Automobili Lamborghini S.P.A. et al v. Lamborghini Latino America USA et al
Filing
211
MEMORANDUM OPINION. Signed by District Judge T. S. Ellis, III on 05/21/2020. (choy, )
Case 1:18-cv-00062-TSE-TCB Document 211 Filed 05/21/20 Page 1 of 29 PageID# 2160
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
AUTOMOBILI LAMBORGHINI S.P.A.,
et al.,
Plaintiffs,
v.
)
)
)
)
)
JOSE ANTONIO FERNANDEZ GARCIA, )
Defendant.
)
Case No. 1:18-cv-62
MEMORANDUM OPINION
This trademark infringement and declaratory judgment action arises from the alleged
marketing and sale of counterfeit Lamborghini-marked merchandise in the United States by
defendants on the website www.lamborghinigrupo.com.1 Based on this alleged conduct by
defendants, plaintiffs, the owner of the Lamborghini trademark and two corporate affiliates, have
asserted claims of (i) trademark infringement and counterfeiting, (ii) cybersquatting, (iii) false
designation of origin, and (iv) trademark dilution under the Lanham Act. See 15 U.S.C. Sections
1114, 1116, 1117, 1125(a), 1125(c), 1125(d). Plaintiffs also seek a declaratory judgment against
Garcia pursuant to 28 U.S.C. § 2201(a) that Garcia’s purported licensing agreements with
Lamborghini are (v) invalid, (vi) unenforceable, and (vii) fraudulent.
At issue in this case is plaintiffs’ motion for default judgment against Garcia. Plaintiffs’
default judgment motion was referred to the Magistrate Judge for a Report and Recommendation
pursuant to 28 U.S.C. § 636(b)(1)(B). On April 20, 2020, the Magistrate Judge entered a Report
1
Plaintiffs’ original complaint sued four defendants—(i) Jose Antonio Fernandez Garcia, (ii) Anthony Crudup, (iii)
Robert Braner, and (iv) Lamborghini Latino America USA. On September 30, 2019, plaintiffs filed a stipulated
motion to dismiss with prejudice Crudup, Braner and Lamborghini Latino America USA pursuant to Rule 41(a)(2),
Fed. R. Civ. P. Plaintiffs agreed to terms on a negotiated settlement with those three defendants. Accordingly,
Garcia is the only remaining defendant in this action.
1
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and Recommendation (the “Report”) in this case, recommending that plaintiffs’ default judgment
motion be granted in part and denied in part. Specifically, the Report recommended that default
judgment be entered against Garcia on Counts I, III, IV, V, VI, and VII of plaintiffs’ First Amended
Complaint (“FAC”) and that default judgment be denied without prejudice on Count II of the FAC.
On May 11, 2020, Garcia filed objections to the Report.2 In his objections, Garcia requests (i) that
judgment on plaintiffs’ motion for default judgment be postponed until after a decision on his
appeal of the November 7, 2019 Order in this case; (ii) that default judgment not be entered so that
he can defend himself in this matter; (iii) that default judgment not be entered because service was
improper under the Hague Convention; and (iv) that all the recommendations in the Report be
rejected.
For the reasons that follow, Garcia’s objections are overruled, the Magistrate Judge’s
Report is adopted, and plaintiffs’ motion for default judgment is granted in part and denied in part.
I.
The Magistrate Judge’s Report fully and correctly sets forth the procedural and factual
history of this case. See Report, Dkt. 209, at 1-7, 9-14. Accordingly, the Court adopts as its own
the procedural and factual background set forth in the Report.
On January 12, 2018, plaintiffs filed this lawsuit against four defendants: (i) Jose Antonio
Fernandez Garcia, (ii) Anthony Crudup, (iii) Robert Braner, and (iv) Lamborghini Latino America
USA. Plaintiffs brought claims of trademark infringement and counterfeiting, cybersquatting, false
2
Although Rule 72(b), Fed. R. Civ. P., provides that objections must be served and filed within 14 days of the
magistrate judge’s report and recommendation, Garcia’s objections have been treated as timely because they appear
to have been delivered to DHL on May 4, 2020 for shipment from Argentina to Alexandria, Virginia. See Dkt. 2101. Thus, although Garcia’s objections were not filed until May 11, 2020 (21 days after the Report was filed), it
appears that his objections were placed in transit 14 days after the Report was filed. See Dkt. 210-1 (DHL package
that states letter shipped from Argentina on May 4, 2020); Dkt. 209 (Magistrate Judge’s Report filed on April 20,
2020).
2
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designation of origin, and trademark dilution because defendants allegedly “trade[d] upon
Lamborghini’s world-renowned reputation by selling unauthorized and unlicensed counterfeit
products and us[ed] counterfeit versions of Lamborghini’s federally-registered trademarks.”
Complaint, Dkt. 1, at ¶ 2.
Between May 2018 and December 2018, plaintiffs were granted three extensions of time
to serve defendant Garcia because Garcia was utilizing evasive tactics to avoid plaintiffs’ attempts
to serve him in Argentina pursuant to the Hague Convention and Rule 4(f)(1), Fed. R. Civ. P.3
Specifically, plaintiffs hired two different foreign service firms and spent nearly twelve months
attempting to serve Garcia in Argentina in accordance with the Hague Convention and Rule
4(f)(1), Fed. R. Civ. P.4 These efforts culminated on October 2, 2018 when Argentinian authorities,
acting in accordance with the Hague Convention, attempted to serve Garcia at his known address
and discovered that it was vacant and under construction.5 Moreover, Garcia and his Mexican
attorney were communicating with plaintiffs via email during this same time period, and they
ignored plaintiffs’ inquiries related to service of the complaint in this lawsuit.6 After these failed
attempts to effect service on Garcia in accordance with the Hague Convention, plaintiffs requested
on December 12, 2018 that they be allowed to serve Garcia via email pursuant to Rule 4(f)(3),
Fed. R. Civ. P..7 On January 18, 2019, an Order issued granting plaintiffs’ request to serve Garcia
3
See Dkt. 48 (May 21, 2018 Order granting extension of time to serve Garcia until August 10, 2018); Dkt. 55
(August 9, 2018 Order granting extension of time to serve Garcia until October 10, 2018); Dkt. 60 (October 11,
2018 Order granting extension of time to serve Garcia until December 10, 2018).
4
See Dkt. 62, at 4-6 (bullet form summary of all steps taken by plaintiffs to serve Garcia between January 12, 2018
and December 8, 2018).
5
See id. at 2.
6
See id. at 2-3.
7
See Dkt. 61.
3
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via email.8
On February 12, 2019, over a year after plaintiffs filed the original complaint, counsel filed
a notice of appearance on behalf of Garcia.9 On February 27, 2019, Garcia, by counsel, filed a
motion to dismiss for lack of personal jurisdiction and for failure to state a claim. After extensive
briefing and an evidentiary hearing held on August 1, 2019, Garcia’s motion to dismiss was denied
by Order dated August 21, 2019 because (i) personal jurisdiction could be exercised over Garcia
pursuant to Rule 4(k)(2), Fed. R. Civ. P., and (ii) plaintiffs alleged sufficient facts to state a claim
on which relief could be granted.10
On September 4, 2019, Garcia, by counsel, filed an answer to plaintiffs’ complaint. Shortly
thereafter, Garcia’s attorneys filed a motion to withdraw as counsel of record because
circumstances rendered their further services “impossible.”11 On September 26, 2019, plaintiffs
filed a motion for leave to file the FAC. On October 4, 2019, after holding a hearing on Garcia’s
attorneys’ motion to withdraw, an Order issued that held the motion in abeyance and ordered that
Garcia hire new counsel or enter a sworn declaration that he intended to proceed pro se by
November 4, 2019.12 On October 23, 2019, Garcia sent a letter to the Court which was docketed,
and the letter (i) represented that he terminated his attorneys because he could no longer afford
their services, (ii) stated that he intended to proceed pro se in this matter, (iii) requested that a pro
bono counsel be appointed to represent him, and (iv) requested that all matters related to this case
8
See Dkt. 70.
