JACQUELINE SCOTT CORLEY United States Magistrate Judge

ORDER OF REASSIGNMENT AND REPORT AND RECOMMENDATION RE: PLAINTIFFS' MOTIONS FOR DEFAULT JUDGMENT AND ATTORNEYS' FEES AND COSTS

Re: Dkt. No. 19 & 29

Baskin-Robbins Franchising LLC and BR IP Holder LLC (together, "Baskin-Robbins" or "Plaintiffs") filed suit against Michael O. Pena, Jennifer Pena, and Palo Alto Sandwiches, Inc. (collectively, "Defendants"), asserting claims for breach of contract, trademark infringement, trade dress infringement, and unfair competition. (Dkt. No. 1.) The Clerk of Court entered default as to all Defendants on November 27, 2019, after they failed to appear or otherwise defend themselves in this action. (See Dkt. No. 14.) Now before the Court is Plaintiffs' unopposed motion for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2), (Dkt. No. 19), and unopposed motion for attorneys' fees, (Dkt. No. 29). Because the Court has not obtained consent from all parties pursuant to 28 U.S.C. § 636, this matter must be REASSIGNED to a district court judge. See Williams v. King, 875 F.3d 500, 504 (9th Cir. 2017) (holding that magistrate jurisdiction "cannot vest until the court has received consent from all parties to an action"). After careful consideration of Plaintiffs' briefing, the Court RECOMMENDS that the newly assigned district court judge GRANT Plaintiffs' motion for default judgment and GRANT IN PART Plaintiffs' motion for attorneys' fees and costs.

BACKGROUND

I. Complaint Allegations

Upon the Clerk's entry of default, the well-pleaded factual allegations in the complaint, except those concerning damages, are deemed to have been admitted by the non-responding party. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). The Court thus accepts the following allegations as true.

A. The Parties

Plaintiffs are Delaware limited liability companies with principal places of business in Massachusetts. (Dkt. No. 1 at ¶¶ 2, 3.) Baskin-Robbins Franchising LLC "is engaged in the business of franchising independent business persons [sic] to operate Baskin-Robbins shops throughout the United States." (Id. at ¶ 2.) BR IP Holder LP owns "the trademark, service mark, and trade name 'Baskin-Robbins' and related marks." (Id. at ¶ 3.) The membership of both Plaintiff LLCs ends with Dunkin' Donuts LLC, a Delaware limited liability company. (See id. at ¶¶ 4, 5.) "The sole member of Dunkin' Donuts LLC is Dunkin' Brands, Inc.[,] a Delaware corporation." (Id.) Thus, Baskin-Robbins is "an indirect, wholly-owned subsidiary of Dunkin' Brands, Inc." (Id., Ex. 1 at 14.) Dunkin' Brands, Inc.'s principal place of business is Canton, Massachusetts. (Id.) "Baskin-Robbins and its franchisees currently operate more than 7,800 shops worldwide, including over 2,500 shops in the United States." (Dkt. No. 1 at ¶ 18.)

Defendants Michael Pena and Jennifer Pena ("Individual Defendants") are citizens and residents of California. (Id. at ¶ 6.) Palo Alto Sandwiches, Inc. ("Palo Alto") "is a California corporation with its principal place of business in San Jose, California." (Id. at ¶ 7.) Mr. Pena is the President of Palo Alto and Ms. Pena is its Secretary. (Id., Ex. 1 at 16.) Mr. Pena and Ms. Pena "are the owners and operators of a retail Baskin-Robbins shop" in Scotts Valley, California, pursuant to a June 2016 Franchise Agreement. (Dkt. No. 1 at ¶ 7; see also id., Ex. 1.)

B. The Franchise Agreement

In June 2016 Defendants entered into a Franchise Agreement with Baskin-Robbins granting Defendants "the right to operate a Baskin-Robbins shop utilizing the Baskin-Robbins system." (Dkt. No. 1 at ¶ 20; see also id., Ex. 1.) In exchange for a license "to use the Baskin- Robbins trademarks, trade names, and trade dress in accordance with the terms of [the] Franchise Agreement," Defendants agreed to, in pertinent part:

(i) pay a franchise fee equal to 5.9% of gross sales of the business, (ii) pay an advertising fee equal to 5.0% of gross sales of the business, (iii) pay late fees, interest and costs on unpaid monies due under the Franchise Agreement, and (iv) pay all sums owing and any damages, interest, costs and expenses, including reasonable attorneys' fees, incurred as a result of Defendants' defaults.

Upon termination of the Agreement, Defendants must cease using "the Baskin-Robbins proprietary marks and system," operating the franchise, and holding themselves "out as a present or former Baskin-Robbins' franchisee." (Dkt. No. 1 at ¶ 28 (citing id., Ex. 1 at §§ 14.6, 14.7.2, and 14.7.3).) The Franchise Agreement provides that "any unauthorized use of the Baskin-Robbins proprietary marks following termination of [the] Agreement would result in irreparable harm to Baskin-Robbins, and would constitute willful trademark infringement." (Id. at ¶ 29 (citing id., Ex. 1 at §§ 9.3, 10.3, 10.4, and 14.5).) As part of the Franchise Agreement, Mr. Pena and Ms. Pena executed a Personal Guarantee making them personally liable for the obligations of Palo Alto under the Agreement. (Id. at ¶ 30 (citing id., Ex. 1 at 5).)

