Same Day Garage Door Services v. Y.N.G. 24/7 Locksmith LLC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Same Day Garage Door Services, No. CV-19-04782-PHX-MTL 10 Plaintiff, ORDER 11 v. 12 Y.N.G. 24/7 Locksmith LLC, et al., 13 Defendants. [14] 15 Plaintiff Same Day Garage Door Services moves for default judgment against 16 Defendant Y.N.G. 24/7 Locksmith, LLC dba Phoenix Garage Master (“Y.N.G.” or 17 “Defendant”) pursuant to Federal Rule of Civil Procedure 55(b)(2). (Doc. 20.) Defendant 18 has not filed a response. The motion is granted. 19 I. BACKGROUND 20 On July 22, 2019, Plaintiff filed the Complaint against Defendants Y.N.G. 24/7 21 Locksmith, LLC, dba Phoenix Garage Masters; AL Services, L.L.C.; and Yavon and Jane 22 Doe Goldenberg. (Doc. 1.) It alleges claims for unfair competition under Section 43(a) of 23 the Lanham Act, deceptive trade practices under Arizona law, misappropriation, and 24 equitable relief. For purposes of this Order, the facts alleged in the Complaint are assumed 25 to be true, except as to damages. Geddes v. United Fin. Grp., 559 F.2d 557 , 560 (9th Cir. 26 1977) (“The general rule of law is that upon default the factual allegations of the complaint, 27 except those relating to the amount of damages, will be taken as true.”). 28 Plaintiff is an Arizona company that “provides garage door repair services, installs 1 garage doors, sells garage door openers, and offers related products and services.” 2 (Doc. 1 ¶ 22.) An “important feature” of Plaintiff’s business is providing “same day” 3 services. (Id. ¶ 27.) Plaintiff operates primarily in the Phoenix metropolitan area under the 4 names “Same Day Garage Door Repair,” “Same Day Garage Door Services,” and “Same 5 Day Garage Repair Services.” (Id. ¶ 2.) Plaintiff has registered these trade names with the 6 Arizona Secretary of State. (Id. ¶ 23.) Plaintiff advertises its trademarks and trade names 7 “extensively,” including “purchasing advertising on Google and other search engines.” 8 (Id. ¶ 29.) 9 The Complaint states that Defendants use “words, Internet domain registrations and 10 addresses, and other features in its advertising, in addition to other unfair and deceptive 11 business practices, that are intentionally designed to mislead and confuse consumers.” 12 (Id. ¶ 1.) For example, Defendants have used domain names including “Same Day Garage, 13 Tempe” and “Same Day Garage, Mesa” “with the intent to divert consumers from 14 Plaintiff’s online locations.” (Id. ¶ 58.) Defendants have also taken other steps to “conceal 15 their true identities in order to mislead consumers,” including the use of fake business 16 addresses. (Id. ¶ 36.) Plaintiff states that Defendants “have a bad faith intent to profit” 17 through their use of domain names, terms, and other strategies intended to deceive 18 consumers. (Id. ¶ 42.) 19 Plaintiff attempted to serve Y.N.G.’s purported statutory agent on August 8, 2019. 20 (Doc. 11.) However, the individual located at the statutory agent’s address professed no 21 knowledge of Y.N.G. (Doc. 20 at 3.) Plaintiff then effected service on September 4, 2019 22 pursuant to A.R.S. § 29-606(B), which allows for service of process on the Arizona 23 Corporation Commission when a “limited liability company fails to appoint or maintain a 24 statutory agent at the address shown on the records of the commission.” (Doc. 12.) See Fed. 25 R. Civ. P. 4(e)(1) (plaintiffs may utilize the service of process rules that apply in the state 26 in which the federal district court is located). Plaintiff has not to date filed proofs of service 27 as to the other named Defendants. 28 Y.N.G. has not filed an answer, a motion to dismiss, or any other response to the 1 Complaint. Upon application (Doc. 17), the Clerk of the Court entered default against 2 Y.N.G. on October 29, 2019. (Doc. 19.) Plaintiff filed the pending motion for default 3 judgment against Y.N.G. on November 7, 2019. (Doc. 20.) Y.N.G. has not responded. 4 II. DISCUSSION 5 A. Default Judgment 6 Once a default has been entered and a defendant fails to move to set aside the 7 default, the Court may enter a default judgment. Fed. R. Civ. P. 55(b)(2). The entry of 8 default judgment is within the Court’s discretion. Aldabe v. Aldabe, 616 F.2d 1089 , 1092 9 (9th Cir. 1980). In determining whether default judgment is appropriate, the Court 10 considers the following factors: “(1) the possibility of prejudice to the plaintiff, (2) the 11 merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of 12 money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) 13 whether the default was due to excusable neglect, and (7) the strong policy underlying the 14 Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel v. McCool, 782 15 F.2d 1470 , 1471-72 (9th Cir. 1986). 