Summary
In V Secret Catalogue, Inc. v. Zdrok., No. 2:01-CV-0059, 2003 WL 22136303 (S.D. Ohio Aug. 29, 2003) at *9, this Court held that Defendant's website, while falling in the "middle ground" identified by Zippo test, was sufficiently interactive to satisfy the purposeful availment prong of Southern Machine.
Summary of this case from Wood v. 1-800-GOT-JUNK?, LLCOpinion
Case No. 2:01-CV-0059
August 28, 2003
OPINION AND ORDER
This matter is before the Court for consideration of the Defendant's Motion for Relief from Judgment (Doc. #26), the Plaintiffs' Motion to Show Cause and for Sanctions (Doc, #30), Defendant's Motion to Strike (Doc. #37) and the Defendant's Motion for Consideration and Request for Oral Argument (Doc. #46). For the reasons that follow, the Motion for Relief from Judgment is provisionally denied, the Plaintiffs' Motion to Show Cause and for Sanctions is denied, the Defendant's Motion to Strike is denied, and the Defendant's Motion for Consideration and Request for Oral Argument is granted in part and denied in part.
I.
The dispute between the parties in this case has been litigated in three forums. In order to resolve the Defendant's present motion for relief from judgment, it is necessary to review the factual and procedural history of the parties' litigation.
Plaintiffs V Secret Catalogue, Inc., Victoria's Secret Direct, LLC, Victoria's Secret Stores, Inc. and Intimate Beauty Corporation d/b/a Victoria's Secret Beauty ["Plaintiffs"] filed suit in this Court on January 22, 2001 to remedy Defendant Victoria Zdrok's alleged "cybersquatting and unauthorized use, infringement and dilution of and Defendant's unfair competition with, Victoria's Secret's famous trademark and service mark VICTORIA'S SECRET and variations thereof." ( Complaint at ¶ 1). Plaintiffs are Delaware corporations with their principal places of business in Columbus, Ohio. The Defendant is a resident of the State of New Jersey who has attained a Juris Doctor degree from Villanova Law School, a Masters Degree from Hahnemann University, and is pursuing a Ph.D. in clinical psychology.
Plaintiffs allege that the Defendant has engaged in the unauthorized use of Plaintiffs' marks in connection with the operation of her adult-oriented Internet business and website. Defendant's website offers for sale merchandise and subscriptions to her Internet site. ( Id. at ¶ 3). The site is accessed through at least five domain names: victoriassecretdesires.com, victoriaz.com, planetvictoria.com, victoriazdrok.net and beautywithbrains.net. ( Id.)
Plaintiffs have registered the domain name of victoriassecret.com in order to provide information about their stores and products which bear the VICTORIA'S SECRET mark. ( Id. at ¶ 27). Plaintiffs' products include women's lingerie, clothing, beauty products, fragrances, outerwear, sleepwear, bedding, swimwear and gift items. ( Id.)
Plaintiffs' complaint presents four counts: federal trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1114 (Count I), cybersquatting in violation of the Lanham Act, 15 U.S.C. § 1125(d) (Count II), federal unfair competition and false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125(a) (Count III), and federal trademark dilution in violation of the Lanham Act, 15 U.S.C. § 1125(c) (Count IV). A summons was issued to Defendant Zdrok at her residence in New Jersey on January 22, 2001.
On February 26, 2001, Attorney Steven L. Sloca, who is licensed in the State of California, wrote a letter to the undersigned as a "friend" of Defendant Zdrok. In the letter, Sloca states that he would like to represent Zdrok in this Court but that he is aware of the Court's rule requiring local counsel for one not admitted to this bar. Sloca asked the Court to waive the local counsel requirement because Zdrok lived a great distance away from this Court and was unable to afford payment for local counsel. In his six-page letter, Sloca went on to argue for dismissal of the case and included citations to caselaw. On February 27, 2001, this Court entered an Order admonishing Sloca that letters to the Court are disfavored under the Local Rules of this Court. Nevertheless, the Court construed the letter as a motion to proceed without local counsel. The Court ordered Plaintiffs to respond to the motion. Following the response, this Court denied Defendant's request for waiver of the local counsel requirement. The Court further observed that "Defendant has been served, has yet to answer and has obtained no extension of time." ( Order, March 24, 2001).