C. Defendants' Breach and Subsequent Trademark Infringement

In October 2018 Baskin-Robbins sent Defendants a Notice to Cure informing Defendants that they were "in default of their Franchise Agreement based on [their] failure to pay required fees." (Id. at ¶ 32; see also Dkt. No. 20-4, Ex. 2 at 7.) Baskin-Robbins sent Defendants a second Notice to Cure in January 2019, informing Defendants that they were in default under the Agreement for failing to pay required fees. (Dkt. No. 1 at ¶ 33; see also Dkt. No. 20-4, Ex. 2 at 5.) In July 2019 Baskin-Robbins sent Defendants a third Notice to Cure for Defendants' failure to report gross sales and to make required payments. (Dkt. No. 1 at ¶ 34; see also Dkt. No. 20-4, Ex. 2 at 2-3.) Defendants did not cure their default after receiving the July 2019 Notice to Cure. (Dkt. No. 1 at ¶ 35.)

In October 2019 Baskin-Robbins sent Defendants a Notice of Termination that "terminated the Franchise Agreement, stated the grounds for termination, and requested that Defendants immediately comply with their payment and de-identification obligations as set forth in [the] Franchise Agreement." (Dkt. No. 1 at ¶ 36; see also Dkt. No. 20-5, Ex. 3 at 2-4.) Since receiving the Notice of Termination "Defendants have continued to operate the Baskin-Robbins shop using Baskin-Robbins' marks and system without . . . license to do so." (Dkt. No. 1 at ¶ 37.) Defendants' continued operation of the shop and "unauthorized use of the Baskin-Robbins marks and system is causing and will continue to cause Baskin-Robbins irreparable harm." (Id. at ¶ 38.) //

II. Procedural History

Plaintiffs filed their complaint on October 16, 2019, asserting claims for: (1) breach of contract against Palo Alto for breach of the Franchise Agreement; (2) breach of contract against the Individual Defendants for breaching the Personal Guarantee; (3) trademark infringement under "the Lanham Act, 15 U.S.C. § 1114 and applicable state law" against all Defendants; (4) unfair competition under "the Lanham Act, 15 U.S.C. § 1125(a) and applicable state law" against all Defendants; and (5) trade dress infringement under "the Lanham Act, 15 U.S.C. § 1125[ ] and the common law" against all Defendants. (Dkt. No. 1 at ¶¶ 41-65.)

Defendants did not appear following service of summons later that month, (see Dkt. Nos. 8-10), and Plaintiffs filed for entry of default with the Clerk of Court on November 25, 2019, (Dkt. No. 13). The Clerk entered default as to all Defendants on November 27, 2019. (Dkt. No. 14.) Plaintiffs filed the instant motion for default judgment on January 16, 2020. (Dkt. No. 19.)

The Court issued an order on February 26, 2020 vacating the hearing scheduled for February 27, and ordering Plaintiffs to file supplemental briefing detailing service of process on the individual and corporate defendants. (Dkt. No. 22.) The Court's Order also directed Plaintiffs to file supplemental briefing in support of their request for reasonable attorneys' fees and costs. On March 3, 2020, Plaintiffs' filed a supplemental declaration with exhibits in response to the Court's Order regarding service of process. (Dkt. No. 23.) Plaintiffs' submission did not address their request for attorneys' fees, however, and the Court issued another order on April 13, 2020 directing Plaintiffs to file their motion for attorneys' fees by April 27, 2020. (See Dkt. No. 28.) Plaintiffs did so. (Dkt. No. 29.) That motion is also unopposed.

DISCUSSION

I. Jurisdiction

District courts have an affirmative duty to examine their jurisdiction—both subject matter and personal jurisdiction—when default judgment is sought against a non-appearing party. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).

A. Subject Matter Jurisdiction

The Court has federal question jurisdiction under 28 U.S.C. § 1331 because Plaintiffs bring claims for trademark infringement pursuant to the Lanham Act, 15 U.S.C. §§ 1114, 1125. The Court also has diversity jurisdiction under 28 U.S.C. § 1332(a) because Plaintiffs and Defendants are citizens of different states and the amount in controversy exceeds $75,000. Further, the Court has supplemental jurisdiction over Plaintiffs' related state law claims for breach of contract pursuant to 28 U.S.C. § 1367.

B. Personal Jurisdiction

Personal jurisdiction may be founded on either general jurisdiction or specific jurisdiction. Daimler AG v. Bauman, 134 S. Ct. 746, 754-55 (2014). "For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile; for a corporation, it an equivalent place, one in which the corporation is fairly regarded as home." Id. at 760 (internal quotation marks and citation omitted).

1. Individual Defendants

As previously discussed, Michael Pena and Jennifer Pena are citizens and residents of California. Thus, the Court may exercise general jurisdiction over the Individual Defendants. See id.