9
See Dkt. 74, 79, 80.
10
See Automobili Lamborghini S.P.A. v. Lamborghini Latino Am. USA, 400 F. Supp. 3d 471, 478-79 (E.D. Va.
2019).
11
See Dkt. 150.
12
See Dkt. 176.
4
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be sent to him via his email address (joanferci@gmail.com).13
On October 28, 2019, an Order issued that denied Garcia’s request for pro bono
representation and granted Garcia’s attorneys’ motion to withdraw.14 The October 28, 2019 Order
further reminded Garcia of his ongoing discovery obligations and granted Garcia an additional
fourteen days to object to plaintiffs’ motion for leave to file the FAC. On November 6, 2019,
Garcia submitted another letter. Garcia’s November 6, 2019 letter requested reconsideration of the
denial of his request for pro bono counsel and objected to plaintiffs’ motion for leave to file the
FAC.15 On November 7, 2019, an Order issued that denied Garcia’s motion for reconsideration
and granted plaintiffs’ motion for leave to file the FAC.16 On November 8, 2019, plaintiffs filed
the FAC and served the FAC on Garcia via the email address Garcia had provided for all caserelated materials and communication.17 On November 18, 2019, Garcia filed a notice of appeal of
the November 7, 2019 Order.
Despite sending multiple letters to the Court that were docketed during November 2019,
Garcia failed to respond to the FAC within the fourteen days provided pursuant to Rule 15(a)(3),
Fed. R. Civ. P. Accordingly, on November 26, 2019, plaintiffs requested the clerk’s entry of default
as to Garcia, and the clerk entered default on November 27, 2019.18 On December 13, 2019,
plaintiffs filed the instant motion for default judgment against Garcia.19 Plaintiffs’ default
13
See Dkt. 178.
14
See Dkt. 179.
15
See Dkt. 180.
16
See Dkt. 181.
17
See Dkt. 182, 183.
18
See Dkt. 188, 198.
19
See Dkt. 202, 203.
5
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judgment motion was referred to the Magistrate Judge for a Report and Recommendation pursuant
to 28 U.S.C. § 636(b)(1)(B). On December 20, 2019, a hearing was held on plaintiffs’ motion for
default judgment, Garcia did not appear, and the Magistrate Judge took the matter under
advisement.20 On April 20, 2020, the Magistrate Judge entered the Report in this case,
recommending that plaintiffs’ default judgment motion be granted in part and denied in part. On
May 11, 2020, Garcia filed objections to the Report.
In addition to failing to respond to plaintiffs’ FAC, Garcia has refused to fulfill his
discovery obligations in this matter. Specifically, Garcia has refused (i) to produce materials
responsive to plaintiffs’ First Set of Requests for Production, (ii) to respond to plaintiffs’ First Set
of Interrogatories, and (iii) to make himself available for a deposition.21 Plaintiffs served these
discovery requests on Garcia’s counsel on October 2, 2019, and re-served them on Garcia on
October 28, 2019 and November 8, 2019 after Garcia chose to proceed pro se in this matter.22 On
November 26, 2019, plaintiffs filed a motion to compel full discovery responses and to compel the
deposition appearance of Garcia.23 On December 10, 2019, an Order issued that granted plaintiffs’
motion to compel and ordered Garcia to respond to plaintiffs’ discovery requests and to appear for
a deposition.24 Garcia has still not responded to plaintiffs’ discovery requests nor made himself
available for a deposition in this matter.
Although the procedural history of this matter is quite lengthy, the factual record can be
20
See Dkt. 206.
21
See Plaintiffs’ Memorandum in Support of Their Motion to Compel, Dkt. 192, at 1-2.
22
Id. at 2.
23
See Dkt. 191.
24
See December 10, 2019 Order, Dkt. 200.
6
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succinctly set forth.25 Garcia is an individual residing in Argentina. Plaintiffs manufacture and sell
high-end automobiles, automobile parts and accessories, and branded merchandise, all of which
utilize a bull logo to represent the brand, through a network of licensed dealerships in the United
States and through online stores at www.lamborghini.com and www.lamborghinistore.com.26
Plaintiff Lamborghini owns several distinctive trademarks that are registered with the U.S. Patent
and Trademark Office (“USPTO”).27
The FAC alleges that the four defendants worked together under the guise of Lamborghini
Latino America USA “to knowingly and willfully manufacture, import, distribute, offer for sale,
and sell products that are either counterfeit or infringe on plaintiffs’ trademarks.” FAC, Dkt. 182,
at ¶¶ 23, 25. Allegedly, Garcia met Braner in 1994, when Braner was the president of Automobili
Lamborghini USA, the North American distribution and marketing arm for Lamborghini
automobiles. Id. at ¶ 26. Garcia and Braner discussed the possibility of Garcia distributing
Lamborghini products in Latin America. Id. In July 1995, Lamborghini and Garcia signed a “letter
of intent” regarding the possible distribution of Lamborghini automobiles in Latin America as well
as a license to market and sell products under the Lamborghini logos in Latin America. Id. at ¶
25
These facts are derived from the FAC and the exhibits attached to the FAC because the well-pleaded allegations
of fact set forth in a complaint are deemed admitted against a defaulting party. See Ryan v. Homecomings Fin.
Network, 253 F.3d 778, 780 (4th Cir. 2001) (a defendant in default admits the plaintiff’s well-pleaded allegations of
fact in a plaintiff’s complaint).
26
Specifically, plaintiff Automobili Lamborghini S.p.A (“Lamborghini”) is an Italian corporation that manufactures
and sells high-end automobiles that display a bull logo to represent the brand. Plaintiff Volkswagen Group of
America, Inc. is a New Jersey corporation that enforces Automobili Lamborghini S.p.A’s trademarks in the United
States pursuant to an agreement between the companies. And plaintiff Automobili Lamborghini America, LLC is a
Delaware limited liability company that is a wholly owned subsidiary of Volkswagen Group of America, Inc.
27
Plaintiffs included a representative chart of its registered trademarks in the FAC. See FAC, Dkt. 182, at 5-9.
Plaintiffs also submitted “status” copies of the trademark registrations, obtained from the USPTO’s Trademark
Status Document Retrieval database. See id. at ¶ 16; Dkt. 182-2.
7
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27.28 In August 1995, Garcia met with Nigel Gordon-Stewart, the head of marketing for
Lamborghini at the time, to attempt to finalize sales and licensing agreements. Id. at ¶ 27. Although
Garcia and Gordon-Stewart worked through draft agreements during this meeting, Braner and
Lamborghini found the draft agreements unacceptable and never signed them. Id. at ¶ 28. Plaintiffs
allege that Garcia knew that the agreements were merely drafts, that the draft agreements were
never “signed by anyone with proper authority from Lamborghini[, and] that they did not confer
any rights from Lamborghini to Garcia.” Id. at ¶ 34. Garcia and Lamborghini never reached an
agreement, and accordingly, Garcia was never authorized or licensed to use any of Lamborghini’s
federally-registered trademarks.