The Court notes that Sloca is apparently a business partner of Defendant in a website hosting business. ( See Exhibit D attached to Plaintiffs' Motion for Entry of Default).
On April 4, 2001, the Plaintiffs filed a Request for Entry of Default, pursuant to Fed.R.Civ.P. 55(a), for Defendant Zdrok's failure to plead or otherwise respond to Plaintiffs' complaint. In their request, Plaintiffs represent that Defendant was served by hand with a summons and complaint on January 29, 2001, making her responsive pleading due on or before February 18, 2001. Plaintiffs note that they agreed to extend the deadline to February 28, 2001. The Clerk entered Default on April 4, 2001. (Doc. #10).
One day earlier, on April 3, Mr. Sloca sent a second letter to the Court again requesting that he be permitted to represent Defendant without local counsel due to Defendant's alleged poor financial status. On April 6, 2001, this Court entered an Order again denying Sloca's request and farther reminding Sloca that letters to the Court are not well-received. On the same day, Plaintiffs filed a Motion for Entry of Default Judgment and Request for Hearing to Assess Damages. (Doc. #12). Plaintiffs requested statutory damages with respect to Count II of their Complaint and a hearing for damages on Counts I, III and IV.
On April 10, 2001, this Court entered an Order of Default Judgment enjoining Defendant from engaging in various activities and awarding Plaintiffs $100,000 on Count II, together with prejudgment and postjudgment interest, with attorneys' fees and costs to be determined later. The Court scheduled the matter for a damages hearing on May 14, 2001. (Doc. #13, #14). On May 9, 2001, Plaintiffs moved to suspend the hearing on the basis that Plaintiffs had been unable to procure cooperation from Defendant as to the damages issue. (Doc. #16), Plaintiffs advised the Court that Defendant had commenced suit against them in the United States District Court for the Central District of California on May 4, 2001. Accordingly, this Court vacated the damages hearing and ordered a subsequent Status Report. (Doc. #17). In June 2001, Plaintiffs advised the Court of their intent to file a Rule 12(b)(6) motion in the California action. (Doc. #19).
In August 2001, Plaintiffs advised the Court that their motion in the California case was granted. (Doc. #20). Accordingly, Plaintiffs renewed their request for prejudgment and postjudgment interest as well as attorneys' fees.
The court's Order stated that the action was commenced by Zdrok under Rule 60(b) to collaterally set aside this Court's entry of Default Judgment. The California court found this Court to be the most appropriate forum for Zdrok's requested relief and accordingly, the court declined to exercise jurisdiction over Zdrok's complaint. The court stated that Zdrok could not "upset the principles of judicial comity, fairness and efficiency that underlie the basic rule against horizontal appeals." (Exhibit A attached to Plaintiffs' Status Report).
On September 20, 2001, this Court entered an Order setting forth additional findings in support of the earlier Default Judgment Order. In particular, the Court found that it has personal jurisdiction over the Defendant under Ohio Revised Code § 2307.382(A). ( Order at ¶ 1). The Court also specifically found that the Defendant was "validly served with a Summons and Complaint on January 29, 2001, in accordance with Fed.R.Civ.P. 4(c)." ( Id. at ¶ 2).
On June 11, 2002, this Court issued an Opinion and Order granting, in part, Plaintiffs' request for attorneys' fees and costs. On July 1, 2002, the Court entered Final Judgment with all outstanding matters resolved. (Doc. #23).
On September 20, 2002, Attorney John Bell, licensed in the State of Ohio, entered a Notice of Appearance as Trial Counsel for Defendant (Doc. #25) and filed the Motion for Relief from Judgment which is presently before the Court. Prior to the filing of this motion and,after, the dismissal of her action in the State of California, Zdrok filed an action against Plaintiffs herein in the United States District Court for the District of New Jersey. The New Jersey case was filed on September 6, 2001. As that court observed, the complaint was nearly identical to the one earlier filed in the State of California. The Defendants in that case moved to dismiss and that motion was granted as set forth in a published decision, Zdrok v. V Secret Catalogue, Inc., et al., 215 F. Supp.2d 510 (D. N.J. 2002).