2. Corporate Defendant

A corporate defendant's place of incorporation and principal place of business form "the bases for the exercise of general jurisdiction." See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011) (citation omitted). As previously discussed, Palo Alto "is a California corporation with its principal place of business in San Jose, California." (Dkt. No. 1 at ¶ 7.) Thus, the Court has general jurisdiction over Palo Alto. See Brown, 564 U.S. at 924.

II. Service

Before the Court can exercise its personal jurisdiction over Defendants, it must ensure that "the procedural requirement of service of summons" has been satisfied. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999) (noting that "one becomes a party officially, and is required to take action in that capacity, only upon service of a summons or other authority-asserting measure.") (citing Fed. R. Civ. P. 4(a)). Service on an individual or corporation may be made by delivering a copy of the summons and complaint in accordance with the law of the state in which the district court is located. Fed. R. Civ. P. 4(e)(1) & 4(h)(1)(A). The Court addresses in turn service on the Individual Defendants and the Corporate Defendants.

A. Individual Defendants

Under California law "[a] summons may be served on a person . . . by delivering a copy of the summons and the complaint to such person or to a person authorized by him to receive service of process." Cal. Civ. Proc. Code § 416.90. California law also provides for "substitute service" as follows:

If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.

Plaintiffs filed proofs of service indicating that Mr. Pena and Ms. Pena were served by substitute service on October 24, 2019. (See Dkt. Nos. 9 & 10.) The proofs of service state that Plaintiffs served the summons and complaint (among other documents) on each defendant by leaving copies with Adam Rogers, store manager of Defendants' Baskin-Robbins franchise, at the shop's location in Scotts Valley, California. (Id.) Plaintiffs then mailed copies of the summons and complaint to the same address by first-class mail, with postage prepaid. (Id.) Prior to completing substitute service as to Mr. Pena and Ms. Pena, Plaintiffs made two attempts to personally deliver the summons and complaint to those individuals at the ice cream shop. (See id. at 2.)

The Court is satisfied that Plaintiffs demonstrated reasonable diligence in attempting to personally serve the Individual Defendants at their last known residential address and the franchise location prior to effectuating substitute service of summons. Having learned that the Individual Defendants no longer resided at the residential address on file with the California Secretary of State, it was reasonable for Plaintiffs to attempt personal service at the franchise location. In sum, the Court is satisfied that the requirements for substitute service under California law are met; specifically: Plaintiffs exercised reasonable diligence in twice attempting personal service on Mr. Pena and Ms. Pena, subsequently left copies at their "usual place of business" with "a person apparently in charge," and then mailed copies "by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left." See Cal. Civ. Proc. Code § 415.20(b). Further, Ms. Chang attests that Plaintiffs' counsel received a research report on March 3, 2020 containing a new residential address for the Individual Defendants, (see Dkt. No. 23 at ¶ 14), and Plaintiffs filed proofs of service indicating that Mr. Pena was personally served with the motion for default judgment and related filings at that address on March 6, 2020 and accepted service on behalf of Ms. Pena, (see Dkt. Nos. 26 & 27; see also Dkt. No. 24).

B. Corporate Defendant

Under California law, a summons may be served on a corporate defendant "by delivering a copy of the summons and the complaint . . . [t]o the president, chief executive officer, other head of corporation." Cal. Civ. Proc. Code § 416.10. California also provides for substitute service of corporate defendants; specifically:

In lieu of personal delivery . . . a summons may be served by leaving a copy of the summons and complaint during usual office hours in his or her office or, if no physical address is known, at his or her usual mailing address, other than a United States Postal Service post office box, with the person who is apparently in charge thereof, and by thereafter mailing a copy of the summons and complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. When service is effected by leaving a copy of the summons and complaint at a mailing address, it shall be left with a person at least 18 years of age, who shall be informed of the contents thereof. Service of a summons in this manner is deemed complete on the 10th day after mailing.

Baskin-Robbins filed a proof of service indicating that Palo Alto was served by substitute service on October 22, 2019. (Dkt. No. 8.) The proof of service states that Plaintiffs served the summons and complaint (among other documents) on Palo Alto's Chief Executive Officer, Mr. Pena, by leaving copies with Adam Rogers, store manager of Defendants' Baskin-Robbins franchise, at the shop's location in Scotts Valley, California. (Id.) Plaintiffs then served Palo Alto by mailing copies of the summons and complaint to the same address by first-class mail, with postage prepaid. (See id.) The Court is satisfied that Plaintiffs met the requirements for substitute service for the reasons previously stated. Having determined that the addresses on file with the California Secretary of State were not current, it was reasonable for Plaintiffs to conclude that the franchise location was Mr. Pena's "office" for purposes of effectuating substitute service. Further, Plaintiffs served Palo Alto with copies of the motion for default judgment and related filings on March 6, 2020, by personally serving Palo Alto's agent for service, Mr. Pena. (See Dkt. No. 25; see also Dkt. No. 24.)

III. Default Judgment

Pursuant to Federal Rule of Civil Procedure 55(b), a district court may grant default judgment after the Clerk's entry of default. "The district court's decision whether to enter a default judgment is a discretionary one." Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Courts consider the following factors in determining whether to grant default judgment:

(1) the possibility of prejudice to the plaintiff, (2) the merits of 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.

