Journey Group Companies v. Sioux Falls Construction, LLC et al

Filing 27

MEMORANDUM OPINION AND ORDER granting 22 Motion for Attorney Fees. Signed by U.S. District Judge Lawrence L. Piersol on 10/5/17. (SLW)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA

FILED
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SOUTHERN DIVISION
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JOURNEY GROUP COMPANIES d/b/a
SIOUX FALLS CONSTRUCTION,

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a South Dakota Corporation,

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Plaintiff,

CIV 16-4125

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-vs-

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SIOUX FALLS CONSTRUCTION,LLC, *

MEMORANDUM OPINION AND
ORDER GRANTING MOTION

FOR ATTORNEY FEES

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a South Dakota Limited Liability Company,
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and LORENA DE JESUS, aka LORENA
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ZAMORA,aka LORENA FLEY,
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an individual.
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Defendants.

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Plaintiff Journey Group Companies d/b/a Sioux Falls Construction ("Plaintiff) has filed a
Motion for Attorney Fees. (Doc. 22.) The motion is supported by the Affidavit of Sander J.
Morehead and exhibits attached to the affidavit.(Doc. 23.) Defendants Sioux Falls Construction,

LLC("SFC") and Lorena De Jesus ("De Jesus") have not resisted the motion. For the following
reasons, the motion will be granted.

BACKGROUND

Plaintiff has offered construction services in South Dakota and the surrounding region for

over a century, continuously using the service mark "Sioux Falls Construction" ("the Mark") in
advertising and otherwise promoting its construction services with great success and consumer
recognition. The Mark is registered with the United States Patent & Trademark Office("USPTO"),
and with the South Dakota Secretary of State on it Fictitious Name Registration system.

SFC and De Jesus began promoting and advertising their construction services using the

Mark on a pirated domain and on Facehook, and by displaying the Mark on business cards and on
the sides of SFCs commercial vehicles.

On June 28,2016,Plaintiffs lawyers sent by certified mail,return receipt requested, and by

e-mail, a letter to De Jesus and SFC advising them that they were infringing upon Plaintiffs
registered service mark. De Jesus represented that SFC would cease and desist using the Mark in
conjunction with its construction business. However, SFC and De Jesus continued to conduct
business in association with the Mark, confusing both consumers and potential consumers. For

instance. Plaintiff was contacted by both potential consumers and Sioux Falls, South Dakota, city
officials who were confused as to whether Plaintiff Sioux Falls Construction was responsible for

SFC commercial trucks with the Mark on the sides of the trucks. Sioux Falls city officials have
called Plaintiff and noted that vehicles hearing the Mark were located at job sites lacking a proper
building permit.

Despite repeated subsequent contacts between Plaintiffs lawyer and SFC and De Jesus

demanding that they cease and desist use ofthe Mark,SFC and De Jesus nevertheless continued to
conduct business in association with the "Sioux Falls Construction" name.

After being notified of Plaintiffs rights in the Mark, including Plaintiffs Registrations

regarding that Mark,SFC and De Jesus fraudulently obtained a South Dakota state registration for
the mark "Sioux Falls Construction LLC" under SDCL Ch. 37-6 on September 12, 2016, by

misrepresenting to the South Dakota Secretary of State's Office that it had valid rights in the Mark.
Plaintiffinitiated this trademark infiingement action against SFC and De Jesus on September

2,2016.(Doc. 1, Complaint.) A Summons was obtained from the Clerk ofCourts the same day,and
Plaintiff began efforts to serve De Jesus both individually and as the Registered Agent of SFC.
Service ofthe Summons and Complaint was accomplished onhoth Defendants on October 18,2016.

(Docs. 6 and 7.) Defendants were required to serve an answer within 21 days. Fed.R.Civ.P.

12(a)(l)(A)(i). They failed to do so. Defendants also failed to file an answer or otherwise respond
to the Amended Complaint that was filed on November 30, 2016.' Plaintiff moved for entry of
default on December 21, 2016.(Doc. 13.) Pursuant to Federal Rule of Civil Procedure 55(a), the
Clerk of Court entered default against Defendants on the same day.(Doc. 16.)

