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Left Coast Wrestling, LLC. v. Dearborn International, LLC

United States District Court, S.D. California

May 23, 2018

LEFT COAST WRESTLING, LLC, a California limited liability company, Plaintiff,
v.
DEARBORN INTERNATIONAL LLC, a California limited liability company, a/k/a and/or d/b/a TRI TITANS; DUKE MINH LE, an individual, Defendants.

          REPORT AND RECOMMENDATION FOR ORDER GRANTING DEFAULT JUDGMENT

          HON. NITA L. STORMES UNITED STATES MAGISTRATE JUDGE.

         Before the Court are Plaintiff's Motion to Dismiss, ECF No. 23, (referred in part as set forth in ECF No. 30) and Application for Default Judgment by Court, Permanent Injunction and Attorneys' Fees and Costs, ECF No. 37 (referred as set forth in ECF No. 38). Plaintiff also submitted Supplemental Documents for consideration. ECF No. 40.

         I. FACTUAL BACKGROUND

         This case is centered on the use of “Battle on the Midway” as a trademark, and alleges claims for False Designation of Origin under the Lanham Act, with attendant state law claims including violation of the California Business & Professions Code, § 17200, common law trademark infringement, conversion, breach of fiduciary duty and declaratory relief. ECF No. 1. Plaintiff alleges that “Battle on the Midway” was developed by and is a common law trademark of plaintiff, Left Coast Wrestling, LLC (“Left Coast”), an LLC of which defendant Mr. Duke Le was once a member. Id. at 4.

         Plaintiff alleges that Left Coast was formed for the purpose of running an annual youth wrestling tournament in San Diego with the final round to occur on the deck of the USS Midway, resulting in the title “Battle on the Midway.” Id. Plaintiff alleges that it developed, marketed, planned and carried out the first tournament in 2016. Id. at 5-10. Plaintiff alleges that after the first tournament, Defendants usurped Plaintiff's idea, mark, tournament, social media accounts, website and other items, and began promoting a “Battle on the Midway” tournament on behalf a “Tri Titans.” Tri Titans is the dba of defendant Dearborn International, LLC and the alleged alter ego of defendant Mr. Le (Dearborn and Mr. Le are collectively referred to as “Defendants”). Id. at 2-3, 12-15.

         Plaintiff's complaint alleges its damages include lost profits and loss of goodwill, and seeks to enjoin Defendants from further use of “Battle on the Midway” in any capacity. Id. at 17-18. Plaintiff also requests disgorgement of any and all profits attributable to Defendants' trademark infringement, rescission of Defendant's pending USPTO trademark application, as well as attorneys' fees and costs. Id. at 25-27.

         II. PROCEDURAL HISTORY

         Plaintiff's complaint was filed March 7, 2017 and served on both Defendants March 14, 2017. ECF Nos. 1, 5. In response, Defendants filed an answer and counterclaims. ECF No. 8. The parties, all represented by counsel at the time, participated in an Early Neutral Evaluation, which was unsuccessful. ECF No. 14. The Court issued a Scheduling Order regulating discovery and pretrial proceedings. ECF No. 15.

         A short time later, counsel for the Defendants moved to withdraw based on Defendants' “failure to communicate with counsel and breach of agreement to pay fees.” ECF No. 17 at 2:9-10. The District Judge issued an order to Defendants to respond and explicitly advised the Defendants of the consequences of failure to do so, as well as the inability of an entity such as defendant Dearborn to proceed without counsel. ECF No. 18. Defendants did not respond and the District Judge granted the motion to withdraw. ECF No. 20.

         Plaintiff proceeded to file a request for entry of default, and then a motion to dismiss Defendants' counterclaims. ECF Nos. 21, 23. The District Judge did not immediately grant the request for entry of default, and instead issued an order to show cause, again requiring written response from the Defendants and advising that failure to respond would result in the dismissal of Defendants' counterclaims and entry of default. ECF Nos. 22, 25. No. response was filed.

         The District Judge dismissed Defendants' counterclaims, and ordered entry of default against both Defendants. ECF No. 30, 31. In the same order, the District Judge referred the request for discovery sanctions and default judgment, to the extent it was requested as a discovery sanction pursuant to Rules 16, 37, and 41, to the undersigned. ECF No. 30. Plaintiff thereafter also moved for default judgment pursuant to Rule 55 and served the motion on Defendants by overnight delivery. ECF No. 37. This motion was also referred to the undersigned. ECF Nos. 38. Defendants did not respond to the motion and have not moved to set aside the default. The docket reflects no attempt on the part of Defendants to file any document of any kind since the motion of their prior counsel to withdraw in July of 2017. ECF No. 17 (Motion to Withdraw, filed July 31, 2017).

