Tapatio Foods, LLC v. Rodriguez

• Decision Date: 19 November 2019
• Docket Number: Case No. 1:19-cv-00335-DAD-SKO
• Parties: TAPATIO FOODS, LLC, Plaintiff, v. SULAIMAN WALEED RODRIGUEZ, Defendant.
• Court: U.S. District Court — Eastern District of California

TAPATIO FOODS, LLC, Plaintiff, v. SULAIMAN WALEED RODRIGUEZ, Defendant.

Case No. 1:19-cv-00335-DAD-SKO

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

November 19, 2019

FINDINGS AND RECOMMENDATION THAT PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AND PERMANENT INJUNCTION BE GRANTED

(Doc. 16)

OBJECTIONS DUE: 21 DAYS

I. INTRODUCTION

On August 6, 2019, Plaintiff Tapatio Foods, LLC filed a motion for default judgment against Defendant Sulaiman Waleed Rodriguez.¹ (Doc. 16.) No opposition to Plaintiff's motion was filed. The motion was referred to the undersigned for findings and recommendation pursuant to 28 U.S.C. § 636(b). The undersigned reviewed Plaintiff's papers and all supporting material and found the matter suitable for decision without oral argument pursuant to Local Rule 230(g). The hearing set for October 16, 2019, was therefore VACATED. (Doc. 23.)

For the reasons set forth below, the Court RECOMMENDS that Plaintiff's motion for default judgment and permanent injunction be GRANTED.

II. BACKGROUND

On April 3, 2019, Plaintiff filed the operative First Amended Complaint ("FAC") alleging claims for trademark infringement; unfair competition under the Lanham Act, 15 U.S.C. § 1125;unfair competition under California law; and trademark dilution by tarnishment. (Doc. 5.) Plaintiff states that it is the owner of four United States Trademark Registrations² (the "Tapatio Marks") related to its meatless hot sauce and apparel sold in grocery stores, retail outlets, and restaurants nationwide. (See id. ¶¶ 10-17.)

Plaintiff alleges Defendant advertises and sells meatless hot sauce infused with T.H.C., a derivative of marijuana, and other related products under the brand name "Tiowaxy" and "a variety of marks that are confusingly similar to the TAPATIO Marks[.]" (Id. ¶¶ 20-33.)

The FAC seeks injunctive relief in the form of "a permanent injunction restraining Defendants, any companies or business that they own, their officers, directors, agents, employees, representatives and all persons acting in concert with Defendants, from engaging in any further trademark infringement, unfair competition and dilution[.]" (Id. at 11.)

Defendant was served on April 15, 2019. (Doc. 10.) To date, Defendant has not responded to the FAC. Plaintiff requested that the Clerk enter default against Defendant on June 21, 2019, (Doc. 11), which was entered on June 24, 2019. (Doc. 12.) Plaintiff then filed a motion for default judgment and permanent injunction against Defendant, which is now before the Court. (Doc. 16.)

III. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 55(b) permits a court-ordered default judgment following the entry of default by the clerk of the court under Rule 55(a). It is within the sole discretion of the court as to whether default judgment should be entered. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). A defendant's default by itself does not entitle a plaintiff to a court-ordered judgment. See id. Instead, the Ninth Circuit has determined a court should consider seven discretionary factors, often referred to as the "Eitel factors," before rendering a decision on default judgment. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). The Eitel factors include (1) the possibility of prejudice to the plaintiff, (2) the merits of the plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to excusable neglect, and(7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. See id.

A plaintiff is required to prove all damages sought in the complaint. See Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1992). In addition, any relief sought may not be different in kind from, or exceed in amount, what is demanded in the complaint. Fed. R. Civ. P. 54(c). If the facts necessary to determine the damages are not contained in the complaint, or are legally insufficient, they will not be established by default. See Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

Finally, once the court clerk enters a default, the well-pleaded factual allegations of the complaint are taken as true, except for those allegations relating to damages. See Televideo Sys., Inc., 826 F.2d at 917.

B. Analysis

1. The Eitel Factors Weigh in Favor of Granting a Default Judgment

a. Prejudice to Plaintiff if Default Judgment is Not Granted

If default judgment is not granted, Plaintiff will effectively be denied a remedy until Defendant participates and makes an appearance in the litigation—which may never occur. Denying Plaintiff a means of recourse is, by itself, sufficient to meet the burden imposed by this factor. See, e.g., Philip Morris, USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 499 (C.D. Cal. 2003); Adobe Systems Inc. v. Cain, No. 5:08-cv-02435 RMW, 2008 WL 5000194, at *3 (N.D. Cal. Nov. 21, 2008) ("[I]f the default judgment motion is denied, [the plaintiff] will be left without a remedy or means to prevent [Defendant's] continued infringement.").

b. Merits of Plaintiff's Substantive Claims and the Sufficiency of the Complaint

The next relevant Eitel factors include an evaluation of the merits of the substantive claims pled in the complaint as well as the general sufficiency of the complaint. In weighing these factors, courts evaluate whether the complaint is sufficient to state a claim that supports the relief sought. See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978); see also DIRECTV, Inc. v. Huynh, 503 F.3d 847, 854 (9th Cir. 2007) ("[A] defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.") (internal quotation marks omitted).

