Pepsico, Inc. v. California Security Cans, CIV.02-5321 NM(RZx).

Citation238 F.Supp.2d 1172
Decision Date27 December 2002
Docket NumberNo. CIV.02-5321 NM(RZx).,CIV.02-5321 NM(RZx).
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
PartiesPEPSICO, INC., et al., Plaintiffs, v. CALIFORNIA SECURITY CANS, et al., Defendants.

David C. Hilliard, Jonathan S. Jennings, Phillip Barengolts, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, William A. Finkelstein, Jonathan R. Goldblatt, Alschuler Grossman Stein & Kahan, LLP, Los Angeles, CA, for plaintiffs.

California Security Cans, pro se.

ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANT JOHN RANDALL COOK

MANELLA, District Judge.

I. INTRODUCTION

On July 3, 2002, PepsiCo, Inc. ("PepsiCo"), Recot, Inc., and Frito-Lay, Inc. ("Plaintiffs") filed the instant action, alleging that Defendant John Randall Cook ("Defendant") manufactured, advertised, promoted, and sold products composed of modified PepsiCo products bearing the Pepsi, Diet Pepsi, Mountain Dew, and Aquafina trademarks owned and registered by PepsiCo, Inc. without PepsiCo, Inc.'s consent or authorization. Defendant was served with the Complaint on July 13, 2002. Default was entered by the Court Clerk on November 1, 2002. Currently before the court is Plaintiffs' Application for Default Judgment against Defendant.

II. RELEVANT FACTUAL BACKGROUND1

PepsiCo is engaged in the manufacture and marking of beverage products throughout the United States and the world. Compl. ¶ 11. For quite some time, PepsiCo has adopted and made continuous use of the Pepsi, Diet Pepsi, and Mountain Dew trademarks on their own, or with designs in connection with the manufacture, sale, and advertising of soft drinks. Compl. ¶ 12. PepsiCo has also adopted and made continuous use of the trademark Aquafina, on its own or with designs, in connection with the manufacture, sale, and advertising of purified water. Id. Through its authorized licensees, PepsiCo sells a wide variety of novelty and promotional merchandise. Compl. ¶ 13.

PepsiCo is the owner of many federal trademark registrations issued by the United States Patent and Trademark Office for Pepsi, Diet Pepsi, Mountain Dew, and Aquafina. Compl. ¶ 14. PepsiCo, through its authorized bottlers and licensees, has sold many billions of dollars worth of beverages and merchandise under these trademarks throughout the world. Compl. ¶ 16. As a result of the extensive sales, promotional efforts, and advertising, the Pepsi, Diet Pepsi, Mountain Dew, and Aquafina trademarks have become famous; indeed, it is one of the most well-known and famous marks in the world. Compl. ¶ 17.

PepsiCo's products sold under the Pepsi, Diet Pepsi, Mountain Dew, and Aquafina trademarks are subject to a strict quality control program that protects all aspects of the beverages, including their ingredients, nutritional content, taste, aroma, appearance, and packaging. Compl. ¶ 18. PepsiCo and its authorized bottlers prohibit the sale of beverages with the Pepsi, Diet Pepsi, Mountain Dew, and Aquafina trademarks that do not comply with the quality control standards. Compl. ¶ 19.

Defendant allegedly began to advertise and sell PepsiCo's bottles and cans labeled with PepsiCo's trademarks and filled with liquids colored to look like PepsiCo's Pepsi, Diet Pepsi, Mountain Dew soft drinks and Aquafina water ("the counterfeit products"). Compl. ¶ 37, 41. In some cases, the liquids contained in the counterfeit products have a strong odor, contain floating solid matter, and have a foul taste. Compl. ¶ 38. The counterfeit products' labels contain information about PepsiCo, including its website address, street address, and a telephone number, but do not contain any reference to Defendant or that the counterfeit products are not legitimate PepsiCo products. Compl. ¶ 41. The counterfeit products' labels list ingredient and nutritional content information that are completely inaccurate for their liquid contents. Compl. ¶ 42.

The counterfeit products contain a hidden interior compartment. The compartments in the bottles are created from the molding of two pieces of plastic that stop the liquids from entering the center of the bottle. Compl. ¶ 45. The compartment can be accessed by pulling the bottles apart. Id. When the compartments are created in the cans, sharp interior edges result, which cut people who use the cans. Compl. ¶ 52. These counterfeit bottles and cans are referred to as "stash" bottles or "stash" cans, and are often used to conceal illicit narcotics or weapons. Compl. ¶¶ 46, 52. Plaintiffs allege that there is a strong likelihood that consumers, either those who buy Defendant's counterfeit products themselves or those who encounter these products post-sale, will mistakenly believe that PepsiCo sells, or authorizes for sale, the counterfeit products. Compl. ¶¶ 48, 54.

On July 3, 2002, Plaintiffs filed the instant action, alleging that Defendant manufactured, advertised, promoted, and sold the counterfeit products without PepsiCo's consent or authorization. Defendant was personally served with the Complaint on July 13, 2002. Goldblatt Decl. ¶ 3; Ex. 1. Defendant contacted Plaintiffs' counsel after the Complaint was served, and he indicated an interest in settling the dispute. Jennings Decl. ¶ 2. On July 23, 2002, Defendant met with Plaintiffs' counsel at a storage locker for the purpose of complying with this Court's order granting an inspection and discovery. Jennings Decl. ¶ 3. During this meeting, Defendant signed the Stipulation and Order Re Preliminary Injunction that was entered by the court on August 2, 2002. Since this initial meeting, Plaintiffs have attempted to contact Defendant numerous times, but have received no response. Jennings Decl. ¶ 6; Goldblatt Decl. ¶ 5. On October 30, 2002, Plaintiffs filed a Request for Default against Defendant, which was entered by the court clerk on November 1, 2002.

