Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-04131/USCOURTS-cand-3_14-cv-04131-1/pdf.json

Parties Involved:
AAA Auto Body & Repair, Inc.
Defendant
American Automobile Association, Inc.
Plaintiff
Sarbjeet Takhar
Defendant

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

AMERICAN AUTOMOBILE 

ASSOCIATION, INC.,

Plaintiff,

v.

AAA AUTO BODY & REPAIR, INC., et 

al.,

Defendants.

Case No. 14-cv-04131-KAW 

ORDER OF REASSIGNING CASE TO A 

DISTRICT JUDGE; AND REPORT AND 

RECOMMENDATION TO GRANT 

PLAINTIFF'S MOTION FOR DEFAULT 

JUDGMENT

Dkt. No. 21

Plaintiff American Automobile Association (“AAA”) moves for default judgment against 

defendants AAA Auto Body & Repair, Inc. and Sarbjeet Takhar (“Defendants”) for trademark 

infringement. Plaintiff’s motion follows entries of default on November 20 and 21, 2014. 

Defendants have not appeared in this action, nor have they responded to Plaintiff’s complaint or 

motion for default judgment. Plaintiff seeks injunctive relief and an award of reasonable costs. 

On January 8, 2015, the Court ordered Plaintiff to provide supplemental briefing in support 

of its motion for default judgment. On February 5, 2015, the Court held a hearing on Plaintiff’s 

motion for default judgment, at which Defendants did not appear. 

Since Defendants, by virtue of being in default, have not consented to the undersigned, the 

Court reassigns this action to a district judge and recommends that Plaintiff’s motion be 

GRANTED.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff AAA is a corporation that provides its members with products and services 

throughout the United States and Canada. (Compl. ¶ 10.) This includes travel and automobile 

products and services, including automobile repair services at its AAA Car Care Centers and 

through AAA approved auto repair businesses. Id. AAA has registered more than 100 trademarks 

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with the United States Patent and Trademark Office, including Marks that AAA has used since at 

least 1902. (Compl. ¶ 19.) AAA has used and continues to use the AAA Marks and logo designs 

in interstate commerce to identify its products and services. (Compl. ¶ 16.) As a result, the AAA 

Marks have become famous in the United States, including California, and through the world in 

connection with its products and services. Id. Only those businesses that are part of AAA’s 

network of approved service providers are authorized to use or display the AAA Marks. (Compl. ¶ 

17.) Consequently, AAA members and the public know that local businesses displaying AAA 

Marks are selected only if they maintain a reputation for quality, integrity, and reliability. Id.

Defendants AAA Auto Body & Repair, Inc. (“AAA Auto Body”) and Sarbjeet Takar were 

never authorized to use the AAA Marks. (Compl. ¶ 21.) AAA learned of Defendants’ 

unauthorized use of the AAA Marks—by using the business name AAA Auto Body & Repair, Inc. 

after the Marks had become famous—in or around November 2013 when an automobile parts 

vendor delivered a shipment intended for a AAA Car Care Center to Defendants’ facility. (Compl. 

¶¶ 22-23.) Thereafter, the general manager of the AAA Car Care Center visited Defendants’ 

facility and spoke with the manager about Defendants’ use of the AAA Marks. (Compl. ¶24.) On 

December 19, 2013 and January 17, 2014, AAA sent letters by certified mail to the manager, 

requesting that Defendants discontinue use of the AAA Marks. (Compl. ¶ 25.) Even though the 

manager did not reply, Defendants appeared to cease doing business. (Compl. ¶ 26.) AAA 

continued to monitor the telephone number associated with the business, and in or around April 

2014, AAA learned that Defendants had begun conducting business at a new address. (Compl. ¶ 

27.) On April 10, 2014 and May 23, 2014, AAA sent cease and desist letters by certified mail to 

the new address, again requesting that Defendants discontinue use of the AAA Marks, but 

Defendants did not reply. (Compl. ¶¶ 28-29.) On June 26, 2014, AAA called the telephone 

number associated with the business and spoke with an employee who provided Defendant 

Sarbjeet Takhar’s name. (Compl. ¶ 30.) On July 25, 2014, AAA sent a final notice letter to 

Defendants requesting that Defendants discontinue use of the AAA Marks, and again received no 

response. (Compl. ¶¶ 31-32.)

