deny all elements of the second amended complaint.
ORDERED.
" 7J, /,
- -)
ack B. Weinstein
enior United States District Judge
Dated: June 16, 2015
Brooklyn, New York
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