On January 12, 2017, Plaintiff moved for default judgment pursuant to Rule 55(b) on its
claims for: 1) violating Plaintiffs rights under the Lanham Act including 15 U.S.C. §§1114 and
1125; 2)a counterfeit trademark under 15 U.S.C. § 1116; and 3)cybersquatting in violation of 15
U.S.C. § 1125(d). Plaintiff also asserted that the admitted facts established that SFC's state

trademark registration for"Sioux Falls Construction,LLC"should be cancelled. This Court granted
Plaintiffs motion for defaultjudgment on April 12, 2017, awarding damages and injunctive relief.
(Doc. 21.) Regarding Plaintiffs request for attorney fees, the Court stated:
The Lanham Act authorizes"reasonable attorneyfees to the prevailing party"

in"exceptional cases." 15 U.S.C. § 1117(a)."Courts have defined the characteristics
of exceptional cases with adjectives suggesting egregious conduct by a party."
Aromatique,Inc. v. Gold Seal, Inc., 28 F.3d 863,877(8th Cir. 1994). According to
the Eighth Circuit, an exceptional case within the meaning ofthe Lanham Act"is one
in which one party's behavior went beyond the pale of acceptable conduct."Id. As
noted above. Defendants deliberately and knowingly counterfeited Sioux Falls
Construction's mark, marketed its own services with this counterfeit mark, and
intended to use Sioux Falls Construction's well-known mark in an attempt to profit

from the goodwill of that well-established construction company. Thus, this is an
exceptional case justifying an award offees.

(Doc. 21 at 12.) Plaintiffs counsel was directed to file an application for attorney fees with a
supporting affidavit and time records.(Jd.)

'The Amended Complaint(doc. 12)added counts for counterfeit trademark and cancellation
of Defendants' state registration of the mark "Sioux Falls Construction, LLC." It reasserted the
claims in the initial complaint against SFC and De Jesus for trademark infhngement,cybersquatting,
trademark dilution, and unfair competition under the Lanham Act, and a state law claim for false

representations under the Deceptive TradePractices Act. Sioux Falls Construction sought permanent
injunctions, statutory damages and attorney fees.

On April 21,2017,Plaintiff moved for attorney fees on the ground that the instant aetion is
an exeeptional case under the Lanham Act.(Docs. 22, 24.) The motion is supported by an affidavit
of Plaintiff's lawyer with billing records attached. (Doe. 23.) Defendants did not object to the
motion.

DISCUSSION

The Lanham Act permits a prevailing plaintiff in a trademark infringement ease to recover
attorney fees and costs.

When a violation of any right ofthe registrant of a mark registered in the Patent and
Trademark Office, a violation under section 1125(a) or(d)of this title, or a willful
violation under section 1125(e)ofthis title, shall have been established in any civil
action arising under this chapter, the plaintiff shall be entitled, subject to the

provisions of sections 1111 and 1114 of this title, and subject to the principles of
equity, to recover ... the costs of the aetion. ... The court in exeeptional cases may
award reasonable attorney fees to the prevailing party.

15 U.S.C. § 1117(a). The Court already has noted that this is an exceptional case where an award
ofattorney fees is appropriate. See,e.g., Cmty. ofChrist Copyright Corp. v. Devon ParkRestoration
Branch of Jesus Christ's Church, 634 F.3d 1005, 1013 (8th Cir. 2011) (holding that when a
defendant's unlawful conduct"was willful and deliberate, the court may well determine that this is

the type of'exceptional' case for which an award ofattorney's fees is appropriate.")(quoting Metric
&Multistandard Components Corp. v. Metric'sine.,635 F.2d 710,716(8th Cir.1980)). Defendants
used Plaintiffs registered mark in advertising and selling their own construction services and
continued to do so even after being notified of the unlawfulness of their activities, thus forcing

Plaintiff into litigation. Defendants failed to answer the complaint and defaulted, leading to this
Court's decision to enter a defaultjudgmentin favor ofPlaintiff,including an award ofdamages and

a permanent injunction enjoining Defendants from further acts ofinfiingement. It is the strength of
the merits of Plaintiffs claims and Defendants' flagrant infringement ofthe Mark that makes this

ease exeeptional, not simply the fact that a default judgment was entered.

Plaintiff requests an award of attorney fees in the amount of$13,903.00, plus 6% sales tax
of $834.18, for a total fee of $14,737.18 for investigating the case and attempting to resolve it
without litigation, preparing and filing the complaints, efforts to locate and serve the elusive De
Jesus, and working on procuring the default judgment.

