Court Opinion

ID: 2664147
Source: CourtListenerOpinion
Date Created: 2014-04-04 03:22:28.944967+00
Date Added: 2024-06-11T13:04:21.270716
License: Public Domain

UNITED STATES DISTRICT COURT
                                FOR THE DISTRICT OF COLUMBIA

DELTA SIGMA THETA SORORITY, INC.,

                          Plaintiff,

                          v.                                 Civil Action No. 10-163 (BAH)
                                                             Judge Beryl A. Howell
LAMITH DESIGNS, INC.,

                          Defendant.

                                       MEMORANDUM OPINION

        In this case, plaintiff Delta Sigma Theta Sorority (hereinafter “Delta”) alleges that

LaMith Designs, Inc. is infringing its trademarks and service marks 1 by offering for sale without

authorization merchandise bearing Delta’s well-known insignias. Currently before the Court is

plaintiff’s motion for default judgment, the defendant’s motion to vacate the Clerk’s entry of

default, as well as the defendant’s motion to dismiss for lack of personal jurisdiction. For the

reasons set forth below, the Court grants the defendant’s motion to vacate entry of default and

therefore denies the plaintiff’s motion for default judgment. The defendant’s motion to dismiss

is denied, without prejudice, in order to provide the plaintiff with a period of sixty days for

jurisdictional discovery. The defendant may re-submit its motion to dismiss following the sixty-

day period of jurisdictional discovery.

I.      BACKGROUND

        Plaintiff Delta Sigma Theta Sorority, Inc. (hereinafter “Delta”) is a well-recognized

1
 A service mark identifies and distinguishes the services of one person from the services of another. 15 U.S.C. §
1127.

                                                         1
sorority with over 900 chapters across the world. Comp. ¶¶ 10, 12. Founded in 1913 on the

campus of Howard University in Washington, D.C., Delta is known not only by its official name,

but also as “Delta,” “Delta Sigma Theta,” “Delta Sorority,” and by its representative Greek letter

symbols ΔΣΘ. Id. ¶¶ 10-11. According to the plaintiff, “[a]ny iteration of Delta’s name or its

Greek letter symbols is famous and recognized as a Mark signifying association with Delta.” Id.

¶ 11.

        Among the trademarks and service marks (hereinafter “Marks”) associated with its

organization and brand, the plaintiff has registered with the U.S. Patent and Trademarks Office:

Delta Sigma Theta (Reg. No. 3,407,876), Delta’s Minerva Crest (Reg. No. 3,465,351 and

2,199,610), Delta Sigma Theta Sorority, Incorporated (Reg. No. 2,197,647), the Greek letter

symbols ΔΣΘ (Reg. No. 3,416,699 and 2,201,178), and the Delta Torch (Reg. No. 3,557,212).

Id. ¶ 15. Delta also states that it owns common law marks, including “Delta” and “Delta

Sorority.” Id. ¶ 16.

        Given its “strong and famous” brand, the plaintiff states that it “vigorously protects its

Marks” and employs an individual to monitor and protect its intellectual property. Id. ¶¶ 17-18.

Delta receives “hundreds of requests” each year from vendors seeking a license to sell

merchandise imprinted with Delta’s name and Marks, but only grants a license to those meeting

the plaintiff’s licensing requirements. Id. ¶ 19.

        In order to obtain a license to use Delta’s Marks, a vendor must complete an application.

Id. ¶ 20. If approved, the vendor must then execute a Licensee Agreement and agree to Delta’s

Guidelines for Operating, which includes a “Code of Conduct.” Id. As part of this process,

vendors agree to acquire a license from Delta before “anyone may manufacture, design, make,

copy, sell, display, or distribute” items containing Delta’s Marks. Id. Vendors further agree to

                                                    2
restrict sales of merchandise bearing Delta Marks “solely to Delta members and solely at Delta-

approved events.” Id.

       The plaintiff alleges that defendant LaMith Design, Inc. is selling clothing and

merchandise bearing Delta’s Marks without license or authorization through its catalog and its

website located at www.lamithdesignonline.com. Id. ¶¶ 21-23. According to the plaintiff, the

defendant has never contacted the plaintiff to seek a license and is “unlawfully trading on Delta’s

name, reputation, goodwill, and the strength of member and public association of Delta Marks

with Delta.” Id. ¶ 22. Among the items the defendant offers for sale are jackets, shoes, scarves,

and bags bearing Delta’s ΔΣΘ insignia and other Marks. Id. ¶ 23. The defendant does not

restrict sale of these items to Delta members. Id.

       Upon learning of the defendant’s alleged infringing activity, the plaintiff unsuccessfully

sought to halt the defendant’s sale of Delta merchandise. Id. ¶¶ 25-27. The plaintiff states that

“[d]espite having been put on notice that it was infringing on Delta’s Marks and directed to cease

advertising for sale and selling the infringing merchandise, Defendant continues to advertise and

offer for sale merchandise that infringes on Delta’s intellectual property rights.” Id. ¶ 27.

