Wecosign, Inc. v. IFG Holdings, Inc.

• Decision Date: 23 January 2012
• Docket Number: Case No. SACV 10–1200–JST (MLGx).
• Citation: 845 F.Supp.2d 1072
• Parties: WECOSIGN, INC., Plaintiff, v. IFG HOLDINGS, INC., et al., Defendants.
• Court: U.S. District Court — Central District of California

845 F.Supp.2d 1072

WECOSIGN, INC., Plaintiff,

v.IFG HOLDINGS, INC., et al., Defendants.

Case No. SACV 10–1200–JST (MLGx).

United States District Court, C.D. California.

Jan. 23, 2012.

Adam Jay Jaffe, Wecosign, General Counsel, Santa Ana, CA, John W. Holcomb, Knobbe Martens Olson and Bear LLP, Riverside, CA, Nicholas Matthew Zovko, Knobbe Martens Olson and Bear LLP, Irvine, CA, for Plaintiff.

IFG Holdings Inc., Woodland Hills, CA, pro se.

Michael Adams, Woodland Hills, CA, pro se.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

JOSEPHINE STATON TUCKER, District Judge.

Before the Court is a Motion for Default Judgment filed by Plaintiff Wecosign, Inc. (“Plaintiff”). (Mot., Doc. 76.) Plaintiff seeks the entry of default judgment against seven Defendants: IFG Holdings, Inc. (“IFG”), Associated Concents Group LLC (“ACG”), Michael Adams (“Adams”), Ted Williams (“Williams”), Mark Avila (“Avila”), Stan Jones (“Jones”), and Robert Miller (“Miller”) (collectively, “Defendants”). (Mot. at 1.) Plaintiff is not seeking entry of default judgment against the eighth and final Defendant, Tara Walker (“Walker”). ( Id.) Instead, Plaintiff and Walker separately entered into a “Stipulation for Consent Judgment with Respect to Plaintiff Wecosign, Inc. and Defendant Walker.” (Consent Judgment, Doc. 84.) Plaintiff seeks permanent injunctive relief, monetary damages, attorneys' fees, and costs. (Mem. of P. & A. at 1, Doc. 77.) Having taken Plaintiff's Motion under submission and read and considered the papers, the Court GRANTS IN PART and DENIES IN PART Plaintiff's Motion, and defers ruling on Plaintiff's claim for “lost profits” damages to allow for submission of additional evidence.

I. Factual Background

Plaintiff is the owner of the service mark “Wecosign” (“the Mark”). (Compl. ¶ 5, Doc. 1.) Since at least 2005, Plaintiff “has continuously and extensively advertised,offered, and rendered financial services” under the Mark. ( Id. ¶ 15.) Plaintiff maintains a web presence for the purposes of providing information about its services offered under the Mark. Plaintiff also offers an online application for those services at its website, located at the domain names , , , and < wecosign.info>, among others. ( Id.) In 2007, Plaintiff filed an application to register the Mark, and subsequently became the owner of U.S. Registration No. 3,677,202 for the Mark for financial guaranty and surety services for renters. ( Id. ¶ 16.)

Defendant IFG is a Nevada corporation with its principal place of business in Los Angeles, California. ( Id. ¶ 6.) Defendant IFG has done business under various names, including We Cosign USA. ( Id.) Defendant Adams purports to be the CEO and President of We Cosign USA, and also a Director of Defendant IFG. ( Id. ¶ 8.) Defendant Williams purports to be the CEO and President of We Cosign USA and Defendant Avila is the purported Vice President and Finance Director of We Cosign USA. ( Id. ¶¶ 9–10.) Defendants Jones and Miller, both Nevada residents, are respectively the Secretary and President of Defendant IFG. ( Id. ¶¶ 11–12.) Defendant ACG is an organization engaged in commercial activity in California. ( Id. ¶ 7.) Furthermore, Defendants engaged in all relevant acts jointly, and there is a unity of interest and ownership among the corporations and individuals. ( Id. ¶¶ 14, 41.)

Sometime prior to July 21, 2010, Defendants arranged for virtual office services at two locations in Los Angeles, California and one location in New York, New York, and arranged for the use of post office boxes in Woodland Hills, California and in La Jolla, California. ( Id. ¶ 19.) Defendants also registered several domain names, including (“the Inscore Domain”), (“the IFG Domain”), (“the Wecosign USA Domain”), and (“the Cosign USA Domain”). ( Id. ¶¶ 20, 22, 24, 26.) When registering each of these domains, Defendants provided materially false contact information to the domain name registrar. ( Id.) At the Inscore Domain and the IFG Domain, Defendants operated commercial websites advertising and soliciting their financial services under the mark “We Co–Sing [sic].” ( Id. ¶¶ 21, 23.) Defendants also began operating a commercial website at the Wecosign USA Domain, advertising and soliciting their financial services under the mark “WE COSIGN USA.” ( Id. ¶ 25.) Defendants diverted traffic from the Cosign USA Domain to the Wecosign USA Domain. ( Id. ¶ 27.)

