Guggenheim Capital, LLC v. Birnbaum

• Decision Date: 15 July 2013
• Docket Number: Docket No. 11–3276–cv.
• Citation: 722 F.3d 444
• Parties: GUGGENHEIM CAPITAL, LLC, Guggenheim Partners, LLC, Plaintiffs–Appellees, v. David BIRNBAUM, aka David B. Guggenheim, Defendant–Appellant, Catarina Pietra Toumei, Aka Lady Catarina Pietra Toumei, Aka Catarina Frederick, Vladimir Zuravel, Aka Vladimir Guggenheim, Aka Vladimir Z. Guggenheim, Aka Vladimir Z. Guggenheim Bank, Eli Pichel, Theodor Pardo, John Does, 1–10, Dabir International, Ltd., Defendants.
• Court: U.S. Court of Appeals — Second Circuit

722 F.3d 444

GUGGENHEIM CAPITAL, LLC, Guggenheim Partners, LLC, Plaintiffs–Appellees,

v. David BIRNBAUM, aka David B. Guggenheim, Defendant–Appellant,Catarina Pietra Toumei, Aka Lady Catarina Pietra Toumei, Aka Catarina Frederick, Vladimir Zuravel, Aka Vladimir Guggenheim, Aka Vladimir Z. Guggenheim, Aka Vladimir Z. Guggenheim Bank, Eli Pichel, Theodor Pardo, John Does, 1–10, Dabir International, Ltd., Defendants.^*

Docket No. 11–3276–cv.

United States Court of Appeals, Second Circuit.

Argued: April 12, 2013.

Decided: July 15, 2013.

John J. Dabney (Rita Weeks, Kevin M. Bolan, on the brief), McDermott Will & Emery LLP, Washington, District of Columbia, and Boston, Massachusetts, for Plaintiffs–Appellees.

Ronald D. Coleman, Goetz Fitzpatrick LLP, New York, NY, for Defendant–Appellant.

Before: KEARSE and CHIN, Circuit Judges, and HALL, District Judge. ^**

CHIN, Circuit Judge:

Defendant-appellant David Birnbaum solicited investors to buy various financial products while presenting himself as “David B. Guggenheim.” Plaintiffs-appellees are entities with rights or licenses to registered trademarks bearing the “Guggenheim” name. They filed suit alleging trademark infringement and other federal and state law claims. Birnbaum never answered the complaint, failed to comply with the district court's discovery orders, disrupted his own deposition, and violated—on at least two occasions—a preliminary injunction precluding use of the “Guggenheim” mark. Finally, upon plaintiffs' request, the district court entered a default judgment against Birnbaum. Birnbaum appeals. As we conclude that the district court was within its discretion to enter a default judgment pursuant to both Rule 37 and Rule 55 of the Federal Rules of Civil Procedure, we affirm.

BACKGROUND

A. The Facts

1. The Parties

Plaintiff-appellee Guggenheim Partners, LLC (“Partners”) provides global investment services and various financial products. It and its predecessors-in-interest have provided similar services for the past fifty years. With investment assets exceeding $110 billion, it is a well-known financial services entity. Partners is a wholly-owned subsidiary of plaintiff-appellee Guggenheim Capital, LLC (“Capital” and, together with Partners, the “Guggenheim LLCs”).

The Guggenheim LLCs are affiliated with the well-known Guggenheim family. Capital owns (and licenses to Partners) the common law rights and the registered trademarks for various “Guggenheim” marks. In light of the longstanding market presence of the Guggenheim LLCs, potential investors identify the registered “Guggenheim” marks with the financial services provided by the Guggenheim LLCs (and their predecessors-in-interest).

Birnbaum is a New York resident who, since the 1970s, has sought investors for investment opportunities by presenting himself as “David B. Guggenheim.” He claims a relationship with the Guggenheim family on his mother's side, but provided no evidence to corroborate the relationship during the proceedings below.

2. Initial Court Orders

On November 22, 2010, the Guggenheim LLCs filed a complaint against Birnbaum alleging trademark infringement pursuant to 15 U.S.C. § 1114(1)(a), other federal trademark claims pursuant to 15 U.S.C. §§ 1114 and 1125, violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) pursuant to 18 U.S.C. § 1962(c), and various state law claims.¹ The district court (Marrero, J.) granted, ex parte, an order authorizing expedited discovery and temporarily restraining Birnbaum from “us[ing] the Guggenheim Capital, LLC and Guggenheim Partners, LLC names and trademarks in any way relevant to this matter.” Order 2, Nov. 22, 2010, ECF No. 3. The Guggenheim LLCs had also requested a preliminary injunction; on December 17, 2010, after a hearing at which Birnbaum appeared but filed no opposition, the district court (Gardephe, J.) converted the temporary restraining order into a preliminary injunction.

3. Violations of Discovery Orders

After the complaint was filed, although Birnbaum appeared in the litigation, he did not respond to the expedited discovery requests. The district court gave Birnbaum an extension, but Birnbaum did not meet this first extension either. At a conference on January 13, 2011, the district court warned Birnbaum that he must comply with the court's discovery orders and also put this order in writing.

