Monster Energy Co. v. Vital Pharm.

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Monster Energy Company v. Vital Pharmaceuticals, Inc., et al.

No. EDCV 18-1882 JGB (SHKx)

United States District Court, C.D. California

April 12, 2023

Present: The Honorable JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE

CIVIL MINUTES-GENERAL

Proceedings Order (1) GRANTING Plaintiff's Motion for a Permanent Injunction (Dkt. No. 901); and (2) VACATING the April 24 2023 Hearing (IN CHAMBERS)

Before the Court is Plaintiff Monster Energy Company's (“Monster”) motion for permanent injunction against Defendants Vital Pharmaceuticals, Inc. (“VPX”) and John H. Owoc (“Owoc”) (collectively, “Defendants”). (“Motion,” Dkt. No. 901.) The Court determines this matter appropriate for resolution without a hearing. See Fed.R.Civ.P. 78; L.R. 7-15. Upon consideration of the papers filed in support of and in opposition to the Motion, the Court GRANTS the Motion and ENJOINS Defendants as set forth below. The Court VACATES the hearing set for April 24, 2023.

I. BACKGROUND

The parties are familiar with the extensive procedural and factual history of this case; the Court relates only the background necessary to understand the Motion.

On September 4, 2018, Monster initiated this action against Defendants Vital Pharmaceuticals, Inc. (“VPX”) and John H. Owoc (“Owoc”) (collectively, “Defendants”). (“Complaint,” Dkt. No. 1.) On April 3, 2019, Monster filed a first amended complaint. (“FAC,” Dkt. No. 61.) On May 20, 2019, the Court granted in part Defendants' motion to dismiss the FAC and dismissed Claim 4 and Claims 7 through 9. (“MTD Order,” Dkt. No. 95.)

On April 19, 2022, the Court (1) denied Monster's partial motion for summary judgment on its Lanham Act claim; (2) granted in part VPX's motion for summary judgment on the Lanham Act claim but only with respect to false statements about the '466 Patent, granted VPX's motion on Monster's intentional interference of prospective economic advantage claim, and denied VPX's motion on all other claims; and (3) granted Mr. Owoc's motion for summary judgment on Monster's claims for intentional interference of prospective economic advantage, and claims under the California Uniform Trade Secrets Act (“CUTSA”), Cal. Civ. Code § 3426, et seq., Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq., and Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq., against Mr. Owoc, and denied Mr. Owoc's motion for summary judgment as to the other claims. (“MSJ Order,” Dkt. No. 740.)

On August 25, 2022, a jury trial began on Monster's claims. (Dkt. No. 820.) On September 29, 2022, the jury returned a verdict for Monster. (“Verdict,” Dkt. No. 890.) Among other findings, the jury found that: (1) Defendants are liable for false advertising under the Lanham Act; (2) Monster shall be awarded $271,924,174 for damages sustained by Defendants' false advertising; and (3) Defendants' false advertising was willful and deliberate. (Id.)

On December 8, 2022, Monster filed the Motion. (See Motion.) In support, Monster filed the declaration of Sourabh Mishra with attached exhibits, (“Mishra Declaration,” Dkt. No. 902), as well as a proposed permanent injunction. (“PPI,” Dkt. No. 901-2.)

On January 23, 2023, VPX opposed. (“Opposition,” Dkt. No. 915.) In support, VPX filed the following documents:

. Declaration of Nolan Mitchell (“Mitchell Declaration,” Dkt. No. 915-1) with attached exhibits;

. Declaration of Rick Oberhofer (“Oberhofer Declaration,” Dkt. No. 916) with an attached exhibit;

. Declaration of Hal Gerson (“Gerson Declaration,” Dkt. No. 917) with an attached exhibit; and

. Proposed alternative injunction (“DPI,” Dkt. No. 915-35).

On the same day, Mr. Owoc joined VPX's Opposition. (“Joinder,” Dkt. No. 918.) On February 23, 2023, Monster replied. (“Reply,” Dkt. No. 925.) In support, Monster filed the declaration of Amber Munoz with attached exhibits. (“Munoz Declaration,” Dkt. No. 926.)

II. LEGAL STANDARD

Under the Lanham Act, a district court has the “power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable,” “to prevent a violation” under 15 U.S.C. § 1125(a) (“Section 1125(a)”). 15 U.S.C. § 1116(a) (“Section 1116(a)”). “A permanent injunction is an extraordinary remedy that may only be awarded upon a clear showing that the moving party is entitled to such relief.” Server Tech., Inc. v. Am. Power Conversion Corp., 2017 WL 2181101, at *3 (D. Nev. May 12, 2017) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam); see also Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165 (2010). To obtain a permanent injunction, the moving party must satisfy a four-factor test: (1) it has suffered irreparable injury; (2) remedies at law are inadequate; (3) the balance of hardships favors an equitable remedy; and (4) that the public interest would not be disserved by a permanent injunction. eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).

