Nobriga v. La Kumbala Lounge & Rest.

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Alyssa Nobriga, et al., Plaintiffs, v. La Kumbala Lounge & Restaurant, Inc., et al., Defendants.

No. 7:23-CV-00005-M

United States District Court, E.D. North Carolina, Southern Division

May 23, 2024

MEMORANDUM & RECOMMENDATION

Robert T. Numbers, II United States Magistrate Judge.

This matter is before the court on Plaintiffs' motion for default judgment. They claim that Defendants La Kumbala Lounge & Restaurant, Inc., and Sergio Umana Portillo have failed to defend against the case. Defendants did not respond to Plaintiffs' motion.

Plaintiffs filed a Complaint, which the Defendants did not answer. D.E 1. Plaintiffs moved for an entry of default, which the court granted. D.E. 25, 29. Plaintiffs now move for default judgment on four of the eight claims alleged in the Complaint. D.E. 33. They contend that default judgment is the suitable relief for the Defendants' failure to appear plead, or otherwise defend against their claims.

After considering the record, the undersigned concludes that the Plaintiffs have shown they are entitled to the relief they seek. The Defendants have not refuted the Plaintiffs' evidence on their claims for false advertisement, false association, misappropriation, and unfair and deceptive trade practices.

The undersigned finds that default judgment on four of the claims is the appropriate relief to address the Defendants' disregard of the case. Their default by failing to appear plead, or otherwise defend against the action by responding to the Complaint and Summonses prejudices the Plaintiffs, the judicial process, and the administration of justice. The Defendants have created a situation that warrants default judgment against them.

I. Background

Plaintiffs are twelve professional models. Compl. ¶ 30, D.E. 1. Each Plaintiff earns her livelihood licensing her identity, image, and likeness (collectively “Images”) advertising products and services. Id.

The modeling industry places value on the Plaintiffs professional reputation for modeling, a critical factor to booking contracts and establishing their individual brands. Id. ¶ 31. To maintain and further their brands, each Plaintiff is selective in selecting the companies and brands for which they model. Id.

A professional model's agency negotiates her fee. Id. ¶ 85. This involves consideration of the reputation and experience, how the client will use the images (“usage”), and how long the client may use the images (“term”). Id. Most terms are from one to three years, and lifetime terms rarely occur. Id. ¶ 86.

Defendant La Kumbala Lounge & Restaurant, Inc. owned La Kumbala Lounge & Restaurant (“Kumbala” or the “Club”), a restaurant and night club in Wilmington, North Carolina. Id. ¶ 25. Defendant Sergio Portillo is the corporation's President. Id. ¶¶ 9, 26.

The Defendants owned, operated, and controlled the Club's social media accounts, including Kumbala Facebook, Twitter, and Instagram accounts. Id. ¶¶ 75, 76. It used these accounts to post advertisements for the Club. Id. Many of its advertisements contained images of the Plaintiffs, which the Defendants had misappropriated and altered to make it appear that the Plaintiffs worked at or endorsed the Club. Id. ¶¶ 32, 39, 42, 45, 48, 51, 54, 57, 60, 63, 66, 69, 72. For each Plaintiff, such appearance was false, and occurred without any Plaintiff's knowledge, consent, or authorization, and without remuneration to any Plaintiff. Id. ¶¶ 33, 34, 78, 79, 81.

Plaintiffs filed suit against the Defendants for false advertising, false association, misappropriation, unfair and deceptive trade practices.^[1] It seeks compensatory and punitive damages and injunctive relief.

Plaintiffs served the Complaint and Summonses on the Defendants. But the Defendants did not respond. So the Plaintiffs moved for an entry of default against them. D.E. 25. Defendants did not respond to that motion, and the Clerk of Court entered default against them. D.E. 29.

Plaintiffs have moved the court to enter default judgment against Defendants. D.E. 33. They maintain that the Defendants have disregarded this litigation. Id. And Plaintiffs request attorneys' fees and costs associated with the motion. Id.

II. Analysis

Plaintiffs ask the court to enter default judgment against Defendants for failing to appear, respond, and defend against the action. Defendants filed no response. The court should grant the Plaintiffs' motion because the Defendants have not appeared in, responded to, or defended this action and all the requirements for entry of default judgment are satisfied. And the Plaintiffs have shown entitlement to relief on four claims asserted in their Complaint.

