Audi AG v. Posh Clothing, LLC

• Decision Date: 02 May 2019
• Docket Number: Civil Action No. 18-14254
• Parties: AUDI AG; BENTLEY MOTORS LIMITED; AUTOMOBILI LAMBORGHINI S.P.A.; and VOLKSWAGEN GROUP OF AMERICA, INC., Plaintiffs, v. POSH CLOTHING, LLC d/b/a CLUB FOREIGN, TRENDS SOCIETY, and TRENDSSOCIETY.COM; PASHA BORSUK; and NICKWON ARVINGER, Defendants.
• Court: U.S. District Court — District of New Jersey

AUDI AG; BENTLEY MOTORS LIMITED; AUTOMOBILI LAMBORGHINI S.P.A.;and VOLKSWAGEN GROUP OF AMERICA, INC., Plaintiffs, v. POSH CLOTHING, LLC d/b/a CLUB FOREIGN, TRENDS SOCIETY,and TRENDSSOCIETY.COM; PASHA BORSUK;and NICKWON ARVINGER, Defendants.

Civil Action No. 18-14254

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

May 2, 2019

Not For Publication

OPINION

John Michael Vazquez, U.S.D.J.

This matter comes before the Court on an unopposed motion for default judgment pursuant to Fed. R. Civ. P. 55(b)(2) by Plaintiffs Audi AG ("Audi"); Bentley Motors Limited ("Bentley"); Automobili Lamborghini S.P.A. ("Lamborghini"); and Volkswagen Group Of America, Inc. ("Volkswagen") against Defendants Posh Clothing, LLC d/b/a Club Foreign, Trends Society, and trendssociety.com ("Posh"); and Pasha Borsuk.¹ D.E. 13. The Court reviewed all submissions made in support of the motion and considered the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the reasons stated below, Plaintiffs' motion is granted.

I. INTRODUCTION²

Plaintiffs allege that Defendants "operate a counterfeiting ring that imports, promotes, advertises, distributes, and/or sells apparel and personal accessories bearing counterfeits of Plaintiffs' world-famous trademarks." Compl. ¶ 2. Plaintiffs filed their Complaint against Defendants on September 25, 2018, alleging three causes of action: (I) federal trademark counterfeiting and infringement under 15 U.S.C. § 1114; (II) false designation of origin or sponsorship and false advertising under 15 U.S.C. § 1125(a); and (III) trademark dilution under 15 U.S.C. § 1125(c). Compl. ¶¶ 52-76. Defendants failed to respond, and the clerk of court entered default on November 20, 2018. Plaintiffs moved for default judgment on December 28, 2018 and submitted a brief in support. D.E. 13-1 ("Pl. Br."). Plaintiffs then agreed to vacate the motion for default judgment as to Defendant Arvinger only.³ D.E. 18. Plaintiffs' pending motion for default judgment is solely against Defendants Posh and Borsuk.

Federal Rule of Civil Procedure 55 allows for the entry of default against a party that fails to plead or otherwise defend against claims. Fed. R. Civ. P. 55. "The entry of a default judgment is largely a matter of judicial discretion, although the Third Circuit has emphasized that such 'discretion is not without limits, . . . and [has] repeatedly state[d] [its] preference that cases be disposed of on the merits whenever practicable.'" Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008) (quoting Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir.1984)).

In entering a default judgment, a court must determine whether (1) it has personal and subject matter jurisdiction; (2) the defendants were properly served; (3) the complaint sufficiently pleads a cause of action; and (4) the plaintiff has proven damages. Days Inns Worldwide, Inc. v. Jinisha Inc., 2015 WL 4508413, at *1 (D.N.J. July 24, 2015). Additionally, a court must determine the appropriateness of default judgment by weighing (1) the prejudice suffered by the party seeking default judgment; (2) whether the party subject to the default has a meritorious defense; and (3) the culpability of the party subject to default. Id. at *2.

II. ANALYSIS

Jurisdiction

When a default judgment is sought against a party that has not filed responsive pleadings, the court "has an affirmative duty to look into its jurisdiction both over the subject matter and the parties." Ramada Worldwide Inc. v. Benton Harbor Hari Ohm, L.L.C., 2008 WL 2967067, at *9 (D.N.J. July 31, 2008) (quoting Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986)). The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331. Section 1331 provides that "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Plaintiffs bring claims under Sections 32(1), 43(a), and 43(c) of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), and 1125(c), respectively. Compl. ¶ 12. In addition, Section 39 of the Lanham Act, 15 U.S.C. § 1121(a), explicitly provides that district courts "shall have original jurisdiction . . . of all actions arising under this chapter, without regard to the amount in controversy or to diversity or lack of diversity of the citizenship of the parties." The Court has subject matter jurisdiction over the matter.