Despite never reaching an agreement with Lamborghini, Garcia allegedly possesses a set
of licensing agreements identical to the draft agreements from his meeting with Gordon-Stewart
that have Braner’s forged signature on them. Id. at ¶ 38. The FAC alleges that Garcia has used
these purported licensing agreements “to establish illegal enterprises throughout Latin America
and the United States.” Id. at ¶ 39. In 2015, Garcia and defendant Crudup decided to manufacture
and sell merchandise, including cigars and t-shirts, bearing the Lamborghini trademarks in the
United States. Id. at ¶ 41. The FAC alleges that Garcia and Crudup worked together to design and
create the merchandise and to use the website “www.lamborghinigrupo.com” as a platform to sell
the counterfeit Lamborghini products. Id. Despite not being authorized retailers of Lamborghini
products, defendants market and sell counterfeit and infringing Lamborghini products through
online marketplaces, such as Etsy, Lord of the Cigars (www.lordcigars.com), Cigar Luxury
28
The letter of intent is attached as Exhibit 5 to Braner’s affidavit. See Dkt. 182-9 at 74. Plaintiffs’ attached Braner’s
affidavit and the exhibits associated with Braner’s affidavit as Exhibit 9 to the FAC. See Dkt. 182-9. Because these
documents have been attached to the FAC as an exhibit, they are properly considered here. See Rule 10(c), Fed. R.
Civ. P. (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”);
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (a defendant in default admits the plaintiff’s
well-pleaded allegations of fact in a plaintiff’s complaint).
8
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(www.cigarluxury.com),
TNT
Cigars
(www.tntcigars.com),
and
the
website
“lamborghinigrupo.com.” Id. at ¶ 4. Defendants market their products as “officially licensed
Lamborghini Products.” Id. at ¶ 34. When items are sold, defendants ship the products to
consumers throughout the United States, including into the Eastern District of Virginia. Id. at ¶¶
4, 24.
Plaintiffs have brought the instant suit seeking monetary damages and injunctive relief
against Garcia for trademark infringement and counterfeiting, as well as a declaratory judgment
that Garcia’s purported licensing agreements with Lamborghini are invalid, unenforceable, and
fraudulent.
II.
As an initial matter, it is necessary to determine whether there is jurisdiction to consider
plaintiffs’ motion for default judgment. Garcia has appealed the November 7, 2019 Order in this
case,29 which (i) granted plaintiffs’ motion for leave to file the FAC and (ii) denied Garcia’s request
for reconsideration of the October 28, 2019 Order that denied Garcia’s request for the appointment
of pro bono counsel to represent him. Because the November 7, 2019 Order is a non-appealable
interlocutory order, Garcia’s appeal of the November 7, 2019 Order does not divest the district
court of jurisdiction.
Ordinarily, the act of filing a notice of appeal confers jurisdiction on the court of appeals
and divests the district court of jurisdiction over matters related to the appeal. See Griggs v.
Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982). That rule, however, does not extend to
deficient notices of appeal. To the contrary, “[w]here the deficiency in a notice of appeal, by reason
29
Garcia’s appeal of the November 7, 2019 Order has been docketed with the Fourth Circuit Court of Appeals (No.
19-2309).
9
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of…reference to a non-appealable order, is clear to the district court, it may disregard the purported
notice of appeal and proceed with the case, knowing that it has not been deprived of jurisdiction.”
Ruby v. Sec’y of U.S. Navy, 365 F.2d 385, 389 (9th Cir. 1966) (en banc); see United States v. Jones,
367 F. App’x 482, 484 (4th Cir. 2010) (“[T]he district court does not lose jurisdiction when the
litigant takes an appeal from an unappealable order.”) (citing Griggs, 459 U.S. at 58).30
In this respect, the Fourth Circuit has made abundantly clear that both (i) orders on a
plaintiff’s motion to amend a complaint and (ii) orders on a party’s motion for appointment of
counsel do not constitute final orders, appealable interlocutory orders, or appealable collateral
orders.31 Instead, these orders are non-appealable interlocutory orders. See Miller v. Simmons, 814
F.2d 962, 967 (4th Cir. 1987) (order denying appointment of counsel); Fuller v. Narron, 977 F.2d
572 (4th Cir. 1992) (ordering granting motion to amend complaint). Moreover, the Federal Circuit
has appropriately held that a defective notice of appeal “does not become effective to deprive the
trial court of jurisdiction simply because the appellate court dockets the appeal.” Gilda Indus., Inc.
v. United States, 511 F.3d 1348, 1351 (Fed. Cir. 2008) (explaining that a defective notice of appeal
is docketed in accordance with procedural rules and does not deprive the district court of
30
See also Rucker v. Dep’t of Labor, 798 F.2d 891, 892 (6th Cir. 1986) (“As a general rule, a district court loses
jurisdiction over an action when a party perfects an appeal unless that appeal is untimely, is an appeal from a nonappealable non-final order, or raises only issues that were previously ruled upon in that case by the appellate
court.”); Gilda Indus., Inc. v. United States, 511 F.3d 1348, 1350 (Fed. Cir. 2008) (same); In re Grand Jury
Proceedings, 795 F.2d 226, 231 (1st Cir. 1986) (same); Arthur Andersen & Co. v. Finesilver, 546 F.2d 338, 340–41
(10th Cir. 1976) (same).
31
See Garland v. Catoe, 12 F. App’x 102, 103 (4th Cir. 2001) (holding that plaintiff’s appeal of an order denying
his motion for the appointment of counsel was neither a final order nor an appealable interlocutory or collateral
order and thus dismissing the appeal for lack of jurisdiction); Miller v. Simmons, 814 F.2d 962, 964, 967 (4th Cir.
1987) (holding that an order denying appointment of counsel is not a final order and is not reviewable by
interlocutory appeal and dismissing the appeal for lack of jurisdiction); Bridges v. Dep’t of Maryland State Police,
441 F.3d 197, 206 (4th Cir. 2006) (holding that “[a] denial of a motion to amend a complaint is not a final order, nor
is it an appealable interlocutory or collateral order” and dismissing the appeal for lack of jurisdiction); Fuller v.
Narron, 977 F.2d 572 (4th Cir. 1992) (holding that an order that granted in part a motion to amend a complaint is
neither a final order nor an appealable interlocutory or collateral order and dismissing the appeal for lack of
jurisdiction); see also Bridges v. Dep’t of Maryland State Police, 441 F.3d 197, 207 (4th Cir. 2006) (holding that
“[t]he denial of reconsideration of a nonappealable order is not a final order”).
10
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jurisdiction).
Thus, Garcia’s notice of appeal of the November 7, 2019 Order is defective because it
seeks to appeal a non-appealable interlocutory order.32 Accordingly, Garcia’s defective notice of
appeal does not deprive the district court of jurisdiction over plaintiffs’ motion for default
judgment. Moreover, consideration of plaintiffs’ motion for default judgment will not be stayed
pending decision on Garcia’s appeal of the November 7, 2019 Order because that appeal is
defective.
III.
Now that jurisdiction over plaintiffs’ motion for default judgment has been established, it
is appropriate to consider Garcia’s objections to the Magistrate Judge’s Report. In his objections,
Garcia states that he objects to the entry of default judgment and that he wants to defend himself
in this case.33 Although not a proper objection to the Report, Garcia’s request will be construed
liberally as a motion to set aside entry of default pursuant to Rule 55(c), Fed. R. Civ. P. Because
Garcia fails to show good cause to set aside the entry of default in this case, his motion must be
denied.