Here, Plaintiff pleads claims for (1) trademark infringement under 15 U.S.C. § 1114; (2) unfair competition under 15 U.S.C. § 1125; (3) unfair competition under Cal. Bus. & Prof. Code § 17200; and (4) dilution by tarnishment under 15 U.S.C. § 1125(c)(2)(C). (Doc. 5 ¶¶ 39-59.)

i. Trademark Infringement and Unfair Competition (Counts 1-3)

The Court analyzes Plaintiff's claims for trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125, and unfair competition under California law together, because if a plaintiff sufficiently pleads a claim for trademark infringement, it also sufficiently pleads claims for unfair competition under 15 U.S.C. § 1125 and California law. See, e.g., Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1153 (9th Cir. 2002) ("[A]ctions pursuant to . . . § 17200 are 'substantially congruent' to claims made under the Lanham Act") (citation omitted); Spy Optic, Inc. v. Alibaba.Com, Inc., 164 F. Supp. 3d 755, 764 (C.D. Cal. 2015); Kythera Biopharmaceuticals, Inc. v. Lithera, Inc., 998 F. Supp. 2d 890, 897 (C.D. Cal. 2014); Phillip Morris USA Inc. v. Liu, 489 F. Supp. 2d 1119, 1122 (C.D. Cal. 2007) ("Proof of trademark infringement under the Lanham Act independently constitutes unfair competition under California law"); Grey v. Campbell Soup Co., 650 F. Supp. 1166, 1173 (C.D. Cal. 1986) ("The tests for infringement of a federally registered mark under § 32(1), 15 U.S.C. § 1114(1), infringement of a common law trademark, unfair competition under § 43(a), 15 U.S.C. § 1125(a), and common law unfair competition involving trademarks are the same.").

To prevail on a claim for trademark infringement, a plaintiff must show "(1) that it has a protectible ownership interest in the mark; and (2) that the defendant's use of the mark is likely to cause consumer confusion." Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1202 (9th Cir. 2012) (quoting Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011)); see also Chan Luu, Inc. v. Guang Gao, No. CV 13-2297 FMO (JCX), 2014 WL 12567141, at *4 (C.D. Cal. Jan. 27, 2014) ("To prevail on its claims under the Lanham Act for trademark infringement . . . plaintiff must demonstrate that, '(1) it owns a valid and protectable trademark, and (2) the defendant used in commerce a similar mark without authorization in a manner likely to cause consumer confusion, deception, or mistake.") (citation omitted).

Trademark Ownership

"Registration of a mark is prima facie evidence of the validity of the mark, the registrant's ownership of the mark, and the registrant's exclusive right to use the mark in connection with the goods specified in the registration." Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1124 (9th Cir. 2014) (citing 15 U.S.C. § 1115(a)). Here, Plaintiff alleges that it owns four registered trademarks in the Tapatio Marks and attaches the registrations to the FAC. (Doc. 5 ¶¶ 10-13; Doc. 5-1.) Thus, Plaintiff has sufficiently established its ownership interest in the Tapatio Marks. See Pom Wonderful, 775 F.3d at 1124.

Likelihood of Confusion

In determining likelihood of confusion, district courts in the Ninth Circuit consider the following factors: "(1) strength of the protected mark; (2) proximity and relatedness of the goods; (3) type of goods and the degree of consumer care; (4) similarity of the protected mark and the allegedly infringing mark; (5) marketing channel convergence; (6) evidence of actual consumer confusion; (7) defendant's intent in selecting the allegedly infringing mark; and (8) likelihood of product expansion." Id. (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979)). The factors are "fluid," and a "plaintiff need not satisfy every factor, provided that strong showings are made with respect to some of them." Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 631 (9th Cir. 2005).

As alleged in the FAC, the Tapatio Marks appear on Plaintiff's products as the word "Tapatio" in red arching font with the image of a Mexican "Charro"³ in a sombrero, yellow shirt and red tie, along with a red banner. (See Doc. 5 ¶¶ 14, 25-30.) The FAC...