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On September 12, 2014, AAA filed the instant suit alleging federal and California state 

trademark infringement, federal and California state unfair competition, and federal and California 

state trademark dilution. Specifically, AAA alleges that Defendants are infringing on four of its 

Marks.1 The summons and complaint was personally served on AAA Auto Body & Repair on 

September 24, 2014 by serving Manager Nick Singh, who represented that he was authorized to 

accept service on behalf of the corporation. (Dkt. No. 8.) After numerous attempts to serve 

Defendant Sarbjeet Takhar at both his Union City and San Jose addresses, he was served by 

substituted service on October 7, 2014 by leaving the summons and complaint with Mr. Singh at 

AAA Auto Body & Repair. (Dkt. Nos. 8-10.) Additionally, a copy of the documents were mailed 

to Mr. Takhar’s attention at the San Jose address, which is his place of business. (Dkt. No. 8.) 

Defendants never served AAA with a responsive pleading. 

On November 18, 2014, AAA filed a request for entry of default against both AAA Auto 

Body and Mr. Takhar, which was served on Defendants by U.S. Mail. (Dkt. No. 11.) The Clerk 

entered the default against Mr. Takhar on November 20, 2014, but declined to enter default against 

AAA Auto Body. (Dkt. Nos. 12 & 13.) On November 20, 2014, AAA filed a second motion for 

entry of default against AAA Auto Body, which was again served on Defendants by U.S. Mail. 

(Dkt. No. 16.) The Clerk entered default against AAA Auto Body on November 21, 2014. (Dkt. 

No. 17.) 

On December 8, 2014, Plaintiff filed a motion for default judgment seeking a permanent 

injunction against Defendants’ use of AAA’s marks, as well as an award of reasonable costs. 

(Dkt. No. 21.) On January 7, 2015, Plaintiff consented to the undersigned’s jurisdiction for all 

purposes in accordance with the provisions of 28 U.S.C. § 636(c). (Dkt. No. 24.) Defendants, by 

virtue of being in default, have not consented.

 

1

The Marks AAA contends are being violated are Reg. No. 829,265 (for the AAA Mark, used in 

connection with automobile association and emergency roadside services), Reg. No. 1,449,079 

(for the AAA APPROVED AUTO REPAIR Mark & Design, used in connection with automobile 

repair services), Reg. No. 2,158,654 (for the AAA Mark & Design, used in connection with 

automobile association and emergency roadside services), and Reg. No. 3,426,468 (for the AAA 

APPROVED AUTO REPAIR Mark & Design, used in connection with automobile repair 

services). (Compl. ¶ 19.)

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On January 8, 2015, the Court ordered Plaintiff to provide supplemental briefing in support 

of its motion for default judgment, which was filed on January 22, 2015. (Pl.’s Brief, Dkt .No. 26.) 

On February 5, 2015, the Court held a hearing, at which Defendants did not appear. 

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case 

following a defendant’s default. Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 

995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court’s discretion. Id. at 

999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)).

Before assessing the merits of a default judgment, a court must confirm that it has subject 

matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the 

adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the 

court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to 

determine whether it should grant a default judgment: 

(1) the possibility of prejudice to the plaintiff, (2) the merits of 

plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 

the sum of money at stake in the action[,] (5) the possibility of a 

dispute concerning material facts[,] (6) whether the default was due 

to excusable neglect, and (7) the strong policy underlying the 

Federal Rules of Civil Procedure favoring decision on the merits. 

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). In this analysis, “the 

well-pleaded allegations of the complaint relating to a defendant’s liability are taken as true.” 

Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002) (citing Televideo 

Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Nevertheless, default does not 

compensate for essential facts not within the pleadings and those legally insufficient to prove a 

claim. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). 

B. Subject Matter Jurisdiction and Personal Jurisdiction

Plaintiff’s complaint alleges trademark infringement, false designation of origin, and unfair 

competition in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), and 1125(c)(1), 

California Business & Professions Code §§ 14247, 17200, and common law. This court has 

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subject matter jurisdiction over the matter pursuant to 28 U.S.C. § 1338(a), and pendant 

jurisdiction to decide related state law claims under 28 U.S.C. § 1367.

Venue is proper in the Northern District of California under 28 U.S.C. § 1391, as AAA 

Auto Body & Repair is a corporation with a principal place of business at 1190 North 13th Street, 

San Jose, California 95112, which is located within the Northern District. (Compl. ¶ 11.) Further, 

Defendant Sarbjeet Takhar is the owner of AAA Auto Body & Repair, Inc. and resides at 32613 

Endeavour Way, Union City, California 94587. (Compl. ¶12.)

Plaintiff AAA served both defendants with a copy of the summons and complaint in 

compliance with California state law. (Dkt. Nos. 8-10.) The court therefore has personal 

jurisdiction over the parties. See Fed. R. Civ. P. 4(e)(1).

C. Analysis of the Eitel Factors

Since the Court has jurisdiction in this matter, this Court must turn to the Eitel factors to 

determine whether the entering of a default judgment is appropriate in this matter.

1. Prejudice

Plaintiff would be gravely prejudiced if the court does not enter a default judgment against 

Defendant, because Plaintiff would have no means to protect its service marks and collect the 

reasonable costs that Defendant owes. PepsiCo, Inc., 238 F. Supp. 2d at 1177; Pl.’s Brief at 2.

2. Merits of Plaintiff's Claims & Sufficiency of the Complaint

The second and third Eitel factors focus on the merits of Plaintiffs' substantive claim and 

the sufficiency of the Complaint. Eitel, 782 F.2d at 1471–72. For ease of analysis, these factors are 

considered together.

a. Trademark Infringement under 15 U.S.C. § 1114

AAA’s first claim alleged that Defendants committed trademark infringement under 15 

U.S.C. § 1114. (Compl. ¶¶ 39-43.) To prove trademark infringement, Plaintiff must show (1) that 

its marks are valid and protectable trademarks; (2) that plaintiff owns the trademarks; (3) that 

plaintiff used its marks in interstate commerce; (4) that defendant used in commerce a 

reproduction or copy of a registered trademark in connection with the advertising or sale of goods 

or services; and (5) that such use is likely to cause confusion, mistake, or deceive consumers. 

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First, AAA has alleged that its marks are valid and protectable trademarks that were 

registered with the United States Patent and Trademark Office. Second, AAA has alleged that it 

owns the trademarks. Third, the complaint alleges that AAA has used its marks in interstate 

commerce. Fourth, AAA alleged that Defendants, by operating a business under the name AAA 

Auto Body & Repair, Inc., have used AAA’s marks in connection with the sale, offering for sale, 

distribution, and advertising of Defendants’ products and services. Finally, AAA has alleged that 

Defendants’ use of the AAA marks is likely to cause confusion by causing consumers to believe 

that AAA is affiliated or endorses Defendants’ business. Thus, AAA has adequately pleaded a

claim for trademark infringement.

b. Unfair Competition under 15 U.S.C. § 1125(a)

In its second claim, AAA alleged unfair competition by false designation of origin under 

15 U.S.C. § 1125(a), which requires Plaintiff to show that Defendants used in commerce 

any word, term, name, symbol, or device, or any combination 

thereof, or any false designation of origin, false or misleading 

description of fact, or false or misleading representation of fact, 

which is likely to cause confusion, or to cause mistake, or to deceive 

as to the affiliation, connection, or association of such person with 

another person, or as to the origin, sponsorship, or approval of his 

goods by such person.

