Five Star Chemicals & Supply, LLC v. 5 Star Enter.
| Docket Number | Civil Action 20-cv-02769-RM-NYW |
| Decision Date | 24 June 2021 |
| Parties | FIVE STAR CHEMICALS & SUPPLY, LLC, Plaintiff, v. 5 STAR ENTERPRISE, INC., d/b/a 5 STAR CHEMICALS, Defendant. |
| Court | U.S. District Court — District of Colorado |
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This matter comes before the court for recommendation on Plaintiff Five Star Chemicals & Supply, LLC (“Plaintiff”)'s Motion for Default Judgment Permanent Injunction, Statutory Damages, Costs Attorneys' Fees, and Other Equitable Relief Against Defendants [sic] 5 Star Enterprise, Inc. (the “Motion” or “Motion for Default Judgment”) [#16,[1] filed February 8, 2021]. The undersigned considers the Motion pursuant to 28 U.S.C. § 636(b), the Order Referring Case dated September 14, 2020 [#5], and the Memorandum dated February 8, 2021. [#17]. Upon review of the Motion, the record before the court, and the applicable case law, this court respectfully RECOMMENDS that the Motion for Default Judgment be DENIED and that this case be DISMISSED without prejudice for lack of personal jurisdiction over Defendant.
This civil action arises out of the alleged infringement of Plaintiff's “FIVE STAR” trademark by Defendant 5 Star Enterprise, Inc. d/b/a 5 Star Chemicals (“Defendant”). [#1 at ¶¶ 1416, 19, 35 40]. In the Complaint, Plaintiff alleges the following:[2]
Plaintiff is a manufacturer of cleaning and sanitizing chemicals in the food and beverage industry, “with [a] particular focus on breweries.” [Id. at ¶ 13]. Plaintiff has manufactured and sold its products using the FIVE STAR mark since 1980, [id. at ¶ 17], and has used the domain name www.fivestarchemicals.com since at least August 30, 2001. [Id. at ¶ 76]. In 2008 Plaintiff applied for registration of the FIVE STAR trademark, designating a date of first use in commerce of May 27, 1994,[3] and the mark was registered on November 10, 2009. [Id. at ¶ 14]. The FIVE STAR mark was “inadvertently abandoned” on June 17, 2016. [Id.]. Upon discovering this inadvertent abandonment, Plaintiff filed a new application for “[its] name and logo” on July 8, 2019. [Id. at ¶ 15]. On March 17, 2017, Plaintiff filed a new application for the FIVE STAR mark. [Id. at ¶ 16]. The mark was registered on July 3, 2018 in class 001 for “[c]hemicals for use in the manufacture of beer, wine, cider, liquor, spirits, mead, and other alcoholic and non-alcoholic beverages” and class 005 for “[s]anitizing preparations for food and beverage industry and homebrewing use.” [Id.]. Plaintiff states that it “has expended tremendous time, energy, and money in the marketing and advertising of its product under the FIVE STAR mark.” [Id. at ¶ 18].
Defendant is a Georgia corporation formed in 2006. [Id. at ¶ 19]. Since at least 2009, Defendant has operated a website using the domain name www.5starchemicals.com. [Id. at ¶ 78]. On its website, Defendant appears to sell, among other items, an “Eco Green Lime & Concrete Remover.” [Id. at ¶ 24]. This product is marketed for use in removing milkstone and beerstone, which “are hard deposits that accumulate on imperfectly cleansed dairy and brewery equipment.” [Id.]. Defendant does not sell products directly through its website, but instead, prospective customers must contact Defendant directly to obtain a price quote. [Id. at ¶ 25]. Defendant claims to have done business with or partnered with several national and international companies, and its clients include companies “which ha[ve] a substantial presence in the State of Colorado.” [Id. at ¶¶ 7-10].
Plaintiff became aware of Defendant's existence in early 2020. [Id. at ¶ 22]. Plaintiff's counsel sent Defendant a letter dated May 21, 2020 concerning the similarities between Plaintiff's registered mark and Defendant's trade name, 5 Star Chemicals,[4] the likelihood of confusion or dilution of the mark, and Plaintiff's potential exposure to legal liability, damage to its reputation, and diminishment of Plaintiff's goodwill if a customer were to be harmed by one of Defendant's products. [Id. at ¶ 26]. Defendant did not respond. [Id. at ¶ 27]. Plaintiff's counsel then made several telephone calls to Defendant's business number; the calls went unanswered and unreturned. [Id. at ¶ 28].