A. Possibility of Prejudice to Plaintiffs

The first Eitel factor considers whether the plaintiff will suffer prejudice if the court denies default judgment. Craiglist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1054 (N.D. Cal. 2010). Plaintiffs assert that absent a default judgment they are prejudiced by Defendants' continued use of the Baskin-Robbins' trademark and use of the trade dress. (Dkt. No. 20 at 12.) The Court agrees. The Notices to Cure and Notice of Termination demonstrate that the Defendants' defaulted under the Franchise Agreement and Baskin-Robbins' terminated the Agreement. Plaintiffs' counsel attests that the parties engaged in settlement negotiations "[b]efore and after Defendants were served, between October and December 2019," but were unsuccessful. (Dkt. No. 20-1 at ¶ 5.) Despite the Notice of Termination and this lawsuit, Defendants continue to use the Baskin-Robbins' marks and system. Thus, absent a default judgment granting the requested declaratory, monetary, and injunctive relief, Plaintiffs are without recourse against Defendants.

B. Merits of Claims and Sufficiency of Complaint

The second and third Eitel factors require the plaintiff "to plead facts sufficient to establish and succeed upon its claims." Naturemarket, Inc., 694 F. Supp. 2d at 1055. As previously discussed, on motion for default judgment the well-pleaded factual allegations in the complaint, except those concerning damages, are deemed to have been admitted by the non-responding party. See Geddes, 559 F.2d at 560. "The district court is not required to make detailed findings of fact." Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).

1. Breach of Contract Claims

Plaintiffs first claim alleges that Palo Alto breached the Franchise Agreement and their second claim alleges that the Individual Defendants breached their Personal Guarantee. To prevail on their breach of contract claims under Massachusetts law, Plaintiffs must show: (1) the existence of a valid contract; (2) Defendants breached the terms of the contract; and (3) Plaintiffs suffered damages as a result. See Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115, 1122 (1st Cir. 1995). Plaintiffs' complaint and the materials submitted in support of the instance motion sufficiently plead claims for breach of contract.

First, Plaintiffs demonstrate the existence of valid contracts because the complaint includes as an exhibit the executed Franchise Agreement and Personal Guarantee. (See Dkt. No. 1, Ex. 1.) Second, the complaint adequately alleges that Defendants breached the Franchise Agreement and Personal Guarantee by failing to pay the required franchise fees, (see Dkt. No. 1 at ¶¶ 31-38), and the Notices to Cure, Notice of Termination, and declaration of Gary Zullig, "Senior Collections Specialist for Dunkin' Brands, Inc.," submitted in support of the instant motion support those allegations, (see Dkt. Nos. 20-2; 20-4, Ex. 2; 20-5, Ex. 3). Finally, Plaintiffs have demonstrated that they suffered monetary damages from the breach and continue to suffer harm from Defendants' use of the Baskin-Robbins' mark and systems. The complaint includes as an exhibit an "Accounts Receivable Status Report" for Palo Alto covering June 2019 through October 2019 demonstrating that Defendants failed to pay required franchise fees during that period. (See Dkt. No. 1, Ex. 1 at 40-44.) In support of the instant motion, Plaintiffs submit an updated "Accounts Receivable Status Report" covering June 2019 through December 2019; the report shows that Defendants owe over $25,000.00 in fees. (See Dkt. No. 20-6, Ex. 4.) Further, the complaint alleges that Defendants' continued use of Baskin-Robbins' mark and systems despite the Notice of Termination will continue to cause Plaintiffs irreparable harm. (See Dkt. No. 1 at ¶ 38.) In sum, Plaintiffs have "pleaded facts sufficient to establish and succeed upon" their breach of contract claims. Naturemarket, Inc., 694 F. Supp. 2d at 1055.

2. Trademark and Trade Dress Infringement, and Unfair Competition Claims

Plaintiffs' third claim alleges trademark infringement in violation of section 32 of the Lanham Act, 15 U.S.C. § 1114, and their fourth and fifth claims allege unfair competition and trade dress infringement under section 43 of the Lanham Act, 15 U.S.C. § 1125. To establish and succeed on its claims for trademark infringement and unfair competition, Baskin-Robbins must show that: (1) they have "a valid, protectable trademark," and (2) Defendants are using a "confusingly similar" mark. See Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1046 (9th Cir. 1999) ("To establish a trademark infringement claim under section 32 of the Lanham Act or an unfair competition claim under section 43(a) of the Lanham Act, [the plaintiff] must establish that [the defendant] is using a mark confusingly similar to a valid, protectable trademark of [the plaintiff's]."). Similarly, "[a] plaintiff seeking to recover for trade dress infringement under section 43(a) must show that its trade dress is protectable and that defendant's use of the same or similar trade dress is likely to confuse those customers." Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 841 (9th Cir. 1987). Plaintiffs assert that Defendants' continued unauthorized use of the Baskin-Robbins marks after termination of the Franchise Agreement establishes trademark and trade dress infringement, and unfair competition under the Lanham Act. The Court agrees.