15 U.S.C. § 1125(a)(1); Compl. ¶¶ 44-48. The analysis for unfair competition under Section 

1125(a) is similar to the analysis for a claim for trademark infringement under 15 U.S.C. section

1114. Brookfield Commc’ns., Inc., v. West Coast Entm’t Corp., 174 F.3d 1046–47 (9th Cir. 1999). 

Here, AAA alleged that Defendants used its marks in such a way that consumers would wrongly 

believe that the use was sponsored or endorsed by, or associated or affiliated with, AAA. (Compl. 

¶ 34.) Indeed, this use already has confused AAA’s vendors and may have caused confusion 

among consumers. Id. AAA has adequately pleaded its unfair competition claim under Section 

1125(a).

c. Trade Name or Service Mark Dilution under 15 U.S.C. § 1125(c)(1)

In its third claim, AAA alleged federal trademark dilution. (Compl. ¶¶ 49-52.) To state a 

claim under Section 1125(c), Plaintiff must show that “(1) its mark is famous; (2) the defendant is 

making commercial use of the mark; (3) the defendant’s use of the mark began after the plaintiff’s 

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mark became famous; and (4) the defendant’s use creates a likelihood of dilution of the distinctive 

value of the mark.” Avery-Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999). 

First, AAA alleged in its complaint that its marks are famous. Second, AAA alleged that 

Defendants used AAA’s marks by naming the business AAA Auto Body & Repair, Inc. Third, 

AAA alleged that it its marks were famous since before Defendants began using the marks. 

Fourth, AAA alleged that Defendants’ use of the marks create a likelihood of the dilution of the 

marks’ distinctive value by tarnishing the good reputation associated with the AAA Marks and 

seeking to derive a commercial benefit from the value and goodwill associated with the AAA 

Marks. AAA has adequately alleged its claim of trademark dilution under Section 1125(c).

d. Injury to Business Reputation and Dilution under California Business & 

Professions Code § 14247

In its fourth claim, AAA alleged trademark dilution under California Business & 

Professions Code § 14247, the successor statute to Business & Professions Code § 14330. (Compl. 

¶¶ 53-56.) Trademark dilution under California law is “substantially similar” to the federal 

trademark dilution under 15 U.S.C. § 1125(c). Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 

873 (9th Cir. 1999). Additionally, section 14330 has been construed consistently with the federal 

trademark dilution statute. Nissan Motor Co. v. Nissan Computer Co., 378 F.3d 1002, 1015 (9th 

Cir. 2004). As mentioned above, AAA has alleged all the necessary elements of a claim for 

trademark dilution under 15 U.S.C. § 1125(c), and so has adequately pleaded its claim for 

trademark dilution under California law.

e. California Unfair Competition under California Business & Professions Code § 

17200

In its fifth claim, AAA alleged unfair competition under California Business & Professions 

Code § 17200 based on Defendants’ violations of the Lanham Act, California Business & 

Professions Code § 14247, and California common law. (Compl. ¶¶ 57-65.) Since this is a 

derivative claim and AAA has alleged all the necessary elements of the statutory violations, it has 

sufficiently pleaded a claim for unfair competition in violation of § 17200.

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f. Unfair Competition and Trademark Infringement under Common Law

In its sixth claim, AAA alleged that Defendants committed trademark infringement under 

California common law. (Compl. ¶¶ 66-70.) Likelihood of confusion is the basic test for common 

law trademark infringement, and the same standard for likelihood of confusion is used for both 

common law trademark infringement and federal trademark infringement under 15 U.S.C. § 1114. 

