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Scores Holding Co. Inc. v. CJ NYC Inc.

United States District Court, S.D. New York

May 24, 2017

SCORES HOLDING COMPANY INC. and SCORES LICENSING CORP., Plaintiffs,
v.
CJ NYC INC., Defendant.

          MEMORANDUM OPINION & ORDER

          RONNIE ABRAMS, United States District Judge

         Plaintiff Scores Holding Company Inc. ("SCRH") is the owner of various marks that Defendant CJ NYC Inc. was authorized to use pursuant to an agreement between Defendant and Plaintiff Scores Licensing Corp. ("SLC"). Plaintiffs allege that Defendant breached the agreement by failing to pay royalties and that Defendant has been using SCRH's marks and trade name without authorization since SLC terminated the agreement in November 2016. Defendant has not appeared in this action, and Plaintiffs move for a default judgment. Plaintiffs' motion is granted.

         BACKGROUND

         I. Procedural History

         Plaintiffs commenced this action on January 3, 2017. Defendant was served with a Summons and Complaint on January 11, 2017. Dkt. 7. On February 27, 2017, the Clerk of Court entered a certificate of default against Defendant. Dkt. 16. The same day, Plaintiffs filed the instant motion and the Court issued an order requiring Defendant to show cause at a conference scheduled for April 5, 2017 why a default judgment should not be entered in Plaintiffs' favor. Dkts. 17, 20. Defendant was served with Plaintiffs' motion papers and the Court's order on March 2, 2017. Dkt. 22. No one appeared at the April 5 conference on behalf of Defendant.

         II. Facts[1]

         SLC is a wholly-owned subsidiary of SCRH that is authorized to license certain marks owned by SCRH (the "Scores Marks"). Compl. ¶ 12. On or about November 10, 2015, SLC entered into a license agreement with Defendant that allowed Defendant to use the Scores Marks at an adult entertainment club in Woodside, New York that was to be operated under the name "Scores Queens." Id. ¶ 13; see also Id. Ex. 1 ("License Agreement"). The parties agreed that upon termination or expiration of the agreement all rights granted to Defendant would "immediately revert to SLC and/or [SCRH]" and that Defendant would be obligated "to immediately return to SLC all original artwork, models, samples, prototypes, renderings and drawings incorporating the [Scores Marks] and to cease all uses of the [Scores Marks]." License Agreement ¶ 7(h). Scores Queens began operating on or about November 13, 2015. Compl. ¶ 15; Gans Aff. ¶ 6.

         After a honeymoon period of three months, Defendant was required to pay fixed-fee royalties of $10, 000 per month for the first two years of the agreement. See License Agreement ¶ 2(a). On November 10, 2016, "[h]aving received almost no payments toward royalties" from Defendant, Compl. ¶ 19, SLC sent a letter advising Defendant that it was "in violation of a material obligation under [the agreement]" and that SLC would terminate the agreement if Defendant failed to cure its default within ten days, id. Ex. 2. Defendant did not respond. Id. ¶ 20. On November 22, 2016, SLC exercised its right to terminate the agreement, giving Defendant until November 30, 2016 to discontinue all use of SCRH's marks and trade name. Id. Ex. 3; see also License Agreement ¶ 12(a) (permitting SLC to terminate the agreement ten days after a notice of default based on a failure to pay royalties). At the time of the termination, Defendant owed SLC $85, 000 in unpaid royalties. Compl. ¶ 17, Ex. 2; Gans Aff. ¶ 6.

         After being notified of the termination, Defendant advised Plaintiffs "that it was taking steps to cease all use of SCRH's marks and trade name. Compl. ¶ 21; see also Gans Aff. ¶ 9. However, it became clear that no steps were in fact being taken. Compl. ¶ 21. Defendant still identifies its club as Scores Queens and "continues to use the [Scores] name and trademarks in . . . connection therewith." Id. ¶ 23; see also Gans Aff. ¶¶ 9-10. Defendant also continues to use the domain name "scoresqueens.com." Compl. ¶ 24; see also Gans Aff. ¶ 10.

         DISCUSSION

         "[T]he court may . . . enter a default judgment if liability is established as a matter of law when the factual allegations of the complaint are taken as true." Bricklayers & Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Constr., LLC, 779 F.3d 182, 187 (2d Cir. 2015). "[A] default is an admission of all well-pleaded allegations against the defaulting party." Vermont Teddy Bear Co. v. 1-800Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004). "There must be an evidentiary basis for the damages sought by plaintiff, and a district court may determine there is sufficient evidence either based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence." Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012). A court is required to "ascertain the amount of damages with reasonable certainty." Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999).

         Although Plaintiffs asserted nine claims in this action, they seek a default judgment with respect to only three: (1) breach of contract; (2) trademark infringement; and (3) unfair competition. Plaintiffs seek damages, costs, and a permanent injunction.

         The Complaint establishes liability for breach of contract as a matter of law. To state a claim for breach of contract under New York law, a complaint must "allege (1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." Eternity Glob. Master Fund Ltd. v. Morgan Guar. Trust Co. of N. Y., 375 F.3d 168, 177 (2d Cir. 2004) (quotation marks omitted). Defendant entered into a contract with SLC, which SLC performed by allowing Defendant to use SCRH's marks and trade name. See License Agreement; Compl. ¶ 15; see also Gans Aff. ¶ 6. Defendant breached the contract by failing to make $85, 000 in royalty payments. Compl. ¶ 17; Gans Aff. ¶ 6; see also Compl. Exs. 2 & 3. SLC is thus entitled to $85, 000 in breach of contract damages.

         The Complaint also establishes liability for trademark infringement and unfair competition. Under the Lanham Act, the analysis for these claims is essentially the same. See TechnoMarine SA v. Jacob Time, Inc., 905 F.Supp.2d 482, 487 (S.D.N.Y. 2012); see also Chambers v. Time Warner, Inc.,282 F.3d 147, 155 (2d Cir. 2002) ("Section 43(a) is a broad federal unfair competition provision which protects unregistered trademarks similar to the way that section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), protects registered marks."). A plaintiff must demonstrate (1) that it holds a mark entitled to protection and (2) that the defendant's use of a similar mark is likely to cause consumer confusion. See Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc.,696 F.3d 206, 216-17 (2d Cir. 2012); Lang v. Ret. Living Publ'g Co.,949 F.2d 576, 579 (2d Cir. 1991). Taking the allegations in the Complaint as true, the Court finds that SCRH's marks and trade name are entitled to ...


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