Digby Adler Group LLC v. Image Rent a Car, Inc.

79 F. Supp. 3d 1095, 2015 U.S. Dist. LEXIS 14664, 2015 WL 525906
CourtDistrict Court, N.D. California
DecidedFebruary 6, 2015
DocketCase No. 10-cv-00617-SC
StatusPublished
Cited by11 cases

This text of 79 F. Supp. 3d 1095 (Digby Adler Group LLC v. Image Rent a Car, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Digby Adler Group LLC v. Image Rent a Car, Inc., 79 F. Supp. 3d 1095, 2015 U.S. Dist. LEXIS 14664, 2015 WL 525906 (N.D. Cal. 2015).

Opinion

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

SAMUEL CONTI, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Now before the Court are two motions for summary judgment. One is brought by Plaintiff Digby Adler Group, LLC. ECF No. 122 (“Pl.’s Mot.”). The other is brought by Defendant Gad Sebag. ECF No. 134 (“Sebag Mot.”). Both motions are [1099]*1099fully briefed,1 and the Court deems them suitable for disposition without oral argument pursuant to Civil Local Rule 7 — 1(b). For the reasons set forth below, Plaintiff Digby Adler Group, LLC’s motion for summary judgment is GRANTED in part and DENIED in part, and Defendant Gad Sebag’s motion for summary judgment is DENIED.

II. BACKGROUND

A. Factual Background

Plaintiff Digby Adler Group, LLC (“Dig-by”) has operated a van rental service under the name Bandago, LLC (“Banda-go”) through its website, bandago.com, since 2003. ECF No. 124 (“Laguana Decl.”) ¶¶ 1-2. On August 31, 2010, the United States Patent and Trademark Office (“P.TO”) issued federal trademark registration number 3839689 to Digby for the BANDAGO mark. ECF No. 123 (“Rosen-feld Deck”) Ex. 18.

The defendants in this matter are two individuals- — Gad Sebag and Schneior Zil-berman — and two companies — Image Rent A Car, Inc. (“Image”) and Van Rental Co., Inc. (“Van”) (Van and Image will be referred to collectively as the “Corporate Defendants”). Mr.- Zilberman operated a third rental car company called Adir Rent A Car, Inc., from 1996 through 2004. ECF No. 129 (“Zilberman Deck”) ¶¶ 3-8. Adir folded in 2004, when a dispute with the car dealership that supplied its inventory resulted in the supplier refusing to let Adir use its cars. Id. ¶¶ 6-8. Mr. Zilber-man’s personal finances and credit were seriously damaged in the process. Id. ¶ 9. So Mr. Zilberman approached Mr. Se-bag — his brother-in-law- — -asking for financial assistance to start a new company. Id. ¶ 9. Mr. Sebag agreed to form a rental car company, serve as its CEO, loan money to the company, and allow Mr. Zil-berman to use his credit rating to obtain cars. ECF No. 130 (“Sebag Deck I”) ¶¶ 7, 9). However, according to both Mr. Sebag and Mr. Zilberman, Mr. Zilberman alone would control all of the company’s operations. Id.;. Zilberman Deck ¶¶ 14, 17-19.

In October 2004, Defendant Image Rent A Car, Inc. (“Image”) was incorporated under the law of New York State. ECF No. 21-4 (“Sebag Deck II”) at 1. Mr. Sebag filed for incorporation and was the company’s CEO (though the corporate record kept by the New York Department of State reflects the name “Gao Sebaf’) and sole shareholder; he also described Image as “my company.” ECF No. 137 Ex. 13 at 162; Rosenfeld Deck Exs. 16, 42 at 14:3-11 (Sebag “owned and initiated [Image and' Van]”), 44 at 30:10-13. Defendant Shneior Zilberman served as Image’s general manager. Id. Ex. 2 at 1. Image operated a car and van rental service primarily in New York, though it also had offices in Florida. Id. Image marketed its rental service through .its website, imagerenta-car.com. Id. Exs. 45 at Responses 19-20. Image’s bylaws were simply blank form bylaws, without even the name of the corporation filled in. ECF No. 137 Ex. 13 at 17-66. Though the bylaws require a board of directors with at least three directors, Image never had a board of directors. Id. [1100]*1100Ex. 13 at 2. Nor do Image’s records indicate that it ever held shareholder meetings or keep corporate minutes. Id. Ex. 13 at 2,15-66.

