Curves International, Inc. v. Schrivener Nash et al

Filing 16

DECISION and ORDERED, that Plaintiffs Motion for default judgment (Dkt. No. 9) is GRANTED in part; and it is further ORDERED, that Defendants are enjoined from continuing to operate a fitness center using and/or displaying Curves registered marks wit hout Curves consent; and it is further ORDERED, that Defendants are enjoined from using the Curves trademark or any confusingly similar name, device, mark, service mark, trademark, trade name, slogan or symbol used in connection with the Curves Franc hise, including any production, counterfeit copy, variation, emulation, or colorable imitation thereof which is likely to cause confusion or mistake or deceive the public; and it is further ORDERED, that Defendants return to Curves, at Defendants exp ense, all printed material furnished to them by Plaintiff, including, without limitation, all Curves manuals, advertising material, stationery, and printed forms and all other matters relating to the operation of the Curves franchise and/or bearing t he Curves trademark; and it is further ORDERED, that Nash is enjoined from owning, maintaining, engaging in, or having any interest in any other business which sells any products similar to those sold as part of the Curves franchise system within for ty (40) miles of Nashs approved location for a period of three (3) years following the date on which Nash and NV Fitness cease operating; and it is further ORDERED, that Nash is enjoined from employing or seeking to employ any person who is employed by Curves or any other Curves franchisee, or otherwise induce or seek to induce such person to leave his or her employment; and it is further ORDERED, that Defendants are enjoined from using any confidential information from Curves manuals or system in any similar business to that licensed and established under and pursuant to the franchise agreement and/or termination agreement; and it is further ORDERED, that Defendants are enjoined from diverting or attempting to divert any customer or busine ss from Curves or any other franchisee or solicit or endeavor to obtain the business of any person who shall have been a customer of a franchisees facility; and it is further ORDERED, that the Court shall consider issuing an award of damages and/or a ttorneys fees only if, within thirty (30) days of the filing of this Order, Plaintiff submits affidavits and documentary evidence substantiating such an award. If Plaintiff submits such evidence, Defendants must file any response withing thirty (30) days of Plaintiffs filing. Signed by Senior Judge Lawrence E. Kahn on March 09, 2012. (sas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
CURVES INTERNATIONAL, INC.,
Plaintiff,
-against-

5:11-CV-00425 (LEK/TWD)

VERONICA SCRIVENER NASH and
NV FITNESS,
Defendants.

DECISION and ORDER
I.

INTRODUCTION
Plaintiff Curves International, Inc. (“Plaintiff” or “Curves”) commenced this action on April 15,

2011, asserting claims against Defendants Veronica Scrivener Nash (“Nash”) and NV Fitness
(collectively, “Defendants”) for breach of contract, violations of the Lanham Act, and misappropriation
of trade secrets, all arising out of the termination of a franchise agreement between Plaintiff and Nash.
See Dkt. No. 1 (“Complaint”). Plaintiff seeks damages, attorneys’ fees, and various forms of
injunctive relief. Id.
The record indicates that Defendants were properly served with copies of the summons and
Complaint. See Dkt. Nos. 5, 6. After Defendants failed to answer, Plaintiff filed a Request for entry of
default on June 28, 2011. Dkt. No. 7. The Clerk of the Court executed a Certificate of Default on May
25, 2011. Dkt. No. 8. Presently before the Court is Plaintiff’s Motion for default judgment pursuant to
Fed. R. Civ. P. 55(b)(2). Dkt. No. 9 (“Motion”).
II.

