United States District Court, E.D. Virginia, Alexandria Division
REPORT AND RECOMMENDATION
THERESA CARROLL BUCHANAN UNITED STATES MAGISTRATE JUDGE.
MATTER comes before the Court on Plaintiffs Motion for
Default Judgment and Incorporated Memorandum in Support (Dkt.
116). After no representative for Defendant responded to
Plaintiffs motion or appeared at the hearing on November 16,
2018, the matter was taken under advisement. For the reasons
stated below, the undersigned U.S. Magistrate Judge
recommends that Plaintiffs Motion for Default Judgment be
November 21, 2017, Overstock.com, Inc. ("Plaintiff)
filed its Complaint against Viktor Visocky ("Mr.
Visocky"), Otto Srams ("Mr. Srams"), seventeen
domain names, and John Does 1-10. The lawsuit alleged
trademark infringement in violation of Section 32 of the
Lanham Act, 15 U.S.C. § 1114; violations of the Computer
Fraud and Abuse Act (the "CFAA"), 18 U.S.C. §
1030(a)(5)(C); copyright infringement in violation of the
Copyright Act, 17 U.S.C. §§ 101 et seq.; false
design of origin, unfair competition, and trade dress
infringement in violation of Section 43(a) of the Lanham Act,
15 U.S.C. § 1125(a); and trademark infringement and
unfair competition in violation of Virginia law. (Dkt. 1.)
With approval of the Court, on January 20, 2018, Plaintiff
filed its First Amended Complaint, adding Edward M. Kaufman
("Mr. Kaufman"), Olga Korischenko ("Ms.
Korischenko"), Alexander Bekoev ("Mr.
Bekoev"), and twenty-two additional domain names as
defendants. (Dkt. 37.) Then, with approval of the Court, on
February 26, 2018, Plaintiff filed its Second Amended
Complaint, adding fourteen additional domain names as
defendants. (Dkt. 70.) Finally, again with approval of the
Court, on April 9, 2018, Plaintiff filed its Third Amended
Complaint, adding ten additional domain names as defendants.
(Dkt. 88.) In all, Plaintiff named sixty-three listed domain
names (the "Infringing Websites") in its Third
Amended Complaint. Despite amending its complaint three times
to add more defendants, at no point did Plaintiff add new
20, 2018, Plaintiff moved for Default Judgment against all
Defendants (Dkt. 104). On August 23, 2018, the undersigned
issued a Report and Recommendation, granting in part and
denying in part Plaintiffs Motion (Dkt. 108). Specifically,
the undersigned recommended default judgment against all
Defendants who were natural persons, with the exception of
Mr. Kaufman. Mr. Kaufman, a natural person, is alleged to
reside in the United States and to be a California resident.
Therefore, serving Mr. Kaufman via email, as Plaintiffs had
done, was insufficient. The undersigned recommended that
Plaintiff be granted the ability to properly serve Mr.
Kaufman and again pursue default judgment against him. On
October 17, 2018, the district judge adopted the
undersigned's Report and Recommendation, (Dkts. 112-13),
and instructed Plaintiff that "[t]o proceed against
Kaufman, plaintiff must first reinitiate the proper procedure
for obtaining an entry of default and subsequently move for
default judgment against him" (Dkt. 112 at 7). Now,
Plaintiff again moves for Default Judgment against Mr.
Kaufman, seeking entrance of a permanent injunction. (Mot.
Default. J. at 16.)
Jurisdiction and Venue
the Court can render default judgment, it must have both
subject-matter jurisdiction and personal jurisdiction over
the defaulting party, and venue must be proper.
Court has subject-matter jurisdiction over the claims in this
lawsuit. A federal district court has original jurisdiction
when an action involves a civil action "arising under
the Constitution, laws, or treatises of the United
States." 28 U.S.C. § 1331. In this case, Plaintiff
has asserted claims pursuant to the Lanham Act, the CFAA, and
the Copyright Act, all of which are federal statutes. (3d Am.