Despite Birnbaum's non-compliance, the district court granted him two more extensions to answer or amend his responses to the interrogatories and to produce the documents requested by the Guggenheim LLCs. Birnbaum, again, provided no substantive responses, responding to each request by invoking the Fifth Amendment privilege. On February 1, 2011, the district court again warned Birnbaum about his behavior, by directing him to show cause as to “why contempt sanctions should not be imposed for his failure to respond to Plaintiffs' discovery requests as ordered by this Court.” Order to Show Cause, Feb. 1, 2011, ECF No. 58. On February 7, 2011, Birnbaum responded, requesting a stay and asserting that, because he had justifiably invoked privilege, the court was precluded from imposing civil contempt sanctions.

On February 8, 2011, the Guggenheim LLCs tried to depose Birnbaum, but he refused to answer any questions. During a telephone conference that same day, the district court directed Birnbaum to participate in discovery in accordance with its instructions. Moreover, in an order issued two days later, the district court reiterated the warning, stating that “[a]ny further improper disruption of the deposition will not be tolerated, and sanctions will be imposed on the Defendant and his counsel in the event that the conduct that took place on February 8, 2011 is repeated.” Order 2–3, Feb. 10, 2011, ECF No. 66.

4. Violations of Preliminary Injunction

Notwithstanding the issuance of the temporary restraining order and preliminary injunction, Birnbaum continued using the “Guggenheim” name and mark. In mid-December, Birnbaum met with a potential investor while posing as “David B. Guggenheim,” chairman of “Guggenheim Bank.” At a December 30, 2010 contempt hearing, the district court stated that its “patience is wearing thin here. It's wearing very thin.” Default J. Against Defs. David Birnbaum & Dabir Int'l Ltd. 3, ECF No. 103 (internal quotation marks omitted). The district court then warned Birnbaum that if he continued to use the “Guggenheim” name, “the consequences [were] going to be very very severe.” Id. (internal quotation marks omitted).

Weeks later, Birnbaum again solicited an investor while presenting himself as “David Guggenheim,” this time in connection with an oil transaction. The district court issued another order to show cause as to “why contempt sanctions should not be imposed for [Birnbaum's] alleged failure to comply with this Court's preliminary injunction order.” ² Order to Show Cause, Mar. 7, 2011, ECF No. 85.

B. Entry of Default Judgment

On February 14, 2011, rather than filing an answer, Birnbaum moved to dismiss the complaint for failure to state a claim. The district court granted the motion, in part, dismissing a cyberpiracy claim, but allowed most of the claims to proceed. Birnbaum did not thereafter file an answer to the remaining claims, as the district court had directed.

At an April 4, 2011 show cause hearing, which addressed Birnbaum's violation of the preliminary injunction, the Guggenheim LLCs requested a default judgment due to his “willful contempt over and over and over and over again.” Hr'g Tr. 4:18–19, Apr. 4, 2011, ECF No. 99–4. The district court provided Birnbaum with an opportunity to respond, but Birnbaum, who was no longer represented by counsel, invoked his Fifth Amendment privilege.³ It then described Birnbaum's “overall obstruction of the discovery process” and observed that his conduct persisted “despite several orders I have issued, despite admonitions, despite warnings that it has to stop.” Id. at 8:11–12, 8:16–17.

On April 14, 2011, the Guggenheim LLCs moved for a default judgment pursuant to Rule 55, as well as injunctive relief, statutory damages, and costs and attorneys' fees. Birnbaum filed no opposition. Three months later, on July 15, 2011, the district court entered a default judgment against Birnbaum, permanently enjoined him from using the “Guggenheim” name or mark, awarded the Guggenheim LLCs statutory damages in the amount of $1.25 million pursuant to 15 U.S.C. § 1117(c), and ordered him to pay reasonable costs and attorneys' fees.

This appeal followed.

DISCUSSION

On appeal, Birnbaum contends that the district court abused its discretion by granting a default judgment in favor of the Guggenheim LLCs. For the reasons described below, we reject this argument. Before we reach the merits of his argument, however, we first address our jurisdiction to hear this claim.

A. Jurisdiction1. Applicable Law

“Issues relating to subject matter jurisdiction may be raised at any time, even on appeal, and even by the court sua sponte.” Cave v. E. Meadow Union Free Sch. Dist., 514 F.3d 240, 250 (2d Cir.2008). We have subject matter jurisdiction over appeals from the “final decisions” of U.S. district courts. 28 U.S.C. § 1291. Thus, we must “determine whether the district court intended the judgment to represent the final decision in the case.” Bankers Trust Co. v. Mallis, 435 U.S. 381, 385 n. 6, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978).

Section 1291 does not “permit appeals, even from fully consummated decisions, where they are but steps towards final judgment in which they will merge.” Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). A decision, however, is final if it “ ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” Leftridge v. Conn. State Trooper Officer # 1283, 640 F.3d 62, 66 (2d Cir.2011) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945)). We...