First, as to trademark infringement and unfair competition, the complaint alleges and Mr. Zullig attests that "BR IP Holder LLC is the owner of the trademarks, service marks, logos, emblems, trade dress and trade name 'Baskin-Robbins,' and related marks." (Dkt. Nos. 1 at ¶ 14 & 20-2 at ¶ 9.) "Baskin-Robbins has the exclusive license to use and license others to use these marks and trade name and has used them continuously since approximately 1946 to identify Baskin-Robbins shops, and the ice cream and other products associated with those shops." (Id.) Further, "BR IP Holder LLC owns numerous federal registrations for the mark 'Baskin-Robbins' or derivations thereof," and "[e]ach of these registrations is in full force and effect" in accordance with the Lanham Act. (Dkt. Nos. 1 at ¶ 15 & 20-2 at ¶ 10.) Such registration constitutes "prima facie evidence of ownership, [and] likewise prima facie evidence of validity of the registration and of the registrant's exclusive right to use." Pac. Supply Co-op. v. Farmers Union Cent. Exch. Inc., 318 F.2d 894, 906 (9th Cir. 1963); see also 15 U.S.C. §§ 1057(b), 1115(a) (same). Thus, Plaintiffs' have a valid, protectable trademark in the "Baskin-Robbins" marks.

Second, Plaintiffs allege facts sufficient to show that Defendants have used and continue to use the Baskin-Robbins marks following termination of the Franchise Agreement. (See Dkt. Nos. 1 at ¶¶ 37, 54 & 20-2 at ¶¶ 30, 31.) Such continued unauthorized use "as a 'holdover' franchisee is dispositive of the [trademark infringement] issue." See Century 21 Real Estate LLC v. Ed/Var Inc., No. 5:13-cv-00887 EJD, 2014 WL 3378278, at *5 (N.D. Cal. July 10, 2014). Further, because Defendants are not using a similar mark but instead continue to use the same mark they used as Baskin-Robbins franchisees under the Franchise Agreement, it is not necessary to engage in the non-exhaustive, eight-factor analysis established by the Ninth Circuit to determine whether there is a likelihood of consumer confusion. See IHOP Franchising, LLC v. Hameed, No. 2:14-cv-1752-TLN-CKD, 2015 WL 429547, at *3 n.2 (E.D. Cal. Feb. 2, 2015) (finding it "unnecessary to engage in a likelihood-of-confusion analysis under the [Ninth Circuit] factors" where the marks at issue were "associated with [p]laintiffs' business" and the defendant previously "used the marks as a franchisee").

As previously discussed, the elements of a section 43 trade dress infringement claim mirror those for a section 32 trademark infringement under the Lanham Act; specifically, Plaintiffs must show that: (1) "its trade dress is protectable," and (2) Defendants' "use of the same or similar trade dress is likely to confuse consumers." Fuddruckers, 826 F.2d at 841. The test the Ninth Circuit has "articulated for trade dress infringement is whether there is a likelihood of confusion resulting from the total effect of the defendant's package on the eye and mind of an ordinary purchaser." Id. (internal quotation marks and citation omitted). That test is satisfied here because Plaintiffs have pleaded facts sufficient to show that Defendants continue to operate the same Baskin-Robbins franchise—with the same "signs, exterior appearance, packaging, containers, and other items on which the words 'Baskin-Robbins' appear[ ] in the same lettering style and in the same distinctive color scheme that Baskin-Robbins uses for the shops operated by Baskin-Robbins' licensees"—that Defendants operated under the Franchise Agreement. (See Dkt. No. 1 at ¶ 62.) Such trade dress is protectable, and Defendants' continued unauthorized use of the same trade dress is likely to confuse consumers. See Fuddruckers, 826 F.2d at 842-43 (noting that a restaurateur "can protect a combination of visual elements that, taken together, . . . may create a distinctive impression").

In sum, Baskin-Robbins has "plead[ed] facts sufficient to establish and succeed upon its claims" under the Lanham Act. See Naturemarket, Inc., 694 F. Supp. 2d at 1055.

C. Money at Stake

Under the fourth Eitel factor, the Court must consider the amount of money at stake in relation to the seriousness of Defendants' conduct. See Eitel, 782 F.2d at 1471-72. "Default judgment is disfavored where the sum of money at stake is too large or unreasonable in light of defendant's actions." Truong Giang Corp. v. Twinstar Tea Corp., No. C 06-03594 JSW, 2007 WL 1545173, at *12 (N.D. Cal. May 29, 2007). Conversely, default judgment may be appropriate where it is "tailored to [the defendant's] specific misconduct." Bd. of Trs. v. Superhall Mech., Inc., No. C10-2212 EMC, 2011 WL 2600898, at *2 (N.D. Cal. June 30, 2011).

Here, Plaintiffs seek to recover from Defendants, jointly and severally, $25,707.16 in damages for amounts past due on the Franchise Agreements. (Dkt. Nos. 20-2 at ¶ 61 & 20-8 at ¶ 4.) In support, Plaintiffs submit the declaration of Mr. Zullig and the previously discussed Accounts Receivable Status Reports. (Dkt. Nos. 20-2 & 20-6, Ex. 4.) The amount requested is specifically tailored to Defendants' alleged breach of the Franchise Agreements and is supported by documentary evidence. Thus, the sum of money at stake is appropriate and weighs in favor of granting default judgment.

