Hakkasan LV, LLC v. Adamczyk

• Decision Date: 05 April 2017
• Docket Number: Case No. 2:14-cv-01717-GMN-NJK
• Parties: HAKKASAN LV, LLC, et al., Plaintiff(s), v. MARK DANIEL ADAMCZYK, et al., Defendant(s).
• Court: U.S. District Court — District of Nevada

HAKKASAN LV, LLC, et al., Plaintiff(s), v. MARK DANIEL ADAMCZYK, et al., Defendant(s).

Case No. 2:14-cv-01717-GMN-NJK

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

April 5, 2017

REPORT AND RECOMMENDATION

(Docket Nos. 76-77)

Pending before the Court is Plaintiffs' amended motion for entry of default judgment against Defendants iDrive Orlando, LLC, James Patrick Adamcyzk, and My Domain Holdings, LLC ("Defaulting Defendants"). Docket No. 76. The undersigned finds the motion properly decided without a hearing. See Local Rule 78-1. For the reasons discussed below, the undersigned RECOMMENDS that the motion for default judgment be DENIED, and that the claims against Defendants iDrive Orlando, LLC, James Patrick Adamcyzk, and My Domain Holdings, LLC be DISMISSED.¹

I. BACKGROUND

This case involves allegations of various intellectual property infringements related to Plaintiffs' Hakkasan nightclub, including for cybersquatting, trademark infringement, and copyright infringement. The gist of the allegations is that Defendants, who have no affiliation with Plaintiffs, used domain namesthat included "hakkasan," along with the Hakkasan mark and images of the Hakkasan night club, to obtain leads to book tables at the nightclub and then sent these leads to commissioned VIP hosts in exchange for $399 per month. See, e.g., Docket No. 52 at 1-3 (order granting summary judgment, providing overview of case). After cease-and-desist efforts failed, Plaintiffs sued Defendants in this Court alleging numerous causes of action. See, e.g., Docket No. 13 (amended complaint).

One defendant, Mark Daniel Adamczyk, appeared in this action. See, e.g., Docket No. 18. On August 19, 2015, Chief United States District Judge Gloria M. Navarro granted Plaintiffs' motion for summary judgment against Mark Daniel Adamczyk on all but one of the claims against him. Docket No. 52. In particular, Chief Judge Navarro granted summary judgment with respect to Plaintiffs' claims for (1) cybersquatting, (2) statutory trademark infringement and counterfeiting, (3) copyright infringement, (4) unfair competition, (5) common law trademark infringement, and (6) deceptive trade practices. Id. at 5-15.² Chief Judge Navarro also awarded significant damages in connection with summary judgment, including:

• $100,000 for cybersquatting;

• $200,000 for copyright infringement;

• $500,000 for counterfeiting; and

• $1,000 for corrective advertising.

Id. at 21. Chief Judge Navarro further awarded Plaintiffs their attorneys' fees and transferred the infringing domain names to Plaintiffs. Id. Chief Judge Navarro denied the request for a permanent injunction. Id. at 20.

The pending motion essentially seeks to extend the judgment already obtained to the Defaulting Defendants. See Docket No. 76 at 14-18. In addition, Plaintiffs seek a permanent injunction against Defaulting Defendants and additional attorneys' fees related to filing the motion for default judgment. See id. at 21-22.

II. ANALYSIS

"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). The Ninth Circuit has made clear that the Court has a duty to ensure that a defendant is properly before the Court prior to entering default judgment against it. Tuli v. Republic of Iraq, 172 F.3d 707, 712 (9th Cir. 1999). This duty encompasses both a determination that the defendant was properly served and that the Court could permissibly exercise personal jurisdiction over the defendant. DFSB Kollective Co. v. Bourne, 897 F. Supp. 2d 871, 877-78 (N.D. Cal. 2012).

The initial motion for default judgment failed to meaningfully address either of these threshold issues, so the Court provided Plaintiffs an opportunity to do so through a renewed motion. Docket No. 75; see also Tuli, 172 F.3d at 713 (courts must give plaintiffs an opportunity to explain basis for personal jurisdiction prior to denying default judgment). For the reasons discussed below, Plaintiffs' renewed motion fails to show that service was effectuated against Defendant My Domain Holdings and also fails to show that the Court may exercise personal jurisdiction over Defendants James Patrick Adamcyzk and iDrive Orlando.

A. Service of Process - My Domain Holdings

As noted above, the Court must ensure that a defendant was properly served prior to entering default judgment against it. The record indicates that service was made on My Domain Holdings through service on the mother of the managing member of that entity at his house. See Docket No. 32. In reviewing the initial motion for default judgment, the Court found that Plaintiffs had failed to explain how service had been effectuated on My Domain Holdings through this substituted service. Docket No. 75 at 1 & n.1. In particular, the Court noted that Plaintiffs failed to supply any legal authority that a corporation may be properly served by leaving the summons and complaint with an officer's mother. See id.

