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Mary Kay Inc. v. Anderson

United States District Court, N.D. Texas, Dallas Division

May 16, 2018

MARY KAY INC., Plaintiff,
v.
ELIZABETH ANDERSON, an individual d/b/a “ppluniversity-us” on www.ebay.com Defendant.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiff Mary Kay Inc.'s (Mary Kay) Motion for Default Judgment. Doc. 16. For the reasons that follow, the Court GRANTS Plaintiff's motion.

         I.

         BACKGROUND

         On July 17, 2017, Mary Kay filed suit, alleging that Defendant Elizabeth Anderson[1] was selling Mary Kay products on eBay “without authorization and in violation of Mary Kay's intellectual property rights under federal and Texas law.” Doc. 1, Compl., ¶ 32. Mary Kay claims that it sells its products only through authorized consultants, which allows Mary Kay to enforce quality controls, such as requiring consultants to meet one-on-one with customers, and prohibiting consultants from selling expired products or selling products on the Internet. Id. ¶¶ 9, 17-18. “Mary Kay also provides consumers who purchase Mary Kay products through authorized channels of distribution a complete money-back satisfaction guarantee.” Id. ¶ 19. According to Mary Kay, Anderson bought Mary Kay products from a Mary Kay consultant and resold them on the Internet. Id. ¶ 33. Thus, because Anderson is not an authorized Mary Kay consultant, the products she sells do not come “with the same quality controls and consumer benefits as [authorized] Mary Kay products.” Id. ¶ 35. Mary Kay claims that Anderson's actions constitute trademark infringement, false advertising, unfair competition, and trademark dilution under the Lanham Act; trademark dilution under Texas statutory law; and common-law trademark infringement, unfair competition, and tortious interference with contracts and business relations. See generally Doc. 1, Compl.

         Summons was executed on Anderson on November 9, 2017, Doc. 10, but Anderson never answered the complaint or otherwise responded. On December 20, 2017, Mary Kay requested that the Clerk enter default against Anderson, Doc. 12, which the Clerk did the same day, Doc. 14. Mary Kay filed a motion for default judgment on February 12, 2018. Doc. 16. Thus, Mary Kay's motion is ripe for review.

         II.

         LEGAL STANDARD

         In determining whether a default judgment should be entered against a defendant, courts have developed a three-part analysis. United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986, 548 F.Supp.2d 381, 384 (W.D. Tex. 2008). First, courts consider whether the entry of default judgment is procedurally warranted. See Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). The factors relevant to this inquiry include:

[1] whether material issues of fact are at issue; [2] whether there has been substantial prejudice; [3] whether the grounds for default are clearly established; [4 ]whether the default was caused by a good faith mistake or excusable neglect; [5] the harshness of a default judgment; and [6] whether the court would think itself obliged to set aside the default on the defendant's motion.

Id.

         Second, courts assess the substantive merits of the plaintiff's claims and determine whether there is a sufficient basis in the pleadings for the judgment. See Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (noting that “default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover”). In doing so, courts are to assume that due to its default, the defendant admits all well-pleaded facts in the plaintiff's complaint. Id. However, a “defendant is not held to admit facts that are not-well pleaded or to admit conclusions of law.” Id.

         Third, courts determine “what form of relief, if any, the [plaintiff] should receive.” 1998 Freightliner, 548 F.Supp.2d at 384. Here, Mary Kay seeks only injunctive relief. Courts have authority under the Lanham Act to issue injunctions “‘to prevent the violation of any right of the registrant of a mark registered in the Patent and Trademark office.'” Mary Kay Inc v. Weber, 661 F.Supp.2d 632, 640 (N.D. Tex. 2009)(“Weber II”) (quoting 15 U.S.C. § 1116(a)). And courts may issue such an injunction upon finding default judgment warranted. Pathway Senior Living LLC v. Pathways Senior Living LLC, No. 3:15-cv-02607-M, 2016 WL 1059536, at * 4 (N.D. Tex. Mar. 17, 2016); Mary Kay Inc. v. Ayers, 827 F.Supp.2d 584, 595 (D. S.C. 2011).

         III.

         ANALYSIS

         A. Whether An Entry of Default Judgment is Procedurally Warranted

         After applying the six Lindsey factors to Mary Kay's motion, the Court determines that default judgment is procedurally warranted. First, Anderson has not filed any responsive pleadings so there exists no material issues of fact. Lindsey, 161 F.3d at 893; Nishimatsu Constr., 515 F.2d at 1206 (noting that “[t]he defendant, by his default, admits the plaintiff's well-pleaded allegations of fact”). Second, Anderson's “failure to respond threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.” Ins. Co. of the W. v. H & G Contractors, Inc., No. C-10-390, 2011 WL 4738197, at *3 (S.D. Tex. Oct. 5, 2011). Third, given that Anderson has had sufficient time to file either an answer to Mary Kay's complaint or explain why she has not done so, the grounds for default are clearly established. Cf. Elite v. KNR Grp., No. 99-41263, 2000 WL 729378, at *1 (5th Cir. May 19, 2000) (per curiam) (holding default judgment to be inappropriate where defendant sent letter to court explaining his failure to appear was due to financial privation). Fourth, there is no evidence before the Court to suggest Anderson's silence is the result of a “good faith mistake or excusable neglect.” Lindsey, 161 F.3d at 893. Indeed, Mary Kay alleges that Anderson twice acknowledged Mary Kay's cease and desist letters and refused to stop selling Mary Kay products. Doc. 1, Compl., ¶¶ 23, 26-27. Fifth, Mary Kay seeks only the relief the law provides it, which “mitigat[es] the harshness of a default judgment.” John Perez Graphics & Design, LLC v. GreenTree Inv. Grp., Inc., No. 12-CV-4194-M, 2013 WL 1828671, at *3 (N.D. Tex. May 1, 2013). Finally, the Court is not aware of any facts that would give rise to “good cause” to set aside the default if it were challenged by Anderson. Lindsey, 161 F.3d at 893.

         B. Whether There Is a Sufficient Basis in the Pleadings ...


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