       On January 28, 2010, the plaintiff filed a Complaint seeking injunctive relief to halt the

defendant’s ongoing violations of its trademark and service mark rights, disgorgement of profits

the defendant realized from sale of the infringing goods, and damages for misuse of the

plaintiff’s Marks. Id. ¶¶ 1-2. Specifically, the plaintiff asserts six causes of action, alleging:

infringement of Delta’s trademarks under section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1),

Federal common law, and District of Columbia common law; dilution of its trademarks under

section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); and unfair competition under Federal and

District of Columbia common law. Id. ¶¶ 28-65.

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         Shortly after filing the Complaint, the plaintiff moved on January 28, 2010, for a

preliminary injunction to enjoin the defendant from selling the alleged infringing merchandise

and “engaging in activities designed to damage [plaintiff’s] reputation and goodwill.” Pl.’s Mot.

Prelim. Inj., ECF No. 2, at 1. The Court scheduled a hearing on the motion for February 25,

2010, but a day before the scheduled hearing, the plaintiff requested a continuance to allow the

parties to explore settlement. Pl.’s Mot. & Mem. P. & A. for Continuance, ECF No. 6, at 1.

Before the defendant had filed a responsive pleading or notice of appearance, the plaintiff stated

that the owner of defendant LaMith Designs, Ajay Chopra, contacted the plaintiff and “expressed

an interest in settling this matter and asked whether it could be resolved without the need for him

to contact the Court or retain counsel.” Id. at 2. The plaintiff also informed the Court that the

defendant “represented that he has discontinued all uses of Delta’s Marks.” The plaintiff further

stated that she informed the defendant, who initially was not proceeding with counsel, that the

plaintiff would “ask the Court to delay any scheduled proceedings to allow the parties to explore

settlement.” 2 Id.

         The Court twice granted the plaintiff’s requests to continue the preliminary injunction

hearing from February 25, 2010 to May 7, 2010. Minute Orders dated Feb. 24 and April 6, 2010

(Walton, J.). After the second continuance, the Court cancelled the hearing “in light of

representation made by the parties,” and the plaintiff did not renew the preliminary injunction

motion nor attempt to re-schedule the hearing thereafter. Minute Order dated May 5, 2010

(Walton, J.). The plaintiff explains that parties were engaging “in continuing settlement

discussions,” which “were ultimately unsuccessful.” Pl.’s Mem. P. & A. Supp. Mot. Entry of

Default, ECF No. 7, at 2.

2
 Plaintiff indicates that, in early May, the defendant finally retained counsel, “who first contacted counsel for Delta
on May 6, 2010.” Pl.’s Mem. P. & A. Supp. Mot. Entry of Default, ECF No. 7, at 2.

                                                           4
        In the midst of the settlement discussions, the defendant was served with the Complaint

on February 17, 2010. See Return of Service Affidavit, ECF No. 5. The defendant’s Answer was

therefore due on March 10, 2010. FED. R. CIV. P. 12(a)(1)(A)(i) (“A defendant must serve an

Answer . . . within 21 days after being served . . .”). Nevertheless, the plaintiff states, “[b]y

agreement between the parties, Defendant’s Answer was due on June 1, 2010.” Pl.’s Mem. P. &

A. Supp. Mot. Entry of Default, ECF No. 7, at 2; Pl.’s Mot. Entry of Default, ECF No. 7, Ex. 1,

Devarieste Curry Aff. (hereinafter “Curry Aff.”), ¶ 6 (plaintiff’s counsel represents that “[o]n

behalf of our clients, [defendant’s counsel] and I reached an agreement whereby Defendant’s

Answer would be due on June 1, 2010 to give the parties additional time to try to reach an

agreement.”). No motion seeking to extend the time to answer was ever filed nor did the Court

grant permission to extend the time for the defendant’s Answer. See FED. R. CIV. P. 6(b)(1).

        In accordance with the informal agreement between the parties, on June 1, 2010, the

defendant submitted to the Clerk of the Court a Motion to Dismiss for Lack of Personal

Jurisdiction under FED. R. CIV. P. 12(b)(2). Def.’s Mem. Supp. Mot. Vacate Entry of Default,

ECF No. 11, at 1. The defendant’s motion to dismiss was also served on plaintiff’s counsel. Id.

