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Park Hotels & Resorts, Inc. v. Spinnaker Resorts, Inc.

United States District Court, E.D. Virginia, Alexandria Division

February 3, 2017

PARK HOTELS & RESORTS, INC., et al., Plaintiffs,
SPINNAKER RESORTS, INC., et al., Defendants.


          Michael S. Nachmanoff United States Magistrate Judge

         This matter is before the Court on Plaintiffs' Motion for Default Judgment as to Defendant Travel Smart Solutions, LLC (Dkt. No. 17). Having reviewed the record, the undersigned Magistrate Judge recommends granting the Motion in part for the reasons that follow.

         I. Factual Background

         On September 26, 2016, Plaintiffs Park Hotels & Resorts, Inc., Hilton Grand Vacations Company, LLC, and Hilton International Holding, LLC (collectively “Hilton”) filed a complaint against Defendants Spinnaker Resorts, Inc. and Travel Smart Solutions, LLC for alleged trademark infringement, trademark dilution, unfair competition, and false advertising, as well as state law claims of alleged unfair competition and tortious interference with business expectancy. See Compl. 1-2 (Dkt. No. 1). Plaintiffs are Delaware corporations offering vacation and timeshare services and products, with principle places of business in either Virginia or Florida. Id. ¶¶ 5-7, 13-16. Defendant Spinnaker Resorts, Inc., a Florida corporation with its principal place of business in South Carolina, is a timeshare developer that markets vacation and resort packages to consumers. Id. ¶¶ 8, 30. Defendant Travel Smart Solutions, LLC, a Florida limited liability company with its principal place of business in Florida, is a third party telemarketing vendor that advertises and sells Spinnaker's vacation and resort packages. Id. ¶¶ 9, 31-32.

         Plaintiffs allege that since its founding in 1919, Hilton “has been a prominent and respected global hospitality company for nearly one hundred years … invest[ing] substantial time, effort, and money in advertising and promoting its services under the Hilton brand and using distinctive Hilton marks … earn[ing] a reputation for quality and consistency in its hotel, resort, and timeshare services.” Compl. ¶ 17 (Dkt. No. 1). “HILTON” and “HILTON GRAND VACATIONS” (collectively “Hilton marks”) are registered marks. Id. ¶ 18 (citing Exs. 1-4). In sum, Plaintiffs allege that “[t]he goodwill of the Hilton name is worth a great deal, and those who invoke and trade on that goodwill receive a valuable benefit.” Compl. ¶ 29 (Dkt. No. 1).

         Plaintiffs assert that Defendants “intentionally target[ ] and market[ ] their products and services directly to Hilton customers through telemarketing and promotions” and “falsely informed them (i) that Defendants obtained their contact information and other personal information through a partnership with Hilton, (ii) that Defendants are associated with Hilton, and/or (iii) that Defendants purchased their contact and other personal information from Hilton.” Id. ¶¶ 30, 33, 39. As a result of Defendants' false representations about their association with Hilton, Plaintiffs claim that “Hilton's customers have been confused and are likely to be confused about an affiliation between Hilton and Defendants.” Id. ¶ 40. Despite Hilton's customers' alleged complaints about Defendants' solicitations and Hilton's cease and desist letters to Defendant Spinnaker Resorts, Inc., Hilton continued to receive customer complaints. Id. ¶¶ 42-43.

         Plaintiffs contend that Defendants' deliberate and intentional “conduct has caused and will continue to cause irreparable injury because it diminishes the reputation of the HILTON Marks and the valuable and inherent goodwill built in the Hilton brand.” Id. ¶¶ 46, 48. Plaintiffs seek declaratory and injunctive relief, damages, profits, interest, attorneys' fees, and costs. Id. 18-21.

         II. Procedural Background

         Defendant's corporate employee was served in person by a special process server on September 30, 2016. See Aff. & Proof of Service (Dkt. No. 6); Letter to the Court (Dkt. No. 6-1). On November 4, 2016, Plaintiffs were ordered to obtain a default from the Clerk's Office, which entered default on November 15, 2016. See Order (Dkt. No. 7); Request for Entry of Default (Dkt. No. 9); Entry of Default (Dkt. No. 11). On December 2, 2016, Plaintiffs filed the instant Motion for Default Judgment as to Defendant Travel Smart Solutions, LLC. See Dkt. Nos. 17, 18. On December 9, 2016, the Court heard oral argument on Plaintiffs' Motion, at which time Defendant failed to appear, and the matter was taken under advisement. See Dkt. No. 23. On February 1, 2017, the Court dismissed Defendant Spinnaker Resorts, Inc. pursuant to a Consent Motion to Dismiss. See Order (Dkt. No. 33). Defendant Travel Smart Solutions, LLC is the only remaining defendant in the case.

         III. Service of Process, Jurisdiction, and Venue

         The docket reflects that Defendant was properly served pursuant to Fla. Stat. § 48.081. See Dkt. Nos. 6, 6-1. The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. §§ 1331 and 1338, and 15 U.S.C. §§ 1121 and 6104, as Plaintiffs' claims arise under federal law, the Lanham Act, and from an Act of Congress regulating trademarks, unfair competition, and false designations. Compl. ¶ 10 (Dkt. No. 1). The Court has supplemental jurisdiction over Plaintiffs' state law claims under 28 U.S.C. § 1367. Id. The Court has personal jurisdiction over Defendant Travel Smart Solutions, LLC. As alleged in the Complaint, through telemarketing and promotions, Defendant solicits members of the public, including Virginia residents, for sales of vacation and timeshares, and represents that it is affiliated with Plaintiffs' entities headquartered in Virginia. Id. ¶ 11. Virginia's long-arm statute authorizes the exercise of personal jurisdiction over Defendant, and Defendant satisfies the minimum contacts test under the Due Process Clause of the Fourteenth Amendment. See CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292 (4th Cir. 2009). Defendant promotes vacation and timeshare packages to Virginia residents. Compl. ¶ 11 (Dkt. No. 1). Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events or omissions giving rise to Plaintiffs' claims occurred in Virginia. Id. ¶ 12.

         For the foregoing reasons, the undersigned recommends a finding that Defendant was properly served with the Summons and Complaint, and that the Court has subject matter jurisdiction over this action, personal jurisdiction over Defendant, and venue in this Court is proper.

         IV. Legal Standard

         Default judgment is appropriate if the well-pled allegations of the complaint establish that the plaintiff is entitled to relief and the defendant has failed to plead or defend within the time frame set out in the rules. Fed.R.Civ.P. 55; see also Traffic Names, Ltd. v. Zhenghui Yiming, No. 14-cv-1607, 2015 WL 2238052, at *4 (E.D. Va. May 12, 2015). By defaulting, the defendant admits the plaintiff's well-pled allegations of fact, which then provide the basis for judgment. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)); Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006). Nevertheless, “‘[a] court confronted with a motion for default judgment is required to exercise sound judicial discretion in determining whether the judgment should be entered, and the moving party is not entitled to ...

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