United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT [RE: ECF
LABSON FREEMAN, UNITED STATES DISTRICT JUDGE
the Court is Plaintiffs' Motion for Default Judgment
(“Motion”). Motion, ECF 19. Defendant Chun has
not appeared in this action. The Court previously found this
matter suitable for submission without oral argument pursuant
to Civil Local Rule 7-1(b). ECF 26. For the reasons stated
below, Plaintiffs' Motion is GRANTED IN PART and DENIED
are Baskin-Robbins Franchising LLC and BR IP Holder LLC
(collectively, “Plaintiffs” or
“Baskin-Robbins”). Compl. ¶¶ 2-3, ECF
1. Defendant Alan A. Chun is an individual and the owner and
operator of a retail Baskin-Robbins shop located in the
County of San Mateo, California. Id. ¶ 4. This
action arises out of Chun's alleged failure to comply
with a franchising agreement between the parties.
Id. ¶ 1.
Franchising LLC is the franchisor of the Baskin-Robbins
franchise system. Compl. ¶ 11. BR IP Holder LLC owns the
Baskin-Robbins trademarks, service marks, trade dress, etc.,
including federal registrations for the mark
“Baskin-Robbins.” Id. ¶¶
12-13. In July 2017, Chun and Plaintiffs entered into a
Franchise Agreement that granted Chun a franchise to operate
a Baskin-Robbins restaurant in Foster City, California.
Id. ¶ 18; see also Franchise
Agreement, Ex. 1 to Compl. Under the Franchise Agreement,
Chun agreed to use Plaintiffs' proprietary marks only in
the manner and to the extent specifically licensed by the
agreement. See Franchise Agreement §§ 2.4,
9. Among other obligations, the Franchise Agreement required
Chun to pay a “Continuing Franchise Fee Rate” of
“5.9% of Gross Sales, ” and a “Continuing
Advertising Fee Rate” of “5.0% of Gross
Sales.” See Franchise Agreement
“Contract Data Schedule”; Compl. ¶ 21.
allege that Chun breached the Franchise Agreement “by
failing to pay the required fees, and/or other amounts owed
to Plaintiffs.” Compl. ¶ 26. On June 25, 2018,
Plaintiffs provided Chun with written notice of his material
defaults under the Franchise Agreement and fifteen days to
cure, as required by the Franchise Agreement. Id.
¶ 27; see also Notice to Cure, Ex. 2 to Compl.
The Notice to Cure set forth outstanding “Franchise and
Advertising Fees in the amount of $17, 157.56.” Notice
to Cure at 1. Chun failed to cure his alleged breaches of the
Franchise Agreement, and on August 27, 2018, Plaintiffs
provided Chun with a written notice of termination of the
Franchise Agreement. See Compl. ¶¶ 28-29;
see also Notice of Termination, Ex. 3 to Compl.
to the Complaint, Chun has continued to operate the
Baskin-Robbins restaurant in question, notwithstanding
Chun's non-performance under the Franchise Agreement and
Plaintiffs' subsequent termination of the Franchise
Agreement. Compl. ¶ 30. Arising out of these
allegations, Plaintiffs assert five causes of action against
Chun: (1) breach of contract (the Franchise Agreement); (2)
trademark infringement under federal and state law; (3)
unfair competition under federal law; (4) unfair competition
and false advertising under California law; and (5) trade
dress infringement. See generally Compl.
filed this lawsuit on September 6, 2018. See
generally Compl., ECF 1. Defendant was served with the
Complaint on September 10, 2018. See Certificate of
Service, ECF 9. The Clerk entered Default on October 19,
2018. See ECF 16. Defendant has not appeared in this
action, and Plaintiffs filed the instant Motion for Default
Judgment on December 19, 2018, see Motion, ECF 19.
an entry of default, Federal Rule of Civil Procedure 55(b)(2)
permits a court to enter default judgment against a defendant
who has failed to plead or otherwise defend. See
Fed. R. Civ. P. 55(a) and 55(b)(2). “The district
court's decision whether to enter a default judgment is a
discretionary one.” Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980). In exercising its discretion to
enter default judgment, a district court considers seven
factors set forth by the Ninth Circuit in Eitel v.
McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986)
(“Eitel 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 dispute concerning material facts; (6)
whether default was due to excusable neglect; and (7) the
strong policy underlying the Federal Rules of Civil Procedure
favoring decisions on the merits.
default, all factual allegations in the complaint are taken
as true, except those relating to damages. TeleVideo
Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir.
1987). Federal Rule of Civil Procedure 54(c) provides that
“[a] default judgment must not differ in kind from, or
exceed in amount, what is demanded in the pleadings.”
Fed.R.Civ.P. 54(c). “The purpose of this rule is to
ensure that a defendant is put on notice of the damages being
sought against it so that he may make a calculated decision
as to whether or not it is in his best interest to
answer.” See Alameda County Elec. v. Banister
Elec., Inc., 2012 WL 3042696, at *1 (N.D. Cal. July 25,
2012) (citing In re Ferrell, 539 F.3d 1186, 1192-93
(9th Cir. 2008); Board of Trustees v. Total Air Balance
Co., 2009 WL 1704677, at *3-5 (N.D. Cal. June 17,
plaintiff is seeking money damages, the plaintiff must
“prove-up” her damages. See Orange County
Elec. Indus. v. Moore Elec. Contracting, Inc., 2012 WL
4120348, at *3 (N.D. Cal. Sept. 18, 2012). In other words,
the plaintiff must “provide evidence of its damages,
and the damages sought must not be different in kind or
amount from those set forth in the complaint.”
