Stark Carpet Corp. v. Stark Carpet & Flooring Installations, Corp.

• Decision Date: 20 June 2013
• Docket Number: No. 12–cv–119 (NG)(VMS).,12–cv–119 (NG)(VMS).
• Citation: 954 F.Supp.2d 145
• Court: U.S. District Court — Eastern District of New York
• Parties: STARK CARPET CORP., Plaintiff, v. STARK CARPET & FLOORING INSTALLATIONS, CORP. and Roxana Valenzuela, Defendants.

954 F.Supp.2d 145

STARK CARPET CORP., Plaintiff,

v.STARK CARPET & FLOORING INSTALLATIONS, CORP. and Roxana Valenzuela, Defendants.

No. 12–cv–119 (NG)(VMS).

United States District Court, E.D. New York.

June 20, 2013.

Bennett D. Krasner, The Law Office of Bennett D. Krasner, Atlantic Beach, NY, for Plaintiff.

ORDER

GERSHON, District Judge.

The court has reviewed for clear error the Report and Recommendation of Magistrate Judge Vera M. Scanlon, dated and filed February 25, 2013, to which no objections have been received. Judge Scanlon has comprehensively surveyed the applicable law and applied it to the facts. The Report and Recommendation is adopted. The individual defendant Roxana Valenzuela is dismissed from the action without prejudice, and the Clerk of Court is directed to enter judgment against defendant STARK CARPET & FLOORING INSTALLATIONS, CORP., only, in the amount of $10,000 in statutory damages, without prejudgment interest, plus costs of $350.

The Clerk of Court is further directed to enter a permanent injunction, pursuant to which Defendant STARK CARPET & FLOORING INSTALLATIONS, CORP., its officers, directors, employees, agents, servants, affiliates and any person and/or entity acting under or through defendant, are hereby enjoined from directly or indirectly:

a) infringing plaintiff's trade name, trademarks and service marks containing the word “Stark” or words “Stark Carpet” in connection with defendant's business; (b) using the word “Stark” or words “Stark Carpet” in connection with advertising, promotion, offering or performance of any services or good related in any manner to interior design products, including but not limited to carpets, rugs, broadloom carpeting, floor coverings, wall coverings, furniture, fabric and/or paint;

(c) holding itself out as the owners of or authorized users of names or marks containing the word “Stark” or words “Stark Carpet” in any manner related to interior design products, including but not limited to carpets, rugs, broadloom carpeting, floor coverings, wall coverings, furniture, fabric and/or paint;

(d) performing or engaging in any actions or use of the word “Stark” or words “Stark Carpet” which is likely to cause confusion or mistake or to deceive or otherwise mislead the trade or public into believing that plaintiff and defendant are one in the same or in some way connected or associated; that plaintiff is a sponsor of or otherwise controls defendant; that defendant is in any way affiliated with, controlled by, associated with or supervised by plaintiff; or that defendant's services or products originate with or are offered with the approval, consent, authorization or supervision of plaintiff; and

(e) using the word “Stark” or the words “Stark Carpet” in any way that would create a likelihood of injury to plaintiff's business reputation or a dilution of Plaintiff's names and marks and the goodwill associated therewith.

SO ORDERED.

REPORT AND RECOMMENDATION

SCANLON, VERA M., United States Magistrate Judge:

I. Introduction

On January 10, 2012, Plaintiff Stark Carpet Corp. (“Plaintiff”) filed this action, alleging that Defendant Stark Carpet & Flooring Installations, Corp. (“Defendant”) violated various federal and state laws by incorporating and operating a business in New York State using a trade name and trademark so similar to Plaintiff's that consumers are likely to confuse Plaintiff's and Defendant's business operations. Docket No. 1 (“Compl.”). Plaintiff alleged that Defendant's use of a trade name and trademark employing the word “Stark” violates the federal Lanham Act barring trademark infringement, 15 U.S.C. Sec. 1114, and the false designation of origin, 15 U.S.C. Sec. 1125(a); New York state statutory law prohibiting the dilution of trademark, General Business Law Secs. 360–L (injury to business reputation and dilution) and Sec. 133 (use of name or address with intent to deceive); and New York state common law prohibiting trademark infringement and unfair competition. Compl. ¶ (Nature of Action). Plaintiff also sued Defendant's putative CEO, Roxana Valenzuela, id.; however, in the motion for a default judgment, Plaintiff moved to dismiss Ms. Valenzuela from the action without prejudice to refile. Docket No. 10–3.