Defendant Van Rental Co., Inc. (“Van”) was incorporated under the law of New York State in July 2007. Rosenfeld Decl.d Ex. 17. Initially founded with the objective of expanding Image’s business into new areas, Van was defunct almost from the start and never actually operated. Id. Ex. 42 at 4:6-19, 5:6-12. Mr. Sebag was Van’s CEO and sole shareholder. Id. Exs. 1 at 1, 42 at 14:3-11. Mr. Zilberman, who served as Van’s president, recalls that Van either owned “none or very few” vehicles. See Id. Exs. 26 at 3, 42:14-19. Van’s finances were run through Image, and the two companies operated essentially as one entity. Rosenfeld Decl. Ex. 42 at 8:14-18,10:3^4.

In August of 2008, Van registered the domain namebandago.net (recall that Dig-by’s website wasbandago.com). Id. Ex. 7 at 6; Ex. 31. Though the account with the domain registrar listed Van as the owner, the contact email address supplied wasinfo@imagerentacar.com. Id. Ex. 31 at 3. There was no website at banda-go.net; the site simply redirected visitors to Image’s website. Sebag Decl. II at 2. In addition to registering the bandago.com domain, Defendants bid on the Google Ad-Words search terms “bandago,” “bandago van rental,” and “bandago van rentals” (the “Bandago Search Terms”). Rosenfeld Decl. Ex. 23. Google AdWords is a service that lets customers bid on certain search terms, so that the customer’s website will show up as advertisement when Google visitors search for those terms. Defendants paid for advertisements that would direct users to Image’s website when they searched for the Bandago Search Terms. Id. Ex. 24. The Google AdWords account "was registered in Mr. Sebag’s name, but Mr. Zilberman operated the account. Id. Exs. 9 at 2, 35.

On July 1, 2007, Digby’s CEO, Sharky Laguana, created content for the Bandago website. The text on the website described Bandago’s vans and rental services. Laguana Decl. ¶ 11, Ex. 3. Digby applied for a copyright registration to cover the text of the website, and the PTO granted the registration on January 31, 2011. Rosenfeld Decl. Exs. 19-20. Virtually identical text (sometimes modified very slightly to reflect Image’s name and locations) appeared on Image’s website. See id. Exs. 52-59.

On April 27, 2010, Philippe Naim (Mr. Sebag’s uncle) formed a corporation called Group Travel Solution, Inc. (“GTS”). Id. Exs. 49 at -8:6 — 23; 60. Mr. Naim recalls that GTS purchased Image’s assets, including vehicles, phones, and websites. Id. Ex. 49 at 9:2-4. He does not recall exactly how many vehicles GTS purchased, but guesses that the number was “[bjetween fifty and sixty.” Id. at 9:5-11. Digby asserts that GTS purchased 78 cars for one dollar each. See PL’s Mot. at 10. In support, Digby cites to GTS’ 2010 tax returns — a 39-page exhibit — with no pincite or explanation. But those returns indicate only that GTS owned some large number of vehicles, and the tax returns do not indicate the vehicles’ source or sources. See Rosenfeld Decl. Ex. 50 (filed under seal) at 11, 16-19, 22-27, 37-38. GTS’ tax returns do, however, reflect the sale of 20 of the ■ vehicles, and the sale prices and proceeds show that each was originally acquired for $1. See id. at 11, 24-27. On March 24, 2011, Van and Image filed for bankruptcy. Id. Exs. 25-26.

B. Procedural History

This case was filed on February 11, 2010. See EOF No. 1 (“Compl.”). The transfer of assets described above there[1101]*1101fore took place after the filing of this lawsuit but before Van and Image declared bankruptcy. When the Corporate Defendants filed for bankruptcy, the Court stayed this case pending the outcome of the bankruptcy proceedings. See ECF No. 90 (“Stay Order”).

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Bluebook (online)
79 F. Supp. 3d 1095, 2015 U.S. Dist. LEXIS 14664, 2015 WL 525906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/digby-adler-group-llc-v-image-rent-a-car-inc-cand-2015.