Despite the fact that at this time, the defendant was represented by counsel, the motion to dismiss

was signed by “Ajay Chopra, Owner, pro se.” Id. According to the plaintiff, the defendant’s

counsel explained in an email message on June 1, 2010, that “Defendant elected to file the

motion to dismiss pro se, rather than retain local counsel.” Curry Aff., ECF 7, ¶ 7. On June 23,

2010, the Court denied the defendant leave to file its motion to dismiss because the defendant, a

corporation, cannot appear pro se. See In re Greater Se. Cmty. Hosp. Found., Inc. v. Potter, 586

F.3d 1, 4-5 (D.C. Cir. 2009 ) (“It has been the law for the better part of two centuries . . . that a

corporation may appear in the federal courts only through licensed counsel,” quoting Rowland v.

                                                   5
Cal. Men's Colony, 506 U.S. 194, 201-02 (1993)).

         On June 18, 2010, five days prior to the Court denying the defendant leave to file its

motion to dismiss, the plaintiff filed a Motion for Entry of Default, stating that because the

defendant “failed to file an answer or otherwise respond through licensed counsel by the due date

. . . [the] Defendant should be treated as having not appeared at all.” Pl.’s Mem. P. & A. Supp.

Mot. Entry of Default, ECF No. 7, at 3. Pursuant to Federal Rule of Civil Procedure 55(a), the

Court Clerk entered default against the defendant on June 21, 2010. 3 Notice of Clerk’s Entry of

Default, ECF No. 8.

         On July 9, 2010, the plaintiff filed the pending Motion for Default Judgment and

Permanent Injunction and Award of Attorney’s Fees and Costs. Pl.’s Mot. Entry of Default J.,

ECF No. 10. Two weeks later, on July 23, 2010, the defendant filed the pending Motion to

Vacate Entry of Default, 4 and, in accordance with Local Rule 7(g), simultaneously re-submitted

its motion to dismiss, which was signed by an attorney admitted to practice in this jurisdiction.

Def.’s Mem. Supp. Mot. Vacate Entry of Default, ECF No. 11; Def.’s Mot. Dismiss, ECF No.

12; LCvR 7(g) (“A motion to vacate an entry of default, or a judgment by default, or both, shall

be accompanied by a verified answer presenting a defense sufficient to bar the claim in whole or

in part.”). Plaintiff’s motion for default judgment and both the defendant’s motions to vacate

entry of default and to dismiss the Complaint are currently before the Court.

         For the reasons set forth below, the Court concludes that vacatur of the Clerk’s entry of

default is proper. Accordingly, the defendant’s motion to vacate entry of default is granted and

3
  FED. R. CIV. P. 55(a) provides that “[w]hen a party against whom a judgment for affirmative relief is sought has
failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the
party’s default.”
4
 The defendant’s brief in support of its motion to vacate entry of default incorporated its opposition to the
plaintiff’s motion for default judgment.

                                                          6
the plaintiff’s motion for default judgment is denied. The defendant’s motion to dismiss, is

denied, without prejudice, and the plaintiff’s request for a period of jurisdictional discovery is

granted.

II.    VACATUR OF THE CLERK’S ENTRY OF DEFAULT

       On June 21, 2010, upon plaintiff’s motion, the Court Clerk entered default against the

defendant for the defendant’s failure to plead or otherwise defend against the plaintiff’s claims.

Clerk’s Entry of Default, ECF No. 8. The plaintiff subsequently moved for entry of default

judgment in the amount of $620,656.11, which represented statutory damages for the defendant’s

alleged unlawful use of its Marks, attorney’s fees, and court costs. Pl.’s Mem. P. & A. Supp.

Mot. Entry of Default J., ECF No. 10, at 2. Prior to the Court’s ruling on plaintiff’s motion for

entry of default judgment, the defendant filed a motion to vacate the Clerk’s entry of default,

ECF No. 11, and simultaneously responded to the Complaint by filing a motion to dismiss for

lack of personal jurisdiction. ECF No. 12.

       Courts “universally favor trial on the merits.” Keegel v. Key West & Caribbean Trading

Co., 627 F.2d 372, 375 (D.C. Cir. 1980) (quoting Bridoux v. Eastern Air Lines, Inc., 214 F.2d

207, 210 (D.C. Cir. 1954)); accord Peterson v. Archstone Communities LLC, 637 F.3d 416, 418

(D.C. Cir. 2011) (vacating district court’s dismissal of action for lack of prosecution, noting that

“disposition of claims on the merits is favored.”) (internal quotations and citations omitted).

Courts disfavor default judgments because entering judgment without allowing a party to present

a defense is a particularly harsh penalty for filing delays. Keegel, 627 F.2d at 375 (“the interests

of justice . . . would be ill-served by resort to a procedural device that would unfairly or

unnecessarily foreclose resolution of the dispute on its merits.”); Jackson v. Beech, 636 F.2d 831,

835-36 (D.C. Cir. 1980) (“Default judgments are not favored by modern courts, perhaps because

                                                  7
it seems inherently unfair to use the court’s power to enter and enforce judgments as a penalty

for delays in filing . . . [and] strong policies favor resolution of disputes on their merits.”).