         III. DISCUSSION

         A. Legal Standard for Default Judgment

         Pursuant to Federal Rule of Civil Procedure 55, the Court may enter default judgment against a defendant who has “failed to plead or otherwise defend” an action. Entry of default does not “automatically entitle the plaintiff to a court-ordered judgment, ” granting relief remains “entirely within the court's discretion.” PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (0th Cir. 1986).

         B. Entry of Default is Proper

         Entry of default may be entered as either a sanction[1] or for “failure to plead or otherwise defend.” Fed.R.Civ.P. 55(a) (“When a party … has failed to plead or otherwise defend …”); Fed R. Civ. P. 16(f)(1)(C) (“On motion or on its own, the court may issue any just orders, including those authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party … fails to obey a scheduling or other pretrial order.”); Fed.R.Civ.P. 37(b)(2)(C) (“If a party ... fails to obey an order to provide or permit discovery, ... the court ... may ... render[ ] a judgment by default against the disobedient party.”); Dreith v. Nu Image, Inc., CV054146 SVW MANX, 2007 WL 9658786, at *3 (C.D. Cal. Mar. 2, 2007) (“A district court may enter default against a defendant as a sanction for engaging in discovery abuse.”); Adriana Intl. Corp. v. Thoeren, 913 F.2d 1406, 1410 (9th Cir. 1990) (dismissing plaintiff's complaint, striking answers to cross claims, and entering default judgment as an evidentiary sanction after plaintiff repeatedly failed to obey discovery orders). Where the drastic sanctions of dismissal or default are imposed, the party's non-compliance must be due to willfulness or bad faith. Id. at 1412, n. 5; Sigliano v. Mendoza, 642 F.2d 309, 310 (9th Cir. 1981). All that is required to show willfulness or bad faith is “disobedient conduct not shown to be outside the control of the litigant.” Henry v. Gill Industries, 983 F.2d 943, 948 (9th Cir. 1993).

         The Ninth Circuit employs a balancing test of five factors for the court to consider before declaring default: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions. Dreith v. Nu Image, Inc., 2007 WL 9658786, at *3 (quoting factors from Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 1987). “Where a court order is violated, the first two factors support sanctions and the fourth factor cuts against a default. Therefore, it is the third and fifth factors that are decisive.” Adriana Intern. Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990).

         Here, Defendants' failure to respond to discovery, appear for deposition, or otherwise meaningfully participate in the either the discovery process or comply with Court's direction to respond or oppose the Plaintiff's submissions constitutes a failure “to plead or otherwise defend” within the meanings of Rules 16 and 55. Defendants have also ignored at least two orders of this Court: the Scheduling Order (ECF No. 15) which directed the timing and compliance with discovery procedures; and the Order to Show Cause (ECF No. 25) as to why the counterclaim should not be dismissed.[2] In light of the explicit direction of the court to Defendants, on multiple occasions, explaining that Dearborn must be represented by counsel, and the consequences of failure to act, coupled with service of every motion and order upon Mr. Le, the Defendants actions can only be construed as “within their control” and thus, willful and bad faith non-compliance.

         Finally, both the third and fifth Malone factors, risk of prejudice and availability of less drastic sanctions, weigh in favor of default. In sum, neither the Plaintiff nor the court have been able to meaningfully engage Defendants in this case. Plaintiff alleges it sent a cease and desist letter to the Defendants prior to bringing this action, to no avail. ECF No. 1 at 14. ¶ 37. Initiation of the present lawsuit does not appear to have impacted Defendants, who refuse to participate. The orders of this court directing Defendants to respond, oppose, or otherwise take part have gone unanswered. Accordingly, there is a possibility of prejudice to the Plaintiff absent default judgment, as the Plaintiff would be left without recourse. PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d at 1177 (“[i]f Plaintiffs' motion for default judgment is not granted, Plaintiffs will likely be without other recourse for recovery.”) Nor is there a lesser sanction available; there is no other means remaining to the Plaintiff or the Court to persuade Defendants to respond, participate, or otherwise permit this case to proceed in the normal adversarial course.