Id. (internal quotation and citation omitted).
“In order to ‘prove up' damages, a plaintiff
is generally required to provide admissible evidence
(including witness testimony) supporting damage
calculations.” Cannon v. City of Petaluma,
2011 WL 3267714, at *2 (N.D. Cal. July 29, 2011).
entry of judgment is sought against a party who has failed to
plead or otherwise defend, a district court has an
affirmative duty to look into its jurisdiction over both the
subject matter and the parties.” In re Tuli,
172 F.3d 707, 712 (9th Cir. 1999). The Court discusses in
turn jurisdiction and service of process, the Eitel
factors, and Plaintiffs' requested relief. For the
reasons discussed below, Plaintiffs' motion for default
judgment is GRANTED IN PART and DENIED IN PART.
JURISDICTION AND SERVICE OF PROCESS
addressing the merits, the Court must first address its
jurisdiction to enter default judgment against Mr. Chun.
Subject matter jurisdiction is indisputably available under
28 U.S.C. §§ 1331, 1338, and 1367(a). This action
arises under the Lanham Act, 15 U.S.C. §§ 1051
et seq., and presents federal questions of trademark
infringement and unfair competition. The Court has
supplemental jurisdiction over Plaintiffs' related state
law claims pursuant to 28 U.S.C. § 1367. The Court must
also have personal jurisdiction over a defendant, or else the
entry of default judgment is void. Veeck v. Commodity
Enterprises, Inc., 487 F.2d 423, 426 (9th Cir. 1973).
Here, as discussed below, the Court is satisfied that (1)
this Court has personal jurisdiction over Mr. Chun because he
is a resident of this District, conducted business in this
District, and the events giving rise to Plaintiffs'
claims occurred in this District, and that (2) Mr. Chun has
been properly served.
Court is bound to follow state law in determining the bounds
of its jurisdiction over parties. See Fed. R. Civ.
P. 4(k)(1)(A); Diamler AG v. Bauman, 571 U.S. 117,
125 (2014). California's “long arm” statute
states that “[a] court of this state may exercise
jurisdiction on any basis not inconsistent with the
Constitution of this state or of the United States.”
Cal. Code Civ. Proc. § 410.10. California's long arm
is thus coextensive with the federal standard. Residency
within the state is sufficient to establish general personal
jurisdiction within the forum state, as are minimum business
contacts. Burnham v. Superior Court, 495 U.S. 604,
610-11 (1990); International Shoe Co. v. State of
Washington, Office of Unemp. Compensation &
Placement, 326 U.S. 310, 316 (1945). The Court is
satisfied that personal jurisdiction exists over Mr. Chun.
Plaintiffs' complaint indicates that Mr. Chun is a
California resident operating a business in Foster City,
California. Compl. ¶¶ 9, 18a. In personam
jurisdiction is thus appropriate.
Service of Process
federal court is without personal jurisdiction over a
defendant unless the defendant has been served in accordance
with Federal Rule of Civil Procedure 4.” Travelers
Cas. & Sur. Co. of Am. v. Brenneke, 551 F.3d 1132,
1135 (9th Cir. 2009). Rule 4 is “flexible” and
“should be liberally construed so long as a party
receives sufficient notice of the complaint.”
United Food & Comm. Workers Union v. Alpha Beta
Co., 736 F.2d 1371, 1382 (9th Cir. 1984). What is
required is “substantial compliance” with Rule 4,
with “neither actual notice nor simply naming the
defendant in the complaint” being sufficient.
Direct Mail Specialists, Inc. v. Eclat Computerized
Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988) (quoting
Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986),
cert. denied, 484 U.S. 870 (1987)).
Court is satisfied that Plaintiffs have substantially
complied with Rule 4. A Notice to Cure the breach of the
Franchise Agreement was served to Mr. Chun at his place of
business. Notice to Cure, Ex. 2 to Compl., ECF 1. A Notice of
Termination was served to Mr. Chun on August 28, 2018, at his
place of business. Notice of Termination, Ex. 3 to Compl. The
Clerk of Court issued a summons on September 10, 2018. ECF 7.
On September 10, 2018, Plaintiffs personally served Mr. Chun
with the summons, complaint, and additional documents.
See Certificate of Service, ECF 9. Accordingly,
Plaintiffs have met the service of process requirements by
substantial compliance with Rule 4.
EITEL FACTORS AS APPLIED TO EACH CAUSE OF
each cause of action, a plaintiff must sufficiently plead
allegations for each element. See Golden West v.
Bartley, 2017 WL 2335602, at *7 (N.D. Cal. May 30,
2017). The Court thus examines each cause of action in light
of the Eitel factors to determine whether default
judgment is appropriate.
Merits of Plaintiffs' Claims and Sufficiency of the
Breach of Contract
claim for breach of contract is comprised of a contract,
plaintiff's performance or excuse for nonperformance,
defendant's breach, and the resulting damages to
plaintiff.” Yelp Inc. v. Catron, 70 F.Supp.3d
1082, 1099 (N.D. Cal. 2014) (citing Careau & Co. v.
Sec. Pac. Bus. Credit, Inc., 222 Cal.App.3d 1371, 1388
(1990)). Here, Chun entered into a franchise agreement with
Baskin-Robbins on or about July 26, 2017. Compl. ¶ 18.
Baskin-Robbins licensed Mr. Chun to use the Baskin-Robbins
trademark, trade name, and trade dress under the terms of the
Franchise Agreement. Id. ¶ 19. Plaintiffs claim
performance of all ...