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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 1 of 14 Page ID #:159

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Title:
Third Estate LLC -v- Cultevation, Ltd.

Date: October 23, 2015

PRESENT: HONORABLE MICHAEL W. FITZGERALD, U.S. DISTRICT


JUDGE
Cheryl Wynn
Relief Courtroom Deputy
ATTORNEYS PRESENT FOR PLAINTIFF:
None Present

None Present
Court Reporter
ATTORNEYS PRESENT FOR DEFENDANTS:
None Present

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING PLAINTIFF THIRD


ESTATE LLCS APPLICATION FOR
DEFAULT JUDGMENT AGAINST
CULTEVATION, LTD [23]
Before the Court is Plaintiff Third Estate LLCs Application for Default
Judgment Against Cultevation Ltd (the Application). (Docket No. 23). The
Court has read and considered the papers filed on this Application, and held a
hearing on October 19, 2015, at which neither counsel for Defendant Culvetation
Ltd., nor anyone else purporting to represent Defendant made an appearance.
As set forth below, the Application is GRANTED. Plaintiffs allegations
and evidence are sufficient to establish personal jurisdiction over Defendant, which
has been adequately served with the Summons and the Complaint as well as
notified of the Application. The Application, moreover, satisfies all procedural
requirements for a default judgment and meets the Eitel factors. A permanent
injunction may therefore be properly imposed against Defendant.
I.

BACKGROUND

This trademark infringement action arises out of Defendants alleged selling


and distributing of apparel bearing Plaintiffs registered logos. (Compl. 1).
According to the Complaint, Plaintiff is a California corporation that designs and
retails high end street-wear, including clothing, apparel, jewelry, and
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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
accessories. (Id. 3). Plaintiff owns numerous registered trademarks that are
purportedly widely recognized among its consumer base. (Id. 10-15). Through
great expense and effort, Plaintiff built valuable reputation and goodwill
symbolized by its strong and distinctive marks. (Id. 17).
Defendant, a limited liability company organized under the laws of United
Kingdom, engages in retail and wholesale of street-wear apparel through an online
store that offers worldwide shipping. (Id. 5). Defendant allegedly incorporated
Plaintiffs trademarks into its products in order to sell them to the same customer
base, including in California. (Id. 5, 18). Plaintiff claims that such actions have
caused consumer confusion, deception, and significant harm to its business,
reputation, and goodwill. (Id. 25-28).
Plaintiff first notified Defendant of its alleged infringing actions in a ceaseand-desist letter. (Id. 22). After Defendant failed to stop selling its merchandise,
Plaintiff filed this lawsuit, alleging seven claims under the Latham Act and
California law. Plaintiff requested waiver of service under Federal Rule of Civil
Procedure 4(d), which Defendant honored in an executed Waiver of the Summons
form (Docket No. 15), filed on May 5, 2015. (Declaration of David Martinez
(Martinez Decl.) 3 (describing Defendants waiver of process).
Although Defendants responsive pleading was due by July 29, 2015,
Defendant failed to appear in this action. (Id. 4). Plaintiff therefore requested
entry of default under Rule 55(a), which the Clerk granted. (Docket No. 21).
Defendant now seeks default judgment and an issuance of a permanent injunction
against Defendant.
II.

LEGAL STANDARD

[D]efault judgments are generally disfavored. Whenever it is reasonably


possible, cases should be decided upon their merits. Pena v. Seguros La
Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). After the clerk enters a
defendants default, a court must take the well-pleaded factual allegations in the
complaint as true. DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir.
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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
2007). However, the defendant is not held to admit facts that are not well-pleaded
or to admit conclusions of law. Id.
In determining whether to enter a default judgment, a court must consider
whether it has jurisdiction over the defendant because a judgment entered without
personal jurisdiction over the parties is void. In re Tuli, 172 F.3d 707, 712 (9th
Cir.1999) (citations omitted). The plaintiff bears the burden to establish personal
jurisdiction, and may rely on the pleadings, bolstered by such affidavits and other
written materials [the plaintiff] may otherwise obtain. High Tech Pet Products,
Inc. v. Juxin Pet Prod. Co., No. 1:10-CV-00547 LJO GS, 2013 WL 1281619, at *4
(E.D. Cal. Mar. 27, 2013); see Tuli, 172 F.3d at 713 (courts must provide the
plaintiff an opportunity to prove personal jurisdiction on a motion for default
judgment).
III.