On July 31, 2020, Plaintiff's counsel sent a follow-up letter, to which Defendant responded. [Id. at ¶¶ 29-30]. Defendant responded that it provides detergent products “to the Beverage manufacturing industry, with clientele such as Coca-Cola, Pepsico, Anheuser Busch amongst a host of other smaller breweries [Defendant does] business with,” which Defendant characterized as “an integral part of [Defendant's] existing business.” [Id. at ¶ 31]. Plaintiff states that, through this letter, “Plaintiff learned . . . that Defendant's sales to the beverage industry are not limited to the Eco Green Lime & Concrete Remover and that such sales represent a substantial portion of Defendant's business.” [Id. at ¶ 31]. In addition, Defendant indicated that “[t]he similarity in names [between Plaintiff's and Defendant's businesses] has . . . caused [Defendant] issues with [Defendant's] current clientele.” [Id. at ¶ 32].
Plaintiff sent Defendant a cease-and-desist letter on August 20, 2020, demanding that Defendant cease all marketing and sales of its product “to any customer in the beverage manufacturing space” using the 5 Star name, logo, or any other name or logo that is confusingly similar to Plaintiff's FIVE STAR mark. [Id. at ¶ 34]. Defendant did not respond to this letter. [Id.].
Plaintiff filed this lawsuit on September 14, 2020, asserting claims of trademark infringement under 15 U.S.C. § 1114; false designation of origin under 15 U.S.C. § 1125(a); trademark dilution under 15 U.S.C. § 1125(c); and cyberpiracy under 15 U.S.C. § 1125(d). See [id. at 11-18]. Defendant was properly served on October 15, 2020. [#9]. After Defendant failed to appear in this case or otherwise defend against this lawsuit, Plaintiff moved for a clerk's entry of default, [#13], and the Clerk of Court entered default on December 4, 2020. [#14]. On February 8, 2021, Plaintiff filed the present Motion for Default Judgment. [#16]. In the Motion, Plaintiff seeks (1) a court order permanently enjoining Defendant from “all use of the ‘5 Star' mark or any other confusingly similar mark”; (2) transfer of Defendant's www.5starchemicals.com domain name to Plaintiff; (3) $100,000 in statutory damages; (4) costs; and (5) attorney's fees. [Id. at 21].[5]The presiding judge, the Honorable Raymond P. Moore, referred the Motion to the undersigned for Recommendation. [#17].
On May 5, 2021, this court set an evidentiary hearing for June 8, 2021 and ordered Plaintiff to submit witness and exhibit lists on or before June 1, 2021. [#18]. In addition, the court noted that the Motion for Default Judgment did not comply with Local Rule 54.3, which requires that all motions for attorney's fees “be supported by an affidavit” and include, for each attorney for whom fees are requested, “a summary of relevant qualifications and experience” and “a detailed description of the services rendered, the amount of time spent, the hourly rate charged, and the total amount claimed.” [Id. at 2]. Plaintiff submitted its List of Exhibits and Witnesses for Evidentiary Hearing [#21], its Exhibits [#22], and an Affidavit of Brian D. Kaider in Support of Motion for Default Judgment [#20] on June 1, 2021.
On June 8, 2021, this court convened for the scheduled evidentiary hearing. See [#18; #23]. Although Plaintiff designated its Vice President and General Manager, Don Eggebraten, as its sole witness for the hearing, see [#21 at 3], Mr. Eggebraten did not appear for the hearing. See [#23]. The court, noting that the Motion for Default Judgment and Exhibits did not contain any affidavits that would authenticate the Exhibits, informed Plaintiff's counsel that the evidentiary hearing could be re-set or that Plaintiff could supplement the record with a document that authenticates the Exhibits so that the Exhibits could be considered by the court. [#23]. Plaintiff indicated that it would provide supplemental information to the court on or before June 15, 2021, [id.], and on June 14, 2021, Plaintiff filed three affidavits: one from Plaintiff's counsel, [#24], one from an investigator, [#25], and one from Mr. Eggebraten. [#26]. Because the Motion is ripe for Recommendation, I consider the appropriateness of an entry of default judgment below.
Rule 55(a) of the Federal Rules of Civil Procedure provides for the entry of default against any party who “has failed to plead or otherwise defend” against an affirmative request for relief. Fed.R.Civ.P. 55(a). To secure a default judgment against such a party under Rule 55(b), the movant must show that the defaulting party is not a minor or incompetent, is not in the military, has not made an appearance, and that the movant is entitled to a sum certain that can be made certain by computation. D.C.COLO.LCivR 55.1(a). Even still, “the entry of a default judgment is committed to the sound discretion of the district court.” Tripodi v. Welch, 810 F.3d 761, 764 (10th Cir. 2016).
The first step in determining whether to enter default judgment requires the court to resolve whether it has jurisdiction and if it does, whether the well-pleaded factual allegations in the Complaint and any attendant affidavits or exhibits support judgment on the claims against the defendants. Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010); see also Magic Carpet Ski Lifts, Inc. v. S&A Co., Ltd, No. 14-cv-02133-REB-KLM, 2015 WL 4237950, at *5 (D. Colo. 2015) . If the court lacks...
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