The Court also has personal jurisdiction over Defendants. "[A]n individual's domicile, or home, constitutes the paradigmatic forum for the exercise of general jurisdiction." Chanel, Inc. v.Matos, 133 F. Supp. 3d 678, 684 (D.N.J. 2015) (internal quotation marks omitted). An individual's domicile is the state that is his or her "home." JWQ Cabinetry, Inc. v. Granada Wood & Cabinets, Inc., 2014 WL 2050267, at *3 (D.N.J. May 19, 2014). Here, Defendant Borsuk resides in or near Springfield, New Jersey. Compl. ¶ 9. Because New Jersey is Borsuk's "home," this Court retains personal jurisdiction over him.

With respect to a company, "the place of incorporation and principal place of business are paradig[m] . . . bases for general jurisdiction." Daimler AG v. Bauman, 134 S. Ct. 746, 760, 187 L. Ed. 2d 624 (2014) (internal quotation and citation omitted) (alteration in original). Here, Defendant Posh is a New Jersey LLC with its principal place of business located in Springfield, New Jersey. Compl. ¶ 8. Because New Jersey is Posh's "home," this Court retains personal jurisdiction over it. The Court has subject matter and personal jurisdiction over the matter.

Service

"Before the Court can enter default judgment, it must find that process was properly served on the Defendant[s]." Teamsters Pension Fund of Phila. & Vicinity v. Am. Helper, Inc., No.11-624, 2011 WL 4729023, at *2 (D.N.J. Oct. 5, 2011) (citing Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985)). Borsuk, an individual, may be served by:

(1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or

(2) doing any of the following:

(A) delivering a copy of the summons and of the complaint to the individual personally;

(B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or(C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

Fed. R. Civ. P. 4(e). On October 20, 2018, a process server left copies of the summons and Complaint with exhibits at Borsuk's dwelling or usual place of abode in Springfield, New Jersey, with a woman of suitable age and discretion who resided therein. D.E. 10. Therefore, the Court finds that service of the summons and Complaint was proper as to Borsuk.

As a limited liability company, Defendant Posh may be properly served "by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process . . . ." Fed. R. Civ. P. 4(h)(1)(B). Here, on October 20, 2018, a process server left a copy of the summons and Complaint with exhibits for Pasha Borsuk, an officer and agent of Posh, at the individual's dwelling or usual place of abode in Springfield, New Jersey, with a woman of suitable age and discretion who resided therein. D.E. 9. Therefore, the Court finds that service of the summons and Complaint was also proper as to Posh.

Sufficient Cause of Action

Next, "the Court must decide whether 'the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.'" Primo No. One in Produce, Inc. v. VG Sales LLC, No. 16-1395, 2017 WL 202169, at *2 (D.N.J. Jan. 18, 2017) (quoting Chanel, 558 F. Supp. 2d at 535). In doing so, the Court must accept all well-pleaded factual allegations in the pleadings as true, except as to damages. Chanel, 558 F. Supp. 2d at 535-36. Plaintiffs bring three causes of action; (I) federal trademark counterfeiting and infringement under 15 U.S.C. § 1114; (II) false designation of origin or sponsorship and false advertising under 15 U.S.C. § 1125(a); and (III) trademark dilution under 15 U.S.C. § 1125(c). Compl. ¶¶ 52-76.

First, "[f]ederal trademark infringement, 15 U.S.C. § 1114(1)(a), and a false designation of origin claim, 15 U.S.C. § 1125(a)(1)(A), are measured by identical standards pursuant to the Lanham Act." Chanel, 558 F. Supp. 2d at 536 (citing A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000)). "To establish either Lanham Act claim, the record must demonstrate that plaintiff (1) has a valid and legally protectable mark; (2) owns the mark; and (3) the defendant's use of the mark to identify goods or services causes a likelihood of confusion." Id. (citing A & H Sportswear, 237 F.3d at 210). "The first two requirements are satisfied when a federally registered mark has become incontestable," which means that "the owner has filed affidavits stating that the mark has been registered, that it has been in continuous use for five consecutive years, and that there has been no adverse decision concerning the registrant's ownership or right to registration." Id. (citing Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466 (3d Cir. 1994)).

Here, Plaintiffs have demonstrated that they own the following valid and legally protectable apparel-related registered trademarks: AUDI STYLIZED® (U.S. Reg. No. 1,416,583) (covering jackets and hats); AUDI RINGS® (U.S. Reg. No. 3,007,305) (covering caps, sweatshirts, t-shirts, and jackets); AUDI RINGS® (U.S. Reg. No. 2,987,328) (covering shirts and jackets); AUDI SPORT® (U.S. Reg. No. 5,174,144) (covering t-shirts, pajamas, trousers, and jackets); AUDI S® (U.S. Reg. No. 4,405,143) (covering t-shirts, shirts, polo shirts, jackets,...