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Eli Lilly and Co. v. Gitmed

United States District Court, E.D. California

March 23, 2017

ELI LILLY AND COMPANY, Plaintiff,
v.
JOHN DEREK GITMED, et al., Defendants.

         OBJECTIONS DUE WITHIN FOURTEEN DAYS

          FINDINGS AND RECOMMENDATIONS RECOMMENDING GRANTING IN PART AND DENYING IN PART PLAINTIFF'S APPLICATION FOR ENTRY OF DEFAULT JUDGMENT AGAINST DEFENDANT ANTHONY POLLINO, JR. ECF Nos. 43, 44, 46, 48)

         Currently pending before the Court is Plaintiff Eli Lilly and Company's (“Plaintiff”) application for entry of default judgment against Defendant Anthony Pollino, Jr. which was referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302.

         I.

          BACKGROUND

         Plaintiff “is a worldwide innovator, manufacturer, distributor and marketer of pharmaceutical products, and is a leader in the industry.” (Compl. ¶ 13.) Plaintiff has the exclusive right to manufacture for distribution the drug Cialis which has been approved for the treatment of erectile-dysfunction (“ED”), the signs and symptoms of benign prostatic hyperplasia, or enlarged prostate (“BPH”), and both ED and the signs and symptoms of BPH. (Compl. at ¶ 15.) Plaintiff has the exclusive right to manufacture Cialis and it is only available by prescription. (Compl. at ¶ 15.) Plaintiff owns several trademarks that are registered with the United States Patent and Trademark Office that are used in interstate commerce in connection with the sale and promotion of Cialis. (Compl. at ¶ 16.)

         Despite protections taken by Plaintiff to protect its intellectual property rights, foreign and domestic parties have imported and sold counterfeit products that violate those rights. (Compl. at ¶ 19.) These counterfeit products cause irreparable damage to Plaintiff's image and the brand names of its pharmaceutical products. (Compl. at ¶ 25.)

         Defendants John Gitmed, Holly Gitmed, Felicia Gitmed, and Anthony Pollino, Jr. sold counterfeit versions of the drug Cialis in person or by mail in Modesto and Los Angeles, California, and Las Vegas, Nevada. (Compl. at ¶ 28.) The counterfeit version of Cialis were shipped by mail and private and commercial carriers to customers in California and other states. (Compl. at ¶ 28.)

         Defendant John Gitmed provided suppliers with pictures of tablets and packaging and negotiated with suppliers to produce imitations of Cialis. (Compl. at ¶ 31.) Once the negotiations were complete, the defendants directed the suppliers to ship the counterfeit goods to various addresses within the United States, including to the “California Confidence Company.” (Compl. at ¶ 32.) Some of the shipments to the California Confidence Company were intercepted by the United States Customs and Border Patrol (“CBP”) in the Los Angeles area. (Compl. at ¶ 33.) Specifically on September 5, 2013, CBP personnel in Los Angeles seized a package from a Chinese supplier that was addressed to California Confidence Company in Florida which contained over 2, 000 counterfeit Cialis tablets. (Compl. at ¶ 33.)

         The defendants posted online advertisements offering genuine Lilly Cialis or stating that their products were genuine. (Compl. at ¶ 34.) The defendants did not sell the products through pharmacies or other authorized outlets. (Compl. at ¶ 35.)

         About August 28, 2014, a grand jury in the Eastern District of California returned an indictment against Defendants John Gitmed, Holly Gitmed, Felicia Gitmed, and Anthony Pollino, Jr. for conspiracy to traffic in counterfeit goods and commit mail fraud under 18 U.S.C. § 371 (one count) and trafficking in counterfeit goods under 18 U.S.C.§ 2320(a)(1) (one count), and initiated a criminal proceeding in the Eastern District, Case No. 1:14-cr-00189-AWI-BAM. (Compl. at ¶ 37.) Defendants John Gitmed, Holly Gitmed, Felicia Gitmed, and Anthony Pollino, Jr. pled guilty to trafficking in counterfeit Cialis in violation of 18 U.S.C. § 2320(a). (Compl. at ¶ 38.)

         In entering his guilty plea, Defendant John Gitmed admitted that he, together with the co-defendants, counterfeited erectile dysfunction drugs and associated packaging, including Cialis. (Compl. at ¶ 29.) Defendants Holly Gitmed and Anthony Pollino, Jr. made substantially similar admissions as part of their plea agreements admitting to counterfeiting Cialis. (Compl. at ¶ 40.)

         On February 8, 2016, Plaintiff filed this action against Defendants John Gitmed, Holly Gitmed, Felicia Gitmed, and Anthony Pollino, Jr. alleging trademark counterfeiting, trademark infringement, false designation of origin, and federal unfair competition in violation of the Lanham Act; common law passing off and unfair competition; and violation of California's Unfair Competition Law (“UCL”), Bus. & Prof. Code § 17200 et seq. (ECF No. 1.)

         Felicia Gitmed and Holly Gitmed filed answers on March 3, 2016, and March 9, 2016 respectively. (ECF Nos. 7, 8.) On May 11, 2016, Plaintiff filed a stipulation to dismiss Defendant Holly Gitmed from the action. (ECF No. 20.) On August 9, 2016, default was entered against Defendant Anthony Pollino, Jr. (ECF No. 30.) On September 7, 2016, Plaintiff filed a stipulation to dismiss Defendant Felicia Gitmed. (ECF No. 33.) On September 26, 2016, Defendant John Gitmed filed a motion to dismiss. (ECF No. 35.) Plaintiff filed an opposition to the motion to dismiss on October 28, 2016.[1] (ECF No. 37.)

         On February 8, 2017, Plaintiff filed the instant application for default judgment as to Defendant Anthony Pollino, Jr. (ECF No. 43.) On February 9, 2017, Plaintiff filed an amended notice of the application for default judgment as to Defendant Pollino. (ECF No. 44.) On February 10, 2017, Plaintiff filed a second amended notice of the application for default judgment. (ECF No. 46.) At the request of the Court, Plaintiff filed supplemental briefing on March 13, 2017. (ECF No. 48.)

         II.

          LEGAL STANDARD

         Pursuant to Rule 55 of the Federal Rules of Civil Procedure, unless a claim is for a sum certain or a sum that can be made certain by computation, a party must apply to the court for a default judgment. Fed.R.Civ.P. 55(b). Upon entry of default, the complaint's factual allegations regarding liability are taken as true. Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977); Garamendi v. Henin, 683 F.3d 1069, 1080 (9th Cir. 2012). However, the complaint's factual allegations relating to the amount of damages are not taken as true. Geddes, 559 F.2d at 560. Accordingly, the amount of damages must be proven at an evidentiary hearing or through other means. Microsoft Corp. v. Nop, 549 F.Supp.2d 1233, 1236 (E.D. Cal. 2008). “[N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of North America, 980 F.2d 1261, 1267 (9th Cir. 1992). Pursuant to Federal Rule of Civil Procedure 54(c), “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”

          Entry of default judgment is not a matter of right and it is within the discretion of the court whether default judgment should be entered. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 999 (N.D. Cal. 2001); Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). The Ninth Circuit has set forth the following factors for the court to consider in exercising its discretion:

(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, 782 F.2d at 1471-72.

         III.

         DISCUSSION

         In the current application, Plaintiff seeks default judgment and requests monetary damages and a permanent injunction.

         A. ...


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