In considering Zdrok's complaint pursuant to Rule 60(b) to set aside this Court's entry of default judgment, the New Jersey court took judicial notice of the various proceedings in this Court and in California. The court concluded that Zdrok's action in New Jersey was barred by claim preclusion. The court observed that Zdrok and her attorney, Mr. Sloca, were verbally instructed by the judge in California that the only recourse for Zdrok was to return to the Southern District of Ohio. Nonetheless, Zdrok attempted to litigate the action in New Jersey. The New Jersey court rejected this attempt holding that to entertain Zdrok's action in New Jersey would violate notions of judicial comity and undermine the ruling of the California court as well as the first decision issued by the undersigned. Id. at 516. The court also awarded Defendants their costs and attorneys' fees. The court stated:
Sloca has demonstrated willful bad faith by instituting multiple proceedings to resolve a single cause of action. Taken separately, Sloca's actions might not warrant sanctions, but his continuous disregard of federal court orders and precedent have led to this Court's determination that sanctions are justified in this situation.Id. at 518.
Thus, after having her claims dismissed in federal courts in California and New Jersey, Defendant Zdrok appears before this Court requesting relief under Rule 60(b) to set aside this Court's entry of Default Judgment. The Court now considers the merits of this request as well as the merits of other pending motions.
II.
A. Defendant's Motion for Relief from Judgment
Defendant Zdrok contends that the entry of Default Judgment should be set aside pursuant to Fed.R.Civ.P. 60(b)(3), (4) and (6). The rule provides:
(b) Mistakes; Inadvertence; Excusable Neglect;(2) Newly Discovered Evidence, Fraud, Etc.
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order or proceeding was entered or taken. . . .
Zdrok first contends that she was never properly served with process in this action because she was at work, and not at home, on the date and at the time that the process server avers that service was made. Zdrok claims that she merely received the complaint by ordinary mail. Zdrok also contends that the judgment against her is void because this Court lacks personal jurisdiction over her. Finally, Zdrok contends that she has a meritorious defense to at least one of the Plaintiffs' claims that would justify relief from judgment. Before addressing the merits of these contentions, the Court outlines the applicable law under Rule 60(b).
For the reasons explained infra, the Court cannot resolve the service of process issue on the present record. Thus, the Court will conduct an evidentiary hearing on September 16, 2003 at 1:30 p.m.
Applicable Law
Under Fed.R.Civ.P. 12(a)(1)(A), a Defendant is required to serve an answer within twenty days of being served with a summons and complaint. Rule 55 permits the clerk to enter a default when a party fails to defend an action as required. The Court then has the authority to enter a default judgment. Fed.R.Civ.P. 55(b)(1). A party against whom a default judgment has been entered may then petition the Court to set aside the default judgment under Rules 55(c) and 60(b).
The seminal case in the Sixth Circuit on the standard for Rule 60(b) motions to vacate default judgments is United Coin Meter Co., Inc. v. Seaboard Coastline R.R., 705 F.2d 839 (6th Cir. T1983). In that case, the Court held that Rule 60(b) is to be applied "equitably and liberally" in considering motions to vacate defaults and default judgments. Id. at 845. Further, the same factors that apply in considering a motion to vacate an entry of default under Rule 55(c) apply to a motion to vacate a default judgment. The factors are: (1) whether the opposing party would be prejudiced; (2) whether the proponent had a meritorious claim or defense; and (3) whether the proponent's culpable conduct led to the default. Id.
Analysis
1. Prejudice to the Plaintiffs
Plaintiffs argue that because both Defendant Zdrok and Mr. Sloca have shown a repeated lack of credibility and candor, setting aside the default judgment in this case would only benefit their misconduct while prejudicing the Plaintiffs.
In particular, Plaintiffs point to the decision in the New Jersey action in which the district court sharply criticized the Defendant and her counsel for not seeking relief in this Court on the entry of default judgment.
