Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02645/USCOURTS-azd-2_09-cv-02645-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1051 Trademark Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western International Inc., an

Arizona non-profit corporation, 

Plaintiff, 

vs.

Dhillon Investments, Inc., a Colorado

corporation; and Rupinder Dhillon, an

individual, 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-09-2645-PHX-DGC

ORDER AND DEFAULT JUDGMENT

Best Western International, Inc. (“Best Western”) is a non-profit corporation

consisting of individually owned hotels that operate under the “Best Western” mark. The

rights and duties of Best Western and its members are created and governed by a membership

agreement, which incorporates by reference certain bylaws and rules and regulations. The

membership agreement permits the Best Western Board of Directors to terminate a member

hotel for failure to meet certain quality and design standards.

Dhillon Investments, Inc. owns and operates a hotel known as the Cow Palace Inn,

located in Lamar, Colorado. On March 15, 2004, Rupinder Dhillon executed a membership

agreement with Best Western on behalf of himself and Dhillon Investments. Best Western

terminated the membership on May 12, 2009.

Best Western filed a complaint against Dhillon Investments and Rupinder Dhillon on

December 21, 2009, asserting various state and federal law claims arising from the alleged

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

unlawful use of Best Western’s marks and alleged failure to pay monies owed to Best

Western. The complaint asserts nine claims: breach of contract, open account, breach of

contract – post termination use of trademarks, federal trademark infringement, federal false

designation of origin and unfair competition, federal trademark dilution under

15 U.S.C § 1125(c), unfair competition under Arizona law, trademark dilution under Arizona

law, and common law trademark infringement. Best Western seeks damages, injunctive

relief, and attorneys’ fees and costs. Dkt. #1.

Best Western has filed a motion for default judgment against Dhillon Investments.

Dkt. #15. Dhillon Investments was served with the complaint (Dkt. #12), but has not

responded to the motion or otherwise appeared in this action. For reasons that follow, the

Court will grant Best Western’s motion.

I. The Motion for Default Judgment.

Pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, Best Western seeks

the following default judgment against Dhillon Investments: (1) damages on counts one and

two in the amount of $5,590.41, plus interest at the rate of 1.5% per month from April 1,

2010, (2) damages on count three in the amount of $394,523.25, (3) a permanent injunction

on counts four through nine that enjoins Dhillon Investments and its representatives from

using Best Western’s marks, and (4) attorneys’ fees and costs on all counts in the amount of

$4,148.70. Dkt. #15 at 2-4.

Because Dhillon Investment’s default has been entered under Rule 55(a) (Dkt. #14),

the Court has discretion to grant default judgment pursuant to Rule 55(b). See Aldabe v.

Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court should consider in deciding

whether to grant default judgment include (1) the possibility of prejudice to Best Western,

(2) the merits of the claims, (3) the sufficiency of the complaint, (4) the amount of money at

stake, (5) the possibility of a dispute concerning material facts, (6) whether default was due

to excusable neglect, and (7) the policy favoring a decision on the merits. See Eitel v.

McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In applying the Eitel factors, the factual

allegations of the complaint, except those relating to the amount of damages, will be taken

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

as true. See Fed. R. Civ. P. 8(6)(6); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th

Cir. 1977).

A. Possible Prejudice to Best Western.

The first Eitel factor weighs in favor of granting Best Western’s motion because it will

be prejudiced if default judgment is not entered. Best Western served process on Dhillon

Investments more than two months ago. Dkt. #12. Dhillon Investments has not answered

the complaint or otherwise appeared in this action. If Best Western’s motion for default

judgment is not granted, it “will likely be without other recourse for recovery.” PepsiCo, Inc.

v. Cal. Security Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Moreover, given the

Court’s finding below that Best Western has stated valid trademark infringement and unfair

competition claims, Best Western “undeniably would be prejudiced absent the entry of

permanent injunctive relief [by] default judgment.” PepsiCo, Inc. v. Distribuidora La

Matagalpa, Inc., 510 F. Supp. 2d 1110, 1116 (S.D. Fla. 2007).

B. The Merits of the Claims and the Sufficiency of the Complaint.

The second and third Eitel factors favor a default judgment where the complaint

sufficiently states a claim to relief under the pleading standards of Rule 8. See Cal. Security

Cans, 238 F. Supp. 2d at 1175; Danning v. Lavine, 572 F.2d 1386, 1388-89 (9th Cir. 1978).

A review of Best Western’s verified complaint and the membership agreement attached

thereto shows that Best Western has stated valid contract, trademark, and unfair competition

claims against Dhillon Investments. The second and third Eitel factors favor a default

judgment.

C. The Amount of Money at Stake. 

Under the fourth Eitel factor, the Court considers the amount of money at stake in

relation to the seriousness of the defendant’s conduct. See Cal. Security Cans, 238 F. Supp.