D. Dispute Over Material Facts

There is no indication that the material facts are in dispute. Upon the Clerk's entry of default, Defendants were "deemed to have admitted all well-pleaded allegations" in the complaint. See Geddes, 559 F.2d at 560 ("The general rule of law is that upon default the factual allegations of the complaint, except those relating to damages, will be taken as true."). Further, Plaintiffs' characterization of the Franchise Agreement and Personal Guarantee is supported by documentary evidence; specifically, the executed June 2016 Franchise Agreement between Baskin-Robbins and Palo Alto and the executed Personal Guarantee signed by Mr. Pena and Ms. Pena. (See Dkt. No. 1, Ex. 1.) There is also no likely dispute over Plaintiffs' allegations regarding Defendants' default, which are supported by the declaration of Mr. Zullig, the Notices to Cure, and the Notice of Termination. (See Dkt. Nos. 20-2; 20-4, Ex. 2; 20-5, Ex. 3.) Accordingly, this factor weighs in favor of granting default judgment.

E. Excusable Neglect

"This factor favors default judgment where the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the lawsuit." Wecosing, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d 1072, 1082 (C.D. Cal. 2012). There is no basis here to conclude that Defendants' default resulted from excusable neglect. Plaintiffs properly served Defendants with the summons, complaint, and the instant motion. (See Dkt. Nos. 8-10, 21.) And as previously discussed, Plaintiffs' counsel attests that the parties have engaged in settlement negotiations regarding this lawsuit. (Dkt. No. 20-1 at ¶ 5.) Thus, Defendants have been aware of this action from the outset. Accordingly, this factor weighs in favor of default judgment. //

F. Policy Favoring Decision on the Merits

"Cases should be decided on upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. This factor is not dispositive, however, and a defendant's failure to answer the complaint "makes a decision on the merits impractical, if not impossible." PepsiCo, 238 F. Supp. 2d at 11. Thus, termination of a case before hearing the merits is permissible when a defendant fails to defend an action. Id. Given Defendants' failure to appear, a decision on the merits is impossible.

***

In sum, the Eitel factors weigh in favor of granting default judgment in favor of Plaintiffs.

IV. Remedies

Plaintiffs' motion seeks monetary damages, injunctive relief, and attorneys' fees and costs. (Dkt. No. 20 at 23-24.) The relief sought was also requested in the complaint. (See Dkt. No. 1.) The Court addresses each remedy in turn.

A. Damages

As previously discussed, under the Franchise Agreement Palo Alto was required to pay weekly franchise and advertising fees. (See Dkt. 1, Ex. 1 at §§ 5.2, 5.3.) Plaintiffs seek to recover from Defendants, jointly and severally, "past damages calculated under the [Franchise Agreement] in the amount of $25,707.16." (Dkt. No. 20 at 24.) In support, Plaintiffs submit the declaration of Mr. Zullig who attests that "[t]he past due amount is $25,707.16 and continues to accrue." (Dkt. No. 20-2 at ¶ 43.) Mr. Zullig attests that his calculations are based on the amounts noted in the Accounts Receivable Status Report for Defendants' Baskin-Robbins franchise, which covers the period from June 8, 2019 to January 8, 2020. (See id. (citing 20-6, Ex. 4).)

The Court recommends granting Plaintiffs' request for $25,707.16 because: (1) the amount reflects continuing franchise fees and charges owed under the Franchise Agreement; (2) the undisputed allegations of the complaint, Notices to Cure, and Notice of Termination indicate that Defendants are delinquent as to that amount; and (3) default judgment is warranted under the Eitel factors.

B. Injunctive Relief

Plaintiffs seek an order that affirms and enforces the termination of the Franchise Agreement and:

enjoin[s] Defendants and all those acting in concert with them from infringing upon the Trademarks and trade name associated with the Baskin-Robbins system and from otherwise engaging in unfair competition with Baskin-Robbins; and order[s] Defendants to with the Court and serve on Baskin-Robbins, within 30 days after the service upon Defendants of the injunction, a report in writing in writing and under oath setting forth in detail the manner and form in which they have complied with the injunction.

Under 15 U.S.C. § 1116(a), a court has the "power to grant injunctions according to principles of equity and upon such terms as the court may deem reasonable, to prevent the violation of any right the registrant of a mark." 15 U.S.C. § 1116(a). "[D]istrict courts should apply 'traditional equitable principles' in deciding whether to grant permanent injunctive relief, and the decision is 'an act of equitable discretion by the district court.'" Reno Air Racing Ass'n., Inc. v. McCord, 452 F.3d 1126, 1137-38 (9th Cir. 2006) (quoting eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)). A plaintiff seeking a permanent injunction must demonstrate: "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury"; (3) the balance of hardships weighs in the plaintiff's favor; and (4) "that the public interest would not be disserved by a permanent injunction." eBay Inc., 547 U.S. at 391.