         With four factors weighing in favor entry of default, conduct within the apparent control of Defendant, and complete failure to participate in litigation, entry of default is supported by the Malone factors.

         C. Default Judgment

         The “entry of default does not entitle the non-defaulting party to a default judgment as a matter of right.” Dreith v. Nu Image, Inc., 2007 WL 9658786, at *5 (quoting In re Villegas, 132 B.R. 742, 746 (BAP 9th Cir. 1991)).

         Here, Plaintiff requests default judgment as either (1) a sanction under Rules 16 and 37 or (2) for failure to appear and defend under Rule 55. ECF No, 37-1 at 6-8. While total failure to participate in a case and comply with the Scheduling Order is sanctionable by default judgment under Rule 16 (which incorporates all remedies provided by Rule 37), the circumstances presented in this case are more analogous to the cases wherein the defendants never appeared than those cases where discovery abuses included misleading conduct or those where defendants act in direct defiance of court orders that resulted in default judgment as a discovery sanction. See Canon Sols. Am., Inc. v. Gungap, SACV141990 JLS RNBX, 2016 WL 9108916, at *4 (C.D. Cal. Feb. 8, 2016) (collecting cases, noting terminating sanctions appropriate when “misconduct includes knowingly deceiving the court with manipulated or fabricated evidence [citation omitted], consistently violating … orders, rules, and procedures…[citation omitted], or engaging in a ‘consistent, intentional, and prejudicial practice of obstructing discovery' [citation omitted]); Schudel v. Searchguy.com, Inc., 07CV0695 BEN BLM, 2010 WL 1945743, at *1 (S.D. Cal. May 13, 2010) (default judgment ordered after defendant, who appeared at the pretrial conference, was ordered to appear for deposition and produce specific discovery, and failed to do so); Dreith v. Nu Image, Inc., 2007 WL 9658786 at *2 (default judgment appropriate as sanction for failing to produce documents as directed at an MSJ hearing, and later appearing at pre-trial conference and again ordered to produce documents). Accordingly, the Court finds it appropriate to address default judgment in the context of Rule 55 and the Eitel factors.[3]

         D. Eitel Factors

         In determining whether default judgment is appropriate, the Ninth Circuit considers the following seven 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). When assessing the Eitel factors, all factual allegations in the complaint are taken as true, except those with regard to damages. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Although a decision on the merits is always preferred, in this case, the Eitel factors weigh in favor of entering default judgment.

         1. Possibility of Prejudice to Plaintiff

         This factor is duplicative of the Malone factor analyzing the risk of prejudice. As discussed, Plaintiff sent a cease and desist letter, initiated litigation, and used proper channels to seek redress. Without default judgment, Plaintiff would be prejudiced by being left without recourse for the claims alleged. PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d at 1177.

         2. Substantive Merits and Sufficiency of the Claims

         The substantive merits and the sufficiency of the claims share a close relationship and are commonly discussed together. PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d at 1175. “The Ninth Circuit has suggested that these two factors require that a plaintiff ‘state a claim on which the plaintiff may recover.'” Id. (quoting Kloepping v. Fireman's Fund, C 94-2684 TEH, 1996 WL 75314, at *2 (N.D. Cal. Feb. 13, 1996)).

         While not dispositive to the analysis, most often when a party seeks default judgment, the defendant has not appeared and had no opportunity to challenge the complaint. In this case Defendants were represented by counsel at the outset of this case and, when presented with an opportunity to challenge the sufficiency of the complaint, submitted an answer rather than a motion to dismiss. See ECF No. 8. Nonetheless, the Court will review the well pled allegations, accepted as true, to ensure the substantive merits and sufficiency of the claims are adequately stated.

         (a) Lanham Act § 43(a) Violation & Declaratory Relief

         Plaintiff's first claim for relief alleges false designation of origin and unfair competition in violation of Section 43(a) the Lanham Act. ECF No. 1 at 18. Section 43(a) of the Lanham Act prohibits using in commerce in connection with goods or services “any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person….” 15 U.S.C. § 1125(a)(1). A mark need not be registered to be protected under Section 43(a) of the Lanham Act. Kendall-Jackson Winery, Ltd. v. E.&.J. Gallo Winery, 150 F.3d 1042, 1047, n.7 (9th Cir. 1998) (“Registration is not a prerequisite for protection under § 43(a).”). However, to prevail on its claim for false designation of origin for an unregistered mark, Plaintiff still must show that “owns protectable trademark rights and that [the defendants'] activities are likely to confuse consumers as to the source of the goods.” HTS, Inc. v. Boley, 954 F.Supp.2d at 942 (citing Brookfield Commc'ns., Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1046 (9th Cir.1999)). Ownership of the mark can be established by priority of use. Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996) (“the standard test of ownership is priority of use.... the party claiming ownership must have been the first to actually use the mark in the sale of goods or services.”).