Refiling the independent action here in New Jersey against the order of Judge Tevrizian [of the federal court in California] is most certainly an act of willful bad faith. Sloca knew . . . that filing suit here would make this the third U.S. District Court to entertain this case. To prevent the appearance that they were vexatiously multiplying the litigation, counsel neglected to mention that, previous to filing the action here, Sloca had filed the case in the Central District of California. It is simply unbelievable that in a 19-page, 47-paragraph Complaint . . . which references everything from Zdrok's childhood dreams up to the present stage of her litigation, Sloca . . . did not feel the need to mention the California action at any point. Omitting this key piece of the procedural history, counsel attempt to persuade the court that "New Jersey is the only state that properly has jurisdiction over the underlying controversy,". . . . Apparently, Zdrok's attorneys did not believe New Jersey was the most appropriate forum until after the complaint in California was dismissed. This omission amounts to deception of a federal court, which should not go unsanctioned. . . . To deter Sloca and [local counsel] from engaging in any such future abuses of the legal system, the Court will award fees and costs, to be borne jointly and severally.Zdrok v. V Secret Catalogue, Inc., 215 F. Supp.2d at 519.
As the Plaintiffs point out, because of Zdrok's actions, the Plaintiffs have been forced to litigate in three different forums. Furthermore, Plaintiffs are now defending Zdrok's appeal of the New Jersey decision before the United States Court of Appeals for the Third Circuit. This Court is convinced, as the New Jersey court observed, that the Defendant's actions amount to a deception on the federal court system. Such deception cannot be condoned. Thus, the Court has no difficulty in concluding that the Plaintiffs would be severely prejudiced if the default judgment entry were to be set aside.
2. Meritorious Claim or Defense
Plaintiffs argue that Defendant Zdrok has no meritorious defense that would justify setting aside the entry of default judgment. The Defendant disagrees. According to the Defendant, she has valid defenses to this Court's exercise of personal jurisdiction over her as well as to the merits of one of Plaintiffs' intellectual property claims. The Court considers Defendant's argument as to each matter, separately. Personal Jurisdiction
Service of Process
Defendant first asserts that this Court is without personal jurisdiction because she was never served with process. Although a return of service was filed in this Court on February 13, 2001, Defendant claims that she was not personally served. Defendant represents that she was at work and not at her home in New Jersey at the date and time when the process server indicates that service of the summons and complaint was made. ( Affidavit of Victoria Zdrok at ¶ 4). Defendant claims that she "learned of the existence of the [instant action] only after receiving a copy of the summons and complaint in the ordinary mail . . . on or about February 8 or 9, 2001,"In light of the factual dispute, the Court cannot determine, at this juncture, whether Defendant was properly served. The Court will resolve the issue after an evidentiary hearing, which the Court schedules for September 16, 2003 at 1:30 p.m. The Court will, however, proceed to consider Defendant's argument that, even if she was properly served, personal jurisdiction is lacking because the requirements of the Ohio long-arm statute and constitutional due process are not satisfied.
In personam Jurisdiction
In order to subject a Defendant to the in personam jurisdiction of this Court, the Court must find that the Ohio long-arm statute, R.C. § 2307.382, permits the exercise of jurisdiction and that the Court's jurisdiction comports with the limits of due process. National Can Corp. v. K Beverage Co., 674 F.2d 1134 (6th Cir. 1982). The burden of proof as to these issues rests with the Plaintiff. Welsh v. Gibbs, 631 F.2d 436, 438 (6th Cir. 1980). Because, however, the issue of jurisdiction is being determined solely on the basis of the current record, i.e., pleadings and affidavits, Plaintiff is required to make only a prima facie showing of jurisdiction. Id. at 438-39, The Court considers the pleadings and affidavits in the light most favorable to the Plaintiff. Id.
The Ohio Supreme Court has concluded that the Ohio long-arm statute is not as expansive as the constitutional limits of due process. See Goldstein v. Christiansen, 70 Ohio St.3d 232 (Ohio 1994). Nevertheless, the central inquiry for this Court is whether the Defendant has certain minimum contacts with the State of Ohio so as not to offend "traditional notions of fair play and substantial justice." Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000) (citations omitted). Thus, the Court proceeds with the due process analysis.