Rule 55(c), Fed. R. Civ. P., provides that a court may set aside an entry of default “[f]or
good cause shown.” The Fourth Circuit has not specifically defined “good cause,” but it has
directed that district courts should consider (1) whether the moving party has a meritorious
32
In the event that Garcia’s defective notice of appeal should be construed liberally as a motion for a 28 U.S.C.
Section 1292(b) certification for an interlocutory appeal, the motion is denied. To grant an interlocutory appeal, a
district court must certify that the order sought to be appealed: “[1] involves a controlling question of law [2] as to
which there is substantial ground for difference of opinion and [3] that an immediate appeal from the order may
materially advance the ultimate termination of the litigation…” 28 U.S.C. § 1292(b). The November 7, 2019 Order
that Garcia seeks leave to appeal clearly fails all three requirements for a § 1292(b) certification. Accordingly, any
motion to certify the November 7, 2019 Order for an interlocutory appeal pursuant to § 1292(b) is denied.
33
See Garcia’s Objections to the Report, Dkt. 210, at 7.
11
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defense; (2) whether the moving party acts with reasonable promptness; (3) the defaulting party’s
culpability for the default; (4) the prejudice to the non-moving party; (5) whether there is a history
of dilatory action; and (6) the availability and effectiveness of less drastic sanctions. See Payne ex
rel. Estate of Calzada v. Brake, 439 F.3d 198, 204–05 (4th Cir. 2006); Davis v. Williams, 588 F.2d
69, 70 (4th Cir. 1978). The Fourth Circuit has also made clear its strong preference that “defaults
be avoided and that claims and defenses be disposed of on their merits.” Colleton Preparatory
Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010) (citations omitted).
Nonetheless, the entry of default will not be set aside in this case because none of the six Payne
factors weigh in Garcia’s favor, and five of the six Payne factors weigh significantly against him.
The first Payne factor, whether Garcia has a meritorious defense, weighs against setting
aside the entry of default against Garcia. At a minimum, the party seeking to overturn a default
must proffer some “evidence,” not just a “conclusory assertion,” that would “permit a finding for
the defaulting party or which would establish a valid counterclaim.” Augusta Fiberglass Coatings,
Inc. v. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir. 1988) (quotations omitted) (emphasis
added). This evidentiary showing should “underscore the potential injustice of allowing the case
to be disposed of by default.” 10A Wright, Miller & Kane § 2697. Here, Garcia, the party seeking
to set aside the entry of default, has not proffered any evidence that he has a meritorious defense.
For his part, Garcia claims that he possesses valid licensing agreements with plaintiffs and
that he has an expert report that states that Robert Braner’s signature on the purported licensing
agreements, allegedly on behalf of plaintiffs, is in Braner’s handwriting.34 But significantly, Garcia
has provided nothing more than his conclusory assertion that he possesses valid licensing
agreements with plaintiffs. And notably, he has not provided the expert report to which he refers,
34
See Garcia’s Objections to the Report, Dkt. 210, at 2, 4.
12
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nor any other evidence that the purported licensing agreements are valid.
In convincing contrast, plaintiffs have attached as an exhibit to the FAC a sworn affidavit
from Robert Braner.35 In his affidavit, Braner avers that he never signed the purported licensing
agreements relied on by Garcia.36 Specifically, Braner attests that “to the extent [the purported
licensing agreements] ha[ve] my signature or signatures, they have been fraudulently applied by
someone other than me.”37 Braner further states that he knows he did not sign any of the purported
licensing agreements relied on by Garcia because the final page of each agreement claims that
Braner is signing on behalf of “Automobili Lamborghini S.p.A.,” but Braner avers that he had no
authority to sign anything on behalf of that entity.38 Braner was employed by a subsidiary of that
entity, Automobili Lamborghini USA, and would only have been authorized to sign documents on
behalf of the subsidiary that employed him. Accordingly, Garcia has failed to proffer any reliable
evidence that he has a meritorious defense to plaintiffs’ claims on this record. Thus, the first Payne
factor to set aside entry of default weighs significantly against Garcia.
The second and third Payne factors, whether Garcia has moved with reasonable promptness
to set aside default and whether Garcia bears culpability for the default, also weigh significantly
against setting aside entry of default here. In this respect, the record clearly shows that Garcia bears
responsibility for his default. On October 23, 2019, Garcia filed a letter stating his intention to
proceed pro se in this case and acknowledging his intention to comply with all applicable rules
35
See Robert Braner Affadavit, Dkt. 182-9.
36
See id. at ¶¶ 38, 41-43, 45, 48-51, 53, 56-58, 60, 65-69.
37
Id. at ¶ 45.
38
Id. at ¶¶ 44, 52, 59, 68.
13
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and procedures.39 Two weeks later, on November 6, 2019, Garcia filed a letter in which he opposed
plaintiffs’ motion for leave to file the FAC.40 On November 7, 2019, an Order issued that granted
plaintiffs’ motion for leave to file the FAC and overruled Garcia’s opposition to plaintiffs’
motion.41 On November 8, 2019, plaintiffs filed the FAC and served the FAC on Garcia.42 Ten
days later, on November 18, 2019, Garcia filed a notice of appeal with respect to the November 7,
2019 Order.43 Eight days after that, on November 26, 2019, plaintiffs requested entry of default
against Garcia because Garcia had not filed an answer to the FAC within 14 days of service as
required by Rule 15(a)(3), Fed. R. Civ. P.44 Garcia has still not filed an answer to plaintiffs’ FAC.
On May 11, 2020, Garcia filed his objections to the Magistrate Judge’s Report on plaintiffs’ motion
for default judgment and, for the first time, requested that the entry of default be set aside.
On this record, it is unmistakably clear that Garcia waited over five months before filing
any request to set aside the entry of default. Moreover, the record indicates that Garcia was aware
of the filing of plaintiffs’ FAC on November 8, 2019 and chose not to file an answer. Specifically,
Garcia filed a notice of appeal ten days after being served with the FAC. And plaintiffs’ FAC and
request for entry of default were served on Garcia via the email address at which Garcia
specifically requested to receive all case-related materials and filings.45 Thus, Garcia cannot
39
See Dkt. 178. In this letter, Garcia also requested the appointment of pro bono counsel to represent him. That
request was denied. See Dkt. 179.
40
See Dkt. 180.
41
See Dkt. 181.
42
See Dkt. 182, 183.
43
See Dkt. 184.
44
See Dkt. 188.
45
See Dkt. 178, at 2 (“I also humbly request your Court to send any notification to my email:
joanferci@gmail.com”); Dkt. 183 (certification of service stating plaintiffs served the FAC on Garcia via email at
14
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plausibly claim that he was not aware of plaintiffs’ request for entry of default against him or of
plaintiffs’ FAC. This is not a case where a “blameless party” is “disadvantaged by the errors or
neglect of his attorney.” United States v. Moradi, 673 F.2d 725, 728 (4th Cir. 1982). To the
contrary, Garcia bears personal responsibility for his default in this case, and he did not promptly
move to set aside the default.46 Accordingly, the second and third Payne factors weight
significantly against Garcia.