BACKGROUND

According to the Complaint, Nash entered into a ten year franchise agreement with Curves on
June 1, 2000, and began operating a Curves franchise at 609 Clinton Street, Ithaca, New York. Compl.
¶¶ 3, 14. As a franchisee, Nash received various materials that are given only to members of the
Curves business system, including a confidential operations manual, marketing and advertising
materials, and other business forms. Id. ¶ 16. Nash also had access to Curves telephone support and
computer-based learning systems, and had the opportunity to receive additional training through
regional and national meetings. Id.
Pursuant to Article 9(B) of the franchise agreement, Nash agreed to refrain from participating in
or deriving any sort of benefit from any business similar to that of Curves: (1) within forty miles of an
designated area; and (2) for three years after the termination of either the franchise agreement or her
actual participation in a similar business, whichever is later. Id. ¶ 24. She also agreed, pursuant to the
same distance and time restrictions, to refrain from interfering with or utilizing any of Curves’ former
customers, employees, business relationships, confidential information, or trademarks. Id. ¶ 25.
Plaintiff and Nash terminated the franchise agreement on August 13, 2009. Id. ¶ 27. Plaintiff
alleges that Nash inquired by e-mail, on October 22, 2010, whether offering personal training services
would be considered a breach of the non-compete provisions. Id. ¶ 29; Dkt. No. 1-2. On October 26,
2010, Plaintiff responded with an email setting forth Nash’s post-termination obligations under the
franchise agreement, and stating that offering personal training services within the designated area
would be considered a breach of the non-compete provisions. Compl. ¶ 30.
Plaintiff alleges that Nash used Curves’ trademarks while advertising personal training and
fitness services under the name “NV Fitness.” Id. ¶ 31. Plaintiff further alleges that Nash has used
mailing and membership lists from her Curves franchise, and that she has used “Curves’ promotions,
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advertisements, equipment, and other proprietary materials” to market her services to the public. Id. ¶¶
31, 34. Plaintiff sent a cease and desist letter to both Nash and NV Fitness on December 17, 2010, but
alleges that Defendants have continued to violate the post-termination provisions of the franchise
agreement, and that Plaintiff’s business has been harmed as a result. Id. ¶¶ 33-34.
III.

DISCUSSION
Defendants’ failure to appear constitutes an admission of all well-pleaded allegations in the

Complaint. H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 107 (2d Cir. 2006). “While a party's
default is deemed to constitute a concession of all well pleaded allegations of liability, it is not
considered an admission of damages. . . . Damages, which are neither susceptible of mathematical
computation nor liquidated as of the default, usually must be established by the plaintiff in an
evidentiary proceeding in which the defendant has the opportunity to contest the amount.” Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992).
As the Defendants failed to answer Plaintiff’s Complaint, and as an entry of default has been
made in this case, the Court deems true all relevant and well-pleaded factual allegations in Plaintiff’s
Complaint. Accordingly, Defendants are deemed to admit that, at all times relevant hereto: (1) Plaintiff
is a franchisor of Curves fitness centers; (2) Plaintiff owns various trademarks, service marks, logos
and derivations; (3) Nash entered into a franchise agreement with Plaintiff, whereby Nash received the
right to use various of Plaintiff’s trademarks and business systems in a limited area; (4) the parties
entered into an agreement to terminate the franchise agreement; (5) under the terms of the termination,
Nash agreed to, inter alia, a non-compete covenant; (6) Nash continues to use Plaintiff’s marks or
substantially similar marks in her operation of NV Fitness; (7) Nash continues to use Plaintiff’s
customer lists to market her business; (8) Nash has ignored Plaintiff’s cease and desist letters and
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demands that she comply with her obligations under the franchise and termination agreements; and (9)
Nash’s conduct is harming Plaintiff’s business interests.
These allegations are sufficient to establish liability under the breach of contract, see First
Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998) (listing the elements of a
breach of contract claim), and Lanham Act claims, see 1-800 Contracts, Inc. v. WhenU.com. Inc., 414
F.3d 400, 407 (2d Cir. 2005) (setting forth the elements of a trademark infringement claim), and to
entitle Plaintiff to injunctive relief. Kingvision Pay-Per-View Ltd. v. Lalaleo, 429 F. Supp. 2d 506,
516 (E.D.N.Y. 2006) (“A court ‘may issue an injunction on a motion for default judgment provided
that the moving party shows that (1) it is entitled to injunctive relief under the applicable statute and (2)
it meets the prerequisites for the issuance of an injunction.’”) (quoting Main Events/Monitor Prods. v.
Batista, No. 96-CV-5089, 1998 WL 760330, at *1 (E.D.N.Y. Aug. 26, 1998)); see also Patsy’s Italian
Restaurant, Inc. v. Banas, 658 F.3d 254, 272-73 (2d Cir. 2011) (setting forth the standards for issuing a
permanent injunction in a Lanham Act case).
Plaintiff also seeks $8,400 for “post-termination wrongful infringement of Curves’ trademarks,
trade names, and service marks and from Cleveland and NV Fitness’ other wrongful acts,” as well as
$8,379.39 in legal fees. Mot. at 2-3. However, after establishing liability, a court must conduct an
inquiry to ascertain the amount of damages with reasonable certainty. Transatlantic Marine Claims
Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). To determine the amount of
damages in the context of a default judgment, “the court may conduct such hearings or order such
references as it deems necessary and proper.” FED . R. CIV . P. 55(b)(2). “It [is] not necessary for the
District Court to hold a hearing, as long as it ensured that there [is] a basis for the damages specified in
the default judgment.” Fustok v. ContiCommodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989).
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Here, Plaintiff has submitted nothing substantiating its claim for damages or attorneys’ fees.1
Because Plaintiff has not specified the basis for these calculations and because they are neither
susceptible of mathematical computation nor liquidated as of the default, the Court does not award
damages or fees at this time. Rather, in order to seek damages and fees, Plaintiff must file with the
Court, and serve on Defendants, affidavits and/or other admissible evidence substantiating its claim for
damages within thirty days of the date of this Order. If Plaintiff makes such a filing, Defendants must
file any response contesting or otherwise addressing Plaintiff’s claim for damages within thirty days.
For the foregoing reasons, Plaintiff’s motion for default is granted on the issue of liability and
the request for injunctive relief. The Court will reserve decision on the issue of damages and attorneys’
fees until the parties have had an opportunity to be heard on that issue.
IV.