PERSONAL JURISDICTION

As anyone reading this Order is aware, the Court judges personal


jurisdiction under minimum contacts and Californias long-arm statute. Intl Shoe
Co. v. State of Washington, 326 U.S. 310, 316 (1945); Cal. Code Civ. P. 410.10.
The party seeking to invoke jurisdiction has the burden of establishing that
jurisdiction exists. Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1392 (9th Cir.
1984).
Here, personal jurisdiction would be founded on specific jurisdiction, for
which courts must inquire whether the nature and quality of the contacts are
sufficient to exercise specific jurisdiction. Data Disc, Inc. v. Sys. Tech. Assoc.,
Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). The Ninth Circuit established a threepart test to determine whether specific jurisdiction is proper: (1) the nonresident
defendant must purposefully direct his activities at the forum or perform some act
by which he purposefully avails himself of the privilege of conducting activities in
the forum, thereby invoking the benefits and protections of its laws; (2) the
plaintiffs claim must arise out of the forum-related activities of the nonresident
defendant; and (3) the exercise of jurisdiction over the nonresident defendant is
reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th
Cir. 2004). The plaintiff bears the burden of satisfying the first two of these three
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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
elements; if the plaintiff fails to establish either of them, specific personal
jurisdiction over the nonresident defendant is improper. Id. (citations omitted). If
the plaintiff satisfies the first two elements, the burden then shifts to the defendant
to present a compelling case that the exercise of jurisdiction would not be
reasonable. Id. (citations and internal quotation marks omitted).
A. Purposeful Direction at California under Calder Effects Test
To satisfy the purposeful-direction element in cases where tortious conduct
is alleged, the Ninth Circuit requires that the actions of the nonresident defendant
be purposefully directed at the forum based on an effects test that focuses on the
forum in which the defendants actions were felt, whether or not the actions
occurred within the forum. Mavrix Photo, 647 F.3d at 1228 (9th Cir. 2011)
(citations and internal quotation marks omitted). This effects test, which is
based on the Supreme Courts decision in Calder v. Jones, 465 U.S. 783 (1984),
requires that the nonresident defendant (1) commit an intentional act, (2) that was
expressly aimed at the forum state, and (3) that caused harm that the nonresident
defendant knew would likely be suffered in the forum state. Mavrix Photo, 647
F.3d at 1228. Unless the plaintiff establishes all three of the Calder elements, the
purposeful-direction element is not met. Id.
Alleged trademark infringement qualifies as tortious conduct under the
Calder effects test. See Rio Properties, Inc. v. Rio Intl Interlink, 284 F.3d 1007,
1021 (9th Cir. 2002) (applying Calder effects test to case involving trademark
infringement).
Here, Plaintiff argues that there are two independent reasons as to why
Defendant has purposefully directed its activities [at] California. (App. at 910).
In the alternative, Plaintiff argues that exercise of personal jurisdiction is available
under Rule 4(k)(2) by aggregating Defendants contacts with the United States.
(Id. at 11). Finally, Plaintiff argues that, even in the absence of any contacts with
the United States, the Court has jurisdiction under Rule 4(k)(2) based on
Defendants waiver of service. (Id.). Because the Court concludes that Plaintiff
has established that Defendant purposefully directed its activities at California, the
Court does not address Plaintiffs arguments under Rule 4(k)(2).
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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Title:
Third Estate LLC -v- Cultevation, Ltd.
1.

Date: October 23, 2015

Intentional Act

The Court is satisfied that the first element of the Calder effects test is met
because Defendant acted intentionally in selling and promoting the allegedly
infringing apparel and in operating the website through which Defendant sold its
merchandise. See Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668,
673-74 (9th Cir. 2012) (Intentional act has a specialized meaning in the context
of the Calder effects test. We have defined an act as denoting an external
manifestation of the actor's will not including any of its results, even the most
direct, immediate, and intended.) (internal quotation marks and citations omitted).
2.