The fourth Payne factor, the prejudice to the non-moving party, does not weigh in favor of
Garcia either. Because of the possibility that Garcia may continue to infringe on plaintiffs’
trademarks, plaintiffs may be prejudiced by further delay in this case. In the context of a motion
to set aside an entry of default, as in other contexts, delay in and of itself does not constitute
prejudice to the opposing party. See Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc.,
616 F.3d 413, 418 (4th Cir. 2010) (citing Indigo America, Inc. v. Big Impressions, LLC, 597 F.3d
1, 4 (1st Cir. 2010)). And, of course, “no cognizable prejudice inheres in requiring a plaintiff to
prove a defendant’s liability, a burden every plaintiff assumes in every civil action filed in every
federal court.” Id. But the Fourth Circuit has recognized that “irreparable injury regularly follows
from trademark infringement.” Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d
922, 939 (4th Cir. 1995). Accordingly, undue delay in a trademark infringement case can prejudice
plaintiffs due to the “risk of further infringement…[during the] delayed resolution of the case.”
Newport News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423, 440 (4th Cir. 2011).
Plaintiffs initiated this case in January 2018, and over two years later still have not received any
joanferci@gmail.com); Dkt. 190 (certification of service stating plaintiffs served the request for entry of default on
Garcia via email at joanferci@gmail.com).
46
See Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 897 (4th Cir.1987) (holding that default judgment should not
be set aside where defendants were at fault for not responding to the complaint because “to hold otherwise would be
to allow defaulting defendants to escape the consequences of their inaction simply by asserting that the legal process
to which they failed to respond was lost”).
15
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discovery from Garcia. It is unclear on this record whether Garcia has continued to infringe
plaintiffs’ trademarks, but if there has been continued infringement, then plaintiffs have suffered
additional harm and are prejudiced by further delay. Accordingly, although delay alone is
insufficient to constitute prejudice to plaintiffs, the extensive delay in this case, combined with the
risk of further infringement during the undue delay, makes clear that the fourth Payne factor does
not weigh in favor of Garcia and is at best a neutral factor here.
The fifth Payne factor, whether Garcia has a history of dilatory action in this case, weighs
heavily against Garcia. As noted, plaintiffs filed the original complaint in this action in January
2018 and still have not received any discovery from Garcia. Between January 2018 and December
2018, plaintiffs employed two foreign service forms in an attempt to serve Garcia in Argentina in
accordance with the Hague Convention and Rule 4(f)(1), Fed. R. Civ. P.47 Plaintiffs’ attempts at
service continually failed due to the evasive tactics employed by Garcia.48 By Order dated January
18, 2019, over a year after the original complaint was filed, plaintiffs were granted permission to
serve Garcia by email pursuant to Rule 4(f)(3), Fed. R. Civ. P. In February 2019, Garcia’s attorney
filed a notice of appearance and a motion to dismiss the original complaint for failure to state a
claim and for lack of personal jurisdiction. After extensive briefing and an evidentiary hearing,
Garcia’s motion to dismiss for failure to state a claim and for lack of personal jurisdiction was
47
See Dkt. 62, at 4-6 (bullet form summary of all steps taken by plaintiffs to serve Garcia between January 12, 2018
and December 8, 2018).
48
Specifically, on October 2, 2018, Argentinian authorities attempted to serve Garcia at his known address and
discovered that it was vacant and under construction. See Dkt. 62, at 2. On October 12, 2018, plaintiffs contacted an
attorney in Mexico who purportedly represents Garcia in an attempt to effect service. In November 2018, Garcia and
this Mexican attorney sent emails to the CEO of plaintiffs’ parent company, Volkswagen AG, but continued to
ignore plaintiffs’ attempts to serve the complaint in this case. See id. at 2-3. At one point in this email exchange, the
Mexican attorney stated that “Mr. Gracia [sic] does not intend to go to the U.S.” See id. at 5.
16
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denied by Order dated August 21, 2019.49 Subsequently, Garcia filed an answer to the original
complaint, fired his attorneys, and then refused to answer plaintiffs’ FAC or to fulfill his discovery
obligations. Specifically, Garcia has refused (i) to produce materials responsive to plaintiffs’ First
Set of Requests for Production, (ii) to respond to plaintiffs’ First Set of Interrogatories, and (iii) to
make himself available for a deposition.50 As noted, plaintiffs served these discovery requests on
Garcia’s counsel on October 2, 2019, and re-served them on Garcia on October 28, 2019 and
November 8, 2019 after Garcia chose to proceed pro se in this matter.51 Despite the December 10,
2019 Order that granted plaintiffs’ motion to compel and ordered Garcia to respond to plaintiffs’
discovery requests and to appear for a deposition,52 Garcia has still not fulfilled his discovery
obligations. On this record, it is abundantly clear that Garcia has a history of dilatory action in this
case, as he has continually used evasive tactics in an attempt to avoid the jurisdiction of the Eastern
District of Virginia and has refused to participate in discovery in this matter. Accordingly, the fifth
Payne factor weighs substantially against Garcia.
Finally, the sixth Payne factor, the availability and effectiveness of less drastic sanctions,
also weighs against Garcia. Neither party has suggested the availability of a result less drastic than
entry of default. Nor is such an alternative readily apparent. The award of the non-movant’s costs
and attorney’s fees is a less drastic sanction sometimes considered by the Fourth Circuit in the
context of motions to set aside entry of default pursuant to Rule 55(c). See Colleton Preparatory
Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 418 (4th Cir. 2010); Augusta Fiberglass
49
See Automobili Lamborghini S.P.A. v. Lamborghini Latino Am. USA, 400 F. Supp. 3d 471, 478-79 (E.D. Va.
2019).
50
See Plaintiffs’ Memorandum in Support of Their Motion to Compel, Dkt. 192, at 1-2.
51
Id. at 2.
52
See December 10, 2019 Order, Dkt. 200.
17
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Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 811 (4th Cir. 1988). Here, however, a
sanction that ordered Garcia to pay plaintiffs’ attorney’s fees and costs would be ineffective. As
noted, Garcia utilized evasive tactics to avoid service in this matter for over a year. In addition,
Garcia has categorically refused to participate in any discovery thus far in this matter, even after
the December 10, 2019 Order that granted plaintiffs’ motion to compel and ordered Garcia to
respond to plaintiffs’ discovery requests and to appear for a deposition. Simply put, Garcia’s
behavior in this litigation over the past two years does not inspire confidence that he respects the
rules and procedure of United States courts, nor that a less drastic sanction would reasonably
ensure his future cooperation in this matter.53 Accordingly, no effective less drastic sanction is
available here, and the sixth Payne factor weighs against Garcia.
In sum, none of the six Payne factors for determining whether there is good cause to set
aside an entry of default weigh in favor of Garcia, and five of the six Payne factors weigh
significantly against him. Specifically, Garcia has not provided any evidence of a meritorious
defense, the entry of default and delay in moving to set aside the entry of default were entirely
Garcia’s fault, Garcia has a history of dilatory action in this case, and no effective less drastic
sanctions are available. Accordingly, Garcia’s motion to set aside the entry of default is denied
because good cause to set aside default has not been shown.
IV.
With respect to the entry of default judgment, Garcia objects to the Magistrate Judge’s
Report on the basis that service was improper because it was not done in accordance with the
53
See Morton v. Johnson, No. 7:13CV00496, 2015 WL 4470104, at *5 (W.D. Va. July 21, 2015) (defendant’s
“‘utter failure to defend this matter’ between January 2014 and April 2015 or to provide any acceptable justification
for that failure, however, does not inspire confidence that he respects this Court’s rules and authority); CoStar Realty
Info., Inc. v. Field, 737 F.Supp.2d 496, 502 (D. Md. 2010) (“[T]he Court believes that [defendant]’s utter failure to
defend this matter or to otherwise cooperate…warrants…the entry of default judgment and finds that a less drastic
sanction will be ineffective.”).
