Cardinal Services, Inc. v. Cardinal Staffing Solutions LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Cardinal Services, Inc.

Plaintiff, : Case No. 2:19-cv-1743

- vs - Judge Sarah D. Morrison

Magistrate Judge Jolson

Cardinal Staffing Solutions, LLC,

:

Defendant.

OPINION & ORDER

The Clerk entered default against Defendant Cardinal Staffing Solutions, LLC on

October 11, 2019. (ECF No. 15.) Plaintiff Cardinal Services, Inc.’s resultant Motion for Default

Judgment (ECF No. 16) is now before the Court. For the reasons that follow, the motion is

GRANTED in part and DENIED in part.

I. Background

This is a trademark infringement and unfair competition case. (ECF No. 1 ¶ 3.) Plaintiff

is a staffing service based in Maumee, Ohio. Id. ¶ 6. Plaintiff has offices in Ohio, Michigan,

Illinois and Florida. Id. ¶ 7. Defendant is a staffing service located in Columbus, Ohio. Id. ¶ 2.

Plaintiff utilizes Cardinal, Cardinal Staffing, Cardinal Staffing Services and Cardinal

Services as common law service marks and has done so since September 1994. Id. ¶ 6. Plaintiff

also uses federally registered service marks depicting cardinal bird designs. Id. ¶ ¶ 6, 13.

Plaintiff began using those marks in Ohio in 2008. Id. ¶ 7. Plaintiff uses the marks to promote

Plaintiff’s services on a variety of mediums. Id. ¶ 10. As a result of their continuous use, the

marks carry significant consumer goodwill. Id. ¶ ¶ 12, 20.

Defendant markets and offers services substantially similar to Plaintiff’s while directly

competing with Plaintiff and unlawfully using Plaintiff’s service marks. Id. ¶ ¶ 16-24.

Defendant’s use of the marks is confusing to the public. Id. ¶ 23.

Prior to filing the action, Plaintiff’s counsel sent Defendant two cease-and-desist letters.

Id. ¶ 21. Defendant continued to use Plaintiff’s marks despite Plaintiff’s requests and in violation

of Plaintiff’s marks. Id.

Plaintiff’s three count complaint asserts claims for trademark infringement under 15

U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125(a) and deceptive trade

practices under Ohio Revised Code Chapter 4165. (ECF No. 1.) After Defendant failed to

respond to the Summons, Plaintiff filed an Application for Entry of Default (ECF No. 14). The

Clerk entered Defendant’s default (ECF No. 15) and the instant motion (ECF No. 16) is ripe for

review.

II. Standard of Review

Federal Rule of Civil Procedure 55 states, “[w]hen a party against whom a judgment for

affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by

affidavit or otherwise, the clerk must enter the party’s default.” A party against whom default has

been entered is deemed to have admitted all of the well-pleaded allegations in the complaint,

except those related to damages. Boost Worldwide, Inc. v. Cell Station Wireless, Inc., No. 2:13-

cv-490, 2014 U.S. Dist. LEXIS 1467, at *3-4 (S.D. Ohio Jan. 7, 2014) (citing Antoine v. Atlas

Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995). Allegations concerning damages are not

deemed true upon entry of default. “The district court must instead conduct an inquiry in order to

ascertain the amount of damages with reasonable certainty.” Vesligaj v. Peterson, 331 F. App’x

351, 355 (6th Cir. 2009) (quoting Credit Lyonnais Sec., Inc. v. Alcantara, 183 F.3d 151, 155 (2d

Cir. 1999)). After default has been entered, the party seeking relief from the defaulting party may

apply for a default judgment. Fed. R. Civ. P. 55(b). “When an application is made to the court

under Rule 55(b)(2) for the entry of a judgment by default, the district judge is required to

exercise sound judicial discretion in determining whether the judgment should be entered.” 10A

Wright & Miller Fed. Prac. & Proc. Civ. § 2685 (3d ed. 2013).

III. DISCUSSION

A. Claims

In its Motion for Default Judgment, Plaintiff seeks an order: (1) finding that Defendant

has infringed upon Plaintiff’s common law and federally registered trademarks; (2) enjoining

Defendant from continuing to infringe upon Plaintiff’s marks; (3) requiring Defendant to

produce or destroy any item bearing the infringing marks; (4) directing the registrar of the

domain www.cardinalstaffingsolutions.com to transfer the domain to Plaintiff; and (5) finding

that Plaintiff is entitled to costs and fees under Fed. R. Civ. P. 4(d)(2) in the sum certain amount

of $1,952.20. (ECF No. 1 at pp. 12-15.)

As noted, Plaintiff’s first two claims allege that the Defendant violated the Lanham Act.

A party proves trademark infringement in violation of the Lanham Act by showing that: (1) it

owns a trademark, (2) the infringer used the mark in commerce without authorization, and (3) the

use of the alleged infringing trademark “is likely to cause confusion among consumers regarding

the origin of the goods offered by the parties.” Coach, Inc. v. Goodfellow, 717 F.3d 498, 502 (6th

Cir. 2013) (citing Leelanau Wine Cellars, Ltd. v. Black & Red, Inc., 502 F.3d 504, 515 (6th Cir.

