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Chanel, Inc. v. Gupton

United States District Court, N.D. California

January 15, 2015

CHANEL, INC., Plaintiff,
v.
KAREN K. GUPTON, Defendant

For Chanel, Inc., a New York corporation, Plaintiff: Anne Elizabeth Kearns, Krieg Keller Sloan Reilley & Roman LLP, San Francisco, CA.

REPORT AND RECOMMENDATION TO GRANT IN PART AN DENY IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANT KAREN K. GUPTON Dkt. No. 57

KANDIS A. WESTMORE, United States Magistrate Judge.

Plaintiff Chanel, Inc. moves for default judgment against Defendant Karen K. Gupton (a/k/a Karen Kearney Gupton, d/b/a The Trendy Baby a/k/a thetrendybaby.com) (" Defendant") for trademark infringement. Plaintiff's motion follows an entry of default by the clerk on September 18, 2014. Defendant has not appeared in this action, nor has she responded to Plaintiff's first amended complaint or motion for default judgment.

On January 15, 2015, the Court held a hearing on Plaintiff's motion for default judgment, at which Defendant did not appear. After a review of Plaintiff's pleadings and moving papers, and for the reasons set forth below, the Court recommends that Plaintiff's motion be GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff Chanel, Inc. (" Chanel") is a New York corporation with its principal place of business located at Nine West 57th Street, New York, New York 10019. (First Am. Compl., " FAC, " ¶ 6.) Chanel is engaged in manufacturing and distributing a variety of high quality goods throughout the world, including within the Northern District of California, under multiple world famous common law and federally registered trademarks (collectively the " Chanel Marks"). Id.

Defendants Jessica Gaul, Gaul Innovations, LLC (d/b/a Kayden Grace Designs a/k/a kaydengracedesigns.com), Karen K. Gupton (a/k/a Karen Kearney Gupton, d/b/a The Trendy Baby a/k/a thetrendybaby.com), and Margaret Malto (d/b/a Lunabelle Boutique a/k/a lunabelleboutique.com) allegedly advertised, distributed, sold and/or offered for sale products in interstate commerce being counterfeit and infringing trademarks, which are exact copies of the Chanel Marks, and did so without authorization. (FAC ¶ ¶ 21-25.) These counterfeit products, including shoes, are of a quality substantially different from Chanel's genuine goods. (FAC ¶ ¶ 21-22.) Plaintiff alleges that Defendants' knowingly and intentional use of the Chanel marks without Chanel's consent or authorization results in consumer confusion. (FAC ¶ 21.)

On July 9, 2014, Chanel filed a complaint for trademark counterfeiting and infringement and false designation of origin. See 15 U.S.C. § § 1114, 1125(a). On July 16, 2014, Plaintiff filed a first amended complaint. (FAC, Dkt. No. 16.) Specifically, Chanel alleges the regarding of three of its Marks.[1] The summons and first amended complaint were personally served on Defendant Karen Gupton on July 27, 2014, at 2425 Stately Oaks Drive, Raleigh, North Carolina, by serving Defendant's son, Elliot Gupton, who is 18 years of age or older and resides at the same address as his mother. (Dkt. No. 35.) Defendant Gupton never served a responsive pleading. Co-defendants Jessica Gaul, Gaul Innovations, LLC (d/b/a Kayden Grace Designs a/k/a kaydengracedesigns.com), and Margaret Malto (d/b/a Lunabelle Boutique a/k/a lunabelleboutique.com), however, participated in this litigation and entered into stipulated consent judgments with Chanel, which included permanent injunctions. (Dkt. Nos. 56 & 64.) Thus, Defendant Gupton is the only remaining defendant.

On September 16, 2014, Chanel filed an amended motion for entry of default against Defendant Gupton, who was served by U.S. Mail. (Dkt. Nos. 37 & 38.) The Clerk entered the amended default on September 18, 2014. (Dkt. No. 40.)

On October 29, 2014, Plaintiff filed a motion for default judgment seeking a permanent injunction against Defendant's use of the Chanel Marks, statutory damages, an award of reasonable costs, and prejudgment interest. (Dkt. No. 21.) On October 30, 2014, the motion was referred to the undersigned for report and recommendation. (Dkt. No. 60.)

On January 15, 2015, the Court held a hearing, at which Defendant did not appear.

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case following a defendant's default. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court's discretion. Id. at 999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)).

Before assessing the merits of a default judgment, a court must confirm that it has subject matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the court finds these elements satisfied, it turns to the following factors (" the Eitel factors") to determine whether it should grant a default judgment:

(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 decision on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). In this analysis, " the well-pleaded allegations of the complaint relating to a defendant's liability are taken as true." Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002) (citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Nevertheless, default does not compensate for essential facts not within the pleadings and those legally insufficient to prove a claim. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

B. Subject Matter Jurisdiction

This Court has subject matter jurisdiction over this matter because Chanel raises claims under federal law, specifically trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a), and dilution of a famous mark under 15 U.S.C. § 1125(c). 28 U.S.C. § § 1331, 1338.

C. Personal Jurisdiction

Plaintiff served Defendant with a copy of the summons and first amended complaint in compliance with California state law. See Fed.R.Civ.P. 4(e)(1).

California's long-arm statute authorizes specific personal jurisdiction over nonresident defendants to the full extent permitted by the Due Process Clause of the United States Constitution. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). Thus, this Court may assert specific personal jurisdiction over nonresident defendants if three requirements are met:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or results from the defendant's forum-related activities; and (3) exercise of jurisdiction must be reasonable.

Id. (quotation marks and citation omitted). Plaintiff bears the burden of satisfying the first two requirements; the burden then shifts to the defendant to present a " compelling case" that the exercise of jurisdiction would be unreasonable. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011) (citations omitted).

1. Purposeful Availment

" A showing that a defendant purposefully availed himself of the privilege of doing business in a forum state typically consists of evidence of the defendant's actions in the forum, such as executing or performing a contract there." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). By taking such actions, a defendant " purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). " In return for these 'benefits and protections, ' a defendant must--as a quid pro quo--'submit to the burdens of litigation in that forum.'" Schwarzenegger, 374 F.3d at 802 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Here, Gupton sold counterfeit goods through her website, which were shipped to consumers by ...


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