Commercial Roofing Specialties, Inc. v. CRS Roofing Co.

• Decision Date: 13 February 2023
• Docket Number: Civil Action 1:21-cv-02758-SDG
• Parties: COMMERCIAL ROOFING SPECIALTIES, INC., Plaintiff, v. CRS ROOFING COMPANY and CLAYTON SHIPLEY, Defendants.
• Court: U.S. District Court — Northern District of Georgia

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COMMERCIAL ROOFING SPECIALTIES, INC., Plaintiff, v. CRS ROOFING COMPANY and CLAYTON SHIPLEY, Defendants.

Civil Action No. 1:21-cv-02758-SDG

United States District Court, N.D. Georgia, Atlanta Division

February 13, 2023

OPINION AND ORDER

Steven D. Grimberg, United States District Court Judge.

This matter is before the Court on Plaintiff Commercial Roofing Specialties, Inc.'s (CRS) motion for default judgement against Defendants CRS Roofing Company and Clayton Shipley (collectively, Defendants) [ECF 21]. For the following reasons, CRS's motion is GRANTED in part and DENIED without prejudice in part.

I. Background^[1]

CRS, a roofing supply retailer and cargo unloading servicer initiated this action against Defendants on July 9, 2021, for unauthorized use of its trade name and service mark (the Mark).^[2] As alleged in the verified complaint, since 1981, CRS has used the Mark in connection with its business in Georgia, Florida, and Tennessee, including in Knoxville, Tennessee.^[3] In May 2020, CRS discovered that Defendants were using the Mark for their competing roofing supply business in Sevierville, Tennessee, which is near Knoxville.^[4]

CRS sent Defendants a demand letter, and, after negotiations, the parties executed a settlement agreement on September 16, 2020 (the Agreement).^[5] The Agreement required Defendants to change their business name and cease all use of the Mark by May 16, 2021; transfer their domain name to CRS; and never use any mark or name like the Mark.^[6] In exchange for Defendants' promises, CRS paid them $30,000.^[7]

Defendants continued using the Mark and domain name beyond May 16, 2021, despite CRS's numerous attempts to correspond.^[8] CRS has asserted federal claims for trademark infringement^[9] and unfair competition,^[10] and state law claims for breach of contract,^[11] unfair competition,^[12] and deceptive trade practices.^[13] CRS seeks injunctive relief, compensatory damages, restitution, Defendants' profits resulting from their use of the Mark, and attorneys' fees.^[14]

Defendants have neither answered nor appeared in this Court in any manner, despite having been properly served on July 13, 2021.^[15] Defendants' deadline to answer was August 3.^[16] The Clerk of Court entered default as to Defendants on August 30. On November 15, 2021, CRS moved for a default judgment.^[17] That motion is now ripe for consideration.

II. Legal Standard

Federal Rule of Procedure 55 establishes a two-step process for a party to obtain a default judgment. First, the party seeking default must obtain a Clerk's entry of default pursuant to Rule 55(a) by providing evidence “by affidavit or otherwise” that the opposing party “has failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). Second, after the Clerk has made an entry of default, the party seeking the judgment must file a motion under Rule 55(b)(1) or (2). Id. See also Frazier v. Absolute Collection Serv., Inc., 767 F.Supp.2d 1354, 1360 n.1 (N.D.Ga.2011) (“First the clerk must enter a party's default . . . the party [seeking the default judgment] must then apply to the court for a default judgment.”).

A defaulted defendant is deemed to have admitted the plaintiff's well-pleaded allegations of fact. Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278 (11th Cir. 2005). However, a defaulted defendant is not held to admit facts that are not well pleaded or which constitute conclusions of law. Id. “[A] default judgment cannot stand on a complaint that fails to state a claim.” Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1371 n.41 (11th Cir. 1997) (citing Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Therefore, when considering a motion for default judgment, a court must investigate the legal sufficiency of the allegations and ensure the complaint states a plausible claim for relief. Crossfit, Inc. v. Quinnie, 232 F.Supp.3d 1295, 1304 (N.D.Ga. 2017). See also Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015) (“Conceptually . . . a motion for default judgment is like a reverse motion to dismiss for failure to state a claim.”). Ultimately, an entry of a default judgment is committed to the discretion of the district court. Hamm v. DeKalb Cnty., 774 F.2d 1567, 1576 (11th Cir. 1985).