Default judgment is usually reserved for “when the adversary process has been halted because of

an essentially unresponsive party . . . [as] the diligent party must be protected lest he be faced

with interminable delay and continued uncertainty as to his rights." Jackson, 636 F.2d at 836

(quoting H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C.

Cir. 1970)).

        Pursuant to Federal Rule of Civil Procedure 55(c), the Court may set aside an entry of

default “for good cause shown.” To demonstrate good cause, “the moving party [must] provide

an explanation for the default or give reasons why vacation of the default entry would serve the

interests of justice.” Haskins v. U.S. One Transp., LLC, 755 F. Supp. 2d 126, 129 (D.D.C. 2010)

(alteration in original) (quoting 10A CHARLES ALAN WRIGHT, ARTHUR R. MILLER, MARY KAY

KANE, & RICHARD L. MARCUS, FED. PRAC. & PROC. CIV. § 2696 (3d ed.)). The decision to

vacate entry of default lies within the discretion of the trial court, but exercising this discretion

requires consideration of whether “(1) the default was willful, (2) a set-aside would prejudice

plaintiff, and (3) the alleged defense was meritorious.” Mohamad v. Rajoub, 634 F.3d 604, 606

(D.C. Cir. 2011) (quoting Keegel, 627 F.2d at 373). “On a motion for relief from the entry of a

default or a default judgment, all doubts are resolved in favor of the party seeking relief.”

Jackson, 636 F.2d at 836.

        A. Defendant’s Default Was Not Willful

        To determine whether to vacate entry of default, the Court must first ascertain whether

the defendant’s failure to respond in a timely manner was willful. Bad faith is not necessary to

conclude that the defendant acted willfully. Capital Yacht Club v. Vessel Aviva, 228 F.R.D. 389,

                                                   8
393 (D.D.C. 2005). “The boundary of willfulness lies somewhere between . . . a negligent filing

error, which is normally considered an excusable failure to respond, and a deliberate decision to

default, which is generally not excusable.” Int’l Painters & Allied Trades Union & Indus.

Pension Fund v. H.W. Ellis Painting Co., 288 F. Supp. 2d 22, 26 (D.D.C. 2003).

       In this case, the defendant does not dispute that it failed to file a timely response on

March 10, 2010, as required by the Federal Rules of Civil Procedure. FED. R. CIV. P.

12(a)(1)(A)(i). In fact, both parties generally focus on the date of June 1, 2010 as the “due date”

for the defendant’s responsive pleading since this was the date set by their informal agreement as

the deadline for the defendant’s response. Pl.’s Mem. P. & A. Supp. Mot. For Entry of Default,

ECF No. 7, at 2 (“Defendant’s Answer was due on June 1, 2010”); Def.’s Mem. Supp. Mot.

Vacate Entry of Default, ECF No. 11, at 5 (“Defendant believed it properly and timely complied

with its obligations to submit a responsive pleading to the Court by June 1, 2010 . . .”). Absent

an extension of time sanctioned by the Court for filing a response to the Complaint, however, the

time limits set forth in the governing rules apply rather than the terms of an informal

“agreement” between the parties.

       Informal resolutions of disputes are certainly encouraged, but once a case is initiated with

the Court, the parties have an independent obligation to comply with the Federal Rules of Civil

Procedure and the local rules of the Court. The Federal Rules are intended to “secure the just,

speedy, and inexpensive determination of every action and proceeding.” FED. R. CIV. P. 1.

“Mere agreements of counsel or parties cannot alone be sufficient to waive the timeliness

requirements of the Federal Rules,” Keegel, 627 F.2d at 374-5, and the Court will not cede to

litigants the Court’s prerogative to control its docket. Default judgment is proper where a

defendant “has failed to protect its own interests” and relied on the “mere existence of settlement

                                                 9
negotiations as an excuse for failing to fulfill its responsibilities to the Court.” Int’l Painters, 288

F. Supp. 2d at 26.

        Nevertheless, in assessing whether good cause exists to set aside the entry of default, an

informal agreement between the parties is relevant to whether the defendant’s failure to file a

responsive pleading was willful. See id. (refusing to vacate default judgment where defendant

ignored plaintiff’s specific threat to file for a default if defendant failed to respond by informal

deadline and defendant had no meritorious defense); Flynn v. Pulaski Constr. Co., No. 02-cv-

2336, 2006 WL 47304, at *8 (D.D.C. Jan. 6, 2006) (“default is willful when a defendant fails to

meet an informal deadline after which plaintiffs specifically threatened to file for default.” ).