Express Aiming

In Plaintiffs view, Defendant has expressly aimed its acts at California by


(1) undertaking a scheme to illegally trade upon DOPEs reputation, goodwill,
and intellectual property; and (2) employ[ing] an interactive website and
mak[ing] shipments worldwide, including California. (App. at 89). The Court is
persuaded that Defendants conduct meets this second element of the Calder
effects test.
The Complaint alleges willful infringement of Plaintiffs copyrights.
Plaintiff claims that Defendant acted with knowledge that [its] copying and use of
the DOPE Marks is unauthorized and unlawful and with the intent to cause
confusion and/or mistake and/or to deceive. (Compl. 27). Plaintiff also notes
that it notified Defendant of the infringing activities via a cease and desist letter,
which Defendant purportedly ignored. (Id. 22). According to Plaintiff, such
allegations establish that Defendant knew its infringing conduct would impact
California, Plaintiffs principal state of business, and the exercise of specific
jurisdiction is therefore proper. (Appl. at 9).
Determining the merits of Plaintiffs contention requires a careful analysis of
the relevant law in, much of which is absent from the Application. The Ninth
Circuit considered similar facts in Pebble Beach Co. v. Caddy, where it concluded
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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
that no personal jurisdiction was established. 453 F.3d 1151, 1153 (9th Cir. 2006).
The plaintiff there operated a well-known golf resort under the trade name of
Pebble Beach in California. Id. The defendant, a dual citizen of both the United
States and the United Kingdom, ran a small bed-and-breakfast, a restaurant, and a
bar in southern England. Id. The name of the operation was also Pebble Beach,
and the defendant advertised his services on the website wwww.pebblebeachuk.com. Id. The district court granted the defendants motion to dismiss for lack
of personal jurisdiction. Id. at 1154.
On appeal, the plaintiff argued the district court may exercise specific
personal jurisdiction over the defendant because he aimed tortious conduct at
California and the United States. Id. According to the plaintiff, the defendants
operation of an allegedly infringing website coupled with his knowledge of
plaintiffs business and location were sufficient to satisfy the express aiming
standard under the Cadler test. Id. at 1156. The Ninth Circuit disagreed,
observing that, there must be something more than a commission of a foreign
act with foreseeable effects in the forum state. Id. at 1157. Nothing indicated that
there was individual targeting of the forum state because the objectionable
webpage simply was not aimed intentionally [at that state]. Id. (internal quotation
marks and citations omitted).
The Ninth Circuit later clarified its holding in Washington Shoe Company v.
A-Z Sporting Goods Inc., a case involving alleged willful infringement of
copyrighted boot designs. 704 F.3d at 671. The plaintiff brought its lawsuit in a
Washington district court after discovering that the defendant, with whom plaintiff
had a prior business relationship, had been selling its shoes in Arkansas. Id. The
defendant operated only one apparel store in Arkansas, sold no products in
Washington, and had no contacts with Washington that would subject it to general
jurisdiction. Id. As is the case here, the plaintiff sent the defendant a cease-anddesist letter notifying it of the alleged infringement. Id.
The Ninth Circuit found personal jurisdiction over the defendant, holding
that the defendant expressly aimed its conduct at Washington. Id. at 677. In so
ruling, the panel focused on the willfulness of the alleged conduct and that the
defendant purportedly knew that its infringing actions would impact Washington.
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 7 of 14 Page ID #:165

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
Id. The panel distinguished cases, including Pebble Beach, where the defendant
could only foresee but not know that its wrongful conduct would have an effect on
another state: where a defendant knowsas opposed to being able to foresee
that an intentional act will impact another state, the expressly aimed requirement
is satisfied. Id. (emphasis in the original). The court determined that although the
infringing acts took place in Arkansas, the defendant knew or should have
knownat least after receiving the cease-and-desist letterthat its actions would
affect the plaintiff and its copyrights. Id. at 678. The panel therefore concluded
that the defendant expressly aimed its conduct at Washington. Id.; see also
Schwarzer, et al., Federal Civil Procedure Before Trial 3:208 (Local jurisdiction
will usually be upheld in copyright and trademark cases, if the nonresident
defendant knowingly caused an effect in the forum state.).
The U.S. Supreme Court recently weighed in on the same issue in Walden v.
Fiore, -- U.S. --, 134 S. Ct. 1115, 1119 (2014). The respondents in Walden were
traveling to Nevada from a gambling trip in Puerto Rico with almost $97,000 in
cash. Id. While waiting for their connecting flight in Georgia, the respondents
were approached by the petitioner, a DEA agent, who began questioning them
about the money. Id. The petitioner eventually seized the cash and drafted an
allegedly false probable cause affidavit to support a potential action in forfeiture
against the respondents. Id. at 1124. After no action was brought and the money
returned, the respondents filed a lawsuit in a Nevada district court seeking damages
for violations of the Fourth Amendment. Id. at 1120.
The Supreme Court unanimously held that the district court could not
exercise personal jurisdiction over the petitioner. Id. at 1125. Although the
petitioner caused an effect on the respondents while knowing they resided in
Nevada, none of the . . . challenged conduct had anything to do with Nevada
itself. Id. The Supreme Court contrasted the facts before it with Calder, which
involved a claim for libel against out-of-state defendants. Id. at 1124. Unlike a
violation of the Fourth Amendment, libel connects the offender not only to the
victim but to the state in which the victim resides. Id. at 1124. As the Supreme
Court explained,

