TRAVEL LEADERS GROUP, LLC and TZELL TRAVEL, LLC, Plaintiffs,
v.
GREG CORLEY, also known as Brian P. Sumwalt also known as Robert Gregory Corley also known as Aaron Dixon also known as Susi Feltch also known as Diane Bosch, and NORTH TEXAS TRAVEL GROUP LLC, d/b/a The Travel Group LLC Defendants.
No. 19-CV-1595 (GBD) (JLC)
United States District Court, S.D. New York
December 5, 2019
Honorable George B. Daniels, United States District Judge.
REPORT & RECOMMENDATION
JAMES L. COTT, United States Magistrate Judge.
On February 21, 2019, plaintiffs Travel Leaders Group, LLC and Tzell Travel, LLC filed a complaint alleging that defendants Greg Corley and North Texas Travel Group LLC, doing business as The Travel Group LLC, falsely advertised that they were affiliated with plaintiffs, engaged in unfair competition, and misappropriated plaintiffs' name or likeness. Defendants have failed to answer the complaint or otherwise appear in this action. Accordingly, on June 21, 2019, Judge Daniels entered a default judgment against defendants on the issue of liability and referred this matter to me for an inquest on damages. For the reasons set forth below, I recommend that plaintiffs' request for damages be denied but that a permanent injunction be entered against defendants. In addition, I do not
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recommend the award of attorneys' fees or costs, as the present case is not “exceptional” under 15 U.S.C. § 1117(a), and plaintiffs have not substantiated their costs. However, should the reviewing court disagree with this assessment and find the case to be “exceptional, ” I recommend an award of $11, 425.01 in fees and $400 in costs.
I. BACKGROUND
A. Facts
The facts presented below are summarized from the well-pleaded allegations of the February 21, 2019 complaint. In light of defendants' default, the Court accepts as true all well-pleaded allegations included in plaintiffs' complaint, except as to damages. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded factual allegations contained in the complaint.”) (quoting Vt. Teddy Bear Co., Inc., v. 1-900 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004)).
Plaintiff Travel Leaders Group, LLC (“TLG”) is a Delaware limited liability company with a home office address in Wilmington, Delaware and a principal executive office address in New York, New York. Complaint (“Compl.”), Dkt. No. 6, ¶ 5. TLG is a travel agency that provides services across the globe including, inter alia, “pricing, customization, travel management, negotiation, [and] personalized luxury travel.” Id. ¶ 17. Plaintiff Tzell Travel, LLC (“Tzell”) is a New York limited liability company headquartered in New York, New York with offices across 20
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states. Id. ¶ 7. As a subsidiary of TLG, Tzell is “one of TLG's most well-known and respected portfolio companies, providing personalized VIP, corporate, entertainment, and luxury travel services.” Id. ¶ 17. Tzell is also “ranked first among the nation's largest corporate travel management companies, according to Business Travel News.” Id. ¶ 7.
Defendant North Texas Travel Group LLC, doing business as The Travel Group (“The Travel Group”), is a Texas limited liability company purporting to offer travel services with a principal place of business in Dallas, Texas. Id. ¶ 8. Defendant Greg Corley, operating under many aliases, is an individual and registered agent of North Texas Travel Group LLC and a resident of Collin County, Texas. Id. ¶¶ 9-11.
On its website operating under the trade name The Travel Group LLC, the North Texas Travel Group LLC claims to have a “long time affiliation with the travel industry's leading luxury network, Tzell Travel Group” and to be a “Tzell Travel Group affiliate.” Id. ¶¶ 18-19. However, neither defendant has any affiliation with TLG or Tzell. Id. ¶ 20. In response to defendants' fraudulent claims and use of a “trade name substantially similar to TLG, ” plaintiffs served defendants with cease and desist demands on September 18, 2018 and January 9, 2019. Id. ¶¶ 21-22. Defendants did not respond to either demand. Id. ¶ 22.
B. Procedural History
On February 21, 2019, plaintiffs commenced this action under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and Texas common law. Id. ¶¶ 23-42. On
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March 6, 2019, plaintiffs filed affidavits of service establishing that they had served a copy of the summons and complaint on Greg Corley on February 26, 2019 (Dkt. No. 13) and on North Texas Travel Group LLC on February 28, 2019 (Dkt. No. 12).
Given that defendants did not answer or otherwise respond to the complaint, on May 7, 2019, plaintiffs requested an adjournment sine die of the initial pre-trial conference scheduled for the following day, which was granted on May 8, 2019. Dkt. Nos. 14, 17. In their May 7 letter, plaintiffs also informed the Court that they had notified both defendants via letters sent on April 30, 2019 of their intention to file a motion for default judgment. Id. Following plaintiffs' request, the Clerk of Court entered a certificate of default on May 13, 2019. Dkt. No. 20.