18
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Hague Convention. Because service of the FAC was proper pursuant to Rule 4(f)(3) and because
service of the FAC was performed in accordance with Garcia’s specific request regarding
notification of case filings, Garcia’s objection to the Magistrate Judge’s Report on the basis of
improper service is overruled.
To serve process on an individual in a foreign country, a federal plaintiff must comply with
both constitutional due process requirements and Rule 4(f), Fed. R. Civ. P. For service to satisfy
constitutional due process, the method of service must provide “notice reasonably calculated,
under all the circumstances, to apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co,
339 U.S. 306, 314 (1950). Rule 4(f), Fed. R. Civ. P., provides three mechanisms for service on an
individual in a foreign country:
(1) by any internationally agreed means of service that is reasonably calculated to
give notice, such as those authorized by the Hague Convention on the Service
Abroad of Judicial and Extrajudicial Documents;
(2) if there is no internationally agreed means, or if an international agreement
allows but does not specify other means, by [certain specified means outlined in the
Rule] reasonably calculated to give notice…; or
(3) by other means not prohibited by international agreement, as the court orders.
Rule 4(f)(1)-(3), Fed. R. Civ. P.
Garcia is a resident of Argentina, and the United States and Argentina are both signatories
to the Hague Convention.54 Article 2 of the Hague Convention requires all judicial documents in
civil matters to be served through a Central Authority.55 However, Article 10 permits service of
54
The Hague Convention on Private International law maintains a list of signatories available at
https://www.hcch.net/en/instruments/conventions/status-table/?cid=17.
55
Hague Convention on Service Abroad of Judicial and Extrajudicial Documents Art. 2, Nov. 15, 1965, 20 U.S.T.
361, 658 U.N.T.S. 163.
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process through alternative means like “postal channels” and “judicial officers” provided that the
destination state does not object to those means.56 Although Argentina has objected to the means
listed in Article 10,57 its objection is specifically limited to the enumerated means of service in
Article 10, which do not include service by email.58
Several district courts have permitted service by email under Rule 4(f)(3) after attempts to
effect service under the Hague Convention were unsuccessful.59 Precisely this occurred here. As
noted in detail in Part I and Part III supra, plaintiffs hired two different foreign service firms and
spent nearly twelve months attempting to serve Garcia in Argentina in accordance with the Hague
Convention and Rule 4(f)(1), Fed. R. Civ. P.60 These efforts culminated on October 2, 2018 when
Argentinian authorities, acting in accordance with the Hague Convention, attempted to serve
56
Id. at Art. 10.
57
See Declarations and Reservations, Hague Convention on Private International Law available at
https://www.hcch.net/en/instruments/conventions/status-table/notifications/?csid=389&disp=resdn.
58
See WhosHere, Inc. v. Orun, No. 1:13-cv-00526-AJT-TRJ, 2014 WL 670817, at *3 (E.D. Va. Feb. 20, 2014)
(holding that service by email and social media are not explicitly listed as means of service under Article 10 and that
Turkey has therefore not specifically objected to service by email or social media by objecting to Article 10;
collecting other district court cases that hold the same).
59
See, e.g., WhosHere, Inc. v. Orun, No. 1:13-cv-00526-AJT-TRJ, 2014 WL 670817, at *3 (E.D. Va. Feb. 20, 2014)
(permitting service by email after plaintiff’s attempts to serve Turkish defendant via the Hague Convention were
unsuccessful); F.T.C. v. PCCare247 Inc., No. 12 Civ. 7189 (PAE), 2013 WL 841037, at *2-4 (S.D.N.Y. Mar. 7,
2013) (permitting service by email and through social media after plaintiff’s attempts to serve Indian defendant via
the Hague Convention were unsuccessful); Sulzer Mixpac AG v. Medenstar Indus. Co., 312 F.R.D. 329, 332
(S.D.N.Y. 2015) (permitting email service after plaintiff’s attempts to serve Chinese defendant via the Hague
Convention were unsuccessful); Bazarian Int’l Fin. Assocs., L.L.C. v. Desarroloos Aerohotelco, C.A., 168 F. Supp.
3d 1, 13-16 (D.D.C. 2016) (permitting service by email after plaintiff had attempted to serve foreign defendants via
the Hague Convention and investigator was unable to locate defendant’s whereabouts); Henry F. Teichmann, Inc. v.
Caspian Flat Glass OJSC, No. 2:13-cv-458, 2013 WL 1644808, at *1-2 (W.D. Pa. Apr. 16, 2013) (permitting email
service on Russian defendant after stating that “the record demonstrates that the Central Authority of the Russian
Federation denies all [Hague Convention service] requests originating from the United States”); Popular
Enterprises, LLC v. Webcom Media Group, Inc., 225 F.R.D. 560, 562 (E.D. Tenn. 2004) (permitting email service
after plaintiffs’ attempts to comply with the Hague Convention’s requirements were unsuccessful because
defendant’s mailing address was unknown).
60
See Dkt. 62, at 4-6 (bullet form summary of all steps taken by plaintiffs to serve Garcia between January 12, 2018
and December 8, 2018).
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Garcia at his known address and discovered that it was vacant and under construction.61 Moreover,
Garcia and his Mexican attorney were communicating with plaintiffs via email during this same
time period, and they ignored plaintiffs’ inquiries related to service of the complaint in this
lawsuit.62 Accordingly, because plaintiffs’ attempts to effect service under the Hague Convention
were unsuccessful due to Garcia’s evasive tactics, plaintiffs’ request to serve Garcia via email
pursuant to Rule 4(f)(3) was granted by Order dated January 18, 2019.63
Importantly, after plaintiffs served the original complaint on Garcia via email, Garcia,
through counsel, filed a motion to dismiss the original complaint for lack of personal jurisdiction
and for failure to state a claim.64 But Garcia did not challenge the original complaint for improper
or insufficient service. Thus, Garcia waived any challenge to insufficient service of the original
complaint. See Rule 12(h)(1), Fed. R. Civ. P. (providing that a party waives the defense of
insufficient service if not raised in their initial Rule 12 motion).
Nonetheless, the FAC must also be served on Garcia in accordance with Rule 4, Fed. R.
Civ. P., because the FAC asserts new claims for relief against Garcia. See Rule 5(a)(2), Fed. R.
Civ. P. In this respect, Garcia specifically requested that all case filings and case-related
notifications be sent to him via his email address in his letter filed on October 23, 2019.65 Garcia’s
request that all case-related notifications be sent to his email address is particularly important here
61
See Dkt. 62, at 2.
62
See id. at 2-3.
63
See Dkt. 70.
64
See Dkt. 81, 82.
65
See Dkt. 178, at 2 (“I also humbly request your Court to send any notification to my email:
joanferci@gmail.com”); Dkt. 183 (certification of service stating plaintiffs served the FAC on Garcia via email at
joanferci@gmail.com).
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because even Garcia’s attorneys had difficulty contacting him about this litigation prior to their
withdrawal.66 A mere two weeks after Garcia informed all parties that any case-related
notifications should be sent to his email address, and only two days after Garcia filed an opposition
to plaintiffs’ motion for leave to file the FAC, plaintiffs served the FAC on Garcia via his specified
email address.