Beginning in June or July 2010, Defendants began advertising and solicitation of their financial services on the Internet under various marks confusingly similar to the Mark, including on Craigslist.org, Twitter.com, Corkin.com, ListOwn.com, Daype.com, and AdsInUSA.com. ( Id. ¶ 28.) These advertisements either directed potential consumers to the Wecosign USA Domain or to contact Defendants directly. ( Id.) Defendants undertook this advertising without Plaintiff's permission or authorization, and intended to cause consumers and potential consumers to believe that Defendants' financial services are associated with Plaintiff when they are not. ( Id. ¶¶ 30, 34.) Furthermore, Defendants had actual knowledge of Plaintiff's prior use of and rights in the Mark. ( Id. ¶ 39.)

II. Procedural Background

On August 9, 2010, Plaintiff filed a Complaint asserting seven claims: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) federal false designation of origin under 15 U.S.C. § 1125(a); (3) federal cyberpiracy under 15 U.S.C. § 1125(d)(1)(A); (4) unfair competition under Cal. Bus. & Prof.Code §§ 17200, et seq.; (5) common law unfair competition under California law; (6) federal racketeering activity under 18 U.S.C. § 1962(c); and (7) conspiracy to commit federal racketeering activity under 18 U.S.C. § 1962(d). (Compl.) On September 1, 2010, Defendant IFG and Defendant Adams filed an Answer to Plaintiff's Complaint. None of the other Defendants filed an Answer. Therefore, at Plaintiff's request, the Clerk entered the Default of the six other Defendants: ACG, Williams, Avila, Jones, Miller, and Walker. (Entry of Default, Doc. 31.)

Despite filing an Answer, Defendants IFG and Adams failed to mount a defense, or participate in discovery. (Mem. of P & A at 3.) Accordingly, on July 22, 2011, Plaintiff filed a Motion for Entry of Default of IFG and Adams. (Motion for Entry of Default, Doc. 56.) On August 10, 2011, the Court granted Plaintiff's Motion for Entry of Default of Defendants IFG and Adams. (Order Granting Plaintiff's Motion for Entry of Default, Doc. 67.) In the same Order, the Court also set forth a procedure for Plaintiff to provide notice to Defendants of Plaintiff's Motion for Entry of Default Judgment. ( Id. at 2–3.) Specifically, the Court required Plaintiff to transmit, via United States Certified Mail, its motion and all supporting papers to Defendants at the addressed listed in the Order at least three Court days before filing the motion. ( Id.) The Court also required that, at least three Court days before filing the motion, Plaintiff publish notice of its motion to Defendants for one day in The Los Angeles Times and one day in The Las Vegas Review–Journal. ( Id.)

III. Legal Standard

Under Rule 55 of the Federal Rules of Civil Procedure, default judgment is a two-step process. SeeFed.R.Civ.P. 55; see also Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir.1986). Prior to entry of default judgment, there must be an entry of default. SeeFed.R.Civ.P. 55. Upon entry of default, the factual allegations of the complaint, save for those concerning damages, are deemed to have been admitted by the defaulting party. Fed.R.Civ.P. 8(b)(6); See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir.1977). “On the other hand, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” United States v. Cathcart, No. C 07–4762 PJH, 2010 WL 1048829, at *4 (N.D.Cal. Feb. 12, 2010). “[I]t follows from this that facts ... not established by the pleadings of the prevailing party, or claims ... not well-pleaded, are not binding and cannot support the judgment.” Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978).

A district court has discretion to grant or deny a motion for default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.1980). The Ninth Circuit has set out seven factors to be considered by courts in reviewing a motion for default judgment: “(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (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 decisions on the merits.” Eitel, 782 F.2d at 1471–72.

“If the court determines that the allegations in the complaint are sufficient to establish liability, it must then determine the ‘amount and character’ of the relief that should be awarded.” Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F.Supp.2d 916, 920 (C.D.Cal.2010) (quoting 10A Charles Alan Wright, Arthur R. Miller, & May Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 2688, at 63 (3d ed.1998)). This is because the allegations of the amount of damages suffered are not necessarily taken as true. Geddes, 559 F.2d at 560.

Accordingly, the Court may hold a hearing to determine the amount of damages. Fed.R.Civ.P. 55(b)(2)(B). Under Ninth Circuit law, “[i]t is well settled that a default judgment for money may not be entered without a hearing unless the amount claimed is a liquidated sum or capable of mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir.1981). However, a “hearing” under this rule need not include live testimony, but may instead rely on declarations submitted by the parties, so long as notice of the amount requested is provided to the defaulting party. C.D. Cal. R. 55–2.

IV. Discussion

a. Allegations and...