Blumenthal Distrib. v. Gamesis, Inc.

BLUMENTHAL DISTRIBUTING, INC. dba OFFICE STAR, a California Corporation, Plaintiff, v. GAMESIS, INC., a suspended California corporation, and TONY S. CHENG, an individual, Defendants.

No. 5:22-cv-01307-SPG-JC

United States District Court, C.D. California

December 12, 2022

ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [ECF NO. 21]

HON SHERILYN PEACE GARNETT UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Blumenthal Distributing, Inc. d/b/a Office Star's (“Plaintiff”) motion for default judgment against Defendants Gamesis, Inc. and Tony S Cheng (together “Defendants”). (ECF No. 21). Defendants did not oppose the motion and have not otherwise appeared in this action. The Court has read and considered the matters raised with respect to the motion and concluded that this matter is suitable for decision without oral argument. See Fed.R.Civ.P. 78(b); Local Rule 7-15. Having considered Plaintiff's submission, the relevant law, and the record in this case, the Court GRANTS Plaintiff's motion.

I. BACKGROUND

A. Factual Background

The following facts are alleged in the Plaintiff's Complaint and are taken as true due to the entry of default against Defendants:

Plaintiff is an importer and distributor of office furniture, including office chairs. (ECF No. 1 (“Compl.”) ¶ 10). Plaintiff protects its brands, including the “Office Star” brand, in part through trademark registration of key marks. (Id. ¶¶ 11-13). For instance, Plaintiff has registered its “Office Star” name and logo. (Id. ¶¶ 13-14). As a part of its distribution network, Plaintiff began a relationship with Defendants in mid-2013 whereby Defendants would sell Plaintiff's office chairs on its website and then have Plaintiff deliver them. (Id. ¶ 15). As a part of this relationship, Plaintiff informally gave Defendants permission to use the name “Office Star” in its domain name officestarstore.com. (Id. ¶ 16). However, Plaintiff never gave Defendants permission to use the trademarked Office Star logo, nor did it give Defendants permission to describe Gamesis as an “Authorized Office Star Dealer.” (Id. ¶¶ 17-18).

In 2017, Plaintiff discovered that Defendants were using the Office Star logo, a registered trademark, on the website at officestarstore.com and were describing Gamesis as an “Authorized Dealer.” (Id. ¶ 20). Plaintiff then wrote a letter to Defendants directing them to remove “all copyrighted images and product descriptions from your site within ten days of this letter.” (Id. ¶ 21). The letter also informed Defendants that the informal sales relationship was over and gave Defendants a short period to wind down their sale of Plaintiff's products. (Id. ¶¶ 21-22). Plaintiff processed the final legitimate order from Defendants in January 2018. (Id. ¶ 22).

However, around March 2022, an individual who had ordered an “Office Star” chair on Defendants' website, officestarstore.com, contacted Plaintiff to inquire about the status of the chair she had ordered. (Id. ¶ 23). She stated that Defendants informed her there were shipping delays with her order but that it would be fulfilled. (Id.). Plaintiff proceeded to investigate Defendants' website and learned that Defendants continued to hold Gamesis out as an “Authorized Dealer” of Plaintiff's chairs. (Id. ¶ 24). Plaintiff also discovered that Defendants were using Plaintiff's Office Star mark and logo to sell office chairs. (Id.). Further investigation revealed that multiple customers had been deceived into placing orders for Office Star products from Defendants' website and had never received them despite paying Defendants for the goods. (Id. ¶ 25). Plaintiff alleges this practice by Defendants confused consumers and damaged Plaintiff's reputation. (Id. ¶¶ 27-28). Plaintiff specifically states that Defendants' representations that Plaintiff was experiencing issues with quality control or shipping further damaged Plaintiff's reputation in the eyes of consumers. (Id.). Plaintiff alleges that Defendants' continued use of Plaintiff's registered marks was willful and was intended “to free ride on the goodwill” associated with Plaintiff's marks. (Id. ¶ 32).

