Opinion
Civ. 1:20-cv-00600-CL
08-23-2021
THE NATIONAL GRANGE OF THE ORDER OF PATRONS OF HUSBANDRY, Plaintiff, v. THE HEMP GRANGE and THOMAS DUBIEL, Defendants.
FINDINGS AND RECOMMENDATION
MARK D. CLARKE United States Magistrate Judge
This case comes before the Court on Plaintiffs' Motion for Default Judgment (#22) filed against the defendants pursuant to Federal Rule of Civil Procedure 55. The Clerk of Court entered an order of default as to all defendants on May 11, 2021 (#21). For the reasons stated below, the Court recommends Plaintiffs motion be GRANTED.
BACKGROUND
Plaintiff the National Grange of the Order of Patrons of Husbandry ("Plaintiff or "the Grange") brings this action against Defendants The Hemp Grange and Thomas Dubiel ("Dubiel") for federal trademark infringement pursuant to Section 32 of Federal Trademark Act of 1946, as amended (the "Lanham Act"), 15 U.S.C. § 1114, false designation of origin and unfair competition pursuant to Lanham Act Section 43(a), 15 U.S.C. § 1125(a), trademark dilution pursuant to Lanham Act Section 43(c), 15 U.S.C. § 1125(c), and common law trademark infringement and unfair competition.
Plaintiff asserts the following facts. The Grange was founded in 1867 to promote the interests of farmers and farming in the United States. Through a network of over 2, 000 local chapters across the country, the Grange provides a variety of goods and services relating to agriculture for both farming communities and the general public. These services include advising members regarding legal regulations on hemp and hemp-based products.
The Grange owns numerous federally registered trademarks, which it uses directly and through its authorized licensees, to provide a variety of goods and services to advance the quality of family life in farm, rural and suburban communities. Further, the Grange maintains an active licensing program, which allows local businesses providing a variety of agricultural-related goods and services, including farms, community garden centers and farm-to-table restaurants, to use the GRANGE name and mark under the supervision of the Grange, and to benefit from the Grange's established national reputation while providing high-quality products and services to their communities.
A table of the Grange's federal trademark registrations comprising or including the mark GRANGE is included in the Complaint (#1) p.4-7. The registrations are also attached to the Complaint as exhibits.
Plaintiff alleges and submits evidence to show that the Grange's registrations are valid, subsisting and in full force and effect. Pursuant to Lanham Act § 7(b), 15 U.S.C. § 1057(b), the Grange's federal registrations constitute prima facie evidence of the validity of the GRANGE Marks, as well as the Grange's ownership and exclusive right to use the GRANGE Marks in commerce in connection with the covered goods and services. Through the Grange's long and continuous use of the GRANGE Marks for over 150 years, the GRANGE Marks have become famous and well-known to members of the public, who identify the Grange as the source of goods and services offered under the GRANGE Marks. In addition, the Grange has built up a high degree of distinctiveness and valuable goodwill in its name and the GRANGE Marks through its extensive investment of time, effort, and money. The GRANGE Marks contain substantial goodwill and are of great importance and value to the Grange. In the United States, the Grange refers, to Plaintiff and its local Grange chapters. This association of Plaintiff and its GRANGE Marks is so well known that it appears in popular dictionaries. E.g., The Grange (in the US), New Oxford American Dictionary (3d. ed.) ("farmer's association organized in 1867.") The Grange has long had a significant presence in Oregon, with more than 180 local Grange chapters in the State. Two chapters, Josephine Pomona Grange # 20 and Redwood Grange #760 are located in Grants Pass, Oregon, the same city where Defendants are conducting business. The GRANGE Marks are famous for purposes of Federal and Oregon trademark law, and all goodwill in the GRANGE Marks inures to the benefit of the Grange.
