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Gonzalez v. Spunk Industries, Inc.

United States District Court, D. Maryland

September 13, 2019

VICKI GONZALEZ, Plaintiff,
v.
SPUNK INDUSTRIES, INC., et al., Defendants.

          REPORT AND RECOMMENDATIONS

          STEPHANIE A. GALLAGHER UNITED STATES MAGISTRATE JUDGE

         Plaintiff Vicki Gonzalez filed suit against Defendants Spunk Industries, Inc. (“SII”) and Jason C. Jean (collectively “Defendants”), asserting six counts including trademark infringement, cyberpiracy, and unfair or deceptive trade practices. ECF 1. This Report and Recommendations addresses Plaintiff's Motion for Entry of Award of Damages (“motion for default judgment”), ECF 25, and Defendant Jean's two near-identical Petitions to Open Default Judgment, ECF 27, 29.[1] I have also considered Plaintiff's opposition to Defendant Jean's Petitions. ECF 30. Judge Hollander referred this case to me to review the pending filings and to make recommendations, pursuant to 28 U.S.C. § 301 and Local Rule 301.6. ECF 31, 32. No. hearing is deemed necessary. Loc. R. 105.6 (D. Md. 2018). For the reasons discussed below, I respectfully recommend that Plaintiff's motion for default judgment be denied for lack of personal jurisdiction, that Plaintiff be ordered to provide additional information about her attorneys' billing records and process server costs, and that Defendant Jean's Petitions be granted and the entry of default be lifted as to Defendant Jean, although I recommend that alternative sanctions in the form of certain costs be imposed. I further recommend that the Court set a schedule for Defendant Jean to respond to the Complaint, to be followed by limited jurisdictional discovery to ascertain whether this Court can exercise personal jurisdiction over Defendants.

         I. BACKGROUND

         Plaintiff owns and operates an adult lifestyle membership club known as the Tabu Social Club, located in Catonsville, Maryland. ECF 1, ¶ 18. The Tabu Social Club has an associated adult lifestyle website, “tabulife.com.” Id. Plaintiff has valid, enforceable trademark registrations with the U.S. Patent and Trademark Office for the marks “Tabu Social Club, ” “Tabulife, ” and “Tabutravel.” Id. ¶ 23. Plaintiff alleges that Defendant Jean, a former member of the Tabu Social Club, knew of Plaintiff s rights in the trademarks, but intentionally created similar names for his websites, with the intent to profit from consumer confusion in Maryland and elsewhere. Id. ¶¶ 41-42. Essentially, the Complaint alleges that Defendants sold and offered to sell adult lifestyle entertainment services using four websites: “tabulifestyle.com, ” “tabulivestyle.com, ” “thetabu.com, ” and “thetabutruthordare.com.” Id. ¶ 24.

         Plaintiff filed her Complaint in this case on September 21, 2018. ECF 1. In relevant part, the Complaint alleges, “On information and belief, Defendant Spunk Industries Inc is a Pennsylvania corporation with a principle [sic] place of business at 709 N 2nd St Fl 2, Harrisburg, PA, 17102-3211.” Id. ¶ 10. The Complaint further alleges, “On information and belief, Defendant Jason C. Jean is the owner of Spunk Industries Inc and may be contacted at the address and contact information listed above for Spunk Industries Inc.” Id. ¶ 11.