Personal jurisdiction may be based on either general or specific jurisdiction, depending on the nature of the contacts that the Defendant has with the forum state. Bird v. Parsons, 289 F.3d 865, 873 (6th Cir. 2002). General jurisdiction exists only where "a defendant's contacts with the forum state are of such a continuous and systematic nature that the state may exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant's contacts with the state." Id., citing Third National Bank in Nashville v. WEDGE Group, Inc., 882 F.2d 1087, 1089 (6th Cir. 1989). Specific jurisdiction occurs when "a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum." Id., quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8 (1984).
The Sixth Circuit has developed a three-part test for determining whether the particular circumstances of a case provide sufficient contact between a non-resident Defendant and the forum state to support the exercise of specific personal jurisdiction:
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968). If the criteria are satisfied, jurisdiction is appropriate if the facts of the particular case are such that "maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
The first step of the analysis considers whether the Defendant has purposely availed himself or herself of the privilege of conducting activities in the forum state, so as to invoke the benefits and protections of its laws. In most cases, it is a common sense inquiry as to "whether the defendant has transacted business within the forum state in the usual, commercial sense of 'doing business.'" American Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988). The inquiry is designed to consider whether the Defendant has become involved with the forum through actions freely and intentionally done which have effects in the forum state. In-Flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220, 226, 228 (6th Cir. 1972).
The second step of the analysis considers whether the Plaintiffs' cause of action arises out of or is related to the Defendant's contacts with the forum state. The third part of the analysis requires inquiry into whether a Defendant's conduct establishes a "substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable." Southern Machin, 401 F.2d at 381. This part of the analysis considers whether the Defendant's conduct relates to the forum in a way that the Defendant should have reasonably anticipated being haled into court. Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). When the first two parts of the three-step analysis are satisfied, an inference arises that the third part of the analysis is also satisfied. First National Bank of Louisville v. J. W. Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir. 1982).
In this case, general personal jurisdiction over Defendant Zdrok does not exist. Thus, the Court applies the three-part test for determining whether specific personal jurisdiction exists. With respect to the first element, purposeful availment, the Plaintiffs assert that the nature of Defendant's website is such that she could reasonably have anticipated being haled to court in this forum.
In Bath Body Works, Inc. v. Wal-Mart Stores, Inc., No. C2-99-1190, 2000 WL 1810478 (S.D. Ohio Sept. 12, 2000), this Court considered the circumstances under which the maintenance of an internet website can satisfy the purposeful availment requirement. This Court relied on the test set forth in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997), for guidance. The Zippo court categorized internet use into a spectrum of three areas. At one end of the spectrum, personal jurisdiction is proper because the Defendant clearly does business over the internet by entering into contracts with residents of other states which involve the knowing and repeated transmission of computer files over the internet, Bath Body Works, Inc., 2000 WL 1810478 at *8 (citations omitted). At the other end of the spectrum, the Defendant merely establishes a passive website that does nothing more than provide information to users. In this instance, the exercise of jurisdiction is not proper. Id. It is the middle of the spectrum, where the Defendant's website allows a user to exchange information with a host computer, that the exercise of jurisdiction is determined by the level of interactivity and commercial nature of the exchange of information that occurs on the website. Id. (citations omitted).
In Mink v, AAAA Development LLC, 190 F.3d 333 (5th Cir. 1999), the Fifth Circuit applied the Zippo test in considering whether the operation of a non-resident Defendant's website gave rise to specific personal jurisdiction. The website provided users with a printable mail-in order form, a toll-free telephone number, a mailing address and an electronic mail address. Orders were not taken through the website and the Defendant had no direct contact with the forum state. The Fifth Circuit held that "the presence of an electronic mail access, a printable order form, and a toll-free phone number on a website, without more, is insufficient to establish personal jurisdiction. Absent a defendant doing business over the Internet or sufficient interactivity with residents of the forum state, we cannot conclude that personal jurisdiction is appropriate." Id. at 337.
