Faizi v. Temori

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 AHMAD MUKHTAR FAIZI, an individual Case No. 22-cv-04224-VKD and derivatively on behalf of FALAFEL 9 FLAME, INC., ORDER GRANTING IN PART AND 10 Plaintiff, DENYING IN PART PLAINTIFF'S RENEWED MOTION FOR DEFAULT 11 v. JUDGMENT

12 BAKTASH TEMORI, et al., Re: Dkt. No. 113 Defendants. 13 14 I. BACKGROUND 15 Mr. Faizi previously moved for default judgment, on behalf of Falafel Flame, Inc. (“Falafel 16 Flame” or “Company”), against defendants Falafel Flame Hayward, Falafel Flame Sunnyvale, and 17 Falafel Flame San Jose. See Dkt. No. 95. The motion concerned only the complaint’s first claim 18 for relief for trademark infringement under the Lanham Act. Id. On March 21, 2024, the Court 19 granted the motion in part and denied it in part. Dkt. No. 107. The Court found that Falafel Flame 20 is entitled to default judgment regarding liability on the Lanham Act claim for trademark 21 infringement. Id. at 4-7. However, the requested remedies were not sufficiently supported by the 22 record. Accordingly, the Court denied that portion of the motion, without prejudice to Mr. Faizi to 23 submit a renewed motion that “address[es] the deficiencies discussed [in the Court’s order] with 24 respect to the relief that is requested on behalf of the Company.” Id. at 9. 25 Mr. Faizi has filed a renewed motion for default judgment, seeking modified remedies on 26 Falafel Flame’s behalf. Dkt. No. 113. Defendants oppose the motion. Dkt. No. 115. The matter 27 is deemed suitable for determination without further oral argument. Civil L.R. 7-1(b). Upon 1 consideration of the moving and responding papers,1 the Court grants the renewed motion for 2 default judgment in part and denies it in part. 3 II. DISCUSSION 4 Under the Lanham Act, when a trademark owner establishes a violation of any registered 5 mark, the owner may, “subject to the principles of equity,” recover: (1) the defendant’s profits, 6 (2) any damages sustained by the plaintiff, and (3) the costs of the action. 15 U.S.C. § 1117(a). 7 Section 1117 of the Lanham Act “confers a wide scope of discretion upon the district [court] in 8 fashioning a remedy for a violation of the Act.” Maier Brewing Co. v. Fleischmann Distilling 9 Corp., 390 F.2d 117, 121 (9th Cir. 1968). This discretion must be exercised subject to the 10 principles of equity. Id.; 15 U.S.C. § 1117(a). 11 In the renewed motion for default judgment, Mr. Faizi confirms that he no longer seeks a 12 permanent injunction, an accounting and disgorgement of profits, attorneys’ fees, or costs.2 Dkt. 13 No. 113 at 2. Instead, Mr. Faizi (on Falafel Flame’s behalf) seeks an order requiring Falafel 14 Flame Hayward, Falafel Flame Sunnyvale, and Falafel Flame San Jose to “pay $1000.00, plus 15 interest, for each month of operation under the FALAFEL FLAME® trademark.”3 Id. The 16 $1,000 monthly payment is based on the monthly license fee Falafel Flame would have charged 17 for the use of its FALAFEL FLAME® trademark and recipes. See Dkt. No. 1 ¶ 33 & Ex. B. Mr. 18 Faizi requests both prejudgment interest and post-judgment interest, apparently based on the 19 weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors 20 of the Federal Reserve System, as of May 10, 2024. Dkt. No. 113 at 3. 21 With respect to Falafel Flame Hayward, Mr. Faizi requests that the period for payment 22 should begin on February 23, 2021 (the day Falafel Flame Hayward was incorporated) “until the 23

24 1 Mr. Faizi did not file a reply brief.

25 2 As the present motion no longer seeks disgorgement of profits, defendants’ argument that Mr. Faizi has no evidence establishing the profits of the defendants in question (see Dkt. No. 115 at 1) 26 is immaterial.