Here, those factors weigh in favor of an injunction. As to the first two factors, Plaintiffs have demonstrated an irreparable injury and inadequate remedy at law based on Defendants' on-going infringing activity. See Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988) ("Injunctive relief is the remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at law for the injury caused by a defendant's continuing infringement."). The balance of hardships also weighs in Plaintiffs' favor because they terminated the Franchise Agreement and Defendants' thus have no license to use the Baskin-Robbins' mark and system. Finally, the public interest would be served by an injunction; indeed, "[i]t is the remedy provided by federal and state trademark infringement statutes." Id. at 1180-81. Accordingly, the Court recommends that the district court grant the requested injunction.

Having determined that Plaintiff is entitled to injunctive relief, the Court must determine the appropriate scope of relief. Pursuant to Federal Rule of Civil Procedure 65(d) "every order granting an injunction . . . shall set forth the reasons for its issuance; shall be specific in terms; [and] shall describe in reasonable detail . . . the act or acts sought to be restrained." Fed. R. Civ. P. 65(d). A broad injunction is appropriate "when the infringing use is for a similar service." Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1177 (9th Cir. 2007) (internal quotation marks and citation omitted). Here, the infringing use is for the same service; thus, a broad injunction is warranted.

Accordingly, the Court recommends that the district court grant Plaintiffs' proposed injunction and issue an order that affirms the termination of the Franchise Agreement and states that:

1. Defendants and their officers, agents, servants, employees and attorneys, and all persons in active concert or participation with them are enjoined from infringing upon the Baskin-Robbins' trademarks, trade names, and trade dress, and from otherwise engaging in unfair competition with Baskin-Robbins; and

2. Defendants and their officers, agents, servants, employees and attorneys, and all persons in active concert or participation with them must comply with all post-termination monetary and de-identification obligations under the Franchise Agreements and Personal Guarantees.

3. Defendants are ordered to file with the Court and serve on Baskin-Robbins, within 30 days after the service upon Defendants of this Order, a report in writing and under oath setting forth in detail the manner and form in which they have complied with the

injunction.

C. Attorneys' Fees and Costs

Plaintiffs' motion for default judgment requests "reasonable counsel fees and costs," (Dkt. No. 20 at 24), and their separately filed motion for attorneys' fees seeks $20,362.50 in attorneys' fees and $1,394.74 in costs, (Dkt. No. 29 at 3). Such fees and costs are provided for under the Franchise Agreement; however, Plaintiffs' motion fails to adequately support the amount of fees requested.

1. The Franchise Agreement

As previously discussed, the Franchise Agreement provides that Defendants agree to pay reasonable attorneys' fees and costs in the event of Defendants' defaults. (See Dkt. No. 1 at ¶ 23 (citing id., Ex. 1 at 35 § 14.4.4 ("You will pay to us all costs and expenses, including . . . reasonable investigation and attorneys' fees, incurred by us in successfully enforcing (which includes achieving a settlement) any provisions of this Agreement.").) Contractual provisions providing for recovery of attorney's fees and costs are valid under Massachusetts law. See Preferred Mut. Ins. Co. v. Gamache, 426 Mass. 93, 95 (1997). Thus, because it is undisputed that Defendants are in default under the terms of the Franchise Agreement, and default judgment is warranted under the Eitel factors, Plaintiffs are entitled to reasonable attorneys' fees and costs.

2. Reasonable Fees

To calculate an award of attorneys' fees, district courts generally apply "the lodestar method, multiplying the number of hours reasonably expended by a reasonable hourly rate." Ryan v. Editions Ltd. W., Inc., 786 F.3d 754, 763 (9th Cir. 2015) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)); see also T&D Video, Inc. v. City of Revere, 66 Mass. App. Ct. 461, 476-77 (2006) (applying lodestar method as set forth in Hensley to determine reasonable fees), rev'd in part on other grounds 450 Mass. 107 (2007). "A reasonable hourly rate is ordinarily the prevailing market rate in the relevant community." Kelly v. Wengler, 822 F.3d 1085, 1099 (9th Cir. 2016) (internal quotation marks and citation omitted). "[T]he burden is on the fee applicant to produce satisfactory evidence—in addition to the attorneys' own affidavits—that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 980 (9th Cir. 2008) (internal quotation marks and citation omitted). The party requesting fees also bears "the burden of submitting billing records to establish that the number of hours" requested are reasonable. Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). The number of hours should not exceed the number of hours reasonable competent counsel would bill for similar services. Hensley, 461 U.S. at 434. Courts may reduce the hours expended "where documentation of the hours is inadequate; if the case was overstaffed and hours are duplicated; if the hours expended are deemed excessive or otherwise unnecessary." Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986) (citing Hensley, 461 U.S. at 433-34).

Here, Plaintiffs request $20,362.50 in fees reflecting a total of 39.9 attorney hours. (Dkt. No. 29-1 at ¶ 14.) In support of that request, Plaintiffs submit the declaration of its counsel Ms. Chang of Fox Rothschild LLP, an attorney biography for another attorney who worked on the case (Craig R. Tractenberg, also of Fox Rothschild LLP), and redacted invoices purportedly reflecting "[a] true and correct copy of Fox Rothschild LLP's invoices issued to Plaintiffs" for work performed in October through November 2019, January 2020, February 2020, and March 2020. (See Dkt. No. 29-1 at ¶ 12.) The redacted invoices are of no help to the Court in determining if the hours expended were reasonable because the "Description" of tasks performed is redacted for every entry. (See generally Dkt. No. 29-1, Ex. 2 at 10-16.) Ms. Chang's declaration does not explain the redactions. Further, the declaration's summary of the work performed for each time period covered by the invoices does not correct this deficiency. Instead, Ms. Chang's declaration merely lists the hours worked by each attorney during a specific time period and then provides a summary of the combined work performed. For example:

February 2020
Tractenberg 0.7 hour
Chang 5.6 hour
Work performed: Prepare for hearing on motion for default judgment; investigate Defendants' location for service of default judgment papers; effectuate service; prepare declaration regarding service.