“The ‘traditional principles of equity' demand a fair weighing of the factors listed above, taking into account the unique circumstances of each case.” La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 880 (9th Cir. 2014). “As a general rule, a permanent injunction will be granted when liability has been established and there is a threat of continuing violations.” MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 520 (9th Cir. 1993). “[T]he decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts.” N. Cheyenne Tribe v. Norton, 503 F.3d 836, 843 (9th Cir. 2007).

III. DISCUSSION

The Court first considers whether Monster is entitled to a permanent injunction and second, whether the PPI is appropriately tailored to enjoin Defendants.

A. Irreparable Harm

Monster asserts that it has suffered irreparable harm because Defendants' false advertising has caused it to (1) lose customers, and (2) lose market share. (Mot. at 15.) Defendants contend that Monster has not shown irreparable harm because: (1) the harms are purely economic; (2) VPX “abandoned any marketing focus on Super Creatine or creatine” before the jury rendered its verdict; and (3) VPX's remediation obviates the need for an injunction. (Opp'n at 7.)

Under Section 1116(a) of the Lanham Act, a plaintiff who prevails on the merits of a Lanham Act claim “shall be entitled to a rebuttable presumption of irreparable harm.” 15 U.S.C. § 1116(a); Blumenthal Distrib., Inc. v. Comoch Inc., 2023 WL 2356713, at *11 (C.D. Cal. Jan. 24, 2023) (a “plaintiff seeking any injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of violation” under Section 1125(a) “in the case of a motion for a permanent injunction.”) Here, the jury found Defendants liable for false advertising, an element of which was injury to Monster and awarded Monster $271,924,174 in lost profits for sales through April 2022.^[1] (See “Jury Instructions,” Dkt. No. 889; Verdict at 1.) Given this finding, Monster is entitled to a “rebuttable presumption of irreparable harm.” Section 1116(a); see also Knature Co. v. Duc Heung Grp., Inc., 2021 WL 3913194, at *5 (C.D. Cal. July 2, 2021) (“Plaintiffs are entitled to a rebuttable presumption of irreparable injury-and therefore no adequate remedies at law-when they prove a violation of the Lanham Act.”). Defendants “may, upon a proper showing, overcome” this presumption and demonstrate lack of irreparable harm by showing “that the alleged injuries are purely pecuniary, or that [they] [] [have] ceased or will soon cease the infringing activities.” Kahala Franchising, LLC v. Real Faith, LLC, 2022 WL 1605377, at *4 (C.D. Cal. May 20, 2022).

1. Loss of Customers and Market Share

Defendants assert that Monster's claim that it will continue to lose prospective customers and suffer decreased market share are purely economic harms, not irreparable harm. (Opp'n at 7.) Monster disagrees and argues that loss of prospective customers and market share encompasses both intangible and incalculable harms. (Reply at 2.)

a. Customers

“Evidence of threatened loss of prospective customers or goodwill certainly supports a finding of the possibility of irreparable harm.” Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 841 (9th Cir. 2001) (affirming the district court's grant of preliminary injunction where district court found that plaintiff stood to “lose its newfound customers and accompanying goodwill and revenue”). Defendants argue that loss of prospective customers constitutes irreparable harm only where it threatens likely “intangible injuries,” “such as damage to ongoing recruitment efforts and goodwill.” (Opp'n at 8.) But loss of prospective customers is an intangible injury. Anhing Corp. v. Thuan Phong Co. Ltd., 2015 WL 4517846, at *23 (C.D. Cal. July 24, 2015) (“Evidence of intangible injury, such as a loss of customers or damage to a party's goodwill, can constitute irreparable harm.”); Am. Rena Int'l Corp. v. Sis-Joyce Int'l Co., 534 Fed.Appx. 633, 636 (9th Cir. 2013) (finding that district court did not abuse its discretion where it found that irreparable harm will likely result in the absence of preliminary injunction relief where plaintiff provided “evidence of threatened loss of customers or goodwill”) (internal alterations omitted); Open Text, S.A. v. Box, Inc., 36 F.Supp.3d 885, 906 (N.D. Cal. 2014) (the loss of customers as a result of infringing conduct may support a finding of irreparable harm).

Here Monster has presented “evidence of threatened loss of prospective customers.” Stuhlbarg Int'l Sales Co., 240 F.3d at 841. At trial, Monster offered evidence that Defendants' false advertising of Super Creatine affected Monster's ability to compete in the market, causing Monster to lose existing...