         On multiple occasions, using two different process servers, Plaintiff unsuccessfully attempted to serve Defendants with the Complaint and Summons at 709 North 2nd Street, Floor 2, Harrisburg, Pennsylvania. ECF 6-1 Ex. A, B. One of the process servers eventually received a voice message from Defendant Jean, stating that an attorney, Johnna Kopecky, Esq., would accept service on behalf of both Defendants. ECF 6-1 Ex. A. A process server also attempted to serve Defendant Jean at his workplace, American Anvil Tattoo, but the telephone is answered by an answering machine, and during an in-person visit, the receptionist would not allow the process server to see Defendant Jean without an appointment. ECF 6-1 Ex. C. The receptionist again advised that the documents should be served on Ms. Kopecky. Id. The process server delivered the Summons and Complaint to Ms. Kopecky's office, but Ms. Kopecky called Plaintiff's counsel and advised that she could not accept service, although she could engage in settlement discussions. Id. Ex. D, E. Plaintiff sought and obtained the Court's permission for alternative service of process, and served Defendants by mailing the Summons and Complaint to 709 North Second Street, Floor 2, Harrisburg, Pennsylvania, and by delivering a copy to the front desk at American Anvil Tattoo. ECF 9, 14. Service by those methods was effected on February 27, 2019. ECF 14. Defendants did not respond.

         On May 13, 2019, Plaintiff filed a Motion for Clerk's Entry of Default against both Defendants. ECF 18. The Clerk entered the default on May 16, 2019, and notified Defendants of its entry by mail to 702 North 2nd Street, Floor 2, Harrisburg, Pennsylvania. ECF 21. On May 31, 2019, Defendant Jean filed a pro se “Motion to Vacate, ” ECF 26-1, but the Court rejected the filing as defective, because it lacked a certificate of service. ECF 26. Defendant Jean then filed his two Petitions on June 18, 2019, and June 21, 2019, respectively. ECF 27, 29. In his Petitions, Defendant Jean asserts that the 709 N. 2nd Street address, used for service of the Complaint and Summons and for mailing of the notice of default, is “a defunked [sic] business address.” See, e.g., ECF 27, ¶ 2. Defendant Jean acknowledged that he received the notice of default via forwarded mail. Id. He provided an updated mailing address, also in Pennsylvania, in his second Petition. ECF 29.

         II. PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

         Upon a party's application for a default judgment, Federal Rule of Civil Procedure 55(b)(2) permits the Court to enter a default judgment against a defendant, after the Clerk has entered default for failing to appear. In assessing whether default judgment is appropriate, the Court accepts all well-pleaded factual allegations in the Complaint as true. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001). However, the Court must still ensure that the undisputed factual allegations prove each of the elements necessary to establish each defendant's liability. Id.; see also 10A Wright, Miller & Kane, Federal Practice and Procedure § 2688 (3d ed. 2010 supp.) (“[L]iability is not deemed established simply because of the default . . . and the court, in its discretion, may require some proof of the facts that must be established in order to determine liability.”).

         This Court's analysis, then, begins with the jurisdictional allegations in Plaintiff's Complaint. Although subject matter jurisdiction in this case is evident because many of Plaintiff's claims present federal questions, personal jurisdiction is far less clear. Personal jurisdiction is a defense which may be waived under some circumstances. See Fed. R. Civ. P. 12(h)(1) (defects in personal jurisdiction are waived unless timely raised by a party). The Fourth Circuit has not determined whether a district court should assess the existence of personal jurisdiction as a prerequisite to entering default judgment.[2] Several other Courts of Appeals have held that such an inquiry is either required or permissible. See, e.g., Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 214 (2d Cir. 2010) (“[W]e agree with our sister circuits that before a court grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over the defendant.”); Mwani v. bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005) (“[A] court should satisfy itself that it has personal jurisdiction before entering judgment against an absent defendant.”); Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001) (“We previously have determined that a judgment entered without personal jurisdiction is void. It should therefore be apparent that a district court has the duty to assure that it has the power to enter a valid default judgment.”); In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“In most circumstances, a defect in personal jurisdiction is a defense that may be asserted or waived by a party. Nevertheless, when a court is considering whether to enter a default judgment, it may dismiss an action sua sponte for lack of personal jurisdiction.”); Williams v. Life Savings & Loan, 802 F.2d 1200, 1202-03 (10th Cir. 1986) (per curiam) (“We hold that a district court may not inquire into its personal jurisdiction and dismiss a case sua sponte except when entering a default judgment. . . . In reviewing its personal jurisdiction, the court does not assert a personal defense of the parties; rather, the court exercises its responsibility to determine that it has the power to enter the default judgment.”).

