United States District Court, E.D. Virginia, Alexandria Division
JUUL LABS, INC. Plaintiff,
JAIDENZEIGLER, et al., Defendants.
REPORT AND RECOMMENDATION
THERESA CARROLL BUCHANAN, UNITED STATES MAGISTRATE JUDGE.
MATTER comes before the Court on Plaintiff Juul Labs,
Inc.'s ("Plaintiff) Motion for Default Judgment
Against Defendant Nat Caruso ("Caruso") (Dkt. 72).
After representatives for Caruso failed to respond to
Plaintiffs motion or to appear at the hearings held on May
10, 2019 and June 7, 2019, 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 GRANTED.
November 5, 2018, Plaintiff commenced this action against
Caruso as well as several other co-defendants. Approximately
one month later, Plaintiff filed its First Amended Verified
Complaint. The First Amended Complaint alleges trademark
infringement and counterfeiting in violation of 15 U.S.C.
§ 1114; false designation of origin in violation of 15
U.S.C. § 1125(a); and trademark dilution in violation of
15 U.S.C. § 1125(c). (Am. Compl. ¶¶ 49-70.)
Over the course of the next several months, Caruso's
various co-defendants were dismissed from the case. (Dkts.
53, 56, 61-62, 67.) Now, Caruso is the only remaining
defendant. Plaintiff moves for an entry of default judgment
against Caruso, seeking an award of monetary damages and a
Jurisdiction and Venue
the Court can render default judgment, it must have both
subject-matter jurisdiction and personal jurisdiction over
the defaulting parties, and venue must be proper.
Court has subject-matter jurisdiction over this action. 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 asserts
trademark infringement claims against Caruso pursuant to the
Lanham Act, a federal statute. (Am. Compl. ¶ 9.)
Accordingly, the Court has subject-matter jurisdiction.
Court has personal jurisdiction over Caruso in this action.
For personal jurisdiction over a defendant, the standards of
both federal due process and the forum state's long-arm
statute 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 7 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)). Caruso targeted business
activities toward consumers in the United States, including
Virginia and this judicial district. (Am. Compl. ¶¶
11, 19; Mem. Supp. at 5-7.) Therefore, Caruso has maintained
sufficient contacts with Virginia based on conduct connected
to this case for personal jurisdiction to be proper in
Virginia courts, and so the Court has personal jurisdiction
over Caruso under the specific jurisdiction inquiry.
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 a substantial part of the events or omissions giving
rise to the action occurred. See 28 U.S.C. §
1391(b)(2). In this case, venue in this Court is proper
because Caruso conducted business with consumers in this
Court's judicial district, by targeting sales to Virginia
residents, by operating an online store available to
consumers in this district, and shipping counterfeit products
to consumers in this district. (Am. Compl. ¶¶ 11,
19; Mem. Supp. at 5-6.)
Service of Process
the Court can render default judgment, it must be satisfied
that all defaulting parties have been properly served. As a
general rule, a defendant must be served with the summons and
complaint filed with a federal court. Pursuant to Federal
Rule of Civil Procedure 4(e)(2), an individual within a
judicial district of the United States may be served by
delivering a copy of the summons and complaint to the
individual personally. On December 3, 2018, a summons was
issued for Nat Caruso at 1824 80th Street, Apartment IF,
Brooklyn, New York 11214. (Dkt. 39 at 25.) The return of
service indicates that Plaintiffs private process server
personally served Caruso at that address on December 6, 2018.
on the foregoing, the undersigned finds that Caruso was
properly served with the summons and complaint.
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, Caruso has not appeared or otherwise
participated in these proceedings. On March 21, 2019,
Plaintiff filed its initial Request for Entry of Default as
to Caruso. (Dkt. 64.) On March 25, 2019, Plaintiff file an
Amended Request for Entry of Default as to Caruso. (Dkt. 68.)