16 Upon consideration of the Eitel factors, the Court concludes that Plaintiff is entitled 17 to default judgment. Plaintiff will be prejudiced if default judgment is denied because it 18 “will likely be without other recourse for recovery.” PepsiCo, Inc. v. Cal. Sec. Cans., 238 19 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). The merits of Plaintiff’s claims and the 20 sufficiency of the Complaint also favor granting the motion. Plaintiff has stated a claim for 21 unfair competition under Section 43(a) of the Lanham Act, which prohibits the sale of 22 goods or services through any “word, term, name, symbol, or device, or any combination 23 thereof … which is likely to cause confusion, or to cause mistake, or to deceive as to the 24 affiliation, connection, or association of such person with another person…” [25] 15 U.S.C. § 1125 (a)(1). The Complaint states that Y.N.G. has used words, terms, or names 26 that are “likely to cause confusion” or to “deceive” with respect to Plaintiff’s registered 27 marks, and therefore states a claim for unfair competition under Section 43(a) of the 28 Lanham Act. Id. 1 Plaintiff has also stated a claim for unfair competition under Arizona law. The 2 “central tort in unfair competition at common law is known as ‘palming off,’ or ‘passing 3 off.’ It consists in a false representation tending to induce buyers to believe that the 4 defendant’s product is that of the plaintiff....” Fairway Constructors, Inc. v. Ahern, 193 5 Ariz. 122 , 124 ¶ 10 (Ct. App. 1998) (citation omitted). The purpose of the doctrine is “to 6 prevent business conduct that is “contrary to honest practice in industrial or commercial 7 matters.” Id. at 124 ¶ 10 (citation omitted). Plaintiff has stated such a claim because it 8 alleges that Y.N.G. has used deceptive names and strategies to induce buyers into believing 9 that they are purchasing Plaintiff’s services. 10 The Court is not convinced that Plaintiff has stated a claim for “misappropriation.” 11 (Doc. 1 ¶¶ 76-77.) With respect to this claim, Plaintiff only states that the acts “complained 12 of herein … constitute misappropriation.” (Id. ¶ 77.) Under A.R.S. § 44-410(2), 13 misappropriation means “[a]cquisition of a trade secret of another by a person who knows 14 or has reason to know that the trade secret was acquired by improper means” or 15 “[d]isclosure or use of a trade secret of another without express or implied consent.” 16 A.R.S. § 44-410(2)(a)-(b). The Complaint does not refer to any “trade secret,” and Plaintiff 17 has not presented another theory of “misappropriation.” (Doc. 1.) Nonetheless, Plaintiff 18 has stated claims for unfair competition under the Lanham Act and Arizona law, weighing 19 in favor of default judgment. 20 As to the remaining Eitel factors, and as discussed further below, the sum of money 21 at stake also weighs in favor of granting default judgment. There is also no possible dispute 22 concerning material facts because upon entry of default, the factual allegations of the 23 Complaint are taken as true. Geddes, 559 F.2d at 560. Y.N.G.’s failure to appear was also 24 unlikely due to excusable neglect. Y.N.G.’s purported statutory agent did not accept 25 service, and Y.N.G. has not responded in nearly eight months following Plaintiff’s 26 successful service via the Arizona Corporation Commission. Lastly, the strong policy 27 underlying the Federal Rules of Civil Procedure favoring decisions on the merits weighs 28 against default judgment, as always. The Court finds that this factor is not sufficient to 1 outweigh the other Eitel factors, however. Plaintiff is therefore entitled to default judgment. 2 B. Damages 3 Having found that entry of default judgment is proper, the next issue is one of 4 damages. Plaintiff seeks $100,000 in damages. (Doc. 20-3 at 3.) “As a general rule, 5 damages which result from a tort must be established with reasonable certainty.... Damages 6 are not rendered uncertain because they cannot be calculated with absolute exactness, yet, 7 a reasonable basis for computation must exist.” Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 8 1400, 1407 (9th Cir.1993) (internal quotation marks omitted). Courts have also “accepted 9 less precise estimates of damages where a defendant frustrates the discovery of a precise 10 amount by defaulting in the action.” Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d 11 1072, 1084 (C.D. Cal. 2012). 12 Y.N.G.’s failure to respond to the Complaint makes it is impossible for Plaintiff to 13 prove actual damages. See Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1238 (E.D. Cal. 14 2008). Plaintiff has, however, attempted to quantify its damages through the affidavit of 15 Joshua Jacoby, Plaintiff’s web marketing director. (Doc. 20-2.) See Doe v. United States, 16 No. CV-17-01991-PHX-GMS (JZB), 2018 WL 2431774 , at *8 (D. Ariz. May 30, 2018) 17 (“In determining damages, a court can rely on declarations submitted by the plaintiff[.]”) 18 (citation omitted). Mr. Jaboby estimates that Defendant’s conduct has resulted in a loss of 19 20 calls per month, with an average “ticket” of $500 each. (Id. at 2.) Mr. Jacoby also states 20 that Defendant’s action has created social medial confusion, as “numerous clients who 21 interacted with the wrong business then went to our social media, which resulted in time 22 lost, and more importantly brand dilution.” (Id.) Mr. Jaboby estimates damages of between 23 $50,000 and $250,0000 “for the last 365 days alone, with more damage being incurred 24 each day.” (Id.) In light of Mr. Jacoby’s affidavit and the Complaint’s material allegations, 25 the Court concludes that $100,000 is an appropriate damages award. 26 C. Injunction 27 Plaintiff also seeks a temporary and permanent injunction. To obtain an injunction, 28 Plaintiff must show “(1) that it has suffered an irreparable injury; (2) that remedies 1 available at law, such as monetary damages, are inadequate to compensate for that injury; 2 (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy 3 in equity is warranted; and (4) that the public interest would not be disserved by a 4 permanent injunction.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). The 5 Court finds that Y.N.G.’s continued actions would cause Plaintiff irreparable injury that 6 could not be fully compensated by monetary damages. The balance of hardships also favor 7 Plaintiff, and the public interest is not disserved by prohibiting Defendant from engaging 8 in conduct contrary to law. Therefore, the Court will enter Plaintiff’s requested injunction. 9 See MGA Entm’t, Inc. v. Alltony Stock, No. CV 17-08878-RGK-MRW, 2018 WL 1942140 , 10 at *4 (C.D. Cal. Apr. 17, 2018) (“Permanent injunctions are routinely granted in cases 11 where, like the instant case, a defendant has not appeared in the action at all.”). 12 D. Attorneys’ Fees and Costs 13 Plaintiff also seeks $11,550.00 in attorneys’ fees. (Doc. 20-1.) The Ninth Circuit 14 has upheld awards of attorneys’ fees arising under the Lanham Act in the default judgment 15 context “solely because, by entry of default judgment, the district court determined, as 16 alleged in [plaintiff’s] complaint, that [defendant’s] acts were committed knowingly, 17 maliciously, and oppressively, and with an intent to ... injure [plaintiff].” Derek Andrew, 18 Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008) (citation and internal 19 quotation marks omitted). Here, Plaintiff alleged that Defendant’s acts were “willful and 20 deliberate, and in bad faith.” (Doc. 1 ¶ 43.) Further, Plaintiff’s attorneys’ fees are supported 21 by the declaration of Roger A. Wright. (Doc. 20-1.) See Doe, 2018 WL 2431774 , at *8 22 (D. Ariz. May 30, 2018). The Court finds that the attorneys’ rates and time spent are 23 reasonable in this matter, particularly in light of the efforts required to effect service given 24 Y.N.G.’s failure to properly designate a statutory agent. 25 Lastly, Plaintiff requests $555.00 in costs. Courts “in the Ninth Circuit have 26 previously awarded costs upon entering default judgment against a defendant.” Concord 27 Servicing Corp. v. Concord Resolution Inc., No. CV-15-01280-PHX-JAT, 2016 WL 28 3653972, at *6 (D. Ariz. July 7, 2016). Plaintiff is entitled to an award of $555.00 for costs 1 associated with bringing this action. 