“Reliance upon representations made by opposing counsel may mitigate an intentional failure to

respond if the court is convinced that such reliance was made in good faith.” Int’l Painters, 288

F. Supp. 2d at 26 (citing Keegel, 627 F.2d at 374). In this case, in the weeks preceding the

March 10, 2010 date by which the defendant was required to file a responsive pleading, the

parties were engaged in settlement negotiations. As part of those negotiations, the plaintiff

informed the defendant, who was then proceeding pro se, that the plaintiff would “ask the Court

to delay any scheduled proceedings to allow the parties to explore settlement.” Pl.’s Mot. &

Mem. P. & A. for Continuance, ECF No. 6, at 2. While this representation by plaintiff does not

relieve the defendant from its obligation to comply with applicable rules, the defendant may have

reasonably assumed that the plaintiff would seek permission to delay all court proceedings,

particularly where the parties had agreed upon a deadline of June 1, 2010 for the defendant to file

an Answer. See Lambert v. Bd. of Comm’rs of Orleans Levee Dist., No. 05-cv-5931, 2006 WL

1581262, at *2 (E.D. La. June 7, 2006) (stating that informal agreements regarding extensions

are “without legal effect,” but holding that the defendant’s failure to answer was not willful, in

                                                   10
part, because of defendant’s belief of the informal extension to answer); DIRECTV, Inc. v.

Meyers, 214 F.R.D. 504, 511-12 (N.D. Iowa 2003) (“[T]he more prudent thing for [defendant’s]

counsel to do to ensure that [defendant] did not default was to seek an extension of the time to

answer from the court. Nevertheless, it was not necessarily unreasonable for counsel to rely on

what counsel believed was an informal agreement concerning the deadline.” (emphasis in

original)). Showing a willful disregard of court filing requirements would plainly be difficult to

make in circumstances where, as here, a pro se defendant relied on opposing counsel’s

representation that court deadlines would be postponed.

       The plaintiff does not address this point but instead argues that the Court should consider

the defendant to have willfully defaulted because, having agreed to an informal deadline of June

1, 2010, the defendant nonetheless failed to file a proper pleading on that date. Although the

defendant submitted a motion to dismiss on June 1, 2010, plaintiff contends that the defendant

deliberately chose, while represented by counsel not admitted to this jurisdiction’s Bar, to “flout

[] well established precedent” by filing its motion pro se in order to avoid retaining counsel

admitted in the District of Columbia. Pl.’s Opp’n Mot. Vacate Entry Default, ECF No 13, at 5.

Thus, according to the plaintiff, this “is not a case of simple neglect.” Id.

       The Court agrees with plaintiff that the defendant should have been aware when it

attempted to file a responsive pleading by the informal deadline agreed to by the parties that a

corporation may not appear pro se, since it was then represented by its current counsel. It is a

stretch, however, to conclude that the failure to file a proper responsive pleading was a deliberate

decision to default in the face of the defendant’s consistent refrain that it simply wished to avoid

or minimize the cost of litigation and local counsel. See Pl.’s Mot. & Mem. P. & A. for

Continuance, ECF No. 6, at 2 (“[Defendant] expressed an interest in settling this matter and

                                                  11
asked whether it could be resolved without the need for him to contact the Court or retain

counsel.”); Curry Aff. ¶ 5 (same); Def.’s Mem. Supp. Mot. Vacate Entry Default, ECF No. 11, at

1 (“After approximately three (4) [sic] months of attempted settlement discussions . . . Defendant

retained Intellectual Property counsel to assist him in further settlement discussions.”).

       The plaintiff cites Brand v. NCC Corp., 540 F. Supp. 562 (E.D. Pa. 1982), to support its

contention that defendant’s failure to respond was willful. That case, however, is distinguishable

on two grounds. First, the defaulting party in Brand was seeking to vacate a default judgment,

not merely the entry of default. See id. at 564. The standard to vacate default judgment is

significantly greater than the “good cause” standard required to vacate a Clerk’s entry of default.

Compare FED. R. CIV. P. 55(c) with FED. R. CIV. P. 60(b); see also Int’l Painters, 288 F. Supp.

2d at 26 (“[T]he Rule 60(b) standard is a more rigorous one because ‘the concepts of finality are

more deeply implicated’ in default judgment cases.”). Second, the defendant in Brand both

intentionally ignored the complaint entirely and refused to obtain counsel after the court stated

that it was necessary. See Brand, 540 F. Supp. at 563-64. Here, the defendant attempted to file a

timely responsive pleading and obtained counsel to rectify its procedural error shortly after the

Court denied the defendant leave to file its motion.

       The context surrounding entry of default in this case indicates that the defendant’s default

was not willful. The defendant participated in settlement negotiations with the plaintiff from

February 2010 until at least early May 2010. It attempted to file a responsive pleading by the

informal deadline agreed upon by the parties, and it moved to vacate the Clerk’s entry of default

and re-file a responsive pleading shortly after it became aware that its June 1, 2010 pleading

would not be accepted. These facts do not suggest willful indifference to this litigation, but

rather demonstrate defendant’s active efforts to avoid entry of default and present its defense.