The Court has already issued two orders addressing Plaintiffs' request for fees, (see Dkt. Nos. 22 at 4 & 28), and Plaintiffs have had ample time to submit a motion that adequately supports their request. Because the declaration and billing records are inadequate, a reduction in the hours expended is warranted. See Chalmers, 796 F.2d at 1210 (noting that "counsel bears the burden of submitting detailed time records justifying the hours claimed to have been expended" and "[t]hose hours may be reduced by the court where documentation of hours is inadequate"); see also World Triathalon Corp. v. Dunbar, 539 F. Supp. 2d 1270, 1284-85 (D. Haw. 2008) (reducing hours due to heavily redacted, block-billed time entries). Thus, the Court recommends reducing the total hours expended by 20%, resulting in 31.9 hours. That time appears reasonable given the short duration of this litigation and the tasks performed. Further, the Court recommends dividing the hours expended evenly between Ms. Chang and Mr. Tractenberg because the summary of work performed does not specify the tasks performed by each attorney.

As for Plaintiffs' counsel's rates, Ms. Chang attests that she charged $475 per hour in this action. (Dkt. No. 29-1 at ¶ 10.) Ms. Chang is a partner at Fox Rothschild with over 15 years of experience in business litigation, and her practice is located in San Francisco, California. (Id.) Mr. Tractenberg's attorney biography indicates that he has over 25 years of litigation experience, specializes in business franchise law, and is based in Philadelphia, Pennsylvania and New York, New York. (Id., Ex. 1 at 6-7.) Ms. Chang attests that Mr. Tractenberg's hourly rate in this action is $550. (Id. at ¶ 9.)

Counsels' rates are in line with those found reasonable in similar cases in this Circuit. See, e.g., Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., 668 F.3d 677, 689 (9th Cir. 2012) (affirming attorneys' fee award in trademark infringement case based on rates of $320-$685/hour), abrogated on other grounds by SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., 839 F.3d 1179 (9th Cir. 2016); Chanel, Inc. v. Hsiao Yin Fu, No. 16-cv-02259- EMC, 2017 WL 1079544, at *5 (N.D. Cal. Mar. 22, 2017) (granting $35,640 in attorneys' fees in a trademark infringement case based on rates of $325-$500/hour for partners); see also Superior Consulting Servs., Inc. v. Steeves-Kiss, No. 17-cv-06059-EMC, 2018 WL 2183295, at *5 (N.D. Cal. May 11, 2018) (noting that "district courts in Northern California have found that rates of $475-$975 per hour for partners and $300-$490 per hour for associates are reasonable."). Accordingly, the Court recommends awarding Plaintiffs attorneys' fees as follows:

Mr. Tractenberg: 15.95 hours at $550 per hour = $8,772.50

Ms. Chang: 15.95 hours at $475 per hour = $7,576.25

Total: 31.9 hours = $16,348.75

3. Reasonable Costs

Plaintiffs request $1,394.74 in litigation costs reflecting "filing fee, process server fees, and delivery costs associated with courtesy copies to the Court." (Dkt. No. 29-1 at ¶ 14.) That amount is reasonable and supported by Ms. Chang's declaration and the redacted invoices. Accordingly, the Court recommends granting Plaintiffs' request for costs in full.

CONCLUSION

For the reasons set forth above, the Court recommends granting Plaintiffs' motion for default judgment and awarding $25,707.16 in monetary damages, $16,348.75 in attorneys' fees, and $1,394.74 in costs. The Court further recommends that a permanent injunction be entered against Defendants as follows:

1. Defendants and their officers, agents, servants, employees and attorneys, and all persons in active concert or participation with them are enjoined from infringing upon the Baskin-Robbins' trademarks, trade names, and trade dress, and from otherwise engaging in unfair competition with Baskin-Robbins; and

2. Defendants and their officers, agents, servants, employees and attorneys, and all persons in active concert or participation with them must comply with all post-termination monetary and de-identification obligations under the Franchise Agreements and Personal Guarantees.

3. Defendants are ordered to file with the Court and serve on Baskin-Robbins, within 30

days after the service upon Defendants of this Order, a report in writing and under oath setting forth in detail the manner and form in which they have complied with the injunction.

Any party may file objections to this report and recommendation with the district court judge within fourteen days after being served with a copy. See 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b); N.D. Cal. Civ. L.R. 72. Failure to file an objection may waive the right to review of the issue in the district court.

IT IS SO ORDERED. Dated: May 7, 2020

/s/_________

JACQUELINE SCOTT CORLEY

United States Magistrate Judge