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Market Day Corp. v. Maas

May 25, 2006

MARKET DAY CORPORATION, PLAINTIFF,
v.
STEVEN R. MAAS, D/B/A NORTHERN PRIME MEATS SEAFOOD & STEAK COMPANY, DEFENDANTS.



The opinion of the court was delivered by: District Judge Susan J. Dlott

Magistrate Judge Timothy Black

ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR AWARD OF FEES AND COSTS AND CLOSING CASE

This matter comes before the Court on Plaintiff Market Day Corporation's ("Market Day's") Motion for Entry of Its Award of Fees and Costs (doc. #9). For the reasons below, Market Day's Motion (doc. #9) is GRANTED IN PART AND DENIED IN PART; Defendant Steven R. Maas, d/b/a Northern Prime Meats Seafood & Steak Co. ("Maas") is ORDERED to pay Market Day $12,758.51 in fees and costs; and this case is hereby CLOSED.

I. BACKGROUND

Market Day filed this trademark infringement case against Maas in September 2005, alleging that Maas has "falsely identified himself as a Market Day representative" and also "falsely represented that he was selling genuine Market Day" products while conducting door to door sales of frozen meat. (Doc. #1 at 1 ¶ 2, 4 ¶ 15.) Market Day sought a declaratory judgment finding Maas in violation of the federal Lanham Act*fn1 as well as Ohio trademark, deceptive trade practices, unfair competition, and unfair dilution law; a permanent injunction barring Maas and any collaborators from using the Market Day or confusingly similar marks in connection with their sales activities; and an award of actual damages, attorney's fees, prejudgment interest, and punitive and exemplary damages.*fn2 (Doc. #1 at 7-8 ¶¶ A-B.) After Maas was served and failed to timely answer Market Day's complaint, Market Day obtained an entry of default and a default judgment. (See docs. ##s 5-8.) The Court's default judgment order, entered on November 9, 2005, declared judgment as to liability against Maas on each count of Market Day's complaint and imposed permanent injunctive relief barring Maas and associated parties from further infringement of Market Day's trademarks or related unlawful activity.*fn3 (Doc. #8 at 1-2 ¶¶ 1-3.) The default judgment order also stated that "Market Day may seek reimbursement of attorney's fees and costs by submitting a declaration regarding such fees and costs." (Id. at 2 ¶ 4.)

On November 22, 2005, Market Day filed its pending motion for an award of fees and costs against Maas. (Doc. #9.) Maas has not responded to Market Day's fee motion, answered Market Day's complaint, filed any papers, or otherwise entered an appearance in this action.

II. ANALYSIS

Market Day asserts that it is entitled to an award of $21,955.94 in attorney's fees "on the basis of the findings" in this Court's default judgment order, as well as "the exceptional circumstances" of Maas' conduct in this case. (Doc. #9 at 1.) More specifically, Market Day maintains that the conduct described in its complaint "constitute[s] blatant, willful infringement of the MARKET DAY mark"; that both federal and Ohio law provide for fee awards in willful infringement cases; and that such an award is particularly justified here in light of Maas' unresponsiveness and apparent "lack of respect for the judicial process." (Id. at 5.) The Court concludes that while Market Day is entitled to some fees and costs in this case, a more reasonable award is $12,759.

A. Legal Authority for Fee Awards

As a threshold issue, the Court rejects Market Day's implication that it is entitled to a fee award by the express terms of the Court's order awarding it default judgment. The order's recognition that Market Day "may seek" reimbursement of its fees and costs in the wake of a favorable judgment, see doc. #8 at 2 ¶ 4 (emphasis added), does not relieve the Court of its obligation to ensure that there is independent legal authority for such reimbursement in the circumstances of this case. See, e.g., Eagles, Ltd. v. American Eagle Found., 356 F.3d 724, 725-26 (6th Cir. 2004) (affirming district court's decision, following entry of order dismissing case with prejudice and allowing defendants to move for fees and costs, to deny defendants' motion for fees and costs.) The Court finds, however, that there is ample authority to support an award of fees and costs here.

The Lanham Act entitles parties prevailing in "exceptional cases" to "reasonable" attorney's fee awards.*fn4 See, e.g., Eagles, 356 F.3d at 726-27 (citing 15 U.S.C. § 1117(a).) "Exceptional cases" are limited to those in which a defendant has engaged in "malicious, fraudulent, wilful, or deliberate" infringement. See id. at 728. Similarly, the Ohio Deceptive Trade Practices Act provides for fee awards in cases where a defendant is found to have "wilfully engaged" in what the defendant knew to be a "deceptive" trade practice. O.R.C. § 4165.03(B). Both statutes afford courts considerable discretion in fashioning fee awards. Hindu Incense v. Meadows, 692 F.2d 1048, 1051-52 (6th Cir. 1982) (Lanham); Walker v. Cadillac Motor Car Div., 578 N.E.2d 524, 530-31 (Ohio App. 8th Dist. 1989) (Ohio Deceptive Trade Practices Act).

Market Day contends that Maas' engagement in what it alleges is "malicious, fraudulent, wilful or deliberate" infringement, combined with his failure to answer Market Day's complaint, render this the sort of "exceptional" case meriting a fee award. (Doc. #9 at 3.) Market Day further suggests that courts may properly award fees under the Lanham Act even where -- as here -- the Court has simply entered default judgment on a complaint alleging willful trademark infringement. (Id. (citing in part Rio Properties v. Rio Int'l, Interlink, 284 F.3d 1007, 1022-23 (9th Cir. 2002)); see also doc. #1 (complaint) at 5 ¶ 23, 6 ¶ 27 (alleging willful trademark infringement) and 6 ¶ 29 (alleging willful engagement in deceptive trade practices).)

The actions described in Market Day's complaint, if true, would constitute willful trademark infringement in this Circuit. See, e.g., Johnson v. Jones, 149 F.3d 494, 503 (6th Cir. 1998) (internal citations omitted) (endorsing proposition that "passing off a product . . . as another seller's better established one, or some other deliberate theft of a marketholder's goodwill," constitutes "willful infringement" supporting a fee award.) The Court has not had the opportunity to validate Market Day's factual allegations against Maas, because its entry of default cut off the presentation of evidence in this case. The Court is persuaded, however, by the courts who have held that certain default judgments may fall within the class of "exceptional cases" justifying fee awards under the Lanham Act. Those courts have articulated two primary rationales, both of which apply here. The first is that an entry of default against a defendant establishes as true all factual allegations in the complaint, including any allegations of conduct constituting willful infringement for Lanham Act purposes. See, e.g., Rio Props., 284 F.3d 1023; American Appraisal Assoc. v. West, No. 3:05-0168, 2006 WL 724547, at *1 (M.D. Tenn. March 21, 2006.) The second is that a defendant's sustained failure to respond to allegations of trademark infringement is itself an "exceptional" circumstance justifying a fee award under the Lanham Act. See, e.g., Lien v. Compusoft of Kalamazoo, No. 1:89-cv-104, 1991 U.S. Dist. LEXIS 3218, at *13 (W.D. Mich. March 13, 1991) (emphasizing defendant's "total disregard" of the proceedings.)

The Court concludes that, in the circumstances of this case, Market Day is entitled to collect "reasonable" attorney's fees and costs*fn5 from Maas. The Court must now determine whether ...


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