2d at 1176. Best Western seeks $5,590.41 for unpaid charges on Dhillon Investment’s Best

Western account, $394,523.25 in liquidated damages for Dhillon Investment’s posttermination use of Best Western’s marks, and attorneys’ fees and costs in the amount of

$4,148.70. Dkt. #15 at 2-4. Given the willfulness of Dhillon Investment’s conduct (see

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

Dkt. #1 ¶¶ 26-32), and the difficulty of proving actual damages on the trademark and unfair

competition claims, the Court finds that the amount of the requested default judgment

damages is not unreasonable. See Best W. Int’l, Inc. v. Oasis Invs., L.P., 398 F. Supp. 2d

1075, 1081 (D. Ariz. 2005) (finding a liquidated damages clause enforceable where the

defendant did not contest the reasonableness of the amount and it would be very difficult for

the plaintiff to accurately estimate the damages caused by the defendant’s infringing

conduct); Bd. of Trs. of Cal. Metal Trades v. Pitchometer Propeller, No. C-97-2661-VRW,

1997 WL 7979222, at *1 (N.D. Cal. Dec. 15, 1997) (amount of money at stake was

reasonable where it was contractually justified). The Court further finds that the amount of

the requested fee award is reasonable.

D. Possible Dispute Concerning Material Facts.

Given the sufficiency of the complaint and Dhillon Investment’s default, “no genuine

dispute of material facts would preclude granting [Best Western’s] motion.” Cal. Security

Cans, 238 F. Supp. 2d at 1177; see Geddes, 559 F.2d at 560.

E. Whether Default Was Due to Excusable Neglect.

Dhillon Investments was properly served with the summons and complaint pursuant

to Rule 4 of the Federal Rules of Civil Procedure. Dkt. #12. It therefore is “unlikely that

[the] failure to answer and the resulting default was the result of excusable neglect.” Gemmel

v. Systemhouse, Inc., No. CIV 04-187-TUC-CKJ, 2008 WL 65604, at *5 (D. Ariz. Jan. 3,

2008).

F. The Policy Favoring a Decision on the Merits.

“Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782

F.2d at 1472. But the mere existence of Rule 55(b) “indicates that this preference, standing

alone, is not dispositive.” Cal. Security Cans, 238 F. Supp. at 1177 (citation omitted).

Moreover, Dhillon Investment’s failure to answer or otherwise respond to the complaint

“makes a decision on the merits impractical, if not impossible.” Id. The Court therefore is

not precluded from entering default judgment. See id.; Gemmel, 2008 WL 65604 at *5. 

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

II. Conclusion.

Having reviewed Best Western’s motion (Dkt. #15) and supporting affidavit

(Dkt. #16), and having considered the Eitel factors as a whole, the Court concludes that the

entry of default judgment against Dhillon Investments is appropriate. The Court will

(1) grant default judgment on counts one and two of the complaint in the amount of

$5,590.41, plus interest at the rate of 1.5% per month from April 1, 2010 (Dkt. ##1 ¶¶ 30-42,

16 ¶ 8), (2) grant default judgment on count three in the amount of $394,523.25 (Dkt. ##1

¶¶ 43-46, 16 ¶¶ 9-11), (3) grant injunctive relief on counts four through nine (Dkt. #1 at

11-18), and (4) award Best Western $4,148.70 in attorneys’ fees and costs (see Dkt. #15-1).

III. Defendant Rupinder Dhillon.

It appears that Best Western has failed to serve process on Rupinder Dhillon within

the time provided by Rule 4(m). Best Western shall, by May 14, 2010, file a notice of

dismissal with respect Rupinder Dhillon or show cause why he should not be dismissed for

lack of service of process.

IT IS ORDERED:

1. Plaintiff Best Western International, Inc.’s motion for default judgment against

Defendant Dhillon Investments, Inc. (Dkt. #15) is granted.

2. Default judgment is entered in favor of Plaintiff and against Dhillon

Investments, Inc. on counts one and two of the complaint in the amount of

$5,590.41, plus interest at the rate of 1.5% per month from April 1, 2010 until

paid in full.

3. Default judgment is entered in favor of Plaintiff and against Dhillon

Investments, Inc. on count three of the complaint in the amount of

$394,523.25.

4. Default judgment is entered in favor of Plaintiff and against Dhillon

Investments, Inc. on counts four through nine of the complaint.

5. Dhillon Investments, Inc., and any person or entity acting on its behalf or in

concert with it, are permanently enjoined from using, or authorizing,

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

licensing, assisting, or facilitating any person’s or entity’s use of, the Best

Western marks, any colorable imitation thereof, or any other confusingly

similar mark.

6. Dhillon Investments, Inc. shall, within 10 days from the date of this Order,

remove all Best Western marks used in connection with the Cow Palace Inn,

located in or near Lamar, Colorado.

7. Plaintiff is awarded attorneys’ fees and costs in the amount of $4,148.70.

8. Plaintiff’s motion for preliminary injunction (Dkt. #6) is denied as moot.

9. Plaintiff shall, by May 14, 2010, file a notice of dismissal with respect

Defendant Rupinder Dhillon or show cause why he should not be dismissed

for lack of service of process.

DATED this 30th day of April, 2010.

Case 2:09-cv-02645-DGC Document 17 Filed 05/03/10 Page 6 of 6