III. Discussion

A. Jurisdiction and Venue

The Court has subject matter jurisdiction over CRS's federal trademark infringement and unfair competition claims pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331, 1337, and 1338. CRS's state law claims share a common nucleus of operative facts with its federal law claims. Through their default, Defendants admitted facts supporting CRS's federal causes of action. Accordingly, the Court exercises supplemental jurisdiction over CRS's state law claims pursuant to 28 U.S.C. § 1367(a). See Growler Station, Inc. v. Foundry Growler Station, LLC, 2019 WL 3769639, at *11 (N.D.Ga. Jan. 9, 2019) (exercising supplemental jurisdiction over a plaintiff's Georgia state law claims for trademark infringement and violation of the Uniform Deceptive Trade Practices Act arising “out of common nucleus of operative fact with the federal trademark infringement claims”).

In addition, as CRS alleges, Defendants consented to personal jurisdiction and venue in this district as parties to the Agreement, which contains a forum selection clause directing that disputes “shall be brought in the U.S. District Court for the Northern District of Georgia.”^[18] When parties have agreed to a valid forum selection clause, the clause should be given controlling weight in all but the most exceptional cases. Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49, 51 (2013). Here, the Court finds its exercise of subject matter jurisdiction, personal jurisdiction, and venue are proper.

B. CRS's Claims

1. Federal Trademark Infringement

CRS asserts a claim for federal trademark infringement under 15 U.S.C. § 1114, alleging that Defendants used the Mark without authorization.^[19]Under the Lanham Act, a defendant is liable for trademark infringement if he, without consent, uses “in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark . . . likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1114. To prevail on such a claim, “the registrant must show (1) its mark was used in commerce by the defendant without the registrant's consent and (2) the unauthorized use was likely to cause confusion, or to cause mistake or to deceive.” Optimum Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d 1231, 1241 (11th Cir. 2007).

i. Unauthorized Use of a Registered Mark in Commerce

CRS is the owner of the right, title, and interest in and to the U.S. Trademark Registration for the Mark.^[20] The Mark is used for CRS's “on-line, wholesale, and retail store services featuring roofing supplies.”^[21] CRS claims Defendants, without permission, made use of the Mark for their roofing supply business in nearby Sevierville, Tennessee and on their websites.^[22] That claim is admitted by function of Defendants' default.

ii. Likelihood of Confusion

Next, CRS argues Defendants' unauthorized use of the Mark will likely create consumer confusion.^[23] This Circuit considers seven factors to determine whether customer confusion is likely to occur under the Lanham Act: (1) the type of mark; (2) the similarity of the mark; (3) the similarity of the products the marks represent; (4) the similarity of the parties' retail outlets and customers; (5) the similarity of advertising media; (6) the defendant's intent; and (7) any actual confusion. Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931, 935 (11th Cir. 2010) (quoting Frehling Enters. v. Int'l Select Grp., Inc., 192 F.3d 1330, 1335 (11th Cir. 1999)). None of the seven factors are dispositive, “but greater weight is given to the type of mark and evidence of actual confusion.” Crossfit, Inc., 232 F.Supp.3d at 1305 (quoting Dieter v. B & H Indus. of Sw. Fla., Inc., 880 F.2d 322, 326 (11th Cir. 1989)). However, a finding of actual confusion is not necessary to show a likelihood of customer confusion. Wreal, LLC v. Amazon.com, Inc., 38 F.4th 114, 137 (11th Cir. 2022).

a. Type of Mark

There are four recognized types of marks, ranging from weakest to strongest: generic, descriptive, suggestive, and arbitrary. Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1240 (11th Cir. 2008). The stronger the mark, the greater the scope of protection accorded it. Id. In addition, if a mark is “incontestable”- that is, if it has been registered for five years with the Patent & Trademark Office, its holder has filed the affidavit required by 15 U.S.C. § 1065(3) with the Patent & Trademark Office, and the Patent & Trademark Office has accordingly declared the mark “incontestable”-then the mark is presumptively strong. Frehling Inc., 192 F.3d at 1336. See also PlayNation Play Sys., Inc. v. Velex Corp., 924 F.3d 1159, 1166 (11th Cir. 2019) (finding an incontestable mark is presumed to be at least descriptive with secondary meaning, and therefore relatively strong); Trilink Saw Chain, LLC v. Blount, Inc., 583 F.Supp.2d 1293, 1311 (N.D.Ga. 2008) (“While suggestive and arbitrary marks are presumed entitled to protection, descriptive marks will be protected only when secondary meaning is shown.”) (citation omitted).^[24]

CRS avers that the Mark is strong by virtue of its continuous use since 1981, its federal registration, and its incontestable status.^[25] CRS maintains it has held Registration Number 4803752 since September 1, 2015, and Registration Number 4900509 since February 16, 2016.^[26] Further though CRS does not say so, the Mark appears to be an arbitrary mark,...