Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-01219/USCOURTS-azd-2_08-cv-01219-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 15:1051 Trademark Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western International, Inc., an

Arizona non-profit corporation, 

Plaintiff/Counterdefendant, 

vs.

Sharda, LLC, a Utah limited liability

company; and Muljibhai M. Chaudhari, 

Defendants/Counterclaimants. 

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No. CV-08-1219-PHX-DGC

ORDER

On November 21, 2008, the Court held a hearing pursuant to the Order to Show Cause

entered on September 29, 2008. Dkt. #46. The Court also addressed Plaintiff’s Motion for

Sanctions. Dkt. #50. In addition to the briefing on these matters, which the Court reviewed

prior to the hearing, the Court received proffers from the parties, identified the largely

undisputed facts on both matters, and heard oral argument. This Order will summarize the

Court’s conclusions.

I. Order to Show Cause.

The Court concluded that Defendants did not take reasonable steps to comply with the

Preliminary Injunction issued by the Court on August 20, 2008. As of September 16, 2008,

Defendants had failed to remove easily removable items from their hotel that bore the Best

Western marks. These included a door mat, notepads, pens, cups, toiletries, laundry bags, donot-disturb signs, and waste baskets. These items could have been removed within two weeks

of the Preliminary Injunction. They were removed only after Plaintiff filed a motion seeking

contempt sanctions. 

Case 2:08-cv-01219-DGC Document 68 Filed 11/24/08 Page 1 of 4
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Defendants are now in substantial compliance with the Preliminary Injunction.

Defendants have removed or covered the marks on the items listed above and have

transferred their affiliation to Days Inn. Although a website for a festival in Delta, Utah,

continues to identify Defendants’ hotel as affiliated with Best Western, a click on the link at

that website directs the viewer to the Best Western website, not to Defendants’ hotel. The

Court concludes that Defendants are in substantial compliance with the Preliminary

Injunction notwithstanding this website.

As a sanction for Defendants’ failure to reasonably comply with the Preliminary

Injunction, the Court will require Defendants to pay all reasonable attorneys’ fees incurred

by Plaintiff in investigating and prosecuting the contempt motion. On or before

December 5, 2008, Plaintiff shall file an application identifying the attorneys’ fees and costs

incurred. Defendants shall file a response on or before December 17, 2008. No reply or oral

argument will be permitted.

II. Motion for Sanctions.

Defense counsel has repeatedly failed to comply with the Court’s orders and the

federal and local rules of civil procedure. Defense counsel failed to file a timely answer,

failed to seek admission pro hac vice before filing matters in this case, filed a cross-motion

for injunctive relief without first answering the complaint or filing a counterclaim, failed to

comply with the Court’s local rules concerning electronic filing, and failed to file a timely

response to the application for a temporary restraining order. See Dkt. #19. Defense counsel

failed to appear at the September 26, 2008 case management conference, failed to file a

timely response to the Order to Show Cause, and failed to produce an initial disclosure

statement by October 1, 2008, as required in the Case Management Order (Dkt. #51).

Defense counsel explained that he has been involved in a difficult personal custody

battle for several months, that he recently formed and dissolved a partnership, that he has

experienced a significant turnover of lawyers in his office, and that he recently transferred

to a new computer system. Even accepting these assertions as true, they do not excuse

defense counsel’s repeated failures to comply with orders and rules over the course of many

Case 2:08-cv-01219-DGC Document 68 Filed 11/24/08 Page 2 of 4
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months. The Court concludes that sanctions are warranted.

Plaintiff asks the Court to enter a default judgment on its complaint and dismiss

Defendants’ counterclaim as a sanction. The Ninth Circuit has made clear, however, that the

Court cannot dismiss claims or enter default judgments without first considering less drastic

sanctions. Valley Eng’rs, Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998). The

Court concludes that lesser sanctions will suffice in this instance.

On or before December 5, 2008, Plaintiff shall file an application for attorneys’ fees

incurred in connection with the motion for sanctions. Defendants shall file a response on or

before December 17, 2008. The Court will award a recovery of Plaintiff’s reasonable

attorneys’ fees as a sanction for Defendants’ repeated non-compliance. The Court likely will

impose this award against defense counsel, not Defendants, but will reserve that decision

until the application and response have been reviewed. No reply or oral argument will be

permitted.

IT IS ORDERED:

1. As a sanction for failing to comply reasonably with the Court’s Preliminary

Injunction, Defendants shall be required to reimburse Plaintiff’s costs and

attorneys’ fees incurred in connection with the motion for contempt.

2. Plaintiff’s Motion for Sanctions (Dkt. #50) is granted. Plaintiff shall recover

costs and attorneys’ fees incurred in connection with the motion for sanctions,

as described above.

3. On or before December 5, 2008, Defendants shall produce their initial

disclosure statement to Plaintiff. At the same time, Defendants shall produce

to Plaintiff all exhibits used by Defendants during the August 14, 2008 hearing

on the Preliminary Injunction.

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4. Defendants are warned that further violations of orders or rules will result in

more severe sanctions, including the possibility of default judgment and

dismissal.

DATED this 24th day of November, 2008.

Case 2:08-cv-01219-DGC Document 68 Filed 11/24/08 Page 4 of 4