Defendant Zdrok concedes that her website falls in the "middle ground" identified by the Zippo court. ( Defendant's Motion at 11). Zdrok argues that the website is more passive than interactive in nature. In support of this assertion, Zdrok notes that visitors to the website cannot purchase merchandise ( i.e., videos, photographs, used lingerie, or other items) from her directly over the internet. Rather, such orders are mailed to her home in New Jersey.
Plaintiffs argue that despite the mail-order situation, Defendant's website offers a variety of interactive features to make the site more interactive than passive. For example, Defendant's site includes an interactive quiz contest, previously entitled "VICTORIA'S SECRET of the Month," where visitors are asked to guess "[w]hat is Victoria's Secret this month?" ( Complaint at ¶ 5). The visitors can win prizes and an auction is held for the purchase of used lingerie and other items. Further, the website offers visitors a "tour" to sample what subscribers, who pay $19.95 per month, can view. ( Id). Visitors to the site are further advised that if they become subscribers, they can use "webcams" to view Zdrok showering and performing other activities in the nude. (Exhibit 2 attached to Complaint). Plaintiffs argue that this level of interactivity is sufficient to confer personal jurisdiction.
The Court concludes that the Defendant's website, while in the middle ground identified by the Zippo court, is certainly more interactive than passive. As the Sixth Circuit recently held, "[a] defendant purposely avails [herself] of the privilege of acting in a state through [her] website if the website is interactive to a degree that reveals specifically intended interaction with residents of the state." Neogen Corporation v. Neo Gen Screening, Inc. 282, F.3d 883, 890 (6ht Cir. 2002), citing Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).
In Neogen, the Defendant's website advertised its business of diagnostic testing of blood samples for newborn infants. The website consisted primarily of passively posted information, advertising its services. The site did, however, allow visitors to purchase testing services on-line through a password. The Sixth Circuit concluded that this aspect of the site was "an interactive usage showing that NGS [a Pennsylvania corporation] has intentionally reached out to Michigan customers and enabled them to use NGS's services from Michigan." Id. at 891. The Sixth Circuit further concluded that the interactive nature of the site was demonstrated by the fact that NGS advertised it would perform testing of blood samples for parents in any state. Id. Also of importance was a chart on the website listing statistical data for testing done in various states, including Michigan. Id. In sum, the Sixth Circuit concluded that the Plaintiff had made a prima facie showing of personal jurisdiction.
In concluding that personal jurisdiction existed, the Sixth Circuit also focused on the fact that NGS held fourteen yearly contracts with Michigan customers. Although NGS argued that these contracts represented an insignificant percentage of NGS's overall business, the court stated that the "test for personal jurisdiction is not based on a 'percentage of business' analysis . . . but rather on whether the absolute amount of business conducted by NGS in Michigan represents something more than 'random, fortuitous, or attenuated contacts' with the state." Neogen Corporation, 282 F.3d at 891-92. (citations omitted).
Similar to the website in Neogen, the Defendant's website offers visitors the ability to purchase "services" on-line through assignment of a password. In addition, the site provides a great deal of interactivity to visitors even without the use of a password. For example, the site makes reference to "Victoria's secret desires" and asks visitors to participate in a quiz called "Victoria's Secret of the Month." In the Court's view, this interactivity exceeds that in the Neogen case. In view of the degree of interactivity which the Defendant's website displays, the Court finds that Defendant's contacts with this state are not random, fortuitous or attenuated. Further, by using the name "Victoria's Secret," a well-known and well-regarded brand name in this country, the Defendant should have reasonably anticipated that her actions would have created a substantial connection with the forum state. In sum, this Court finds that Defendant purposely availed herself of conducting business in this state such that she should have reasonably anticipated being haled to court in the forum for her actions.
The second part of the Mohasco test — that the cause of action must arise from the Defendant's activities in the forum state — is also satisfied. Plaintiffs claim that the Defendant's many references to the "Victoria's Secret" name have caused a variety of harm, including economic harm. Defendant asserts that Plaintiffs have offered no proof of such damages. At this juncture, however, such proof is unnecessary. The Court must construe the pleadings in the light most favorable to Plaintiffs in considering whether Plaintiffs make a prima facie showing. In so doing, the Court finds that Defendant's activities have caused Plaintiffs harm sufficient to satisfy the "arising from" requirement of the Mohasco test.