2 E. Entry of Judgment Against Less Than All Defendants 3 The remaining issue is whether to issue default judgment against Y.N.G. while other 4 defendants remain in the case. As noted, Plaintiff has not to date filed proof of service with 5 respect to Defendants AL Services, L.L.C., and Yavon and Jane Doe Goldenberg. Rule 6 54(b) provides that “[w]hen an action presents more than one claim for relief—whether as 7 a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are 8 involved, the court may direct entry of a final judgment as to one or more, but fewer than 9 all, claims or parties only if the court expressly determines that there is no just reason for 10 delay.” Fed. R. Civ. P. 54(b). The Ninth Circuit has stated that judgment should not be 11 entered against only one defaulting defendant where a complaint alleges that defendants 12 are jointly liable. See In re First T.D. & Investment Inc., 253 F.3d 520, 532 (9th Cir. 2001) 13 (citing Frow v. De La Vega, 15 Wall. 552 , 82 U.S. 552, 554 , 21 L.Ed. 60 (1872)). 14 The Court finds that entry of default judgment against Y.N.G. is appropriate. See 15 Curtiss–Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980) (a district court has 16 discretion to enter a default judgment as to less than all defendants). The Complaint does 17 not allege that Defendants are jointly liable. Further, the Court finds that there is no just 18 reason to delay entry of judgment. Y.N.G. has had nearly eight months to respond to the 19 Complaint and has not done so. The Court will enter default judgment against Y.N.G. It 20 will also require Plaintiff to show cause why the case should not be dismissed as to the 21 remaining Defendants. 22 III. CONCLUSION 23 Accordingly, 24 IT IS ORDERED that Plaintiff’s motion for default judgment (Doc. 19) is granted. 25 IT IS FURTHER ORDERED that the Clerk of the Court shall enter judgment in 26 favor of Plaintiff and against Defendant Y.N.G. 24/7 Locksmith, LLC dba Phoenix Garage 27 Masters in the amount of $100,000. [28] 1 IT IS FURTHER ORDERED awarding Plaintiff attorneys’ fees in the amount of 2 $11,550.00 and costs in the amount of $555.00. 3 IT IS FURTHER ORDERED awarding Plaintiff post-judgment interest at the 4 applicable federal rate pursuant to 28 U.S.C. § 1961 (a). 5 IT IS FURTHER ORDERED that Defendant Y.N.G. 24/7 Locksmith, L.L.C. is 6 temporarily and permanently enjoined from: 7 1. Using in connection with its services, the domain name, the search engine 8 optimization techniques described herein, the word “same day garage” or the 9 combination of “same day garage door repair” and “same day garage door 10 service,” such as “Same Day Garage Door Repair, Tempe,” “SameDay 11 Garage Door Repair, Mesa,” “Same Day Garage Door Repair, Phoenix,” 12 “Mesa Same Day Garage Door Repair,” or the phrases “Same Day Garage 13 Door” or “Same Day Garage Repair” in combination with the name of any 14 of the cities in metropolitan Phoenix, or otherwise continuing any and all acts 15 of unfair competition as alleged in this Complaint; 16 2. Advertising, offering for sale, marketing, distributing, selling or promoting 17 any garage door related products or services using any false designation of 18 origin, false or misleading description of fact, or any false or misleading 19 representation of fact; 20 3. Using in connection with any garage door service related products or 21 services, any promotional materials, advertisements, fliers, brochures, 22 proposals, labels, signs, contacts, invoices, or other materials printed, 23 electronic or otherwise, or Internet or on-line website, which suggest that 24 defendant offers any goods or services that are sponsored by or affiliated with 25 Plaintiff; 26 4. Using confusingly similar Internet domain names including those identified 27 herein, in connection with its business, or garage door repair and services, or 28 website; 1 5. Any acts of trademark infringement, unfair competition, or use of any 2 domain name or mark that is confusingly similar to Plaintiff's trade names 3 and trademarks. 4 IT IS FINALLY ORDERED that no later than 14 days following entry of this 5 || Order, Plaintiff shall show cause in writing why the case should not be dismissed as to the || remaining Defendants. 7 Dated this 2nd day of April, 2020. [8] ° WMichak T. giburde Micha T. giburke Michael T. Liburdi 11 United States District Judge [28] -9-