On June 4, 2019, plaintiffs submitted a motion for default judgment, accompanied by a declaration from plaintiffs' counsel, Adam C. Ford, Esq., and attached exhibits, requesting an award of damages “and such further relief as the Court deems just and proper.” Dkt. No. 21; Affidavit of Adam C. Ford dated June 4, 2019 (“Ford Aff.”), Dkt. No. 22. After defendants failed to answer, appear, or otherwise move with respect to the complaint, Judge Daniels entered a default judgment against them (Order dated June 21, 2019, Dkt. No. 24) and referred this case to me to conduct an inquest into damages (Order Referring Case to Magistrate Judge dated June 21, 2019, Dkt. No. 23). I then directed plaintiffs to file Proposed Findings of Fact and Conclusions of Law, supported by one or more affidavits, concerning all damages and any other monetary relief permitted under the entry of
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default by July 15, 2019. Scheduling Order for Damages Inquest dated June 21, 2019, Dkt. No. 25.
In their July 15, 2019 submission, plaintiffs did not include any affidavits. See Proposed Findings of Fact and Conclusions of Law (“FOF”) dated July 15, 2019, Dkt. No. 27. Additionally, plaintiffs' filing raised questions as to whether the Court could permissibly exercise personal jurisdiction over the non-appearing defendants, given that they are Texas-based entities. Order dated July 16, 2019, Dkt. No. 28 (citing Compl. ¶¶ 8-11). Accordingly, on July 16, 2019, I issued an order directing plaintiffs to file: (1) a sworn affidavit from someone with personal knowledge of the alleged misconduct, setting forth the facts which establish liability, the proposed damages amount, and the facts which establish that the Court has personal jurisdiction over defendants; (2) a sworn affidavit from counsel providing information on each attorney (year admitted to the bar, etc.) who worked on the case and their hourly rate, and why the No. of attorneys involved are entitled to the fees; and (3) documentary evidence justifying an award of costs. Id.
On July 23, 2019, plaintiffs filed their supplemental submissions, including two affidavits in support of their request for damages. Second Affidavit of Adam C. Ford dated July 23, 2019 (“Ford Supp. Aff.”), Dkt. No. 30; Affidavit of Sara Altschul dated July 23, 2019 (“Altschul Aff.”), Dkt. No. 29. Plaintiffs seek $300, 000 in statutory damages, $27, 587.29 in attorneys' fees and costs, and an injunction barring defendants from continuing to misappropriate defendants' name and likeness. Ford Supp. Aff. (Wherefore Clause); Altschul Aff. ¶¶ 8-11; FOF at 10.
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II. DISCUSSION
A. Personal Jurisdiction
1. Legal Standards
“Where a plaintiff's filings raise questions as to whether a district court may permissibly exercise personal jurisdiction over a non-appearing defendant, the court may consider sua sponte whether the plaintiff has set forth facts justifying the assertion of personal jurisdiction.” Hood v. Ascent Med. Corp., No. 13-CV-0628 (RWS) (DF), 2016 WL 1366920, at *6 (S.D.N.Y. Mar. 3, 2016), adopted by 2016 WL 3453656 (S.D.N.Y. June 20, 2016), aff'd, 691 Fed.Appx. 8 (2d Cir. 2017). See generally Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 213 (2d Cir. 2010) (“Because personal jurisdiction can be waived by a party, a district court should not raise personal jurisdiction sua sponte when a defendant has appeared and consented [. . .] to the jurisdiction of the court. But when a defendant declines to appear, [. . .] before a court grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over the defendant.”) (internal citation omitted).
In a federal question action like this one where the statute does not provide for nationwide service, the personal jurisdiction rules of the forum state apply. See Schentag v. Nebgen, No. 17-CV-8734 (GHW), 2018 WL 3104092, at *15 (S.D.N.Y. June 21, 2018) (citing PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997)). Accordingly, New York law applies.
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New York's long-arm statute provides that a court may exercise personal jurisdiction over any non-domiciliary who commits a tortious act outside of the state that causes injury to any person or property in New York if that entity “expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” CPLR § 302(a)(3)(ii). Jurisdiction under this provision has five elements:
(1) the defendant committed a tortious act outside New York (2) the cause of action arose from that act; (3) the tortious act caused an injury to a person or property in New York; (4) the defendant expected or should...