Plaintiff further alleges that Defendants the Hemp Grange and Dubiel began operating a hemp manufacturing and retail operation in or around December 2019. The Hemp Grange came to Plaintiffs attention in January 2020 upon the registration of the infringing domain name THEHEMPGRANGE.COM, which was registered using a privacy protection service. On January 21, 2020, Plaintiff, through its counsel, sent correspondence to The Hemp Grange using the physical address and email address provided on the THEHEMPGRANGE.COM website.' The correspondence explained Plaintiffs prior rights in the GRANGE Marks, expressed concerns regarding the likelihood of consumer confusion arising from the continued use of the name "The Hemp Grange," and requested that The Hemp Grange adopt a new, non-infringing name. When the physical and email addresses proved to be incorrect, Plaintiff made multiple attempts to contact Defendants via mail, email, and the telephone. Finally, during one phone call, Plaintiff counsel briefly spoke with Mr. Dubiel and an individual identified as John Riccio, who claimed that the use of "The Hemp Grange" did not violate Plaintiffs prior rights in the GRANGE Marks, and invited Plaintiff to bring a lawsuit to enjoin the use of the name.
Despite being put on notice of the Plaintiffs exclusive rights in the GRANGE Marks, Defendants continue to use the name and mark "The Hemp Grange" in violation of Plaintiff s exclusive rights in the GRANGE Marks. The name and mark "The Hemp Grange" incorporates the mark GRANGE in its entirety and is highly similar to the other GRANGE Marks. The term "hemp" is descriptive of Defendants' goods and services, and therefore the addition of "the hemp" to the mark GRANGE does not distinguish "The Hemp Grange" from the GRANGE Marks. Defendants provide goods and services related to those offered by the Grange and its authorized licensees, and upon information and belief, Defendants market the goods and services to an identical or overlapping group of consumers. Defendants' continued use of "The Hemp Grange" is likely to cause consumer confusion, mistake or deception. Defendants are also unfairly benefitting from the Grange's reputation and goodwill that the Grange has built up and established in its GRANGE Marks.
Defendants' continued use of the name and mark "The Hemp Grange" after being put on notice of the Grange's rights demonstrates an intentional and willful intent to trade on the goodwill associated with the GRANGE Marks, which harms the Grange. Defendants are using the name and mark "The Hemp Grange" in commerce, which dilutes and is likely to dilute the distinctiveness of the mark GRANGE by eroding the public's exclusive identification of this famous mark with the Grange and lessening the capacity of the mark GRANGE to identify and distinguish the Grange's goods and services.
LEGAL STANDARD
The decision to grant or deny a motion for default judgment is within the discretion of the court. Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986). In exercising its discretion, the court must consider seven factors, often referred to as the Eitel factors: (1) the possibility of prejudice to the plaintiff; (2) the merits of 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 favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
Upon entry of default, plaintiffs well-pleaded allegations of fact regarding liability, except allegations relating to the amount of damages, will be taken as true. Geddes v. United Fin-Group, 559 F.2d 557, 560 (9th Cir. 1978). Plaintiff must establish damages by proof, unless the amount is liquidated or otherwise susceptible of computation. Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981) (internal citation omitted). Relief for cases of default judgment "must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Rule 54(c).
DISCUSSION
The Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1338(a)and 1338(b), and Section 39 of the Federal Trademark Act of 1946, as amended (the "Lanham Act"), 15 U.S.C. § 1121, as the claims asserted herein present federal questions relating to trademarks and unfair competition under the Lanham Act. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(1) and (b)(2) because it is where Defendants, The Hemp Grange and Dubiel, are conducting business and where a substantial part of the acts or omissions giving rise to the Plaintiffs claims occurred.
Plaintiffs motion for default judgment and motion for attorney fees should be granted.
I. The Eitel factors weigh in favor of entering default judgment against the defendants.
All of the factors weigh in favor of granting default judgment, except the policy factor favoring a judgment on the merits. On balance, the factors strongly favor granting the motion.
a. The possibility of prejudice to Plaintiffs weighs in favor of default judgment.
First, if default judgment were not granted, Plaintiffs would be denied a legal remedy against the defendants for their allegedly unlawful actions and "would be left without a remedy given defendant's failure to appear and defend themselves." J & J Sports Prods., Inc. v. Frei, No. 4:12-cv-0127-BLW, 2013 WL 3190685, *1 (D. Idaho Jun. 21, 2013).
Among other allegations, Plaintiff alleges that Defendants were put on notice of the Plaintiffs exclusive rights in the GRANGE Marks, and yet they continue to use the name and mark "The Hemp Grange." Defendants even invited Plaintiff to bring a lawsuit to enjoin the use of the name. Thus, without a default judgment, Plaintiff would be left without a remedy for the defendant's actions in this case. This prejudice renders the first factor favorable to Plaintiff.
b. The sufficiency of the complaint and the merits of Plaintiffs substantive claims also weigh in favor of default judgment.
Next, Plaintiffs' Complaint sufficiently states a claim for relief, thus meeting the second, and third Eitel factors. See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (stating the second and third factors require a plaintiffs allegation "state a claim on which the [plaintiff] may recover"). Since the Clerk of the Court has entered default, the well-pleaded allegations of the complaint are taken as true and are binding against the defaulting party. Garcia v. Pacwest Contracting LLC, 2016 WL 526236, 1 (D. Or. Feb 9, 2016) (citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). Thus, the question is whether Plaintiff is entitled to recover on the facts set forth in the complaint. The Court concludes that Plaintiff is so entitled.
Plaintiff alleges and submits evidence to show that the Grange's registrations are valid, subsisting and in full force and effect. Plaintiff has sufficiently alleged Defendants' continued use of the mark in the marketing and sale of overlapping products and services creates consumer confusion, mistake or deception. Defendants are unfairly benefitting from Grange's reputation and goodwill that the Grange has built up and established in its GRANGE Mark. Defendant's use of the mark also dilutes the distinctiveness of the mark by eroding the public's exclusive identification of this mark with the Grange and lessening the capacity of the mark to identify and distinguish the Grange's goods and services.
Thus, Plaintiff has established its claims for trademark infringement and unfair competition under the Lanham Act, by pleading and proving that: (1) it owns a valid, protectable trademark (ECF No. 1, ¶¶ 8-20), (2) Defendants used a mark entirely incorporating Plaintiffs GRANGE Mark without the consent of Plaintiff in a manner that is likely to cause confusion among ordinary purchasers as to the source of the services and (3) Plaintiff was damaged by Defendants' infringement and unfair competition (Id. at ¶¶ 40-43). See Chevron U.S.A., Inc. v. Pelican Butte Oil, LLC, 2011 U.S. Dist. LEXIS 39569, *11 (D. Or. Jan. 31, 2011), adopted, 2011 U.S. Dist. LEXIS 39627 (D. Or., Apr. 12, 2011) (recommending entry of default judgment on trademark claim). Plaintiff has satisfied the second and third Eitel factors.
c. The possibility of a dispute concerning material facts is a neutral factor, or it weighs in favor of granting default judgment.
As discussed above, the defendants have been properly served but have not appeared in this case. Without an appearance by the defendants and their version of the facts, or any other countervailing evidence, and because all well-pleaded allegations of the complaint are deemed true after entry of default, "no likelihood that any genuine issue of material fact exists" after default has been entered. Elektra Entm't Grp Inc v. Crawford, 226 F.R.D. 388, 393 (CD. Cal. 2005). This factor is neutral or weighs in favor of granting default judgment.
d. The sum of money at stake in the action weighs in favor of granting default judgment.
"One of the factors the court is free to consider in exercising its discretion to grant or deny default judgment is the sum of money at stake." J & J Sports Prods., Inc. v. Rafael, No. CIV S-10-1046 LKK GGH, 2011 WL 445803, at *2 (E.D. Cal. Feb 8, 2011). Here, Plaintiff is not seeking monetary damages on this motion. See Rimlinger v. Shenyang 245 Factory, 2014 U.S. Dist. LEXIS 76099, *9 (D. Nev. Jun. 4, 2014) (finding this factor neutral where monetary relief is not sought on motion for default judgment). This factor is neutral.
e. No evidence suggests default was due to excusable neglect; this factor is neutral or weighs in favor of granting default judgment.
No evidence exists to suggest the Defendants' failure to respond to the Complaint was due to excusable neglect. Plaintiffs provided sworn proof of service of process, and an Order of Default was entered. The Defendants have not appeared in this case or otherwise indicated that they will do so. No. evidence of excusable neglect exists or is apparent in the record. This factor is neutral or weighs in favor of granting default judgment.
f. Policy favors a decision on the merits of the case; this factor weighs against default judgment.
The one factor that weighs in favor of the Defendants, and against default judgment, is the strong policy favoring decisions on the merits. However, this factor, without more, is not sufficient to preclude default judgment. "Although 'cases should be decided upon their merits whenever reasonably possible,' 'the mere existence of Fed.R.Civ.P. 55(b) indicates that this preference, standing alone, is not dispositive.'" Garcia v. Pacwest Contracting LLC, 2016 WL 526236, at *4 (D. Or. Feb. 9, 2016) (quoting PepsiCo, Inc., 238 F.Supp.2d. at 1177). Here, the Defendants' "failure to defend against [Plaintiffs] claims makes a decision on the merits impossible. Accordingly, the policy favoring decision on the merits does not preclude the Court from entering default judgment against [the Defendants]." Id.
g. Conclusion
The Eitel factors weigh in favor of granting Plaintiffs motion for default judgment because the only factor that weighs against default judgment is the final, policy factor, and it is not dispositive. Without an appearance by the Defendants and their side of the facts or any other countervailing evidence, the factors weigh in Plaintiffs favor, and the Court cannot find a reason to deny the motion for default judgment.
RECOMMENDATION
For the reasons stated above, the Court recommends that Plaintiffs' motion for default judgment (#22) should be GRANTED. Rule 54(c) of the Federal Rule of Civil Procedure provides that "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Here, Plaintiffs complaint includes prayers for injunctive relief as well as monetary damages based on an accounting of Defendants' revenue. However, the only relief sought by Plaintiffs motion for default judgment, are the requests for injunctive relief. Therefore, judgment should be entered as follows:
A. Defendants and all other persons in active concert or participation with them, or either of them, who receive actual notice of the Final Judgement by personal service or otherwise, be permanently restrained and enjoined from:
i. Using the GRANGE Marks or any other mark, corporate name, trade name or domain name that consists of or contains the mark GRANGE, or any other trademarks confusingly similar to the GRANGE Marks in the United States;
ii. Using any false designation of origin that is likely to lead members of the public to believe that any good or service offered or rendered by Defendants is, in any manner, associated or connected with the Grange and/or its authorized licensees, or is licensed, sponsored or approved by the Grange; and
iii. Engaging in any other activity that constitutes unfair competition with the Grange, or acts and practices that deceive the public.
B. Defendants shall destroy all business cards, brochures, advertisements, products, and other physical or electronic materials in Defendants' possession or control bearing the GRANGE Marks, or any simulation, reproduction, counterfeit, copy or colorable imitation thereof, including, but not limited to, "The Hemp Grange, "
C. Defendants shall cancel the registration for any domain name that includes GRANGE or any confusingly similar variant. Defendants shall file with the Court and serve upon the Grange's counsel within thirty (30) days after entry of judgment, a written report under oath, describing in detail the manner and form in which it has complied with the Court's judgment.
SCHEDULING
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure Rule 4(a)(1) should not be filed until entry of the district court's judgment or appealable order. The Report and Recommendation will be referred to a district judge. Objections to this Report and Recommendation, if any, are due fourteen (14) days from today's date. If objections are filed, any response to the objections is due fourteen (14) days from the date of the objections. See Fed.R.Civ.P. 72, 6.