See Thane Int’l., Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 n.3 (9th Cir. 2002). Because AAA 

has sufficiently pleaded its claim for federal trademark infringement, it has also adequately 

pleaded its claim for common law trademark infringement. (See Pl.’s Brief at 3-4.)

g. Common Law Trademark Dilution

In its seventh claim, AAA alleges that Defendants engaged in trademark dilution under 

California common law. (Compl. ¶¶ 71-74.) The common law dilution claim is based on the same 

factual allegations as the statutory claim, and is “substantially congruent” to claims made under 

the Lanham Act. See Petroliam Nasional Berhad v. GoDaddy.com, Inc., No. C 09-5939 PJH, 2010 

WL 3619780, at *6 (N.D. Cal. Sept. 9, 2010) (citing Denbicare U.S.A. Inc. v. Toys R Us, Inc., 84 

F.3d 1143, 1153 (9th Cir. 1996), abrogated on other grounds by Kirtsaeng v. John Wiley & Sons, 

Inc., 133 S.Ct. 1351, 1358 (2013)). Thus, AAA has sufficiently pleaded a claim for common law 

trademark dilution. (See Pl.’s Brief at 4-5.)

3. Sum of Money at Stake

The fourth Eitel factor focuses on the amount at issue in the action, as courts should be 

hesitant to enter default judgments in matters involving large sums of money. “When the money at 

stake in the litigation is substantial or unreasonable, default judgment is discouraged.” Bd. of Trs. 

v. Core Concrete Const., Inc., No. C 11-2532 LB, 2012 WL 380304, at *4 (N.D. Cal. Jan. 17, 

2012) (citing Eitel, 782 F.2d at 1472). However, when “the sum of money at stake is tailored to 

the specific misconduct of the defendant, default judgment may be appropriate.” Id. (citations 

omitted). The sum of at stake are Plaintiff's reasonable costs totaling $1,931.90, which the Court 

finds to be appropriately tailored to the conduct in this case, and reasonable under Eitel.

4. The Possibility of a Dispute Concerning Material Facts

With respect to the fifth prong, Defendants have not participated in this action and have not 

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made any attempt to contest any of Plaintiff’s material facts or legal assertions or moved to set 

aside the entry of default despite being served with all papers. Even if the material facts were 

found to be untrue, the effect of a permanent injunction on any non-use of the AAA marks would 

be negligible, because there would be no conduct to be enjoined, and Defendants could move to 

set aside the default judgment awarding reasonable costs.

5. Whether Default was a Result of Excusable Neglect

Plaintiffs properly served Defendants with the Summons and Complaint. Defendants made 

no appearance in this matter and have not responded to Plaintiffs’ motion. Consequently, there is 

nothing suggesting that Defendant’s failure to appear and litigate this matter is based on excusable 

neglect. Shanghai Automation Instr. Co. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001). (Pl.’s 

Brief at 6.)

6. Federal Rules Preference for a Decision on the Merits

After an examination of these facts in the aggregate, this Court finds that Eitel factors one 

through six outweigh the Federal Rules of Civil Procedure’s preference for a decision on the 

merits. This Court, therefore, recommends an entry of a default judgment.

III.DAMAGES & INJUNCTIVE RELIEF

In its complaint and in making this motion, Plaintiff asked for an injunction forbidding 

Defendants from using AAA’s marks, and requiring Defendants to destroy or remove all literature, 

advertising, and electronic materials. A plaintiff may receive injunctive relief under 15 U.S.C. §

1118 because “injunctive relief is the remedy of choice for trademark and unfair competition 

cases, since there is no adequate remedy at law for the injury caused by defendant’s continuing 

infringement.” Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988).

A. Permanent Injunctive Relief

As of the time that AAA filed its complaint, Defendants were still using AAA’s Marks in

the AAA Auto Body business name. In doing so, Defendants are misrepresenting that it is 

endorsed by or affiliated with AAA, making it likely that customers would be confused. This 

Court, therefore, recommends that an order enjoining Defendants from using AAA’s trademarks, 

service marks, and certification marks in any way be issued.