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UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
The strength of [the connection to the forum state in Calder] was
largely a function of the libel tort. However scandalous a newspaper
article might be, it can lead to a loss of reputation only if
communicated to (and read and understood by) third persons. . . .
Accordingly, the reputational injury caused by the defendants story
would not have occurred but for the fact that the defendants wrote an
article for publication in California that was read by a large number of
California citizens.
Id.
With these principles in mind, the Court concludes that the facts before it are
more analogous to Washington Shoe and Calder than Pebble Beach or Walden.
Just as did the allegations in Washington Shoe, Plaintiff claims that that Defendant
willfully infringed on its intellectual property with the knowledge that [the]
copying and use of the DOPE Marks is unauthorized. (Compl. 27). Although
the allegations do not expressly state that Defendant knew Plaintiff is a California
corporation, the Court finds that Defendant at least should have known that its
alleged unlawful conduct would affect California after receiving the cease-anddesist letter. Unlike in Pebble Beach, the facts and allegations here do not merely
show foreseeable impact on the forum state but a knowing one.
Importantly, Defendants alleged conduct does not merely affect Plaintiff
personally but has a broader connection to California. Similar to the libel claim
involved in Calder, trademark infringement causes harm only by having an impact
on California consumers of Plaintiffs merchandize. In other words, a loss of sales
and business reputation would not occur but for consumer confusion due to
infringing marks capitalizing on Plaintiffs goodwill. Defendants infringing
activity was therefore expressly aimed at California, even if it occurred in the
United Kingdom.
The Courts conclusion is bolstered by the alleged fact that some of
Defendants infringing conduct occurred in California. Plaintiff claims that
Defendant does business with the United States and the State of California by
selling infringing merchandize through its website, which advertises worldwide
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 9 of 14 Page ID #:167

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
shipping. (Id. 5). Courts distinguish between passive and interactive
websites in determining whether specific jurisdiction is proper. High Tech Pet
Products, Inc. 2013 WL 1281619, at *4; Pebble Beach, 453 F.3d at 1156. If the
website is interactive and commercial in nature, like the one at issue here, courts
generally conclude that there are sufficient minimum contacts for specific
jurisdiction. WebZero, LLC v. ClicVU, Inc., No. CV08-0504-MRP PLAX, 2008
WL 1734702, at *5 (C.D. Cal. Apr. 4, 2008) (it is a well settled rule that a nonresident's maintenance of an interactive website through which consumers may
purchase goods or services is sufficient for purposes of specific jurisdiction);
Wash. v. www.dirtcheapcig.com, Inc., 260 F.Supp.2d 1048, 1052 (D.Wash.2003)
(holding that company's sale of cigarettes through a website to Washington
residents constitutes sufficient contacts with the Washington forum); Am. Eyewear,
Inc. v. Peeper's Sunglasses & Accessories, Inc., 106 F. Supp. 2d 895, 903 (N.D.
Tex. 2000) (finding exercise of jurisdiction proper where Defendant had shipped
products directly to the homes of Texas residents and has attempted through its
interactive web site to establish a retail presence in Texas). Plaintiffs allegations
regarding Defendants commercial activities in California, coupled with
Defendants purported knowledge of the effects of its actions on California,
sufficiently establish that Defendant aimed its actions at this State.
3.

Harm

The Court finds that the third element of the Calder test is also met because
Defendant knew that any harm suffered by Plaintiff would be suffered in
California, as Plaintiffs principal place of business is in California. As the Ninth
Circuit stated in Washington Shoe, it is foreseeable that the loss will be inflicted
both in the forum where the infringement took place . . . and where the [the rights
holder] has its principal place of business. 704 F.3d at 679.
B. Remaining Elements of Specific Jurisdiction
The Court must still consider the remaining two requirements of specific
jurisdiction: whether Plaintiffs claims arise out of Defendants forum-related
activities, and whether the exercise of jurisdiction over the nonresident defendant
is reasonable. Schwarzenegger, 374 F.3d at 802. As is obvious from the
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 10 of 14 Page ID #:168

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
Complaint, Plaintiffs trademark infringement action stems directly from
Defendants allegedly infringing activities. Moreover, nothing in the Complaint
indicates that exercise of jurisdiction would be unfair or unreasonable. And in any
event, it is Defendants, not Plaintiffs burden, to establish unfairness. Id. (the
defendant must present a compelling case that the exercise of jurisdiction would
be unreasonable).
IV.