One day later, the Clerk of the Court issued the Entry of
Default for Caruso. (Dkt. 71.) On April 30, 2019, Plaintiff
filed its Motion for Default Judgment. United States
Magistrate Judge Ivan D. Davis then held a hearing on
Plaintiffs Motion for Default Judgment on May 10, 2019, at
which no representative for Caruso appeared. Approximately
eleven (11) days later, it came to the undersigned's
attention that Plaintiff did not properly serve Caruso with
the Motion for Default Judgment, including the corresponding
Notice of Hearing. As a result, the Court ordered Plaintiff
to serve Caruso with the Motion and supporting documents and
to re-notice the Motion for a hearing. (Dkt. 77.) Plaintiff
subsequently complied with that order. (Dkts. 78-79.) On June
7, 2019, United States Magistrate Judge Davis again held a
hearing on Plaintiff's Motion for Default Judgment, at
which no representative for Caruso appeared. Finding the
matter uncontested, the undersigned 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 established the
is a Delaware corporation with its principal place of
business in San Francisco, California. (Am. Compl. ¶
12.) Plaintiff sells JUUL, an electronic nicotine delivery
system designed for and directed to existing adult smokers
who seek an alternative to smoking traditional, combustible
cigarettes. (Id. ¶ 14.) The system involves (1)
a main device which contains the system electronics and (2)
individual pods containing e-liquid that is vaporized when a
user inhales a puff. (Id.) Plaintiff owns trademarks
for JUUL and has valid and subsisting U.S. Certificates of
Trademark registration numbers ("Marks").
(Id. ¶¶ 16-17.) Plaintiffs Marks have
acquired considerable brand loyalty, are associated with
superior quality products, and are considered by some to be a
dominating force in the e-cigarette industry. (Id.
¶¶ 18, 62-63.) Plaintiff uses and advertises its
marks throughout the United States, expending significant
effort in developing the Marks in the United States.
(Id. ¶ 18.) Plaintiff greatly values the
reputation and consumer goodwill associated with the Marks.
is an individual residing in Brooklyn, New York.
(Id. ¶ 27.) Caruso offered to sell and has sold
counterfeit pods to consumers within the Commonwealth of
Virginia and this judicial district. (Id.
¶¶ 19, 33.) These goods are cheap, low quality, and
potentially harmful imitations of genuine pods. (Id.
¶ 39.) Caruso sold, and might continue to sell, these
counterfeit products on online marketplaces, such as eBay.
(Id. ¶ 19.) In promoting his counterfeit
products on the marketplace, Caruso employs counterfeit
versions of Plaintiff s Marks, using similar or the same
pictures and descriptions of the Pods. (Id. ¶
33.) The counterfeit pods are packaged using virtually
identical packaging as Plaintiffs genuine products and Caruso
even offered customer service. (Id. ¶ 40.)
Caruso also used other indicia of authenticity and security
that consumers associate with Plaintiffs products by
displaying the Visa, MasterCard, and/or PayPal logos.
(Id.) Caruso also deceives consumers by using
Plaintiffs Marks within the content, text, and/or meta tags
of his website to attract various search engines looking for
relevant consumer searches for Plaintiffs products.
(Id. ¶ 41.)
has not licensed or authorized Caruso to use its Marks.
(Id. ¶ 40.) Caurso's use of Plaintiffs
Marks in connection with the advertising, distribution,
offering for sale, and sale of counterfeit pods is likely to
cause and has caused confusion, mistake, and deception among
consumers. (Id. ¶ 47.)
EVALUATION OF PLAINTIFF'S COMPLAINT
defendant has defaulted, the well-pleaded allegations of
facts set forth in the plaintiffs complaint are deemed
admitted. JTH Tax, Inc. v. Grabert, 8 F.Supp.3d 731,
736 (E.D. Va. 2014) (citing Ryan v. Homecomings Fin.
Network, 253 F.3d 778, 780 (4th Cir. 2001)). Before
entering default judgment, however, the Court must evaluate
the plaintiffs complaint against the standards of Federal
Rule of Civil Procedure 12(b)(6) to ensure that the complaint
properly states aclaim. GlobalSantaFe Corp. v.
Globalsantafe.com, 250F.Supp.2d610, 612n.3 (E.D. Va.
2003). As such, it is appropriate to evaluate Plaintiffs
complaint against the standards of Federal Rule of Civil
asserts three separate claims against Caruso. Plaintiff
alleges one count of Trademark Infringement and
Counterfeiting, one count of False Designation of Origin, and
one count Trademark ...