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       B. Plaintiff Would Not Suffer Prejudice if Entry of Default is Vacated

       The second factor the Court must consider when deciding whether to vacate entry of

default is the potential prejudice to the plaintiff. “[D]elay in and of itself does not constitute

prejudice.” Haskins, 755 F. Supp. 2d at 130 (quoting KPS & Assocs., Inc. v. Designs by FMC,

Inc., 318 F.3d 1, 15 (1st Cir. 2003)). To evaluate prejudice, “a court should consider – not the

mere fact of delay itself – but rather any effects such delay may have on the plaintiff (for

example, loss of evidence or increased difficulties in obtaining discovery).” Essroc Cement

Corp. v. CTI/D.C., Inc., 263 F.R.D. 17, 21 (D.D.C. 2009); see also Haskins, 755 F. Supp. 2d at

130-31 (“The issue is not mere delay, but rather its accompanying dangers: loss of evidence,

increased difficulties of discovery, or an enhanced opportunity for fraud or collusion,” quoting

KPS & Assocs., Inc., 318 F.3d at 15).

       To support its contention that it will suffer prejudice from vacatur of the Clerk’s entry of

default, the plaintiff states “it appears that evidence may have been destroyed in the months

following the filing of the Complaint.” Pl.’s Opp’n Def.’s Mot. Vacate Entry of Default, ECF

No. 13, at 13. Specifically, the plaintiff asserts that the defendant “disabled its websites entirely”

rather than “simply remove the infringing merchandise,” and this “destruction of evidence

related to Defendant’s websites will likely compromise [plaintiff’s] ability to litigate its claims.”

Id. Plaintiff supplies no additional information on how loss of this evidence will prevent it from

prosecuting its case.

       The defendant denies it destroyed evidence, referring to the plaintiff’s allegations as

“potentially libelous” and “grossly false.” Def.’s Reply Br., ECF No. 16, at 4. The defendant

further argues that even if disabling the defendant’s website resulted in a loss of evidence, the

plaintiff has not demonstrated any relationship between the purported destruction of evidence

                                                  13
and prejudice the plaintiff will suffer if default is vacated. Id. at 4.

        Even if the disabling of the defendant’s website resulted in the loss of evidence, the

plaintiff has not sufficiently demonstrated prejudice in this case since both discovery sanctions

and statutory damages remain available to compensate the plaintiff. First, if the defendant failed

to fulfill its obligation to preserve evidence relevant to the claims and defenses in this lawsuit,

the plaintiff may seek appropriate sanctions. See, e.g., Talavera v. Shah, 638 F.3d 303, 312-314

(D.C. Cir. 2011) (reversing summary judgment to defendant on claim for which defendant’s

employee destroyed evidence since plaintiff was entitled to more than just “weak adverse

inference”); Webb v. District of Columbia, 146 F.3d 964, 976 (D.C. Cir. 1998)(defendant’s

failure to ensure that documents relevant to litigation were preserved was “certainly serious” but

default judgment vacated for district court to consider appropriate sanctions); Shepherd v. Am.

Broad. Cos., 62 F.3d 1469, 1475-78 (D.C. Cir. 1995) (discussing district court’s power to impose

sanctions for misconduct during discovery); Mazloum v. D.C. Metrop. Police Dep’t, 530 F.

Supp. 2d 282, 290 (D.D.C. 2008) (where “party having control over evidence had an obligation

to preserve it at the time it was destroyed . . . [and] should have known that the evidence might

be relevant to future litigation,” adverse inference is appropriate) (internal quotes and citations

omitted); More v. Snow, 480 F. Supp. 2d 257, 275 (D.D.C. 2007) (“a court may employ an

adverse inference due to a party’s ‘failure to preserve evidence,’ even if deliberate or reckless

conduct is not present,” quoting Rice v. United States, 917 F. Supp. 17, 19-20 (D.D.C. 1996)).

        Second, if any loss of evidence occurred that adversely affects the plaintiff’s access to

information relating to the amount of actual damages incurred, the plaintiff may be entitled to

statutory damages. Even without any evidence from the defendant’s website establishing actual

damages, the plaintiff may move, as it has done in its Motion for Default Judgment, for statutory

                                                   14
damages under the Lanham Act, 15 U.S.C. § 1117(c). The Lanham Act allows the trademark

holder to recover statutory damages from $1,000 to $200,000 “per counterfeit mark per type of

goods or services sold, offered for sale, or distributed,” regardless of willfulness, and up to

$2,000,000 per counterfeit mark per type of goods if the infringement was willful. 15 U.S.C. §

1117(c). Indeed, the problem of infringer nondisclosure during discovery leaving trademark

holders with uncertain damages motivated the enactment of the statutory damages provision.