B. Procedural History

Plaintiff filed the Complaint in this action on July 25, 2022. (ECF No. 1). While Plaintiff initially struggled to adequately serve Defendants, on August 23, 2022, Defendant Gamesis filed an updated statement with the California Secretary of State listing Defendant Cheng as its agent and 324 S. Diamond Bar Blvd., # 197, Diamond Bar, CA 91765 as its address. (ECF No. 21-1 at 14, n.5). Plaintiff then served Defendants at the new address on August 24, 2022. (ECF Nos. 12, 13). On September 26, 2022, after Defendants failed to answer or otherwise respond to the Complaint, Plaintiff filed a request for entry of default. (ECF No. 15). The clerk entered default as to both Defendants on September 28, 2022. (ECF No. 18). On October 13, 2022, Plaintiff filed the instant motion for default judgment, which Defendants have not opposed. (ECF No. 21).

II. LEGAL STANDARD

A court may order default judgment following the entry of default by the Clerk of Court pursuant to Federal Rule of Civil Procedure 55(b). Fed.R.Civ.P. 55(b). Generally, after the Clerk enters default, the defendant's liability is conclusively established, and the well-pleaded factual allegations in the complaint are accepted as true, except those pertaining to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). To determine damages, a court may rely on the declarations submitted by the plaintiff or order a full evidentiary hearing. Fed.R.Civ.P. 55(b)(2). Additionally, “[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).

Before a court can enter a default judgment against a defendant, the plaintiff must comply with the procedural requirements set forth in Federal Rules 54(c) and 55, as well as those in Local Rule 55-1. Local Rule 55-1 requires the party moving for default judgment to submit a declaration establishing: (1) when and against which party default was entered; (2) identification of the pleading to which default was entered; (3) whether the defaulting party is a minor or incompetent person; (4) that the Servicemembers Civil Relief Act, 50 U.S.C. § 3931, does not apply; and (5) that the defaulting party was properly served with notice, if required under Federal Rule 55(b)(2). C.D. Cal. L.R. 55-1.

If these procedural requirements are satisfied, a district court has discretion to enter a default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). That a defendant has defaulted “does not automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002). Instead, the court, in its discretion, considers several factors, colloquially known as the “Eitel factors.” The Eitel factors ask courts to weigh: (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 favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

III. DISCUSSION

“When 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 parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The Court therefore examines jurisdiction and service of process in addition to the Eitel factors.

A. Jurisdiction

1. Subject-Matter Jurisdiction

Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). However, district courts have subject-matter jurisdiction over civil actions arising under federal law. 28 U.S.C. § 1331. Furthermore, where such “federal question” jurisdiction exists, courts may exercise supplemental jurisdiction over any state law claims that “derive from a common nucleus of operative fact.” City of Chicago v. Int'l Coll. Of Surgeons, 522 U.S. 156, 157 (1997) (citing United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966)).

Here, Plaintiff asserts claims for federal trademark infringement and counterfeiting, federal unfair competition, and violation of the federal anticybersquatting consumer protection act, in addition to several state law claims. (ECF No. 1). The Court has subject matter jurisdiction under section 1331 over each of Plaintiff's claims arising under federal law. Additionally, the Court may exercise supplemental jurisdiction over Plaintiff's state law claims because they arise out of the same nucleus of operative fact. All the claims relate to Defendants' use of Plaintiff's marks and goods in falsifying online sales. See (ECF No. 1 ¶¶ 37-77). Therefore, the Court may properly exercise subject matter jurisdiction in this action.

2. Personal Jurisdiction

A court may exercise general personal jurisdiction over a corporation that is fairly regarded as “at home” in the forum state. Bristol-Meyers Squibb Co. v. Superior Court 137 S.Ct. 1773, 1779-80 (2017). A corporation is considered to be “at home” in both its “place of incorporation and principal place of business.” Daimler AG v. Baumann, 571 U.S. 117, 137 (2014). Likewise, a court has general jurisdiction over an individual defendant where a defendant is domiciled in the forum state or his activities there are “substantial” or “continuous and systematic.” Panavision Intern.. L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998) (quoting Helicopteros...