Plaintiffs' renewed motion states that service may be made on a corporation through its managing member or officer pursuant to Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure, and that service on an individual is proper by leaving a copy of the summons and complaint with a person of suitable age at the officer's residence pursuant to Rule 4(e)(2) of the Federal Rules of Civil Procedure.See Docket No. 76 at 3-4. Hence, Plaintiffs read these rules together as allowing service on a corporation through substituted service on the corporation's officer at his residence. Plaintiffs cite no case law supporting this interpretation of the rules. See id. The undersigned declines to adopt Plaintiffs' unsupported interpretation.

The text of the applicable Rule cited by Plaintiffs provides that a corporation may be served "by delivering a copy of the summons and of the complaint to an officer, a manager or a 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). The Rule does not define how such "deliver[y]" must be made. Nonetheless, courts have held that service on a corporation through Rule 4(h)(1)(B) requires "personal service" on the corporate representative. See Annex Telecom Co. v. Brown, 2014 WL 5149101, at *3 (E.D. Pa. Oct. 14, 2014); see also McAllister v. Hawiiana Mgmt. Co., 2012 WL 292955, at *12 (D. Haw. Jan. 30, 2012); In re TFT-LCD (Flat Panel) Antitrust Litig., 2009 WL 4874872, at *2 (N.D. Cal. Oct. 6, 2009). More specifically to this case, courts have long held that delivering papers to an adult at an officer's residence does not constitute proper service on the corporation. "Service under this part of the rule cannot be made, as it may be made on individuals pursuant to Rule [4(e)(2)], by leaving a copy of the summons and complaint at the officer's or agent's dwelling house or usual place of abode with a person residing therein." Gottlieb v. Sandia Am. Corp., 452 F.2d 510, 514 & n.7 (3d Cir. 1971). Such a reading of the Rules is consistent with the fact that Rule 4(h) lacks a provision for substituted service. See Allstate Ins. Co. v. Riverside Roofing & Const. Inc., 2007 WL 1191785, at *3 (E.D. La. Apr. 19, 2007). Moreover, it is consistent with the fact that Rule 4(h) requires the "delivering" of the process papers rather than the serving of the papers. See, e.g., Colorado Legal Servs. v. Legal Aid Nat'l Servs., 2010 WL 1258090, at *2 (D. Colo. Mar. 29, 2010) ("That is the import of the language 'delivering . . . to' in Rule 4(h)"). Following this interpretation of the Rules, courts have repeatedly rejected service attempts akin to the circumstances presented here. See Tryforos v. Icarian Develop. Co., 518 F.2d 1258, 1260, 1264 (7th Cir. 1975), overruled on other grounds, Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1975) (holding that service on president's wife at his residence did not constitute service on the corporation); Barclays Bank of New York v. Goldman, 517 F. Supp. 403, 413 (S.D.N.Y. 1981) (holding that service on maid at officer's residence did not constitute service on the corporation); Annex Telecom, 2014 WL 5149101,at *3 (holding that service on officer's mother at their shared residence did not constitute service on the corporation); Colorado Legal Servs., 2010 WL 1258090, at *2 (holding that service on adult son of corporate agent at their residence did not constitute service on the corporation); Allstate Ins. Co., 2007 WL 1191785, at *1, 3 (holding that service on father of corporate agent at their shared residence did not constitute service on the corporation); Slater v. Mid S. Extrusion, 2006 WL 4006129, at *2 (W.D. La. Dec. 20, 2006) (holding that service on wife of corporate agent at their residence did not constitute service on the corporation).

The Court finds the above case law interpreting the cited provisions of Rule 4 to be persuasive, and Plaintiffs have provided no contrary legal authority. As a result, Plaintiffs' service on the mother of My Domain Holdings' corporate officer at their shared home does not constitute effective service under Rule 4. Plaintiffs articulate no other possible basis on which the Court could conclude that service was effectuated on My Domain Holdings.³ Accordingly, the undersigned recommends that the motion for default judgment be denied with respect to My Domain Holdings for lack of service.

B. Personal Jurisdiction - Defendants James Patrick Adamcyzk and iDrive Orlando

As noted above, the Court has a duty to ensure that it may permissibly exercise personal jurisdiction over a defendant before entering default judgment against it. The analysis focuses on whether the exercise of personal jurisdiction comports with the constitutional principles of due process, which requires that a defendant have minimum contacts with the forum "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v.Wa...