Back Shop Tiefkuhl GmbH v. GN Trade, Inc., 061614 CAEDC, 2:12-cv-0540 WBS KJN

Docket Nº2:12-cv-0540 WBS KJN
Opinion JudgeKENDALL J. NEWMAN, Magistrate Judge.
Party NameBACK SHOP TIEFKUHL GmbH, Plaintiff, v. GN TRADE, INC., et al., Defendants.
Case DateJune 16, 2014
CourtUnited States District Courts, 9th Circuit, Eastern District of California

BACK SHOP TIEFKUHL GmbH, Plaintiff,

v.

GN TRADE, INC., et al., Defendants.

No. 2:12-cv-0540 WBS KJN

United States District Court, E.D. California.

June 16, 2014

ORDER AND FINDINGS AND RECOMMENDATIONS

KENDALL J. NEWMAN, Magistrate Judge.

Presently before the court is plaintiff Back Shop Tiefkühl GmbH's ("plaintiff") motion for default judgment against defendants GN Trade, Inc. ("GN Trade") and Vladimir Demin ("Demin") (collectively, defendants).1 (ECF No. 68.) After defendants failed to file an opposition to the motion in accordance with Local Rule 230(c), the June 5, 2014 hearing on plaintiff's motion was vacated, and the motion was submitted on the record and briefing pursuant to Local Rule 230(g). (ECF No. 74.)

After considering the briefing in support of plaintiff's motion, the court's record, and the applicable law, the court recommends that plaintiff's motion for default judgment be granted in part upon the terms set forth below.

I. BACKGROUND

Plaintiff commenced this action on February 29, 2012. (See Complaint, ECF No. 2 ["Compl."].) According to the complaint, plaintiff, founded in 1998, is a German corporation and a subsidiary of Germany's biggest private bakery, the Harry-Brot GmbH, and "has achieved an international reputation for its diverse line of high quality frozen European bakery products." (Compl. ¶¶ 4, 9.) Plaintiff's bakery products are sold throughout the United States, and have been for over 8 years, under the name and mark "Back Shop, " which has allegedly become publicly associated exclusively with plaintiff and its products, and in which plaintiff claims to have established protectable common law trademark rights. ( Id. ¶ 10.) According to plaintiff's complaint, defendant GN Trade, which does business under the name and mark "Backer Back, " is a California corporation with its principal business office in Sacramento; and defendant Demin, a resident of Sacramento, is involved with GN Trade in some capacity. ( Id. ¶¶ 5-6.)2 In a filing by defendant Demin's former counsel, the attorney indicated that Demin is the Chief Executive Officer of GN Trade. (ECF No. 20 at 3.)

Plaintiff essentially alleges that, in the six months prior to the filing of the complaint, plaintiff discovered that defendants had been selling Back Shop products through improper and illegal means, including by: (a) misappropriating plaintiff's website through using on defendants' own website exact copies of plaintiff's product photographs, product nomenclature, product descriptions, and nutrition information without plaintiff's consent; and (b) selling plaintiff's Back Shop products by removing or obliterating plaintiff's label and affixing defendants' own label in its place. (Compl. ¶¶ 11-16.) Plaintiff's complaint asserts claims for (1) false designation of origin under 15 U.S.C. § 1125(a)(1)(A); (2) false advertising under 15 U.S.C. § 1125(a)(1)(B); (3) copyright infringement under 17 U.S.C. §§ 101 et seq.; and (4) unfair business practices under Cal. Bus. & Prof. Code §§ 17200 et seq. against all defendants. ( Id. ¶¶ 17-40.)

On August 29, 2013, after defendants' counsel was permitted to withdraw, and defendants failed to comply with their discovery obligations and several court orders, the court struck GN Trade and Demin's operative answers, and directed the Clerk of Court to enter their default. (ECF Nos. 54.)3 The Clerk entered defendants' GN Trade and Demin's default that same day. (ECF No. 55.)

Subsequently, on October 16, 2013, all claims against defendant Shevschenko were dismissed with prejudice pursuant to a stipulation, with each party to bear its own costs and attorneys' fees. (ECF No. 63.) Additionally, plaintiff has since settled all claims against defendant Almansky, and on April 15, 2014, the court entered a stipulated judgment for injunctive relief against defendant Almansky, with each party to bear its own costs. (ECF No. 67.) As such, GN Trade and Demin are the only remaining defendants.

The instant motion for default judgment against defendants GN Trade and Demin was filed on April 15, 2014, and served on defendants by mail. (ECF Nos. 68, 71.) As noted above, defendants failed to oppose the motion or even seek an extension of time to do so.

II. LEGAL STANDARDS

Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed.R.Civ.P. 55(a). However, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." PepsiCo, Inc. v. Cal. Sec. Cans , 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs , 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies within the district court's sound discretion. Aldabe v. Aldabe , 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the court considers the following factors:

(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 v. McCool , 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily disfavored. Id. at 1472.

As a general rule, once default is entered, well-pleaded factual allegations in the operative complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal , 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group , 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs , 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the complaint are admitted by a defendant's failure to respond, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default." Cripps v. Life Ins. Co. of N. Am. , 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine , 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh , 503 F.3d 847, 854 (9th Cir. 2007) (stating that a defendant does not admit facts that are not well-pled or conclusions of law); Abney v. Alameida , 334 F.Supp.2d 1221, 1235 (S.D. Cal. 2004) ("[A] default judgment may not be entered on a legally insufficient claim."). A party's default conclusively establishes that party's liability, but it does not establish the amount of damages. Geddes , 559 F.2d at 560.

III. DISCUSSION

A. Appropriateness of the Entry of Default Judgment Under the Eitel Factors

For the reasons stated below, an evaluation of the Eitel factors supports the entry of a default judgment.

1. Factor One: Possibility of Prejudice to Plaintiff

The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting a default judgment. See PepsiCo, Inc. , 238 F.Supp.2d at 1177. Here, plaintiff would potentially face prejudice if the court did not enter a default judgment. Absent entry of a default judgment, plaintiff would be without another recourse for recovery against defendants. "Denying judgment against a defendant who does not participate in litigation deprives the plaintiff of a remedy until such time as the defendant chooses to litigate." Joe Hand Promotions, Inc. v. Be , 2011 WL 5105375, at *2 (N.D. Cal. Oct. 26, 2011). Accordingly, the first Eitel factor favors the entry of a default judgment.

2. Factors Two and Three: The Merits of Plaintiff's Substantive Claims and the Sufficiency of the Complaint

The court evaluates the merits of plaintiff's...

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