APPLICATION FOR DEFAULT JUDGMENT


A. Procedural Considerations

The Court is satisfied that Defendant was adequately served with the
Summons and the Complaint. Plaintiff provided copies of those documents in its
request to waive service under Rule 4(d), and Defendant acknowledged service in
the executed Waiver of the Service of Summons, filed with the Court on May 5,
2015. (Docket No. 15; see also Martinez Decl. 2). Although Defendants
responsive pleading was due by July 29, 2015 under Rule 12(a)(1)(A)(ii),
Defendant has not appeared in this action. (Martinez Decl. 3).
As a matter of discretion, the Court also requires a plaintiff to serve the
Application for Default Judgment on all defendants in danger of default. The
Court does not require service under Rule 4, but only that service be reasonably
likely to provide notice to the defendants. Plaintiff filed a Proof of Service
indicating that on September 21, 2015 it mailed the Application and related papers
to Defendant at Unit 19A, 25 Orbital Business Park, Dwight Road, Tolpits Lane,
Watford, United Kingdom WD18 9DA. (Docket No. 23). Plaintiff also emailed
the papers to Defendant on the same day. (Martinez Decl. 6, Ex. A). Such
actions are sufficiently likely to provide notice to Defendant.
Finally, having reviewed the filings in this action, the Court determines that
the five procedural requirements of Federal Rule of Civil Procedure 55 and Local
Rule 55-1 are met: (1) the Clerk entered default judgment against Defendant on
August 21, 2015 (Docket No. 21); (2) Defendant failed to respond to the
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 11 of 14 Page ID #:169

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
Complaint; (3) Defendant is not an infant or incompetent person (Martinez Decl.
4); (4) Defendant is not in military service and thus the Service Members Civil
Relief Act does not apply (id.); and (5) Plaintiff served Defendant with notice of
this Application and supporting papers on September 21, 2015 in a manner deemed
appropriate by the Court (id. 6).
B. Eitel Factors
The choice as to whether a default judgment should be entered is at the sole
discretion of the trial court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.
1980). The Ninth Circuit has determined that a court should look at seven
discretionary factors before rendering a decision on default judgment: (1) the
possibility of prejudice to the plaintiff; (2) the merits of the plaintiffs 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 a decision on the merits. Eitel v.
McCool, 782 F.2d 1470, 147172 (9th Cir.1986). All seven factors favor granting
default in this action.
Denying Plaintiff means of recourse represents a sufficient likelihood of
prejudice that supports entry of default. See Pepsico, Inc. v. Cal. Sec. Cans, 238 F.
Supp. 2d 1172, 1177 (C.D. Cal. 2002) (explaining that plaintiff will likely be
without other recourse for recovery if default judgment is not entered); Win
Transp., Inc. v. Cal. Freedom Trans LLC, No. 14-cv-04178, 2015 U.S. Dist.
LEXIS 55023, at *8 (N.D. Cal. Feb. 24, 2015) (Prejudice exists where denying
the requested default judgment would leave the plaintiff without a proper
remedy.).
As to the second and third factors, the Ninth Circuit has held that upon
default the factual allegations of the complaint, except those relating to the amount
of damages will be taken as true. Geddes v. United Fin. Group, 559 F.2d 557,
560 (9th Cir. 1977). The second and third factors thus require the Court to
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 12 of 14 Page ID #:170

