United States District Court, Southern District of New York
June 11, 2003
EASTERN FREIGHT WAYS, INC., PLAINTIFF, AGAINST EASTERN MOTOR FREIGHT, INC., DEFENDANT.
The opinion of the court was delivered by: Laura Taylor Swain, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Eastern Freight Ways, Inc. ("Plaintiff") brings this action for trademark infringement, false designation of origin, trademark dilution, unfair competition and deceptive acts and practices against defendant Eastern Motorfreight, Inc. ("Defendant") (sued as "Eastern Motor Freight, Inc")*fn1. The Court has original and supplemental jurisdiction of this action pursuant to 28 U.S.C. § 1338.
The case is now before the Court upon Plaintiff's motion for a default judgment arising from Defendant's failure to appear by new counsel in accordance with Court orders following the withdrawal of its original counsel. Plaintiff seeks injunctive relief and damages. For the following reasons, Plaintiff's motion is granted and injunctive relief is awarded as set forth below. The issues of actual and punitive damages, as well as claims for interest and attorneys' fees, will be referred to Magistrate Judge Peck for inquest.
Plaintiff alleges in its Complaint that it is a Delaware corporation engaged in the freight transportation business, and is currently the premium service truckload carrier in the Northeast and Mid-Atlantic regions of the U.S. Since 1994, according to the Complaint, Plaintiff has used the trade name and service mark "Eastern Freight Ways" in connection with its trucking business, and the service mark "Eastern Freight Ways, Inc. On the Ball" has been registered with the U.S. Patent and Trademark Office since September 23, 1997. See U.S.P.T.O. Reg. No. 2,099,020, dated Sep. 23, 1997, Ex. 2 to Comp.
The Complaint further alleges that Defendant operates a similar freight carrying business under the trade name and service mark "Eastern Motorfreight." Arguing that this mark is confusingly similar to Eastern Freight Ways, Plaintiff's attorney sent two letters, on November 1, 2001 and November 19, 2001, to Defendant requesting that Defendant cease using its Eastern Motorfreight mark. Defendant ignored the letters and continues to use Eastern Motorfreight in commerce. Copies of the correspondence, as well as of Plaintiff's service mark registration and pages from Plaintiff's Website, are annexed to the Complaint, which was filed on April 24, 2002.
On July 30, 2002, Defendant filed an answer to the complaint, denying all of Plaintiff's substantive allegations. On October 4, 2002, Defendant's attorney, David Spector, sought leave to withdraw as counsel for Defendant due to nonpayment of attorney's fees. By Order dated October 15, 2002, the Court (Peck, M.J.) relieved Mr. Spector's firm as counsel for Defendant and ordered Defendant to retain new counsel and to file a Notice of Appearance by November 8, 2002. The Order provided that, if Defendant did not retain new counsel by November 8, 2002, "the Court [would] grant judgment for Plaintiff on default." Defendant has not retained new counsel, failed to appear by November 8, 2002, and has not responded to Plaintiff's application for a default judgment, which was served on Defendant pursuant to Judge Peck's order, on November 22, 2002.
An entry of default judgment should be made only where there was willful default, more than mere negligence or carelessness. See SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998). Here, Plaintiff clearly received adequate notice of the pendency of the action and was further notified of counsel's application to withdraw, the Court's decision on that application, the Court's direction to Plaintiff to move for a default judgment, and the instant application for a default judgment. Even if a party appears in a case, if that party by its subsequent actions plainly abandons its defense, including by violating Court orders, such actions can warrant the judgment of default. See CMI Capital Corp. v. DHKT Investment Co., Inc., No. 99-CV-4338(JBW), 2002 WL 460040, at *2 (E.D.N.Y. Feb. 9, 2002). Dispositions of motions for default judgments are left to the sound discretion of the district court. See Shah v. New York State Dep't of Civil Service, 168 F.3d 610, 615 (2d Cir. 1999).
In light of all the circumstances previously outlined, the Court finds that denial of this motion would be unfairly prejudicial to Plaintiff. Defendant, having failed to appear by new counsel, has defaulted willfully. Defendant's Answer is hereby deemed stricken and the well-pleaded allegations of the Complaint, other than as to the amount of damages, are deemed admitted.
Judgment shall therefore be entered against Defendant. Defendant, Eastern Motorfreight, Inc., its officers agents, servants, employees, attorneys, and those in active concert or participation with it, are hereby permanently enjoined from using the trade name and service mark Eastern Motorfreight, and/or any other designation which is confusingly similar to Plaintiff's trade name and service mark Eastern Freight Ways, for freight transportation or related services, and/or any other designation which is dilutive of Plaintiff's trade name and service mark Eastern Freight Ways, from using any false descriptions or any false designations of origin, or from otherwise committing any acts of unfair competition or deceptive acts and practices with respect to Plaintiff and Plaintiff's trade name and service mark.
In view of Defendant's default, the only issues remaining to be determined are the amount(s), if any, of actual and punitive damages, and of attorneys' fees, to be awarded. The case will be referred to Magistrate Judge Peck for appropriate inquest.
Plaintiff is directed to contact Magistrate Judge Peck's chambers for further scheduling.