On this record, it is abundantly clear that the FAC was properly served on Garcia in
accordance with Garcia’s specific request regarding notification of case filings and in accordance
with Rule 4(f)(3), Fed. R. Civ. P. No plausible argument can be made that Garcia did not have
reasonable notice of the action against him; Garcia, through counsel, aggressively litigated the
sufficiency of the original complaint via a Rule 12(b)(2) and 12(b)(6) motion and Garcia filed a
pro se opposition to plaintiffs’ motion for leave to file the FAC. Moreover, it is clear that Garcia
has been afforded the opportunity to present his objections to the FAC, as evidenced by his
opposition to plaintiffs’ motion for leave to file the FAC and by his objections to the Magistrate
Judge’s Report. Accordingly, Garcia’s objections to the Magistrate Judge’s Report based on
insufficient service are overruled.
V.
Finally, Garcia generally objects to all of the Magistrate Judge’s recommendations in the
Report and requests that all the Report’s recommendations be rejected. Because general objections
are tantamount to a failure to object and because there is no clear error in the Report, Garcia’s
general objection to the Report and its recommendations must be overruled.67
66
See Dkt. 176, at 1 (“Counsel represented to the Court that Counsel has received no response from Mr. Garcia to
the communication of the discovery plan.”).
67
See Tyler v. Wates, 84 Fed. Appx. 289, 290 (4th Cir. 2003) (“A general objection to the entirety of the magistrate
judge’s report is tantamount to a failure to object.”); Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315
(4th Cir. 2005) (in the absence of any objections to a magistrate’s report, the court “need not conduct a de novo
22
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Pursuant to 28 U.S.C. § 636(b)(1), a de novo review of “those portions of the [magistrate
judge’s] report or specified proposed findings or recommendations to which objection is made” is
required. 28 U.S.C. § 636(b)(1). In this respect, the objection requirement is designed to allow the
district court to “focus on specific issues, not the [magistrate judge’s] report as a whole.” United
States v. Midgette, 478 F.3d 616, 621 (4th Cir. 2007). Therefore, objections must be specific and
particularized in order to direct the attention of the district court to “only those issues that remain
in dispute after the magistrate judge has made findings and recommendations.” Id. Thus, the Fourth
Circuit has made clear that “[a] general objection to the entirety of the magistrate judge’s report is
tantamount to a failure to object.” Tyler v. Wates, 84 Fed. Appx. 289, 290 (4th Cir. 2003).
Garcia’s request to “reject all the recommendation of the Magistrate Judge” is precisely the
type of general objection categorized as a failure to object by the Fourth Circuit.68 Accordingly,
all aspects of the Report not already addressed in this Opinion are subject only to clear error review,
and there is no clear error on the face of the record in this case. In any event, even assuming,
arguendo, that de novo review of the Magistrate Judge’s entire Report were warranted in this case
(which it is not), the findings and recommendations in the Magistrate Judge’s Report are
appropriate and should be adopted.
review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the
recommendation.’”).
68
See Garcia’s Objections to the Report, Dkt. 210, at 8. Garcia makes one additional specific objection that has not
already been addressed and that can be disposed of succinctly. Garcia objects to the Magistrate Judge’s Report
because he claims there is an ongoing case in Argentina that covers similar issues to those raised in this case. See id.
at 2-3. But the ongoing litigation in Argentina does not preclude the entry of default judgment in this case because
that litigation has not yet concluded. See Reebok Int’l, Ltd. v. Marnatech Enterprises, Inc., 970 F.2d 552, 555 (9th
Cir. 1992) (affirming a preliminary injunction against the sale of counterfeit Reebok shoes in Mexico despite
apparently related ongoing litigation in Mexico; finding that “the Mexican litigation presented no conflict with the
district court’s order because the litigation in Mexico had not yet been concluded”). Because there has been no
adjudication on the merits in the Argentinian courts based on the documents submitted by Garcia, there is no danger
at this time of this default judgment interfering with the laws of a foreign nation. Moreover, the FAC only seeks
relief for Garcia’s alleged violations of the Lanham Act in the United States, not for alleged sales of counterfeit
items in any foreign country.
23
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Specifically, the Report appropriately concluded that plaintiffs sufficiently plead a claim
of trademark infringement and counterfeiting in Count I. To state a claim of trademark
infringement, a plaintiff must show that (1) it owns a valid mark; (2) the defendant used the mark
in commerce and without authorization; (3) the defendant used the mark, or an imitation of the
mark, in connection with the sale, offering for sale, distribution, or advertising of goods or services;
and (4) the defendant’s use of a colorable imitation of the mark is likely to cause confusion among
consumers. See Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 152 (4th Cir. 2012) (citations
omitted). Lamborghini possesses valid, protectable trademarks registered with the USPTO.
Registration with the USPTO constitutes “prima facie evidence of the validity” of the trademarks
as well as Lamborghini’s exclusive right to use the trademarks. See 15 U.S.C. § 1057(b). Plaintiffs
adequately allege that Garcia used, and continues to use, Lamborghini’s trademarks without its
permission in commerce and in connection with the sale, offering for sale, distribution, and
advertising of infringing goods. And Garcia’s infringing conduct is highly likely to confuse
customers because the marks on defendants’ counterfeit products are virtually identical to
Lamborghini’s registered trademarks.69 Thus, the entry of default judgment against Garcia on
Count I, trademark infringement and counterfeiting, is appropriate on this record.
The Report also appropriately concluded that plaintiffs sufficiently plead a claim of false
designation of origin in Count III. The required elements for a false designation of origin claim
are essentially the same as the elements for a trademark infringement claim under the Lanham Act.
69
Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987) (holding that when the allegedly infringing
mark is nearly an exact imitation of a plaintiff’s trademark in an apparent attempt to capitalize on a plaintiff’s
trademark’s popularity, the court may presume a likelihood of confusion among consumers). The Report
appropriately addresses the nine factors that the Fourth Circuit has stated courts should consider in determining the
likelihood of consumer confusion. See Report, Dkt. 209, at 15-16 (applying the nine factors enumerated by the
Fourth Circuit to determine the likelihood of consumer confusion to the facts alleged here); George & Co., LLC v.
Imagination Entm’t Ltd., 575 F.3d 383, 393 (4th Cir. 2009) (setting forth the nine factors to consider to determine
the likelihood of consumer confusion).
24
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See Lamparello v. Falwell, 420 F.3d 309, 313 (4th Cir. 2005) (stating that trademark infringement
and false designation of origin claims have the same elements). Accordingly, the entry of default
judgment against Garcia on Count III, false designation of origin, is appropriate on this record for
the same reasons that the entry of default judgment against Garcia on Count I is appropriate.
The Report’s conclusion that plaintiffs sufficiently plead a claim of trademark dilution in
Count IV is also appropriate. To state a claim of federal trademark dilution, a plaintiff must show:
(1) that the plaintiff owns a famous mark that is distinctive; (2) that the defendant
has commenced using a mark in commerce that allegedly is diluting the famous
mark; (3) that a similarity between the defendant’s mark and the famous mark gives
rise to an association between the marks; and (4) that the association is likely to
impair the distinctiveness of the famous mark or likely to harm the reputation of
the famous mark.
Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 264-65 (4th Cir. 2007).