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
examine the Complaint to determine whether Plaintiff adequately pleaded a claim
for relief. Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978).
Plaintiff alleges that it is an owner of multiple registered trademarks that are
widely recognized among the consumers of its products. (Compl. 11-16).
Many famous music artists have appeared with Plaintiffs clothing in music videos,
concerts, and various public events, thereby fueling the popularity of the
trademarks among the public and building Plaintiffs reputation and goodwill. (Id.
14). According to the Complaint, Defendant has unlawfully incorporated
Plaintiffs trademarks into its apparel sold to the same consumer base. (Id. at 1819). Such actions have caused consumer confusion, misrepresented the nature of
Defendants goods, and damaged Plaintiffs business, reputation, and goodwill. (Id.
26-32). Plaintiff avers that Defendants actions dilute, blur and tarnish
distinctive quality of the trademarks. (Id. 37).
If true, the alleged facts entitle Plaintiff to relief under multiple provisions of
California and federal law. Specifically, Plaintiff states a claim for relief under the
Latham Act 32, 43(a), 43(c), as well as California Business & Professions Code
14247, which redress the exact type of misconduct alleged in the Complaint
trademark infringement, trademark dilution, and unfair competition. Plaintiff also
adequately establishes common law and statutory trade name infringement claims
by alleging that Defendant misled the public into believing that its products are
sponsored or authorized by Plaintiff. (Id. 42-43). Finally, Plaintiff has stated
claims for unfair competition under California law based on the same conduct
described above. (See id. 45-50).
The fourth Eitel factor examines the amount of money at stake in relation to
the seriousness of a defendants conduct. Craigslist, Inc. v. Naturemarket, Inc.,
694 F. Supp. 2d 1039, 1060 (N.D. Cal. 2010). Although in the Complaint Plaintiff
requests multiple types of relief, including damages, the Application seeks only a
permanent injunction. When only injunctive relief is at stake, the fourth factor
favors entering default. United States v. Torres, No. 2:12-cv-10530, 2013 U.S.
Dist. LEXIS 185079, at *5 (C.D. Cal. Apr. 17, 2013) (There is no money at stake
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 13 of 14 Page ID #:171

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
in this action, only permanent injunctive relief. Accordingly, this factor favors
granting default judgment.).
Plaintiff satisfies all required elements for a permanent injunction. In order
to obtain injunctive relief, the plaintiff must show that (1) it has suffered an
irreparable injury; (2) remedies available at law are inadequate to compensate that
injury; (3) the balance of hardships favors such relief; and (4) the public interest is
not disserved by an injunction. Geertson Seed Farms v. Johanns, 570 F.3d 1130,
1136 (9th Cir. 2009). Here, Plaintiff claims that it has suffered, and continues to
suffer, an irreparable injury that cannot be redressed by remedies at law.
Specifically, Defendants conduct purportedly continues to dilute Plaintiffs
trademarks and to damage its business, reputation, and goodwill. (Compl. 23).
Because of the allegedly continuous wrongful conduct and the extreme difficulty in
accurately assessing damages (Appl. at 13), the Court concludes that the first two
elements are satisfied. Moreover, the balancing of hardships weighs in favor of
Plaintiff since the only hardship imposed on Defendant would be the cessation of
illegal activities. Finally, there is no public interest in allowing such activities to
continue.
While Plaintiff also requests prospective civil damages in the amount of
$500 per day for each violation of the injunction, the Court does not find that the
imposition of such damages is warranted here. In support of its contention,
Plaintiff cites Aradia Womens Health Center v. Operation Rescue, which affirmed
violations of a preliminary injunction order that contained the same damages
provision Plaintiff seeks to include here. 929 F.2d 530, 532 (9th Cir. 1991). But
importantly, the violation contemplated in the Aradia order constituted
blocking access to abortion facilities and other activities in the state. Id. at 531.
Such violations would necessarily be confined in number and scope, producing a
limited amount of contempt damages.
Here, conversely, each infringing use of Plaintiffs numerous trademarks
would constitute a violation of the Courts permanent injunction. A continuation
of Defendants infringing activities even for a day could result in an amount of
contempt damages far beyond the sanctions involved in Aradia. The Court is not
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Case 2:14-cv-05125-MWF-JPR Document 25 Filed 10/23/15 Page 14 of 14 Page ID #:172

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. CV 14-05125 MWF(JPRx)
Date: October 23, 2015
Title:
Third Estate LLC -v- Cultevation, Ltd.
prepared to arbitrarily impose prospective damages of $500, which apparently are
related neither to Plaintiffs possible future losses nor the minimum incentive
necessary for Defendant to comply with the injunction. An appropriate contempt
sanction is best determined any future violation of the Courts Order.
The final three Eitel factors also favor entry of default judgment. Because
Plaintiff filed a well-pleaded complaint alleging the facts necessary to establish its
claims, and the clerk entered default against Defendant, there is no dispute
regarding the material facts. Defendant has made no showing of excusable
neglect, and where a defendant fails to appear and respond as occurred here, a
decision on the merits is impossible and default judgment is appropriate. Coach
Servs., Inc. v. YNM, Inc., No. 2:10-CV-02326-JST (PLAx), 2011 WL 1752091, at
*4 (C.D. Cal. May 6, 2011).
V.

CONCLUSION

For the foregoing reasons, the Application is GRANTED. A separate


Judgment will issue.
IT IS SO ORDERED.

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CIVIL MINUTESGENERAL
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