         The Fourth Circuit has clearly determined that “any judgment entered against a defendant over whom the Court does not have personal jurisdiction is void.” Koehler v. Dodwell, 152 F.3d 304, 306-07 (4th Cir. 1998). Thus, even if the inquiry is not required at this stage, it appears prudent to determine, prior to entry of a default judgment, whether this Court can exercise personal jurisdiction over Defendants SII and Jean.

         To exercise personal jurisdiction over a non-resident defendant, a court must determine that (1) the exercise of jurisdiction is authorized under the state's long-arm statute, pursuant to Federal Rule of Civil Procedure 4(k)(1)(A); and (2) the exercise of jurisdiction conforms to the Fourteenth Amendment's due process requirements. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). When interpreting the reach of Maryland's long-arm statute, a federal district court is bound by the interpretations of the Maryland Court of Appeals. See Carbone v. Deutsche Bank Nat'l Tr. Co., Civil Action No. RDB-15-1963, 2016 WL 4158354, at *5 (D. Md. Aug. 5, 2016); Snyder v. Hampton Indus., Inc., 521 F.Supp. 130, 135-36 (D. Md. 1981), aff'd, 758 F.2d 649 (4th Cir. 1985); see also Mylan Labs., Inc. v. Azko, N.V., 2 F.3d 56, 61 (4th Cir. 1993) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 178 (1938)). Moreover, courts must address both prongs of the personal jurisdiction analysis, despite Maryland courts consistently holding that “the state's long-arm statute is coextensive with the limits of personal jurisdiction set out by the due process clause of the Constitution.” Bond v. Messerman, 391 Md. 706, 721, 895 A.2d 990, 999 (2006); see Carefirst of Md., 334 F.3d at 396; CSR, Ltd. v. Taylor, 411 Md. 457, 472, 984 A.2d 492, 501 (2009) (noting that the personal jurisdiction analysis “entails dual considerations”).

         Under the first prong, the plaintiff must identify a provision in the Maryland long-arm statute that authorizes jurisdiction. Ottenheimer Publishers, Inc. v. Playmore, Inc., 158 F.Supp.2d 649, 652 (D. Md. 2001). Under the second prong, “due process requires only that . . . a defendant . . . have certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milleken v. Meyer, 311 U.S. 457, 463 (1940)). This “minimum contacts” analysis depends on the number and relationship of a defendant's contacts to the forum state, and whether the present cause of action stems from the defendant's alleged acts or omissions in the forum state. Id. at 316-19.

         Finally, a court may exercise two types of personal jurisdiction, “general” or “specific.” Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S.Ct. 1773, 1780 (2017). “General” jurisdiction is a fairly limited concept, since it only arises where “the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against [defendant] on causes of action arising from dealings entirely distinct from those activities.” Int'l Shoe, 326 U.S. at 318. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). In the context of a corporation, the paradigm bases for general jurisdiction are “the place of incorporation and principal place of business.” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). The Daimler court clarified that while those paradigms are not necessarily the only bases for general jurisdiction, it would be “unacceptably grasping” to approve the exercise of general jurisdiction wherever a corporation, “engages in a substantial, continuous, and systematic course of business.” Id. at 137-38 (declining to find general jurisdiction lies in every state in which a corporate defendant has “sizable” sales). In this case, there is no basis for general personal jurisdiction. The domicile alleged for Defendant Jean, and the primary place of business alleged for Defendant SII, are both in Pennsylvania.

         “Specific” jurisdiction arises when there is an “affiliation between the forum and the underlying controversy.” Goodyear, 564 U.S. at 919; Carefirst of Md., 334 F.3d at 397. To assess specific jurisdiction, the Fourth Circuit considers: “(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.” Consulting ...


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