         To state a valid claim under Section 43(a) of the Lanham Act, a plaintiff show that the defendant (1) uses a designation or false designation of origin, (2) in interstate commerce, and (3) in connection with goods or services, that (4) is likely to cause confusion, mistake or deception as to either the affiliation, connection, or association of defendant with another person, or the origin, sponsorship, or approval of defendant's goods, services, or commercial activities by another person, that (5) has or will damage the plaintiff. 5 McCarthy on Trademarks and Unfair Competition § 27:13 (5th ed.).

         Under Section 43(a), “the ultimate test is whether public is likely to be deceived or confused by the similarity of the marks.” HTS, Inc. v. Boley, 954 F.Supp.2d 927, 942 (D. Ariz. 2013) (citing Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir.2008)); see also, Starbuzz Tobacco, Inc. v. Melnick, SACV 15 0224 DOC RNBX, 2015 WL 12656925, at *3 (C.D. Cal. July 31, 2015) (“Whether the violation is called infringement, unfair competition or false designation of origin, the test is identical -whether there is a likelihood of confusion.”) (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 781 (1992)); Celebrity Chefs Tour, LLC v. Macy's, Inc., 16 F.Supp.3d 1159, 1166 (S.D. Cal. 2014) (“[a] claim for false designation of origin is subject to the same standard, except a claim for false designation of origin does not require that the mark be registered.”) (internal quotation omitted). “The likelihood of confusion is the central element of trademark infringement, and the issue can be recast as the determination of whether ‘the similarity of the marks is likely to confuse customers about the source of the products.'” GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000) (quoting Official Airline Guides v. Goss, 6 F.3d 1385, 1391 (9th Cir.1993)).

         The Ninth Circuit has developed eight factors, the Sleekcraft factors, to analyze the likelihood of confusion: (1) the similarity of the marks; (2) the relatedness of the two companies' services; (3) the marketing channels used; (4) the strength of the plaintiff's mark; (5) the defendant's intent in selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion into other markets; and (8) the degree of care likely to be exercised by purchasers. Id. (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir.1979)). The eight-factor test is “pliant.” When the relevant marketing channel is the internet, the three Sleekcraft factors that are most relevant are: (1) the similarity of the marks; (2) the relatedness of the goods or services; and, (3) the “simultaneous use of the Web as a marketing channel.” Brookfield, 174 F.3d at 1055 n. 16 (citing Comp Exam'r Agency, Inc. v. Juris, Inc., 1996 WL 376600, *1 (C.D. Cal. Apr. 26, 1996)); but see Network Automation, Inc. v. Adv. Sys. Concepts, Inc., 638 F.3d 1137, 1148 (9th Cir. 2011) (“we did not intend Brookfield to be read so expansively as to forever enshrine these three factors…as the test for trademark infringement on the Internet … Depending on the facts of each specific case arising on the Internet, other factors may emerge as more illuminating on the question of consumer confusion.”)

         Plaintiff's complaint for violation of the Lanham Act based upon false designation of origin states a claim, establishes priority of use, and likelihood of confusion. Plaintiff alleges that Plaintiff developed and used the phrase “Battle on the Midway” to nationally and internationally promote a wrestling tournament presented by Plaintiff in 2016, primarily via the internet and social media. ECF No. 1 at ¶¶ 15, 19, 21-23. Plaintiff alleges that Defendants then used the phrase “Battle on the Midway” to nationally and internationally promote a wrestling tournament presented by “Tri Titans, ” a dba of Defendants, in 2017- also primarily via the internet. ECF No. 1 at ¶¶ 29-31. The Plaintiff's complaint establishes a claim for false designation of origin by showing use of the phrase “Battle on the Midway” as being presented by Tri Titans, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of Defendants with Plaintiff, or as to the origin, sponsorship, or approval of the Defendants' goods and services by Plaintiff. 15 U.S.C. 1125(a)(1)(A); see also PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1176 (C.D. Cal. 2002). Plaintiff also alleges damages in the form of lost sales, lost profits, loss of goodwill, and customer confusion. ECF No. 1 at ¶¶ 44-53.

