Volkswagen Grp. of Am. v. Varona

VOLKSWAGEN GROUP OF AMERICA, INC., et al., Plaintiffs, v. ANDY VARONA, et al., Defendants.

CASE NO. 19-24838-CIV-GOODMAN [CONSENT CASE]

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION

January 25, 2021

ORDER ON PLAINTIFFS' SUMMARY JUDGMENT MOTION

Plaintiffs allege that Defendants sold counterfeit Audi wheel sets through Defendants' eBay store, and, in doing so, infringed on Plaintiffs' trademark and design patent rights. Defendant Varona denies operating the eBay store (despite overwhelming evidence to the contrary), but he also contradicts this outright denial to say that the wheel sets Defendants sell on eBay are not infringing on Audi's trademarks and design patent. Plaintiffs filed a summary judgment motion, Defendant filed an opposition response, and Plaintiffs filed a reply. [ECF Nos. 65; 70; 73].

For the reasons outlined below, the Court grants in part Plaintiffs' motion for summary judgment on Counts I-IV for Defendants' sale of the counterfeit wheel set to Plaintiffs' investigator. The issue of damages (including for any additional wheel sets) will be addressed during the scheduled bench trial.

I. Background

A. Complaint

Plaintiffs, Volkswagen Group of America, Inc. and Audi AG, filed an amended verified complaint against Defendants Andy Varona and Verotec Wheels, Inc. [ECF No. 41]. Plaintiffs allege that in June 2019, "Plaintiffs were informed that Defendants were suspected of operating a counterfeiting ring, and importing and selling counterfeit parts and accessories bearing the Audi Trademarks in the United States." Id. at p. 6. Thus, Plaintiffs began an investigation of Defendants. Id. As discussed further below in the undisputed material facts, Plaintiffs' investigator purchased a wheel set, which was advertised as a new Audi wheel set, from Defendants and confirmed that it was counterfeit. Id. at pp. 6-8.

Plaintiffs allege the following counts against Defendants: Count I: Trademark Infringement and Counterfeiting under 15 U.S.C. § 1114; Count II: False Designation of Origin or Sponsorship and False Advertising under 15 U.S.C. § 1125(a); Count III: Trademark Dilution under 15 U.S.C. § 1125(c); and Count IV: Infringement of United States Design Patent No. D721,028 S.

Plaintiffs seek the entry of a permanent injunction against Defendants, an award of statutory damages, and recovery of attorney's fees and costs.

B. Varona's Sham Declaration

In an attempt to overcome the overwhelming evidence presented in Plaintiffs' statement of materials facts in support of their motion for summary judgment, Defendants submitted the Declaration of Andy Varona. The declaration is clearly a failed attempt to muddy the factual record and create disputed questions of fact. The declaration is contradictory to Varona's deposition testimony, and relies on no support other than Varona's own statements and his own supplemental unverified answers to interrogatories.

"When a party has given clear answers to unambiguous questions which negate the existence of any genuine issue of material fact, that party cannot thereafter create such an issue with an affidavit that merely contradicts, without explanation, previously given clear testimony." Bentley Motors Corp. v. McEntegart, 976 F. Supp. 2d 1297, 1307 (M.D. Fla. 2013) (citing Van T. Junkins and Assocs., Inc. v. U.S. Indus., Inc., 736 F.2d 656, 657 (11th Cir. 1984)). The Eleventh Circuit finds such affidavits to be "'shams,' and, although a court should not reject an affidavit merely because it is at odds with statements made in an earlier deposition, the court need not give credence to an affidavit that contradicts previous testimony without any valid explanation or clarification." Id.

Here, there are multiple instances where Varona contradicts prior testimony without any valid explanation or clarification.

In his declaration, Varona claims that "any ownership of or interest in any onlinestore bearing that name does not belong to me," and "Defendants do not have an eBay account." [ECF No. 70-1, ¶¶ 4-5]. However, Mr. Varona testified during his deposition that he (through his corporation Verotec Wheels) sells "cars, wheels, tires, racing cars, and some automotive racing equipment" that he gets from distributors on eBay through his username "OEM Wheels Direct." [ECF Nos. 66-5, pp. 8-9; 1-4, p. 2; 66-5, pp. 28 (deposition testimony from Varona stating that his CPA filed an application for registration of fictitious name "OEM Wheels Direct" to be in compliance with eBay's requirement that user names be registered as fictitious names), p. 38 ("[T]his is the PayPal account where you received money for the goods you sold on eBay under the user name OEM Wheels Direct? A. Correct.")].

Varona also claims in his declaration that "Tech Designs" is responsible for creating the descriptions on the eBay page; however, during his deposition he testified that he provides the description to "Tech Designs" and that "[b]oth of us post listings." See ECF No. 66-5, p. 47.