Finally, this Court concludes that the Plaintiffs have sufficiently shown that the Defendant's acts have a substantial enough connection with the forum state to make the exercise of jurisdiction over the Defendant reasonable. Defendant's use of the name "Victoria's Secret" and the highly interactive nature of her website should have allowed the Defendant to realize that her actions would have consequences in this state.
In sum, the Court concludes that it has personal jurisdiction over Defendant Zdrok. Thus, to the extent Defendant argues that the default judgment should be set aside because the Court lacks jurisdiction, the Defendant's argument is without merit. The Court will, however, resolve the service of process issue at a later date after an evidentiary hearing.
Defense to Merits of the Plaintiffs' Claims
In moving to set aside the default judgment, the Defendant also contends that she has a meritorious defense to one of the Plaintiffs' claims. Defendant also argues that she has removed all references to "Victoria's Secret" on her website. As the Plaintiffs point out, however, the Defendant's cessation of allegedly illegal conduct does not constitute a defense to the claims.
With respect to her purported substantive defense, the Defendant relies on the United States Supreme Court's recent decision in Moseley v. V Secret Catalogue, Inc., 123 S.Ct. 1115 (2003), to argue that in order to succeed on their trademark dilution claim, Plaintiffs would have to come forward with proof of actual injury to the economic value of their mark. Prior to this case, which reversed a decision of the Sixth Circuit, a claim of trademark dilution under the Federal Trademark Dilution Act, 15 U.S.C. § 1125, could be established without proof of actual harm. Defendant argues that, in light of the change in law, she has a meritorious defense to the Plaintiffs' dilution claim which warrants setting aside the judgment rendered on that claim.
The Supreme Court held that the language of the statute "unambiguously requires a showing of actual dilution, rather than a likelihood of dilution." Moseley, 123 S.Ct. at 1124. The statute provides, in pertinent part:
The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. . . .15 U.S.C. § 1125(c)(1) (emphasis added).
As the Plaintiffs point out, in this circuit, "a change in decisional law is usually not, by itself, an 'extraordinary circumstance' meriting Rule 60(b)(6) relief." Blue Diamond Coal Co. v. Trustees of the UMWA Combined Benefit Fund, 249 F.3d 519, 524 (6th Cir. 2001) (citations omitted). Rather, the presence of "some other special circumstance" is required in order to grant relief under Rule 60(b). Id. The Court finds no special circumstance in this case that would overcome the general rule that changes in decisional law do not serve as a basis for Rule 60(b) relief. Furthermore, as the Plaintiffs point out, this Court did not award damages on Plaintiffs' dilution claim and did not, therefore, attempt to value the harm Plaintiffs' allegedly suffered by the diluted mark.
In sum, although Defendant may have been able to successfully defend against the Plaintiffs' trademark dilution claim, the Court concludes that this fact does not warrant setting aside the entry of default judgment.
3. Culpable Conduct Leading to the Default
The final factor to consider in resolving Defendant's motion to set aside the default judgment is whether there exits culpable conduct on the part of Defendant that led to the default. The Court has little trouble concluded that this factor weighs against the Defendant. As the record reflects, this Court advised Plaintiff and her attorney, in response to two separate letters which this Court construed as motions to proceed without local counsel, that Defendant had yet to answer the Plaintiffs' complaint. Defendant was well aware that she had to abide by this Court's rules, obtain local counsel and file an answer or otherwise move in response to the complaint. Defendant failed to do so and the consequence of default ensued. This Court finds that the Defendant is solely responsible for the current case posture.
Conclusion
In sum, this Court finds no basis under Rule 60(b) that warrants setting aside the default judgment entered against Defendant Zdrok.