         These admitted allegations of the complaint also establish ownership of the “Battle on the Midway” mark through Plaintiff's first use for the 2016 tournament, and establish likelihood of confusion as the identical mark is being used to promote an identical wrestling tournament, via the same social media and internet providers. These allegations easily satisfy the three most relevant Sleekcraft factors identified in Brookfield. Brookfield, 174 F.3d at 1055 n. 16.

         The facts of this specific case are also strongly influenced by the fifth Sleekcraft factor, Defendants' intent in selecting its mark, as “more illuminating on the question of consumer confusion.” Network Automation, Inc. v. Adv. Sys. Concepts, Inc., 638 F.3d at 1148. This factor weighs strongly in favor a finding of likelihood of confusion because both the timing of the events and use of the Plaintiff's own marketing channels (Facebook and Instagram) provides strong evidence that Defendants' intentionally aimed to confuse consumers into the belief that Defendants were the originators of the Battle on the Midway mark and tournament.

         The remaining Sleekcraft factors are also satisfied. The degree of care likely to be exercised by consumers as to the “presenter” of a wrestling tournament is low, and the occurrence of the event as put on by Defendants in 2017 is evidence of actual confusion. See ECF No. 37-1 at 12. Plaintiff has established a likelihood of confusion, and a claim under the Lanham Act. Likewise, Plaintiff adequately alleges an actual controversy exists regarding ownership of the mark and would be aided by judicial determination. See ECF No. 1 at 88-91.

         (b) California Business and Professions Code Violations & Common Law Trademark Claims

         The Ninth Circuit “has consistently held that state common law claims of unfair competition and actions pursuant to California Business and Professions Code § 17200 are ‘substantially congruent' to claims made under the Lanham Act.” Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994) (citing Academy of Motion Pictures Arts & Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir. 1991). “This also applies to common law trademark infringement claims.” Starbuzz Tobacco, Inc. v. Melnick, 2015 WL 12656925, at *4; see also, Grateful Palate, Inc. v. Joshua Tree Imports, LLC, 220 Fed.Appx. 635, 637 (9th Cir. 2007) (“California trademark law is ‘substantially congruent' to federal trademark law under the Lanham Act.”); Monte Carlo Shirt, Inc. v. Daewoo Intern. (Am.) Corp., 707 F.2d 1054, 1058 (9th Cir. 1983) (“A showing of likely buyer confusion as to the source, origin, or sponsorship of goods is part of a cause of action for infringement of a registered trademark, ” but also “applies to common-law trademark infringement claims brought under California law.”).

         Here, where Plaintiff's allegations as set forth above also establish priority of use and a likelihood of confusion sufficient to support a false designation of origin claim, Plaintiff has also established claims under California common law trademark law[4] and California Business and Professions Code §§ 17200[5] and 17500.[6]

         (c) Conversion

         Under California law, the elements of a conversion claim are (1) plaintiff's ownership or right to possession of the property at the time of the conversion; (2) defendants' conversion by a wrongful act or dispossession of plaintiff's property rights; and (3) damages. Miles, Inc. v. Scripps Clinic and Research Found., 810 F.Supp. 1091, 1094 (S.D. Cal. 1993).

         Plaintiff's complaint establishes Plaintiff's ownership and thus, right to possession of the “Battle on the Midway” mark, the websites and social media pages associated with the tournament, as well as apparel and profits derived from the 2016 tournament of which Defendants retained possession. ECF No. 1 at ¶¶ 13, 15-17, 23-25, 74-79.

         (d) Breach of Fiduciary Duty

         To state a claim for breach of fiduciary duty under California law, a plaintiff must allege (1) the existence of a fiduciary relationship; (2) breach of the fiduciary duty; and (3) damage proximately caused by that breach. Sunrider Corp. v. Bountiful Biotech Corp., SACV 08 1339 DOC AJWX, 2010 WL 11596235, at *5 (C.D. Cal. June 4, 2010) (citing Roberts v. Lomanto, 112 Cal.App.4th 1553, 1562 (2003)).