"The starting point in determining attorney fees is the lodestar, which is calculated hy
multiplying the number of hours reasonably expended hy the reasonable hourly rates." Fish v. St.
Cloud State University, 295 F.3d 849, 851 (8th Cir. 2002)(citing Hensley v. Eckherhart, 461 U.S.
424,433(1983)). A strong presumption exists that the figure resulting fiom the above calculation
(i.e., the lodestar figure) is reasonable. See Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 554
(2010).

Plaintiff is requesting compensation for 69 hours of work done between June of2016 and

February of2017. The fee chart submitted by Plaintiff and the supporting unredacted time entries
are clear and concise. The Court concludes that the 69 hours worked by the lawyers and the paralegal

in this case, which involved legally complex infringement issues and difficulty with service, are
reasonable.

Courts require the attomey seeking fees to justify the reasonableness ofthe requested rate or
rates. Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984). Courts have found that,

[t]o inform and assist the court in the exercise of its discretion, the burden is on the
fee applicant to produce satisfactory evidence... that the requested rates are in line
with those prevailing in the community for similar services by lawyers ofreasonably
comparable skill, experience and reputation. A rate determined in this way is
normally deemed to he reasonable ....

Id. As such, counsel for Plaintiff hears the burden of proving that the requested hourly rates are
reasonable. "When determining reasonable hourly rates, district courts may rely on their own

experience and knowledge of prevailing market rates." Hanig v. Lee,415 F.3d 822,825(8th Cir.
2005).

Plaintiffs lawyer, Sander Morehead, submitted an Affidavit in Support of the motion for
attorney fees in which he states,

3.1 began working for Woods Fuller as an Associate Attorney on May 9, 2005, and
immediately worked on intellectual property matters for the firm, including trade
secret litigation, trademark disputes, and patent disputes.
4. I have continued to work primarily in the area of intellectual property litigation
since starting my employment with Woods Fuller. I have worked on patent,
trademark, copyright, and trade secret matters in federal and state courts in South
Dakota,North Dakota, Michigan, Minnesota,Iowa,and Texas, as well as before the
Trademark Trial and Appeal Board of the United States Patent and Trademark

Office. Approximately half of my practice time is devoted to intellectual-property
matters. Them remainder of my practice involves complex commercial litigation.
15. The hourly rates charged by myself($225 per hour), Ms. Doohen ($115 per
hour), Mr.Engel($175)and Mr. Leonard($275 per hour)are commensurate with or
lower than the rates these timekeepers charge other clients in similar intellectualproperty matters. In intellectual-property matters, I typically charge $275 per hour,
and typically bill time for associates, such as Mr. Engel, at $200 per hour.
Doc. 23 at 2,4. The Court is aware that the rates requested are similar to the rates prevailing in the
legal community. Thus, upon consideration of the Affidavit of Sander Morehead and the Court's

own familiarity with the prevailing market rates for attorneys with similar experience, skill, and

reputation in the Sioux Falls region, the Court finds the rates billed to be reasonable.^

Multiplying the hours worked by the rates billed, the lodestar is $13,903.00. The Court may
adjust the lodestar to account for other considerations that have not yet figured into the computation,
including"the plaintiffs overall success;the necessity and usefulness ofthe plaintiffs activity in the

particular matter for which fees are requested; and the efficiency with which the plaintiffs attomeys
conducted that activity." Jenkins by Jenkins v. State ofMo., Ill F.3d 709, 718 (8th Cir. 1997).
Consideration ofthese factors supports the reasonableness ofthe lodestar. Plaintiffdoes not request
an upward adjustment, and the Court will not adjust the lodestar upward or downward.It will award

^The Court notes that Mr.Leonard's first two time entries are billed at $275 per hour,but the
following seven entries are billed at $285 per hour. Mr. Engel's billing rate for entries beginning in
2017 is $200 rather than $175. These higher rates remain reasonable.

Plaintiff $13,903.00 in attorney fees, plus 6% sales tax of $834.18, for a total of $14,737.18.
Accordingly,

IT IS ORDERED that Plaintiffs Application for Attorney Fees, doc. 22, is granted

and the Court awards attorney fees plus 6% sales tax to Plaintiff in the amoxmt of
$14,737.18.

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Dated this ^ day of October,2017.
BY THE COURT:

awrence L. Piersol

United States District Judge
ATTEST:

JOSEPH HAAS,CLERK

(SEAL)

DEP