Gucci Am., Inc. v. Duty Free Apparel, LTD., 315 F. Supp. 2d 511, 520 (S.D.N.Y. 2004)

(“Congress added the statutory damages provision of the Lanham Act . . . because

‘counterfeiters’ records are frequently nonexistent, inadequate, or deceptively kept . . . , making

proving actual damages in these cases extremely difficult if not impossible,’” quoting S. Rep.

No. 104-177, at 20 (1995)); Sara Lee Corp. v. Bags of N.Y., Inc., 36 F. Supp. 2d 161, 165

(S.D.N.Y. 1999).

       In short, the record currently before the Court does not support the plaintiff’s contention

that it will be prejudiced from vacatur of the Clerk’s entry of default.

       C. The Defendant Presents a Meritorious Defense

       Finally, the Court must consider whether the defendant has submitted a meritorious

defense. When moving to vacate entry of default, the defendant is not required to prove a

defense, but rather must only assert a meritorious defense that it may prove at trial. See Int’l

Painters, 288 F. Supp. 2d at 28. “[A]llegations are meritorious if they contain even a hint of a

suggestion which, proven at trial, would constitute a complete defense.” Mohamad, 634 F.3d at

606 (quoting Keegel, 627 F.2d at 374).

       In this case, in accordance with Local Rule 7(g), the defendant filed simultaneously with

its motion to vacate the Clerk’s entry of default, a motion to dismiss for lack of personal

                                                 15
jurisdiction, arguing that the defendant has no contacts or ties to the District of Columbia. If the

defendant is correct and the Court lacks personal jurisdiction, the Court may not enter judgment

against the defendant. In fact, even if the defendant had not appeared to contest entry of default

judgment or moved to vacate the Clerk’s entry of default, the Court would have an independent

obligation to evaluate personal jurisdiction. Although questions of personal jurisdiction are

waived if not raised by motion or responsive pleading, see FED. R. CIV. P. 12 (b), (h)(1), where a

defendant is in default a court must “satisfy itself that it has personal jurisdiction before entering

judgment against an absent defendant.” Mwani v. Bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005);

Kline v. Williams, No. 05-cv-1102, 2006 WL 758459, at *1 (D.D.C. Mar. 23, 2006)

(“jurisdictional defects ‘are not waived by default when a party fails to appear or to respond,’”

quoting Dennis Garberg & Assocs., Inc., v. Pack-Tech Int'l Corp., 115 F.3d 767, 772 (10th Cir.

1997)).

          The plaintiff characterizes the defendant’s motion to dismiss for lack of personal

jurisdiction as “lack[ing] merit.” Pl.’s Opp’n Mot. Vacate Entry Default, ECF No. 13, at 13. Yet,

in support of its motion, the defendant provides an affidavit from the defendant’s owner, who

states that he “cannot recall ever conducting a business transaction, including the mailing of

catalogues, shipment of products or sourcing of material of Delta Sigma Theta Sorority, Inc.

within Washington D.C.” Def.’s Mot. Dismiss, ECF No. 12, Ex. A, Ajay Chopra Aff., ¶ 8. He

further avers that “[u]pon review of accessible documents in [his] possession, [he] cannot find

any indication that [the defendant] has ever conducted business in regards to Delta Sigma Theta

Sorority, Inc. within Washington, D.C.” Id. Moreover, the description of the defendant’s

website raises issues whether this website alone would support exercise of personal jurisdiction.

Def.’s Mot. Dismiss, ECF No. 12, at 8; Def.’s Mot. Dismiss, ECF No. 12, Ex. A, Ajay Chopra

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Aff., ¶¶ 6-8. These assertions provide “a hint of a suggestion” of a meritorious defense, sufficient

to meet the defendant’s burden to vacate entry of default. See Keegel, 627 F.2d at 374 (stating

that the defendant’s defense was “somewhat broad and conclusory” but “adequately [met] the

meritorious defense criterion”).

           The defendant’s motion to dismiss filed simultaneously with its motion to vacate entry of

default supplies, if proven, a meritorious defense to the plaintiff’s claims. Moreover, the

defendant’s default was not willful and the plaintiff will not suffer prejudice if the Clerk’s entry

of default is vacated. Accordingly, the defendant’s motion to vacate entry of default is granted

and, consequently, the plaintiff’s motion for default judgment is denied. 5

    III.      DEFENDANT’S MOTION TO DISMISS

           Concurrently with its motion to vacate entry of default, the defendant filed a motion to

dismiss for lack of personal jurisdiction. In its opposition to this motion, the plaintiff states that

“[i]n the event the Court grants Defendant’s Motion to Vacate Entry of Default, [the plaintiff]

respectfully requests leave to conduct limited jurisdictional discovery related to Defendant’s

contacts with the District of Columbia and reserves its right to more fully oppose Defendant’s

Motion to Dismiss.” Pl.’s Opp’n Mot. Dismiss, ECF No. 14, at 1. Jurisdictional discovery is

warranted in this case, and the Court therefore grants the plaintiff’s request.