         Plaintiff alleges Mr. Le was a member of the member-managed limited liability corporation, Left Coast Wrestling, LLC. ECF No. 1 at ¶ 11. The Plaintiff's operating agreement is not a part of the record, but members of member-managed LLCs owe fiduciary duties of care and loyalty. Cal. Corp. Code § 17704.09 (a) (“The fiduciary duties that a member owes to a member-managed limited liability company and the other members of the limited liability company are the duties of loyalty and care under subdivisions (b) and (c)”); § 17701.10(c) (“an operating agreement shall not do any of the following… [e]liminate the duty of loyalty…[u]nreasonably reduce the duty of care…”). The duties of loyalty and care are enumerated by the California Corporations code as requiring members to “account to the limited liability company and hold as trustee for it any property, profit, or benefit derived by the member in the conduct … of the activities of a limited liability company” and “[t]o refrain from competing with the limited liability company in the conduct or winding up of the activities of the limited liability company.” Cal. Corp. Code § 17704.09 (b) (1, 3).

         Plaintiff adequately alleges that Mr. Le, at a minimum, retained entry fees and profits from the sale of apparel, all of which are alleged to have occurred during the time Mr. Le remained an active member of the LLC. ECF No. 1 at ¶¶ 11, 13, 23-26, 81-86.

         The undersigned finds the substantive merits of each claim are sufficiently stated, and this factor weighs in favor of entry of default judgment.

         3. Sum of Money at Stake in the Action

         This Eitel factor examines “the amount of money at stake in relation to the seriousness of Defendant's conduct.” PepsiCo, 238 F.Supp.2d at 1176. If the sum of money at stake is completely disproportionate or inappropriate, then default judgment is disfavored. Twentieth Century Fox Film Corp. v. Streeter, 438 F.Supp.2d 1065, 1071 (D. Ariz. 2006). When evidence is presented that shows the damages are “proportional to the harm caused” and “otherwise appropriate, ” this factor weighs in favor of entry of default judgment. Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F.Supp.2d 916, 921 (S.D. Cal. 2010) (damages consistent with terms of contract are appropriate); see also, Moroccanoil, Inc. v. Allstate Beauty Products, Inc., 847 F.Supp.2d 1197, 1202 (C.D. Cal. 2012) (judgment amount sought pursuant to statute, 15 U.S.C. § 1117, and “consistent with the allegations in the first amended complaint” weighs in favor of default judgment).

         Here, Plaintiff's complaint seeks both injunctive relief and damages under 15 U.S.C. § 1117.[7] See ECF No. 1. Plaintiff seeks damages in the amount of $232, 755.70. ECF No. 37-1 at 9. Damages are addressed in detail in subsequent sections, but this amount is reasonable and consistent with the allegations of the complaint. See also, Weeks v. Fresh-Pic Produce Co., Inc., 08CV02058 BTM WVG, 2012 WL 1815648, at *4 (S.D. Cal. May 17, 2012), amended in part, 08CV02058 BTM WVG, 2013 WL 990827 (S.D. Cal. Mar. 12, 2013) (“the sum of money that would be awarded is not unreasonable… the total damages award that the Court is willing to entertain [] pales in comparison to the three million dollars at issue in Eitel.”)

         4. Possibility of Dispute Concerning Material Facts

         By operation of default, the material allegations of the complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.”). Likewise, the District Judge dismissed, without leave to amend, Defendants' counterclaims. ECF No. 30 (“The Court construes their non-opposition as consent to the motion's being granted. … The Court deems their counterclaims abandoned, and DISMISSES them without leave to amend.”). Finally, Defendants have refused to participate in litigation and there is no indication Defendants intend to so. The possibility of dispute is therefore remote and this factor weighs in favor of default judgment.

         5. Whether Default was Due to Excusable Neglect

         There is no question that Defendants were properly served and are aware of the litigation, having answered the complaint and previously participated. See ECF Nos. 8, 14. Defendants' refusal to participate following the withdrawal of counsel and despite direction from the District Judge cuts against any finding of excusable neglect.

         6. Strong Policy Favoring a Decision on the Merits

         Finally, the strong policy favoring a decision on the merits is outweighed by the other factors. See Moroccanoil, Inc. v. Allstate Beauty Products, Inc.,847 F.Supp.2d 1197, 1203 (C.D. Cal. Mar. 2, 2012) (“Although default judgment is disfavored, a decision on the merits is impractical, if not impossible, when the defendant takes no part in the action”). Defendants have refused to respond, oppose, appear for deposition, or otherwise ...


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