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AAA also asks that Defendants be required to file and serve on AAA, within thirty days of 

entry of the judgment, a report in writing and under oath detailing the manner in which Defendants 

have complied with the injunction. Since the reporting requirement is permitted by 15 U.S.C. § 

1116(a), which pertains to injunctive relief in the infringement context, the Court recommends that 

Defendants be required to file such a report.

For the Court’s contempt power to apply to this injunction, Defendants “must receive 

actual notice of the order by personal service or otherwise.” Fed. R. Civ. P. 65(d). The Court 

recommends that Plaintiff be instructed to provide proper service of this order, by personal service 

to the extent possible, within thirty days, and that Plaintiff be ordered to file a copy of the proof of 

service.

B. Costs

Plaintiffs have submitted evidence indicating they incurred court costs in the amount of 

$1,931.90, including the filing fee in the amount of $400.00, service of the summons and 

complaint, and courier and messenger fees. (Decl. of Ethan Forrest, Dkt. No. 21-5 ¶ 14, Ex. 1; 

Supplemental Decl. of Ethan Forrest, Dkt. No. 27 ¶¶ 2-6, Exs. 1-3.) These costs appear 

reasonable, therefore, the undersigned recommends that the district court award costs in the 

amount of $1,931.90.

IV.CONCLUSION

For the reasons set forth above, the undersigned recommends that Plaintiff’s motion for 

default judgment be GRANTED, and that the district court award Plaintiff reasonable costs in the 

amount of $1,931.90.

This Court further recommends that Defendants shall comply with the following:

(1) Pursuant to the Court’s authority under 15 U.S.C. § 1116(a), Defendants, their 

agents, servants, employees, attorneys, and any and all persons in active concert or participation 

with any of them, are hereby permanently enjoined and restrained from:

(a) Using without the authorization of AAA any of AAA’s trademarks, logos, 

and trade names, including, but not limited to, the designations “AAA,” 

“AAA Approved,” “AAA Approved Auto Repair,” or any other name, logo, 

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or mark that includes the designation “AAA” or that is confusingly or 

deceptively similar to any of AAA’s trademarks, logos, and trade names, 

either alone or in conjunction with other words or symbols, as part of any 

trademark, service mark, logo, trade name, corporate name, assumed name, 

domain name, website, or email address, on or in relation to any goods or 

services sold or provided by the Defendants, or in any other manner; and

(b) Using the AAA Marks in any form or manner that would tend to identify or 

associate Defendants or their business or services with AAA, including, 

without limitation, in the marketing, promotion, advertising, identification, 

sale or distribution of goods or services, or in any other manner.

(2) Pursuant to 15 U.S.C. § 1118, Defendants shall destroy all literature, signs, labels, 

prints, packages, wrappers, containers, advertising materials, stationary, Internet content, websites, 

email addresses, computer files, software, and any other items in their possession or control that 

contain the infringing designations “AAA,” or any term, symbol, or logo confusingly similar to 

“AAA,” either alone or in combination with other words or symbols and to destroy all computer 

back-up files and tapes, plates, molds, matrices, masters, and other means in their possession or 

control of making any of those infringing items.

(3) Defendants shall file with the Court and serve on AAA, within thirty days after 

entry of an injunction, a report in writing under oath setting forth, in detail, the manner in which 

they have complied with the Court’s injunction and orders. Judgment shall be entered 

accordingly.

Additionally, Plaintiff shall serve copies of this report and recommendation on Defendants.

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Any party may file objections to this report and recommendation with the District Judge 

within 14 days of being served with a copy. See 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b); N.D. 

Civil L.R. 72-3. The parties are advised that failure to file objections within the specified time 

may waive the right to appeal the District Court's order. IBEW Local 595 Trust Funds v. ACS 

Controls Corp., No. C-10-5568, 2011 WL 1496056, at *3 (N.D. Cal. Apr. 20, 2011).

IT IS SO RECOMMENDED.

Dated: February 9, 2015

______________________________________

KANDIS A. WESTMORE

United States Magistrate Judge

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