           In cases where a party’s contacts with the jurisdiction are unclear and the record before

the court is “plainly inadequate,” courts have allowed for a discovery period within which to

5
  Plaintiff requests that, if the defendant’s motion to vacate entry of default is granted, the Court should order the
defendant to pay the plaintiff’s costs in moving for entry of default and default judgment. The Court denies the
plaintiff’s request. A court may “impose a reasonable condition on the vacatur in order to avoid undue prejudice to
the opposing party.” Capital Yacht Club v. Vessel Aviva, 228 F.R.D. 389, 395 (D.D.C. 2005) (quoting Powerserve
Int'l, Inc. v. Lavi, 239 F.3d 508, 515-16 (2d Cir. 2001)). Prior to moving for entry of default, the plaintiff was served
with the defendant’s procedurally defective motion to dismiss and was thus aware that the defendant had made
efforts to respond to the Complaint in accord with the informal time agreement. When plaintiff moved for entry of
default and for default judgment, it did so with clear notice that the defendant would likely appear to contest this
action. Therefore, the Court concludes that re-allocation of litigation costs are not warranted.

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gather evidence to support jurisdiction. See GTE New Media Servs., Inc., v. BellSouth Corp.,

199 F.3d 1343, 1351-52 (D.C. Cir. 2000) (reversing lower court’s finding of personal

jurisdiction, but stating that “[t]his court has previously held that if a party demonstrates that it

can supplement its jurisdictional allegations through discovery, then jurisdictional discovery is

justified.”). “This Circuit’s standard for permitting jurisdictional discovery is quite liberal,”

Diamond Chem. Co. v. Atofina Chems., Inc., 268 F. Supp. 2d 1, 15 (D.D.C. 2003), and

jurisdictional discovery is available when a party has “at least a good faith belief” that the court

has personal jurisdiction. Caribbean Broad. Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d 1080,

1090 (D.C. Cir. 1998).

        Courts have permitted discovery even when a party has failed to establish a prima facie

case of personal jurisdiction. See GTE New Media Servs., 199 F.3d at 1351-52 (“. . . as the

record now stands, there is absolutely no merit to [plaintiff]’s bold claim that the parent

companies and subsidiaries involved in this lawsuit should be treated identically. Jurisdictional

discovery will help to sort out these matters.”); see also In re Vitamins Antitrust Litig., 94 F.

Supp. 2d 26, 35 (D.D.C. 2000) (discussing GTE New Media Servs. and stating that “the D.C.

Circuit held that although plaintiffs had failed to establish a prima facie case of personal

jurisdiction and the court was unable to tell whether jurisdictional discovery would assist GTE

on this score, plaintiffs were entitled to pursue [discovery].”). Faced with the prospect of

dismissal, a plaintiff “is entitled to reasonable discovery, lest the defendant defeat the jurisdiction

of a federal court by withholding information on its contacts with the forum.” Humane Soc’y of

the United States v. Amazon.com, Inc., No. 07-cv-623, 2007 U.S. Dist. LEXIS 31810, at *10

(D.D.C. May 1, 2007) (internal quotation and citation omitted).

        The defendant has provided a sworn affidavit from the defendant’s owner, Ajay Chopra,

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asserting that he “cannot recall” ever conducting business of any kind involving the plaintiff’s

Marks in this jurisdiction. Def.’s Mot. Dismiss, Ex. A, Ajay Chopra Aff., ¶ 8. The nature of the

defendant’s business operations, however, includes selling merchandise via websites and

catalogues and may consequently reach customers outside the local area in New York, New

York, where the defendant’s business is physically located. Even if the defendant’s owner has no

present recollection of reaching customers in this jurisdiction, the plaintiff is entitled to test Mr.

Chopra’s memory through discovery.

        The Court therefore grants the plaintiff sixty (60) days to conduct discovery regarding the

defendant’s ties to the District of Columbia. The defendant’s motion to dismiss is denied, with

leave for the defendant to re-file its motion to dismiss following completion of jurisdictional

discovery. On or before the conclusion of the period of jurisdictional discovery, the parties shall

submit to the Court an agreed-upon schedule for further briefing in the issues raised by the

defendant’s Motion to Dismiss and otherwise comply with paragraph 1 of the Standing Order.

IV.     CONCLUSION

        For the foregoing reasons, the plaintiff’s motion for default judgment is denied and the

defendant’s motion to vacate entry of default is granted. The Court further denies the

defendant’s motion to dismiss for lack of personal jurisdiction, and grants the plaintiff sixty (60)

days to conduct jurisdictional discovery. An Order consistent with this Memorandum Opinion

will be entered.

DATED: June 21, 2011
                                                         /s/ Beryl A. Howell
                                                        BERYL A. HOWELL
                                                        United States District Judge

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