2007)). Taking the Plaintiff’s well-plead allegations as true, the Plaintiff owns its trademarks,

Defendant used Plaintiff’s marks in commerce without authorization, and Defendant’s use of

Plaintiff’s marks is likely to cause confusion among consumers regarding the origin of the goods

offered by the parties. (ECF No. 1 at ¶ ¶ 6, 13, 16-24.) Consequently, Plaintiff’s well-pled

Complaint demonstrates that the Defendant violated the Lanham Act. See Antoine v. Atlas

Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995) (“[a] default judgment on well-pleaded allegations

establishes only defendant’s liability”) (citation omitted).

Plaintiff’s third and final claim, for deceptive trade practices under Ohio state law, is also

satisfied because that claim is “considered encompassed by the federal trademark infringement

analysis.” Coach, Inc. v. Cellular Planet, No. 2:09-cv-00241, 2010 U.S. Dist. LEXIS 45087, at

*11-12 (S.D. Ohio May 7, 2010) (citing Victoria’s Secret Stores v. Artco Equip. Co., 194 F.

Supp. 2d 704, 724 n. 8 (S.D. Ohio 2002) (“The Court notes the same analysis applies to [federal]

trademark infringement, unfair competition, Ohio common law, and Ohio’s deceptive trade

practices statutes.”)).

B. Permanent Injunction

Based on the Defendant’s violation of the Lanham Act, the Plaintiff requests that this

Court enter a permanent injunction enjoining the Defendant from further infringing conduct.

Courts may issue permanent injunctions, “according to the principles of equity and upon such

terms as the court may deem reasonable,” to prevent violations of the Lanham Act. 15 U.S.C. §

1116(a). A plaintiff seeking a permanent injunction must demonstrate (1) that it has suffered

irreparable injury; (2) that there is no adequate remedy at law; (3) that considering the balance of

the hardships between the plaintiff and defendant, a remedy in equity is warranted, and (4) it is in

the public’s interest to issue the injunction. Audi AG v. D’Amato, 469 F.3d 534, 550 (6th Cir.

2006) (citing eBay Inc., et al. v. MercExchange, L.L.C., 547 U.S. 388, 391, (2006)). “The

decision to grant or deny permanent injunctive relief is an act of equitable discretion by the

district court.” MercExchange, 547 U.S. at 391.

The Court finds that a permanent injunction enjoining the Defendant’s use of Plaintiff’s

marks is appropriate under the circumstances of this case. First, the Plaintiff is likely to suffer

irreparable injury if the Defendant is not permanently enjoined from using the marks. The

irreparable injury factor is established in trademark cases by showing that the defendant’s use of

a trademark is likely to cause confusion. Wynn Oil Co. v. American Way Serv. Corp., 943 F.2d

595, 608 (6th Cir. 1991). The Court has already found that the Defendant’s use of the Plaintiff’s

marks is likely to cause confusion. Therefore, the first factor weighs in favor of a permanent

injunction.

Second, as the Sixth Circuit has explained, there is no adequate remedy at law where

there is a potential future harm from infringement. Audi AG, 469 F.3d at 550. The Defendant in

this case has ignored the Plaintiff’s request to cease the use of Plaintiff’s marks and continued to

use them in the regular course of Defendant’s business. Absent a permanent injunction, there is

the potential that the Defendant will continue to use the Plaintiff’s marks and likely cause

confusion among the public about the origination of its good and services. Therefore, the second

factor weighs in favor of a permanent injunction.

Third, the Defendant will not incur any hardship as a result of the issuance of a

permanent injunction requiring that it comply with the Lanham Act. A defendant does not suffer

any hardship in complying with the Lanham Act. Id. Therefore, the third factor weighs in favor

of a permanent injunction.

Finally, the issuance of a permanent injunction in this case is in the public interest.

Trademark enforcement and prevention of customer confusion are inherently in the public

interest. Park’N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985); see also

Lorillard Tobacco Co. v. Amouri’s Grand Foods, Inc., 453 F.3d 377, 383 (6th Cir. 2006)

(recognizing that a permanent injunction in cases involving the Lanham Act serves “two

fundamental purposes of trademark law: preventing consumer confusion and deception in the

marketplace and protecting the trademark holder’s property interest in the mark”). Therefore, the

fourth factor weighs in favor of a permanent injunction. In light of the foregoing analysis, the

Court will grant the Plaintiff’s request for a permanent injunction.

C. Attorney’s Fees and Costs

Although the Plaintiff’s Complaint requests damages for the Defendant’s alleged

violations of the Lanham Act (ECF No. 1 at p. 11) and of Ohio’s Deceptive Trade Practices Act

(ECF No. 1 at p. 12) in its Motion for Default Judgment, the Plaintiff presently requests only that

the Court enter a permanent injunction on those claims. However, Plaintiff also requests that the

Court award it a total of $1,952.20 in attorney’s fees and expenses incurred relative to service

under Fed. R. Civ. P. 4. (ECF No. 16 at 12).