Compl. ¶¶ 7, 239-76.) Further, a federal district
court has "supplemental jurisdiction over all other
claims that are so related to claims in the action within
such original jurisdiction that they form part of the same
case or controversy." 28 U.S.C. § 1367(a). In this
case, Plaintiff has asserted claims of common law trademark
infringement and unfair competition, which are clearly part
of the same case or controversy as the federal claims. (3d
Am. Compl. ¶¶ 277-82.) Accordingly, the Court has
subject-matter jurisdiction over all claims in this action.
Court has personal jurisdiction over Defendant in this
action. In order for the Court to exercise personal
jurisdiction, the standards of both federal due process and
the forum state's long-arm statute and must be satisfied.
See Tire Eng'g & Distrib., LLC v. Shandong
Linglong Rubber Co., 682 F.3d 292, 301 (4th Cir. 2012).
Federal due process permits personal jurisdiction where a
defendant has "certain minimum contacts with [the forum
state] such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial
justice.'" Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
Virginia's long-arm statute, Virginia Code §
8.01-328.1, "extends the jurisdiction of its courts as
far as federal due process permits." ePlus Tech.,
Inc. v. Aboud, 313 F.3d 166, 176 (4th Cir. 2002). With
federal due process and Virginia's long-arm statute
requiring the same standards, essentially only one personal
jurisdiction inquiry is required. See id. The
inquiry to find personal jurisdiction requires either
specific jurisdiction "based on conduct connected to the
suit" or general jurisdiction based on "continuous
and systematic" activities in the forum state. Tire
Eng'g & Distrib., 682 F.3d at 301 (quoting
ALS Scan, Inc. v. Dig. Serv. Consultants. Inc., 293
F.3d 707, 711 (4th Cir. 2002)).
jurisdiction can exist over a nonresident defendant based on
that defendant's Internet contacts with the forum. A
state may exercise personal jurisdiction over a nonresident
defendant when that defendant"(1) directs electronic
activity into the State, (2) with the manifested intent of
engaging in business or other interactions within the State,
and (3) that activity creates, in a person within the State,
a potential cause of action cognizable in the State's
courts." ALS Scan, 293 F.3d at 714. However, a
state may not exercise personal jurisdiction over a
nonresident defendant when that defendant engages in
"passive Internet activity" such as "simply
plac[ing] information on the Internet." Id.
Mr. Kaufman is not a resident of Virginia, Virginia may
exercise personal jurisdiction over Mr. Kaufman based on his
Internet contacts. Mr. Kaufman has interacted with a domain
name registry located in Virginia in order to maintain all of
the Infringing Websites that end in ".com." (3d Am.
Compl. ¶¶ 11, 153.) Further, Mr. Kaufman sought to
use the Infringing websites, which function as interactive
e-commerce websites, to phish for consumers' personal and
financial data. (Id. ¶¶ 11, 53-54, 190-91,
196.) Therefore, Defendants directed electronic activity into
Virginia with the intent to engage in business and other
interactions, and such activity created potential causes of
in this action is proper in this Court. Venue in a court is
proper when the action is brought in a judicial district in
which any defendant resides if all defendants are residents
of the same state or in which a substantial part of the
events or omissions giving rise to the action occurred. See
28 U.S.C. § 1391(b). In this case, venue in this Court
is proper because a substantial part of the events giving
rise to Plaintiffs claims, particularly the harm felt by
Plaintiff and the instrumentalities used in maintaining the
Infringing Websites, occurred in this Court's judicial
district. (3d Am. Compl. ¶ 7.)
Service of Process
the Court can render default judgment, it must be satisfied
that a defaulting party has been properly served. As a
general rule, a defendant must be served with the summons and
complaint filed with a federal court. See Fed.R.Civ.P. 4.
However, various avenues exist to serve a defendant.