Finally, Varona's statement in his declaration that he was not aware that Audi wheels were being listed for sale is contradicted both by his later statement in the declaration that he was aware of one item that was offered for sale and by his earlier deposition testimony. See ECF Nos. 66-5, pp. 3-4; 66-5, p. 106:5-12 ("Q. Have you ever listed Audi wheels? A. They've listed Audi wheels as in my IT department, yes."). And, as detailed below, Plaintiffs provided screenshots of an eBay listing for an "Audi" wheelset from "OEM Wheels Direct." Plaintiffs' investigator, Michael Jaczewski, purchased the wheel set and Russell Trowbridge, Manager of Audi Parts, and confirmed they were counterfeit goods. [ECF Nos. 66-10, p. 2; 66-14].

Accordingly, Varona's declaration does not need to be considered because it is a sham declaration. See Santhuff v. Seitz, 385 F. App'x 939, 945 (11th Cir. July 6, 2010) (finding district court did not err in rejecting as a sham the affidavit of a non-party witness, and explaining that "we see no reason, however, to refuse to apply the sham rule" under the facts and noting that "a sham is a sham"); see also Liebman v. Metropolitan Life Ins. Co., 708 F. App'x 979 (11th Cir. Sept. 8, 2017) (affirming order excluding inconsistent paragraphs of employee's declaration under the sham affidavit rule). See generally Adelman-Tremblay v. Jewel Cos., 859 F.2d 517, 521 (7th Cir. 1988) (internal citation omitted) ("The purpose of summary judgment motions—to weed out unfounded claims, specious denials, and sham defenses—is served by a rule that prevents a party from creating issues of credibility by allowing one of its witnesses to contradict his own prior testimony.").¹

However, in an abundance of caution, the Court still considered the declaration to the extent that Varona's statements did not contradict prior statements and when reviewing Defendants' response to Plaintiffs' statement of material facts.

C. Undisputed Material Facts

The following facts are undisputed unless otherwise noted. The numbered paragraphs correspond to the numbered paragraphs in Plaintiffs' Statement of Undisputed Material Facts. [ECF No. 66].

1. Plaintiff Audi AG ("Audi") is a world-famous automobile manufacturer that sells Audi automobiles and genuine parts and accessories through a network of licensed Audi dealerships. In addition to the physical car lots operated by its licensees, Audi also operates various websites, including without limitation parts.audiusa.com, through which consumers can purchase genuine Audi parts, Audi wheels, automotive accessories, and Audi-branded merchandise directly from Audi.

2. Under agreement with Audi, Plaintiff Volkswagen Group of America, Inc. ("VWGoA") polices and enforces Audi's trademarks in the United States.

3. Audi uses its trademarks in connection with the marketing of Audi vehicles, accessories, parts, and Audi-branded merchandise. Audi is the owner of numerous federally-registered trademarks for automobiles, parts, accessories, and a long list of related services and merchandise, including the sample attached to the Verified Complaint, collectively referred to as the "Audi Trademarks."

4. Audi's world-famous and distinctive trademarks symbolize the Audi brand and its marketability, reputation, and goodwill. Audi first registered AUDI® as a trademark with the United States Patent and Trademark Office (or "USPTO") in 1960(U.S. Reg. No. 0,708,352) and has subsequently obtained numerous other registrations for that mark. Audi first registered the AUDI RINGS® trademark with the USPTO in 1971 (U.S. Reg. No. 0,906,525) and has also obtained numerous other registrations for that mark. True and correct "status" copies of the Audi Trademark registrations, obtained from the Trademark Status Document Retrieval (TSDR) database of the United States Patent and Trademark Office, are attached to the Verified Amended Complaint as Exhibit 2. (ECF No. 1-2). Audi's registrations for the Audi Trademarks are valid, unrevoked, subsisting, and many are incontestable.

5. Audi extensively and continuously uses the Audi Trademarks on advertisements, vehicles, automobile accessories, apparel, and other products to identify the source of Audi's goods and services. In addition to producing high-quality vehicles, Audi produces automotive parts and accessories for its vehicles, including, without limitation, wheels that bear or are in the form of the Audi Trademarks.

6. Audi has spent hundreds of millions of dollars and has expended significant effort in advertising, promoting, and developing the Audi Trademarks throughout the world. As a result of such advertising and expenditures, Audi has established considerable goodwill in its trademarks. The distinctive Audi Trademarks have become widely known and recognized throughout the world as a symbol of high-quality automotive goods and services. The goodwill associated with the Audi Trademarks is of incalculable and inestimable value to Audi. 7. Audi has...