A. Jurisdiction

1. Subject Matter

The court has subject matter jurisdiction over this dispute pursuant to 28 U.S.C. § 1331 because Plaintiffs' bring their false advertising and false association claims the Lanham Act, 28 U.S.C. § 1125(a)(1). Under 28 U.S.C. § 1367(a), the court has supplemental subject matter jurisdiction over their claims for common law misappropriation claim and the unfair and deceptive trade practices claim under state law. See N.C. Gen. Stat. § 75-1.1 et seq. And it is appropriate to exercise supplemental jurisdiction because these two claims “derive from [the same] common nucleus of operative fact” as the federal claims. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966).

2. Personal Jurisdiction

The court has personal jurisdiction over Defendant La Kumbala Lounge & Restaurant, Inc. because it is a corporation formed under North Carolina laws with its principal place of business in North Carolina. Compl. ¶ 7. The corporation operates La Kumbala Lounge & Restaurant, located in Wilmington, North Carolina. Id. ¶ 8. Defendant Sergio Amana Portillo is the president of the corporation. Id. ¶ 9.

The Defendants were served with the Complaints and Summons in February 2023. D.E. 17, 18, 26, 27. Defendants have answered, responded, or otherwise moved against the Complaint. To the extent that the Defendants could have maintained any defense to personal jurisdiction, they have waived any such defense by their litigation conduct. See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982).

B. Motion for Default Judgment

The Federal Rules allow the court to enter default judgment upon a party has defaulted by failing to appear, plead, or defend. Fed.R.Civ.P. 55(b). Rule 55 sets forth the process for obtaining such relief.

The Fourth Circuit has noted there is a strong interest in merits-based adjudications. Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Ci. 2010). Here, though, Defendants' total indifference to the action has undermined that “strong interest.” They have failed to appear, answer or defend against the Complaint, or respond to the pleadings.

Defendants unresponsiveness and refusal to participate in the litigation has halted the adversary process. SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). In sum, Defendants' inaction extinguishes the prospect of a merits-based adjudication. This warrants the entry of default judgment against them.

1. Entry of Default

“Prior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a).” 10A Charles Alan Wright, et al., Federal Practice & Procedure § 2682 (4th ed. 2023); Ironhorse v. Stomel, No. 7:21-CV-27-D, 2022 WL 495191, at *2 (E.D. N.C. Jan. 19, 2022). “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a).

Plaintiffs served the Complaint and Summonses on the Defendants. D.E. 15-18. As noted above, Defendants entered no appearance and did not plead or otherwise respond to the Complaint. In support of their motion for entry of default, Plaintiffs submitted a Declaration from Stephen Chamberlin setting forth their claimed damages. D.E. 33-1. The Clerk of Court entered default against the Defendants. D.E. 29.

2. Default Judgment

Once default has been entered, a party may seek a default judgment. Fed.R.Civ.P. 55(b). The “interlocutory entry of default pursuant to Federal Rule of Civil Procedure 55(a) provides notice to the defaulting party prior to the entry of default judgment by the court.” Epic Tech, LLC v. Raleigh Startup Sols. LLC, No. 5:23-CV-136-D, 2023 WL 9051298, at *6 (E.D. N.C. Dec. 29, 2023) (quoting Hummel v. Hall, 868 F.Supp.2d 543, 547 (W.D. Va. 2012)).

Here, the Defendants have not made an appearance or responded to the Complaint. The Clerk entered default against them. Plaintiff seek default judgment on four claims in their Complaint. And the undersigned finds Plaintiffs are entitled to that relief.

C. The Complaint Supports the Relief Plaintiffs Seek

After the entry of default, the well-pleaded factual allegations in the complaint are considered admitted. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Having determined that it is appropriate to enter a default judgment against a defendant, a court must ensure that, as a factual matter, the plaintiff is entitled to judgment in its favor. This requires a determination of “whether the well-pleaded allegations in [the operative] complaint support the relief sought.” Id. If facts as alleged in the Complaint entitle Plaintiffs to relief, Defendants, by their default, cannot now controvert them successfully. See Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 64 (2d Cir. 1971), rev'd on other grounds, Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363 (1973).

1. Findings of Fact

The undersigned finds the verified, unchallenged Complaint...