CONCLUSION
Accordingly, it is hereby:
ORDERED, that Plaintiff’s Motion for default judgment (Dkt. No. 9) is GRANTED in part,

consistent with this Decision and Order; and it is further
ORDERED, that Defendants are enjoined from continuing to operate a fitness center using
and/or displaying Curves’ registered marks without Curves’ consent; and it is further
ORDERED, that Defendants are enjoined from using the Curves trademark or any confusingly
similar name, device, mark, service mark, trademark, trade name, slogan or symbol used in connection
with the Curves Franchise, including any production, counterfeit copy, variation, emulation, or

1

Although Plaintiff submitted an affidavit concerning the rates charged by its attorneys, it
did not submit anything substantiating the amount of time spent on litigating this case.
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colorable imitation thereof which is likely to cause confusion or mistake or deceive the public; and it is
further
ORDERED, that Defendants return to Curves, at Defendants’ expense, all printed material
furnished to them by Plaintiff, including, without limitation, all Curves’ manuals, advertising material,
stationery, and printed forms and all other matters relating to the operation of the Curves franchise
and/or bearing the Curves trademark; and it is further
ORDERED, that Nash is enjoined from owning, maintaining, engaging in, or having any
interest in any other business which sells any products similar to those sold as part of the Curves
franchise system within forty (40) miles of Nash’s approved location for a period of three (3) years
following the date on which Nash and NV Fitness cease operating; and it is further
ORDERED, that Nash is enjoined from employing or seeking to employ any person who is
employed by Curves or any other Curves franchisee, or otherwise induce or seek to induce such person
to leave his or her employment; and it is further
ORDERED, that Defendants are enjoined from using any confidential information from
Curves’ manuals or system in any similar business to that licensed and established under and pursuant
to the franchise agreement and/or termination agreement; and it is further
ORDERED, that Defendants are enjoined from diverting or attempting to divert any customer
or business from Curves or any other franchisee or solicit or endeavor to obtain the business of any
person who shall have been a customer of a franchisee’s facility; and it is further
ORDERED, that the Court shall consider issuing an award of damages and/or attorneys’ fees
only if, within thirty (30) days of the filing of this Order, Plaintiff submits affidavits and documentary

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evidence substantiating such an award. If Plaintiff submits such evidence, Defendants must file any
response withing thirty (30) days of Plaintiff’s filing.
IT IS SO ORDERED.

DATED:

March 09, 2012
Albany, New York

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