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American Automobile Association, Inc. v. AAA Auto Body & Repair, Inc.

United States District Court, N.D. California

February 9, 2015

AMERICAN AUTOMOBILE ASSOCIATION, INC., Plaintiff,
v.
AAA AUTO BODY & REPAIR, INC., et al., Defendants.

ORDER OF REASSIGNING CASE TO A DISTRICT JUDGE; AND REPORT AND RECOMMENDATION TO GRANT PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT Dkt. No. 21

KANDIS A. WESTMORE, Magistrate Judge.

Plaintiff American Automobile Association ("AAA") moves for default judgment against defendants AAA Auto Body & Repair, Inc. and Sarbjeet Takhar ("Defendants") for trademark infringement. Plaintiff's motion follows entries of default on November 20 and 21, 2014. Defendants have not appeared in this action, nor have they responded to Plaintiff's complaint or motion for default judgment. Plaintiff seeks injunctive relief and an award of reasonable costs.

On January 8, 2015, the Court ordered Plaintiff to provide supplemental briefing in support of its motion for default judgment. On February 5, 2015, the Court held a hearing on Plaintiff's motion for default judgment, at which Defendants did not appear.

Since Defendants, by virtue of being in default, have not consented to the undersigned, the Court reassigns this action to a district judge and recommends that Plaintiff's motion be GRANTED.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff AAA is a corporation that provides its members with products and services throughout the United States and Canada. (Compl. ¶ 10.) This includes travel and automobile products and services, including automobile repair services at its AAA Car Care Centers and through AAA approved auto repair businesses. Id. AAA has registered more than 100 trademarks with the United States Patent and Trademark Office, including Marks that AAA has used since at least 1902. (Compl. ¶ 19.) AAA has used and continues to use the AAA Marks and logo designs in interstate commerce to identify its products and services. (Compl. ¶ 16.) As a result, the AAA Marks have become famous in the United States, including California, and through the world in connection with its products and services. Id. Only those businesses that are part of AAA's network of approved service providers are authorized to use or display the AAA Marks. (Compl. ¶ 17.) Consequently, AAA members and the public know that local businesses displaying AAA Marks are selected only if they maintain a reputation for quality, integrity, and reliability. Id.

Defendants AAA Auto Body & Repair, Inc. ("AAA Auto Body") and Sarbjeet Takar were never authorized to use the AAA Marks. (Compl. ¶ 21.) AAA learned of Defendants' unauthorized use of the AAA Marks-by using the business name AAA Auto Body & Repair, Inc. after the Marks had become famous-in or around November 2013 when an automobile parts vendor delivered a shipment intended for a AAA Car Care Center to Defendants' facility. (Compl. ¶¶ 22-23.) Thereafter, the general manager of the AAA Car Care Center visited Defendants' facility and spoke with the manager about Defendants' use of the AAA Marks. (Compl. ¶24.) On December 19, 2013 and January 17, 2014, AAA sent letters by certified mail to the manager, requesting that Defendants discontinue use of the AAA Marks. (Compl. ¶ 25.) Even though the manager did not reply, Defendants appeared to cease doing business. (Compl. ¶ 26.) AAA continued to monitor the telephone number associated with the business, and in or around April 2014, AAA learned that Defendants had begun conducting business at a new address. (Compl. ¶ 27.) On April 10, 2014 and May 23, 2014, AAA sent cease and desist letters by certified mail to the new address, again requesting that Defendants discontinue use of the AAA Marks, but Defendants did not reply. (Compl. ¶¶ 28-29.) On June 26, 2014, AAA called the telephone number associated with the business and spoke with an employee who provided Defendant Sarbjeet Takhar's name. (Compl. ¶ 30.) On July 25, 2014, AAA sent a final notice letter to Defendants requesting that Defendants discontinue use of the AAA Marks, and again received no response. (Compl. ¶¶ 31-32.)

On September 12, 2014, AAA filed the instant suit alleging federal and California state trademark infringement, federal and California state unfair competition, and federal and California state trademark dilution. Specifically, AAA alleges that Defendants are infringing on four of its Marks.[1] The summons and complaint was personally served on AAA Auto Body & Repair on September 24, 2014 by serving Manager Nick Singh, who represented that he was authorized to accept service on behalf of the corporation. (Dkt. No. 8.) After numerous attempts to serve Defendant Sarbjeet Takhar at both his Union City and San Jose addresses, he was served by substituted service on October 7, 2014 by leaving the summons and complaint with Mr. Singh at AAA Auto Body & Repair. (Dkt. Nos. 8-10.) Additionally, a copy of the documents were mailed to Mr. Takhar's attention at the San Jose address, which is his place of business. (Dkt. No. 8.) Defendants never served AAA with a responsive pleading.

On November 18, 2014, AAA filed a request for entry of default against both AAA Auto Body and Mr. Takhar, which was served on Defendants by U.S. Mail. (Dkt. No. 11.) The Clerk entered the default against Mr. Takhar on November 20, 2014, but declined to enter default against AAA Auto Body. (Dkt. Nos. 12 & 13.) On November 20, 2014, AAA filed a second motion for entry of default against AAA Auto Body, which was again served on Defendants by U.S. Mail. (Dkt. No. 16.) The Clerk entered default against AAA Auto Body on November 21, 2014. (Dkt. No. 17.)

On December 8, 2014, Plaintiff filed a motion for default judgment seeking a permanent injunction against Defendants' use of AAA's marks, as well as an award of reasonable costs. (Dkt. No. 21.) On January 7, 2015, Plaintiff consented to the undersigned's jurisdiction for all purposes in accordance with the provisions of 28 U.S.C. § 636(c). (Dkt. No. 24.) Defendants, by virtue of being in default, have not consented.

On January 8, 2015, the Court ordered Plaintiff to provide supplemental briefing in support of its motion for default judgment, which was filed on January 22, 2015. (Pl.'s Brief, Dkt.No. 26.) On February 5, 2015, the Court held a hearing, at which Defendants 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 and Personal Jurisdiction

Plaintiff's complaint alleges trademark infringement, false designation of origin, and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), and 1125(c)(1), California Business & Professions Code §§ 14247, 17200, and common law. This court has subject matter jurisdiction over the matter pursuant to 28 U.S.C. § 1338(a), and pendant jurisdiction to decide related state law claims under 28 U.S.C. § 1367.

Venue is proper in the Northern District of California under 28 U.S.C. § 1391, as AAA Auto Body & Repair is a corporation with a principal place of business at 1190 North 13th Street, San Jose, California 95112, which is located within the Northern District. (Compl. ¶ 11.) Further, Defendant Sarbjeet Takhar is the owner of AAA Auto Body & Repair, Inc. and resides at 32613 Endeavour Way, Union City, California 94587. (Compl. ¶12.)

Plaintiff AAA served both defendants with a copy of the summons and complaint in compliance with California state law. (Dkt. Nos. 8-10.) The court therefore has personal ...


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