In reaching this conclusion, the Court specifically rejects the Defendant's argument that the conduct of Plaintiffs' counsel somehow supports Defendant's request for relief under Rule 60(b)(3). While Plaintiffs' counsel may have engaged in some pre-filing settlement discussions with Mr. Sloca, who is not counsel of record in this case, the subsequent filing of the lawsuit does not amount to any sort of misconduct. Further, while Defendant takes issue with the veracity of the process server's representation that a service was made on the Defendant, the dispute in no way implicates the conduct of counsel. In addition, the Court finds that the equities do not weigh in favor of the Defendant so as to justify setting aside the default judgment under Rule 60(b)(6).
For these reasons, the Defendant's Motion for Relief from Judgment is provisionally denied, subject to the Court resolution of the service of process issue.
B. Plaintiffs' Motion to Show Cause and for Sanctions / Defendant's Motion to Strike
On October 31, 2002, Plaintiffs filed a Motion for an Order to Show Cause as to why Defendant should not be held in contempt of this Court's April 10, 2001 Order that permanently enjoined her continued use of the name "VICTORIA'S SECRET." Plaintiffs also request that the Court award them double their fees and costs in order to deter Defendant's conduct. In response, the Defendant filed a Motion to Strike on the basis that the Motion to Show Cause was not included in the materials delivered to her counsel's office.
From a review of the record, it appears to the Court that Defendant's counsel was under the mistaken impression that the Plaintiffs filed two separate motions — one to Show Cause and the other for Sanctions. The two requests are, however, contained in one pleading which Defendant apparently did receive. Thus, the Defendant's Motion to Strike is denied.
In their Motion to Show Cause, Plaintiffs assert that, as of October 10, 2002, Defendant Zdrok was using the website "Victoria's Secret Desires" to advertise her services as a spokesmodel for products. Plaintiffs attach a copy of the site page to their motion. At the top of the page appear the words "Victoria's Secret Desires." The page reveals shows that it was accessed through the website "planetvictoria.com." (Exhibit 1 attached to Affidavit of Carrie A. Shufflebarger, Esq.) Defendant contends that the page was not part of the website in October 2002. Defendant particularly avers that she "would have quickly deleted the superceded file on the server if only [Plaintiffs] had told me it was still showing up on a search engine and had asked me to delete it. I was not aware until this moment that anyone could still even see this old superceded page. . . . " ( Affidavit of Victoria Zdrok at ¶ 3). Defendant attaches a printout of the current webpage which contains no reference to "Victoria's Secret Desires."
In light of Defendant Zdrok's representations, the Court declines to hold her in contempt of the injunction Order. The Court admonishes Defendant that violation of this Court's Orders is a serious matter, however, the Court is not convinced that a finding of contempt is warranted. Further, the Court concludes that an award of double the Plaintiffs' attorneys' fees and costs is unnecessary to deter future violations. The record reveals no further instances of alleged violations by Defendant Zdrok. For these reasons, the Plaintiffs' Motion to Show Cause and for Sanctions is denied.
C. Defendant's Motion for Consideration of Previously Filed Memorandum and Request for Oral Argument
On January 30, 2003, the Defendant filed a motion for the Court to consider her Supplemental Memorandum in Opposition to the Plaintiffs' Motion to Show Cause, filed on January 3, 2003. The Court considered the memorandum in making the above ruling. In her January 30, 2003 motion, Defendant also requests oral argument on the earlier filed Motion for Relief from Judgment. The Court concludes that such argument is unnecessary.
The Defendant's January 30, 2003 motion is therefore granted in part and denied in part.
III.
In light of the foregoing, Defendant's Motion for Relief from Judgment ( Doc. #26) is PROVISIONALLY DENIED. The Plaintiffs' Motion to Show Cause and for Sanctions ( Doc.#30) DENIED. Defendant's Motion to Strike ( Doc.#37) is DENIED. The Defendant's Motion for Consideration and Request for Oral Argument ( Doc. #46) is GRANTED in part and DENIED in part.This matter is hereby scheduled for an EVIDENTIARY HEARING on the Service of Process issue on Tuesday, September 16, 2003 at 1:30 p.m. The parties shall be prepared to present witness testimony and documentary evidence to the Court to resolve the matter.
IT IS SO ORDERED.