Rule 4(d)(2), addressing waiver of service, relevantly provides:

(d) Waiving Service.

(2) Failure to Waive. If a defendant located within the United

States fails, without good cause, to sign and return a waiver

requested by a plaintiff located within the United States, the court

must impose on the defendant:

(A) the expenses later incurred in making service; and

(B) the reasonable expenses, including attorney’s fees, of any

motion required to collect those service expenses.

Availability of fees under this rule is predicated on valid service of the waiver. Spivey v. Board

of Church Extension, 160 F.R.D. 660, 8 Fla. L. Weekly Fed. D 702, 32 Fed. R. Serv. 3d

(Callaghan) 484 (M.D. Fla. 1995). Here, the waiver was sent to the same address in Ohio that the

Court found invalid for service. (ECF No. 12.) Plaintiff provides no indication that it sent the

waiver request to the address in Texas used to perfect service. Because it is unclear if Defendant

was actually served with the waiver of summons, the Court cannot decipher whether Defendants

failed to comply with Rule 4. Accordingly, the Court DENIES Plaintiff’s request for $1,952.20

in attorney’s fees and costs for service under Rule 4. (ECF No. 16.) See Owens v. Benton, 190

Fed. Appx. 762 (11th Cir. 2006) (upholding denial of motion for reimbursement of funds under

Fed. R. Civ. P. 4(d)(2) because it was unclear whether appellees were actually served with

waiver of service of summons, so it could not be determined that appellees failed to comply with

waiver).

IV. CONCLUSION

Plaintiff’s request for attorney’s fees and costs is DENIED. (ECF No. 16.) Plaintiff’s

motion for a permanent injunction is GRANTED. Id. The Court finds and ORDERS as follows:

(a) Defendant has infringed Plaintiff’s federally registered service marks under 15 U.S.C.

§ 1114, infringed and committed acts of unfair competition and false designation of origin in

violation of Plaintiff’s common law service mark rights under 15 U.S.C. § 1125(a), and

committed acts of Deceptive Trade Practices under Ohio Law in violation of Plaintiff’s common

law service mark rights under Ohio Revised Code Chapter 4165.

(b) Defendant and its owners, officers, agents, divisions, branches, subsidiaries, parents,

assigns, successors and attorneys, and all others acting in active concern therewith, are

permanently restrained and enjoined from:

a. imitating, copying or making unauthorized use of any of Plaintiff’s Marks;

b. making any further use of the Infringing Marks;

c. using any false designation of origin, false description, false representation or

any designator which can or is likely to lead the trade or public, or individual

members thereof, to mistakenly believe that any product or service advertised,

promoted, offered or sold by Defendant is sponsored, endorsed, connected

with, approved by, or authorized by Plaintiff;

d. causing likelihood of confusion or misunderstanding as to the source of

Defendant’s goods or services as relates to Plaintiff;

e. causing likelihood of confusion or injury to Plaintiff’s business reputation and

to the distinctiveness of Plaintiff’s Marks by any unauthorized use of the

same;

f. engaging in any activity constituting trademark infringement, unfair

competition, or deceptive trade practices with Plaintiff or with Plaintiff’s

rights in Plaintiff’s Marks;

g. passing off Defendant’s goods or services as those of Plaintiff’s;

h. engaging in false or deceptive commercial advertising and promotion based

upon the use of any designation or other information likely to confuse

consumers about Defendant’s affiliation, connection, or association with

Plaintiff;

i. trading on the goodwill associated with Plaintiff’s Marks; and

j. assisting, aiding or abetting another person or business entity in engaging or

performing any of the activities enumerated in sub-paragraphs a – h above;

(c) Defendant and its owners, officers, agents, divisions, branches, subsidiaries, parents,

assigns, successors and attorneys, and all others acting in active concern therewith, to:

a. destroy or deliver up for destruction to Plaintiff any item, including but not limited to:

business cards, letterhead, labels, signs, prints, packages, wrappers,

receptacles, advertisements, brochures, literature, promotions, websites,

domains, displays, catalogs and all other matter in the custody and under the

control of Defendant bearing the Infringing Marks or any confusingly similar

marks;

b. notify all customers, vendors, salespeople, employees and authorized agents

of this Judgment;

c. take corrective action as is or might become necessary to prevent and remedy

the trade or public from deriving the erroneous impression that any service or

product of Defendant is authorized, affiliated with or related to Plaintiff’s

Services;

(d) The registrar of the domain www.cardinalstaffingsolutions.com to transfer such

domain to Plaintiff.

This case is closed and shall be terminated from the Court’s docket.

IT IS SO ORDERED.

/s/ Sarah D. Morrison

SARAH D. MORRISON

UNITED STATES DISTRICT JUDGE