III. LEGAL STANDARD FOR DEFAULT JUDGMENT

Pursuant to Fed.R.Civ.P. 55(b), a court may order default judgment following the entry of default by the Clerk of the Court. See Kloepping v. Fireman's Fund, 1996 WL 75314, at *2 (N.D.Cal. Feb.13, 1996). In the Central District of California, motions for default judgment must set forth the following information: (1) when and against which party the default was entered; (2) the identification of the pleading to which default was entered; (3) whether the defaulting party is an infant or incompetent person, and if so, whether that person is adequately represented; (4) that the Soldiers' and Sailors' Civil Relief Act of 1940 does not apply; and (5) that notice of the application has been served on the defaulting party, if required. Local Rule 55-1.

A defendant's default does not automatically entitle the plaintiff to a court-ordered judgment. See Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986). Rather, granting or denying relief is entirely within the court's discretion. See id. The Ninth Circuit has enumerated the following factors (collectively, the Eitel factors) that a court may consider in determining whether to grant default judgment: (1) the merits of the plaintiff's substantive claim; (2) the sufficiency of the complaint; (3) the sum of money at stake in the action; (4) the possibility of prejudice to the plaintiff; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decision on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986).

Upon entry of default, the well-pleaded allegations of the complaint relating to a defendant's liability are taken as true, with the exception of the allegations as to the amount of damages. See TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir.1987). Thus, the plaintiff is required to provide proof of all damages sought in the complaint. This process is limited by Fed.R.Civ.P. 54(c), which states that "[a] judgment by default shall not be different in kind or exceed in amount that prayed for in the [complaint]."

IV. DISCUSSION
A. Procedural Requirements

In the instant case, Plaintiffs have satisfied the procedural requirements for default judgment pursuant to Fed.R.Civ.P. 55(a), Local Rule 55-1, and Fed.R.Civ.P. 54(c). Pursuant to Fed.R.Civ.P. 55(a), the Court Clerk properly entered default against Defendant. As required by Local Rule 55-1, Plaintiffs provided proof in their Application for Default Judgment that: (1) default was entered against Defendant November 1, 2002; (2) Defendant failed to respond to the Complaint; (3) Defendant is neither an infant nor an incompetent person; (4) Defendant is not otherwise exempt under the Soldiers' and Sailors' Civil Relief Act of 1940; and (5) Defendant was served with notice of the application for default judgment on November 15, 2002. Finally, the motion complies with Fed.R.Civ.P. 54(c) in that it requests a remedy that is not different in kind from that prayed for in the Complaint. Thus, the court, in its discretion, may order a default judgment against Defendant based on the Eitel factors, outlined below.

B. Eitel Factors
1. Substantive Merits and Sufficiency of the Complaint

The first two Eitel factors are (1) the merits of Plaintiffs' substantive claim, and (2) the sufficiency of the complaint. Eitel, 782 F.2d at 1471-72. The Ninth Circuit has suggested that these two factors require that a plaintiff "state a claim on which the [plaintiff] may recover." Kloepping, 1996 WL 75314, at *2 (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978)). In the instant action, Plaintiffs assert the following claims: (1) trademark counterfeiting in violation of 15 U.S.C. § 1114; (2) trademark infringement in violation of 15 U.S.C. § 1114 and common law; (3) false designation of origin in violation of 15 U.S.C. § 1125(a); (4) unfair competition in violation of Cal. Bus. & Prof.Code § 17200, et seq.; (5) dilution in violation of 15 U.S.C. § 1125(c); (6) dilution in violation of Cal....

To continue reading

Request your trial
1423 cases
  • Yelp Inc. v. Catron
    • United States
    • U.S. District Court — Northern District of California
    • 1 Octubre 2014
    ...“the well-pleaded allegations of the complaint relating to a defendant's liability are taken as true.” Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D.Cal.2002) (citing Tele V ideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir.1987) ). Nevertheless, default does not......
  • HTS, Inc. v. Boley
    • United States
    • U.S. District Court — District of Arizona
    • 21 Junio 2013
    ...The first Eitel factor considers whether HTS will suffer prejudice if default judgment is not entered. PepsiCo, Inc. v. Cal. Sec. Cans., 238 F.Supp.2d 1172, 1177 (C.D.Cal.2002). Boley has failed to appear or otherwise defend this action. In the absence of a default judgment, HTS “would be w......
  • Craigslist, Inc. v. NATUREMARKET, INC.
    • United States
    • U.S. District Court — Northern District of California
    • 5 Marzo 2010
    ..."makes a decision on the merits impracticable, if not impossible," entry of default judgment is warranted. Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D.Cal.2002). As Defendants have failed to appear or respond in this matter a decision on the merits is impossible. Therefor......
  • United States v. 9mm Machinegun Manufactured by Parabellum Combat Sys.
    • United States
    • U.S. District Court — District of Nevada
    • 9 Julio 2020
    ...of Material Fact "Upon entry of default, all well-pleaded facts in the complaint are taken as true." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Default has been entered in this case, meaning that the alleged facts are not in dispute and the allegations of th......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT