Default Judgment

Subscribe to Default Judgment via RSS

Lyons Partnership, L.P. v. Welle, No. 08 C 2909, Slip Op. (N.D. Ill. Feb. 22, 2010) (Grady, Sen. J.).
Jude Grady denied defendants’ motion to set aside the Court’s Fed. R. Civ. P. 55(c) default judgment in this case alleging that defendants violated plaintiff’s intellectual property rights in children’s characters Hello Kitty, Bob the Builder and Thomas the Tank Engine, among others. While the defendants acted diligently after default was entered, they did not act diligently prior to the default. Defendants’ “cash flow” problems were not an excuse for failing to appear pro se. Additionally, the defendants did not identify a meritorious defense. Bare denials from defendants’ answer were not sufficient.
…
Continue Reading Bare Denials Not Sufficient to Reverse Default Judgment

American Taxi Dispatch, Inc. v. American Metro Tax & Limo Co., __ F. Supp.2d __, 2008 WL 4616855 (N.D. Ill. Oct. 20, 2008) (St. Eve, J.).
Judge St. Eve permanently enjoined defendants’ (collectively “Metro”) use of trademarks infringing plaintiff American Taxi’s American Taxi marks, and awarded American Taxi damages in the amount of Metro’s gross sales as well as attorney’s fees. American Taxi began using its marks in 1975. Metro incorporated and began using their American Metro Taxi marks in early 2007. American Taxi filed the instant suit for trademark infringement, Lanham Act unfair competition and related state law claims. Metro initially defended itself, but after repeatedly missing deadlines th Court entered a default judgment and allowed American Taxi to submit proofs, which led to this opinion.
Pursuant to Fed. R. Civ. P. 54(c), the award could not exceed in form or amount what was demanded in the pleadings. The Court held that the complaint justified a permanent injunction. American Taxi alleged that Metro’s infringing acts harmed American Taxi’s goodwill, and the Seventh Circuit has held that damage to goodwill can constitute irreparable harm. And American Taxi backed up its complaint with an affidavit detailing actual confusion between the marks. Furthermore, a tailored injunction would not put Metro out of business. In fact, Metro’s owner claimed that Metro had been dissolved. So, the balance of harms weighed in American Taxi’s favor. And finally, there is a public interest in knowing whom they conduct business with, which favored an injunction. The Court, therefore, permanently enjoined Metro and its affiliates, successors and assigns from using its marks or any others that were confusingly similar to the American Taxi marks.
The Court then awarded damages in the amount of Metro’s provable gross sales. The Court focused its analysis on the Seventh Circuit’s recent WMS Gaming, Inc. v. WPC Prods. Ltd. decision in which the Seventh Circuit held that plaintiff need only prove gross sales and then the burden shifts to defendant to prove its costs — click here to read the Blog’s post about that decision. As a result, where defendant is in default, plaintiff’s may be awarded defendant’s gross profits.
Finally, the Court held that the case was exceptional, warranting an award of attorney’s fees. But the Court limited the amount of fees because the request was “less than a model of clarity” and it was not clear from the submission which of the time entries were appropriate.
…
Continue Reading Default Ends in Injunction & Award of Defendants’ Gross Sales

Lorillard v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2008 WL 1775512 (N.D. Ill. Apr. 17, 2008) (Aspen, J.).
Judge Aspen adopted Magistrate Judge Cole’s Report and Recommendation, denying defendants’ Fed. R. Civ. P. 59(e) motion to alter the Court’s judgment against defendants – click here to read more about that Report and click here to read more about this case in the Blog’s archives. The Court awarded plaintiff Lorillard $2.5M in statutory damages for defendants’ sales of counterfeit cigarettes using Lorillard’s trademarks. Defendants objected to, among other things, a statutory damages award in excess of $1M. Defendants argued that 15 U.S.C. § 1117(c)(2) only allowed $1M in statutory damages per type of goods sold. Because this case only involved one type of goods, cigarettes, defendants argued statutory damages could not exceed $1M. But the Court held that the limitation was $1M per counterfeit mark per type of good. Because Lorillard alleged five counterfeit marks were used, the statutory damages limit was $5M.
…
Continue Reading Counterfeiting Statutory Damages are up to $1M/Trademark

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2007 WL 2580491 (N.D. Ill. Sep. 10, 2007) (Cole, Mag. J.).
Judge Cole recommended awarding plaintiff $2.5M in statutory damages. The Court had previously entered a Fed. R. Civ. P. 37(b) default judgment against defendants for sales of counterfeit Newport cigarettes in violation of the Lanham Act.* The Court recommended that a damages hearing was not necessary because of defendants’ four year pattern of avoiding discovery obligations leading to a default judgment, including failing to produce damages documents. Having actively avoided producing the information for four years, defendants were not now entitled to seek opportunities to present evidence in their defense. Furthermore, the Court reported that a $2.5 M award was reasonable. $2.5M was half of plaintiff’s estimate of defendants’ infringing sales and it was half of the potential $1M statutory award for each of the five marks defendants infringed.
* For more on this case, see the Blog’s archives.
…
Continue Reading $2.5M Statutory Damages Award Set Without Hearing

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 03 C 4844, Slip Op. (N.D. Ill. Jul. 27, 2007) (Cole, J.).
Judge Cole recommended granting plaintiff Lorillard Tobacco’s (“Lorillard”) petition for attorneys fees, but reduced the requested fees by about $80,000. Lorillard received a default judgment against defendants in 2006 and, as a result, brought this petition seeking its fees and costs. The Court’s opinion is an excellent guide for anyone preparing a fee petition. The Court refused to consider Lorillard’s costs because although Lorillard submitted a list of costs, it did not total the costs or discuss them in its petition and supporting declaration. Next, the Court accepted most of the costs for the four attorneys whose billing rates were explained in the supporting declaration, but denies any fees for the other nineteen people whose fees were not explained in the declaration. The Court notes that these nineteen people could be partners, associates or paralegals, but the Court cannot assess the reasonableness of their rates or billed activities without knowing their roles. And even for the four, the Court notes that it would have preferred some explanation of each attorney’s experience in past Lanham Act cases, in order to judge whether the attorneys’ billing rates were commensurate with their experience.
Finally, the court refused a subset of the fees for the four attorneys that were inadequately described, unnecessarily billed by multiple attorneys or clerical in nature. For example, the Court disallowed two eighteen minute bills for attorneys reviewing a one-sentence minute order changing the date of a status hearing.
Practice tip: Generate thorough bills and have someone with perspective on a case do a sanity check to make sure your client is not being billed for unreasonable work or duplicative efforts. Also, when preparing a fee petition, make sure to support the rates and fees billed by all attorneys and paralegals with detailed affidavits.
…
Continue Reading Fee Petitions Must be Detailed and Supported