Rule of Civil Procedure 4(e)(1) allows service on an
individual within a judicial district of the United States
pursuant to state law for service in the state where the
district court overseeing the lawsuit sits or state law for
service in the state where service is made. Under Virginia
law, a plaintiff may make service of process on a nonresident
of Virginia via the Secretary of the Commonwealth if a court
in Virginia can exercise personal jurisdiction over the
defendant. Va Code. § 8.01-329(A). In order to properly
effectuate service on the Secretary, a plaintiff must file an
affidavit with the court, "stating either (i) that the
person to be served is a nonresident or (ii) that, after
exercising due diligence, the party seeking service has been
unable to locate the person to be served. In either case,
such affidavit shall set forth the last known address of the
person to be served." Id. § 8.01-329(B).
Service via the Secretary of the Commonwealth is
"effective on the date when service is made on the
Secretary." Id. § 8.01-329(C).
case, Mr. Kaufman is a nonresident. Additionally, Plaintiff
could not locate Mr. Kaufman's whereabouts. (Weigand
Decl. ¶ 2.) Therefore, pursuant to the statute,
Plaintiff took steps to properly effectuate service on Mr.
Kaufman through the Secretary of the Commonwealth. Plaintiff
"provided copies of the summons and Third Amended
Complaint to the Secretary, filed an affidavit with this
Court reflecting service on the Commonwealth, and filed a
copy of the return envelope showing" that Mr.
Kaufman's California address did not in fact exist. (Mot.
Default J. at 9; Weigand Decl. ¶¶ 1-4.) On
September 6, 2018, the Secretary served Mr. Kaufman at the
California address, and filed a certificate of compliance on
September 12, 2018 (Dkt. 110). The documents forwarded to Mr.
Kaufman by the Secretary were later returned as
undeliverable. (Weigand Decl. ¶¶ 3-4, Ex. A.)
the Secretary could not successfully serve Mr. Kaufman,
service of process is still proper in this instance. The
Fourth Circuit has previously held that if a plaintiff
complies "with the statutory provisions [of Virginia
law] ... [then] sufficiency of process [is] not affected by
the failed delivery of notice from the Secretary to the
putative defendant." Equip. Fin. Servs., Inc. v.
Traverse Comput. Brokers, 973 F.2d 345, 347 (4th Cir.
1992) (holding service of process was sufficient under
Virginia's long-arm statute even though service was
returned by the post office as undeliverable); see also
Aremeni v. Trans Union LLC, Inc., No. 3:15-cv-00066,
2016 WL 4098540, at *4 (W.D. Va. July 28, 2016); cf Steed
v. Commonwealth, 397 S.E.2d 281, 284 (Va. Ct. App. 1990)
(holding that the trial court obtained jurisdiction over
nonresident defendant "once the affidavit of compliance
was filed by the Commissioner of the Division of Motor
Vehicles, and the fact that he did not actually receive
notice ... did not affect the validity of that
proceeding"). Therefore, service of process on Mr.
Kaufman via the Secretary was proper and effective as of
September 5, 2018, the date of Plaintiff s service on the
Grounds for Default Judgment
entry of default judgment may be appropriate when a defendant
has failed to appear in a case. See Fed.R.Civ.P. 55. To date,
Mr. Kaufman has failed to appear personally or by
representative or otherwise participate in these proceedings.
On October 23, 2018, Plaintiff filed its Request for
Clerk's Entry of Default (Dkt. 114), seeking an entry of
default for Mr. Kaufman. On October 30, 2018, the Clerk of
the Court issued the Entry of Default (Dkt. 115) for Mr.
Kaufman. On that same day, Plaintiff filed its Motion for
Default Judgment. The Court then held a hearing on Plaintiffs
Motion for Default Judgment on November 16, 2018, at which no
representative for Mr. Kaufman appeared. Finding the matter
uncontested, the Court took the matter under advisement to
issue this Report and Recommendation.
FINDINGS OF FACT
full review of the pleadings and the record in this case, the
undersigned finds that Plaintiff has ...