First, plaintiffs allege that Lamborghini’s trademarks are famous and distinctive due to their
decades of use in connection with Lamborghini’s high-quality products and services. Second,
Garcia used Lamborghini’s trademarks, or at least marks that were essentially identical to
Lamborghini’s trademarks, in connection with the advertisement, promotion, and sale of
counterfeit products. Moreover, when consumers purchase items and expect to receive genuine
Lamborghini products, Lamborghini’s reputation and brand is harmed when they receive lowquality products that are not manufactured to Lamborghini’s standards. Third, there is a clear
similarity between the counterfeit marks and Lamborghini’s trademarks that gives rise to an
undesired association between the marks. And fourth, the association between Garcia’s counterfeit
marks and Lamborghini’s trademarks is likely to harm the reputation of Lamborghini’s marks.
Accordingly, the entry of default judgment against Garcia on Count IV, trademark dilution, is
appropriate on this record.
With respect to Counts I, III, and IV, plaintiffs request monetary damages and injunctive
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relief. When a defendant uses a counterfeit mark under the Lanham Act, the trademark owner may
elect to recover an award of statutory damages. See 15 U.S.C. § 1117(c). Section 1117(c) provides
that “if the court finds that the use of the counterfeit mark is willful” the maximum award of
statutory damages is $2,000,000 “per counterfeit mark per type of goods or services sold, offered
for sale or distributed.” Id. Here, it is abundantly clear that Garcia willfully used counterfeit
versions of plaintiffs’ trademarks to sell counterfeit products in the United States. Plaintiffs have
requested statutory damages for each type of counterfeit goods that plaintiffs’ investigator
purchased in the United States via defendants’ website, www.lamborghinigrupo.com. Plaintiffs
attached to the FAC copies of purchase receipts for (1) cigars and cigar boxes, (2) t-shirts, and (3)
flags that displayed counterfeit Lamborghini marks.70 Accordingly, because Garcia willfully used
counterfeit versions of plaintiffs’ trademarks to sell three different types of goods in the United
States, a $6,000,000 award of statutory damages, the maximum amount of statutory damages
available pursuant to 15 U.S.C. § 1117(c), is the appropriate remedy here.
Plaintiffs also seek a permanent injunction that prohibits Garcia from (1) advertising,
marketing, and selling unauthorized and unlicensed counterfeit products that infringe on
Lamborghini’s federally-registered trademarks and (2) using Lamborghini’s federally-registered
trademarks. The Lanham Act provides that a court may grant permanent injunctive relief to prevent
the infringement of trademarks. See 15 U.S.C. § 1116(a). To obtain a permanent injunction in the
Fourth Circuit, a plaintiff must show:
(1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are inadequate to compensate
for that injury;
(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy
70
See Dkt. 182-6 (receipt and shipping label for purchase of counterfeit Lamborghini-branded cigars and t-shirts
shipped to Virginia); Dkt. 182-7 (receipt, packing slip, and photos of counterfeit Lamborghini-branded cigars and
flag shipped to Florida).
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in equity is warranted; and
(4) that the public interest would not be disserved by a permanent injunction.
Christopher Phelps & Assocs., LLC v. Galloway, 492 F.3d 532, 543 (4th Cir. 2007) (quoting eBay
Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)).
Here, a permanent injunction against Garcia is appropriate because all four elements are
satisfied. As the Magistrate Judge’s Report appropriately found, plaintiffs suffered, and continue
to suffer, irreparable injury because of Garcia’s willful infringement of plaintiffs’ trademarks. See
Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 939 (4th Cir. 1995) (citation
omitted) (“[W]e recognize that irreparable injury regularly follows from trademark
infringement.”). Second, other available remedies at law are inadequate to compensate plaintiffs
because other remedies do not prevent Garcia from continuing to sell counterfeit Lamborghini
products. Third, Garcia would not face hardship from a permanent injunction because the
permanent injunction would only require that Garcia follow clearly established trademark law and
stop his infringing activity. Fourth, the public interest favors an injunction here because an
injunction would protect the public from purchasing Garcia’s counterfeit, inferior products.
Accordingly, a permanent injunction against Garcia is an appropriate remedy here for plaintiffs’
claims in Counts I, III, and IV.
Finally, plaintiffs seek declaratory relief in Counts V, VI, and VII of the FAC. When a
federal district court has “a case of actual controversy within its jurisdiction,” the Declaratory
Judgment Act allows the court to “declare the rights and other legal relations of any interested
party.” 28 U.S.C. § 2201(a). Here, Lamborghini seeks three declarations of its rights: (1) that
Garcia’s purported licensing agreements with Lamborghini are invalid (Count V), unenforceable
(Count VI), and fraudulent (Count VII); (2) that Garcia has no rights from Lamborghini to license,
27
Case 1:18-cv-00062-TSE-TCB Document 211 Filed 05/21/20 Page 28 of 29 PageID# 2187
manufacture, and sell Lamborghini-branded merchandise in the United States;71 and (3)
Lamborghini has never conveyed a license or otherwise authorized Garcia to use Lamborghini
trademarks in the United States by any agreement or otherwise. As noted in detail Part I supra and
in the Magistrate Judge’s Report,72 Garcia and Lamborghini did not reach an agreement on the
sales and licensing agreements that the parties discussed in 1995. Moreover, Braner has submitted
a sworn affidavit that to the extent his signature is on any purported licensing agreement between
Lamborghini and Garcia, it has been fraudulently affixed to the purported licensing agreement
because he never signed the document. Accordingly, on this record, the purported licensing
agreements attached to plaintiffs’ FAC are invalid, unenforceable, and fraudulent because
plaintiffs never assented to the formation of a contract or licensing agreement with Garcia. Phillips
v. Mazyck, 643 S.E.2d 172, 175 (Va. 2007) (“Until the parties have a distinct intention common to
both and without doubt or difference, there is a lack of mutual assent, and therefore, no contract.”).
Thus, plaintiffs are entitled to declaratory relief.
*
*
*
For the reasons set forth above, Garcia’s objections are overruled, the Magistrate Judge’s
Report is adopted in its entirety in accordance with this Opinion,73 and plaintiffs’ motion for default
71
Plaintiffs’ request also asks for a declaration that Garcia has no rights from Lamborghini to license, manufacture,
and sell Lamborghini-branded merchandise anywhere in the world. Such a declaration is beyond the power of the
Court, and therefore plaintiffs’ request will be denied in this respect.
72
See Report, Dkt. 209, at 11-14, 19-21.
73
This includes the Report’s denial of default judgment against Garcia with respect to Count II. Denial of default
judgment with respect to Count II is appropriate because plaintiffs did not request transfer of the only domain name
listed in the FAC in their motion for default judgment (lamborghinigrupo.com). Instead, plaintiffs requested the
transfer of domain names not listed in the FAC in their motion for default judgment, a request that is inappropriate
in a default judgment motion because proper notice has not been provided to the defendant. The Report’s
recommendation with respect to Count II is not discussed in greater detail because Garcia does not object to the
denial of default judgment against him on Count II. Accordingly, the Report’s findings and recommendations with
respect to Count II are reviewed for clear error, and no clear error has been found. See Diamond v. Colonial Life &
Acc. Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (in the absence of any objections to a magistrate’s report, the court
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Case 1:18-cv-00062-TSE-TCB Document 211 Filed 05/21/20 Page 29 of 29 PageID# 2188
judgment is granted in part and denied in part.
An appropriate order will issue separately.
The Clerk is directed to send a copy of this Opinion to all counsel of record and to Mr.
Garcia via email atjoanforci@gmail.com pursuant to Mr. Garcia's request.
Alexandria, Virginia
May 21, 2020
T. S. Ellis, lll
"need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the
record in order to accept the recommendation."').
29
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