Despite proper service, Defendant did not answer or otherwise move in response to the Complaint. Docket Nos. 5; 10–1, Ex. B (service effected with Donna Christie, the New York Secretary of State). On July 17, 2012, the Clerk of the Court entered a notation of default against Defendant. Docket No. 9. On July 23, 2012, Plaintiff filed a motion for default judgment as to Defendant. Docket No. 10. On July 30, 2012, District Judge Nina Gershon granted Plaintiff's motion for default judgment in its entirety and referred the case to the Magistrate Judge for a Report and Recommendation “to determine the scope of relief, including damages, interest, costs, and attorney's fees, if any.” Docket No. 11.

I respectfully recommend that the Court 1) grant Plaintiff's request for statutory damages to the extent the Court enter an award in the amount of $10,000 in statutory damages (but not the $25,000 requested by Plaintiff); 2) deny the request for prejudgment interest; 3) award costs of $350; and 4) grant the request for an injunction against Defendant as set forth below at pages 26–27. infra.

II. Factual Summary

The law requires a court to accept as true a plaintiff's factual proffer when uncontested by a defaulting defendant. See Priestley v. Headminder, Inc., 647 F.3d 497, 504 (2d Cir.2011); Finkel v. Romanowicz, 577 F.3d 79, 83 n. 6 (2d Cir.2009). There is no question that a “default judgment entered on well-pleaded allegations in a complaint establishes a defendant's liability.” Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69 (2d Cir.1971), rev'd on other grounds,409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973). Although courts considering motions for default judgment are entitled to accept as true all well-pleaded facts in a complaint pertaining to liability, courts have an “obligation to ensure that damages [a]re appropriate.” See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir.1997) (recognizing that the factual allegations in the complaint, except those relating to damages, are deemed true after default). “Even when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint with respect to the amount of the damages are not deemed true.” Credit Lyonnais Sec., Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir.1999). When a district court determines the appropriate amount of damages, it must undertake two tasks: “determining the proper rule for calculating damages on such a claim, and assessing plaintiff's evidence supporting the damages to be determined under this rule.” Id.

A determination as to damages may be made on the paper submission where a plaintiff has not asked for a hearing but instead submitted documentary evidence of damages. See Finkel, 577 F.3d at 83 n. 6. Accordingly, the following facts are taken from Plaintiff's various submissions in this case to provide background, but only those allegations that relate to liability are accepted as true.

Plaintiff Stark Carpet Corp. is a New York corporation that was formed on August 23, 1946. Compl. ¶ 6.¹ Its present-day Executive Office and Main Showroom are located at 979 Third Avenue in the borough of Manhattan in New York City. Id. ¶ 7. Since 1946, Plaintiff has built a strong world-wide reputation as a wholesaler and, more recently, retail distributor of high-end home and commercial interior design products and services including, but not limited to, carpets, rugs and other fine floor covering, fabric, wall coverings, furniture and paint. Id. ¶¶ 7, 38. Plaintiff's products are delivered and installed by highly qualified and trained professionals who either work for or are approved by Plaintiff. Id. ¶ 15. The name Stark has become synonymous with high-end interior design products and services as a result of Plaintiff's many decades of operations; accordingly, the Stark name has significant value in terms of marketplace goodwill. Id. ¶¶ 6, 8. Plaintiff has registered the Stark name with the United States Patent and Trademark Office. Id. ¶ 9. In fact, Plaintiff has registered nine variations of the Stark name and mark, and all of these registrations have been current and valid through at least the filing of the motion for a default judgment. Id.

On December 24, 2010, Defendant filed a Certificate of Incorporation with the New York Secretary of State. Id; Docket No. 10–1, Ex. C. In that document, Defendant incorporated under the name Stark Carpet and Flooring Installations, Corp. Id. Defendant listed its address as 53–3796th Street in Corona, Queens, New York State. Id. In its complaint, Plaintiff stated that Defendant is knowingly using the infringing trade names Stark Carpet and Stark Carpet & Flooring Installations. Compl. ¶ 12. Plaintiff stated on information and belief that Defendant adopted the Stark mark with the intention of “trading off” Plaintiff's goodwill and confusing the public and the interior design industry. Id. ¶¶ 14, 21. Plaintiff also alleged that it has no control over the nature and quality of Defendant's services such that because of the confusion as to a relationship between the parties, Plaintiff's name and marks will suffer. Id. ¶¶ 16, 19, 26–28. Plaintiff alleged that it had suffered and would continue to suffer irreparable harm should the infringement continue. Id. ¶¶ 18, 22. Plaintiff stated on information and belief that Defendant is “providing carpet and installation services through similar channels of trade and to similar classes of customers of Plaintiff and Plaintiff and Defendants are in competition with respect to those services.” Am Compl. ¶ 18.

Once one considers the record beyond the complaint, the factual record becomes more murky, and the extent...