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Nucal Foods, Inc v. Shawn Kaye

April 16, 2013

NUCAL FOODS, INC., PLAINTIFF,
v.
SHAWN KAYE, DEFENDANT.



The opinion of the court was delivered by: Allison Claire United States Magistrate Judge

ORDER AND FINDINGS & RECOMMENDATIONS

Pending before the court is plaintiff's March 13, 2013 motion for default judgment against defendant Shawn Kaye.*fn1 The court has determined that the matter shall be submitted upon the record and briefs on file and accordingly, the date for hearing of this matter shall be vacated. Local Rule 230. On review of the motion, the documents in support, and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:

ALLEGATIONS IN COMPLAINT

Plaintiff, a California agricultural cooperative association, and its predecessor members have been processing, marketing, and distributing conventional and specialty farm fresh eggs produced by family-owned farms located in Northern California for over 50 years. Compl. ¶ 8. At all relevant times, plaintiff has been and is engaged in the processing, interstate distribution, and marketing of conventional and specialty eggs to retail and foodservice customers under the trademark of "Cal Eggs," which it has used continuously for over 17 years Id. ¶¶ 9-10. Plaintiff's "Cal Eggs" brand of eggs has been and continues to be extensively advertised and sold throughout California and Nevada under the "Cal Eggs" trademark. Id. ¶ 13. By virtue of its advertising and sales, together with consumer acceptance and recognition, plaintiff's mark identifies plaintiff's "Cal Eggs" brand eggs only, and distinguishes them from eggs processed and sold by others. Id. Plaintiff claims it is entitled to protection under California common law.*fn2 Id.

At some point in either 2011 or 2012, when plaintiff attempted to register the "Cal Eggs" domain name (www.caleggs.com), it learned that defendant owns the domain name, having registered it on April 5, 2011. Compl. ¶ 15. On or about September 6, 2012, plaintiff advised defendant by letter of plaintiff's ownership of the "Cal Eggs" trademark and requested that defendant immediately cease and desist further use of the domain name. Id. ¶ 18. Defendant did not comply with plaintiff's request. Id. Instead, defendant offered to sell the domain name to plaintiff for $500,000. Id. ¶ 19.

PROCEDURAL BACKGROUND

This action is proceeding on plaintiff's original complaint, filed November 7, 2012, brought against defendant and Does 1 through 10 for violating the federal Anti-Cybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d), and asserting state law claims of unjust enrichment and declaratory relief.

The summons and complaint were served on defendant by mail on November 20, 2012 and by substituted service on November 19, 2012 (the documents were left with or in the presence of "Debra Doe -- Person in Charge of Office") at the address listed on the domain registration information for the owner of the www.caleggs.com domain name,: 11701 Moorpark Street, Studio City, CA 91604. ECF No. 7; Scott Decl. ¶¶ 3-4; Fed. R. Civ. P. 4(e)(2); Pacific Atlantic Trading Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985) (default judgment void without personal jurisdiction). Because defendant failed to file an answer or otherwise appear in this action, the clerk entered default against him on January 11, 2013. ECF No. 9.

Request for entry of default and the instant motion for default judgment and supporting papers were served by mail on defendant at three different addresses identified by plaintiff during the course of this litigation to be attributable to defendant. See ECF No. 15; Scott Decl. ¶ 11. Defendant did not file an opposition to the motion for entry of default judgment. Plaintiff seeks an entry of default judgment in the amount of $1,000 for violation of the ACPA, and $14,050 for attorneys' fees and costs.*fn3

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed. R. Civ. P. 55(a). However, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)); see Fed. R. Civ. P. 55(b) (governing the entry of default judgments). Instead, the decision to grant or deny an application for default judgment lies within the district court's sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the court may consider the following factors:

(1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily disfavored. Id. at 1472.

As a general rule, once default is entered, well-pleaded factual allegations in the operative complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); see also Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Although well-pleaded allegations in the complaint are admitted by a defendant's failure to respond, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are notestablished by default." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Huynh, 503 F.3d 847, 854 (9th Cir. 2007) ("[A] defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law" (citation and quotation marks omitted).); Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) ("[A] default judgment may not be entered on a legally insufficient claim."). A party's default conclusively establishes that party's liability, although it does not establish the amount of damages. Geddes, 559 F.2d at 560; cf. Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1414 (9th Cir. 1990) (stating in the context of a default entered pursuant to Federal Rule of Civil Procedure 37 that the default conclusively established the liability of the defaulting party).

DISCUSSION

A. The Eitel Factors

1. Factor One: Possibility of Prejudice to Plaintiff The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting a default judgment. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, plaintiff would potentially face prejudice if the court did not enter a default judgment. Absent entry of a default judgment, plaintiff would be without another recourse for recovery. Additionally, given defendant's failure to participate in this litigation in any fashion, it is unlikely that defendant will cease use of the "Cal Eggs" mark in the absence of an entry of default judgment. Accordingly, the first Eitel factor favors the entry of default judgment.

2. Factors Two and Three:

The Merits of Plaintiff's Substantive Claims and the Sufficiency of the Complaint The undersigned considers the merits of plaintiff's substantive claims and the

sufficiency of the complaint together because of the relatedness of the two inquiries. The undersigned must consider whether the allegations in the complaint are sufficient to state a claim that supports the relief sought. See ...


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