27 3 The Company’s registered service mark, covering restaurant services, “consists of a stylized 1 ce[ssation of] use of the FALAFEL FLAME® trademark at the Hayward location.” Dkt. No. 113 2 at 2; see also Dkt. No. 113-1 ¶ 7 & Ex. D. With respect to Falafel Flame Sunnyvale and Falafel 3 Flame San Jose, Mr. Faizi says that neither entity registered with the California Secretary of State. 4 He therefore requests that the payment periods for Falafel Flame Sunnyvale and Falafel Flame San 5 Jose begin on March 31, 2021 (the date Mr. Faizi says he discovered the existence of those 6 restaurants) “until the ce[ssation of] use of the FALAFEL FLAME® trademark at the respective 7 locations.” Id.; see also Dkt. No. 1 ¶ 35. According to Mr. Faizi’s calculations, as of May 14, 8 2024, Falafel Flame Hayward owes the Company $41,331.81, Falafel Flame Sunnyvale owes the 9 Company $39,438.75, and Falafel Flame San Jose owes the Company $39,438.75—for a total of 10 $120,209.30. See Dkt. No. 113-1 ¶ 3 & Ex. A; see also Dkt. No. 113 at 3-4. 11 Under the circumstances presented, Falafel Flame’s $1,000 license fee is an appropriate 12 measure of the Company’s claimed actual damages for the unauthorized use of its FALAFEL 13 FLAME® service mark. As noted in the Court’s March 21, 2024 order, Mr. Faizi previously 14 averred that Falafel Flame “does not operate or own a restaurant location” and “was designed to be 15 the parent holding company, which would grant intellectual property licenses to individual 16 FALAFEL FLAME® locations[.]” Dkt. No. 107 at 7-8 (quoting Dkt. No. 26-1 ¶¶ 4-5). 17 Throughout this litigation, including in their response to the original motion for default judgment, 18 defendants themselves have maintained that the Company’s $1,000 monthly license fee is “how 19 any damages in this case should be measured.” Dkt. No. 100 at 3; see also Dkt. No. 50 at 3 (the 20 $1,000 license fee is “a fair amount, as determined by [the Company]’s own actions, to 21 compensate [the Company] for any unauthorized use of its trademark.”). Additionally, to make 22 Falafel Flame whole, the Court finds reasonable Mr. Faizi’s proposal for the relevant payment 23 periods to run from (1) February 23, 2021 for Falafel Flame Hayward, (2) March 31, 2021 for 24 Falafel Flame Sunnyvale, and (3) March 31, 2021 for Falafel Flame San Jose, through the date 25 these defendants cease using the Company’s FALAFEL FLAME® mark. 26 There is no dispute that Falafel Flame Hayward, Falafel Flame Sunnyvale, and Falafel 27 1 Flame San Jose have changed their name to “Falafel Flare.”4 It is unclear exactly when this name 2 change occurred, although the parties reported at the May 7, 2024 further case management 3 conference that the name change was a recent development. See Dkt. No. 111. In any event, the 4 Lanham Act claim is based on more than just the use of the “Falafel Flame” name and includes the 5 unauthorized use of the Company’s registered mark. See Dkt. No. 1 ¶¶ 69-73. Defendants do not 6 refute Mr. Faizi’s evidence that the Company’s registered service mark(s) continue to be displayed 7 and used on the websites and on other materials for each of these entities. See Dkt. No. 113-1 8 ¶¶ 4-6 & Exs. B, C. 9 Defendants vaguely allude to “defunct entity defendants” that “are now closed and have no 10 money,” and maintain that the individual defendants Messrs. Temori and Rustakhis have no 11 money to pay any judgment. Dkt. No. 115 at 2. Although they had ample opportunity to do so, 12 defendants submitted no evidence with their opposition to support those assertions. Indeed, as 13 noted in the Court’s March 21, 2024 order, defendants have repeatedly made such assertions in 14 this litigation, without submitting any evidence that would provide a basis to credit those 15 assertions. See Dkt. No. 107 (citing Dkt. No. 100 at 3). While Messrs. Temori and Rustakhis 16 argue that default judgment is not warranted because they say that they are the majority owners of 17 Falafel Flame, they have not submitted evidence to support that assertion either. In any event, Mr. 18 Faizi filed the present motion, not for himself personally, but on behalf of the Company. 19 Defendants have not persuasively demonstrated that the respective ownership interests of Messrs. 20 Temori and Rustakhis should preclude default judgment. 21 However, the Court denies Mr. Faizi’s request for prejudgment interest, as he has offered 22 no argument or authority demonstrating that such an award is fair or necessary to make the 23 Company whole, much less justifying such an award running from periods preceding the filing of 24 this lawsuit. See Fitness Anywhere LLC v. WOSS Enters., LLC, No. 14-cv-01725-BLF, 2018 WL 25 4 It is unclear whether these defendants have merely changed their names or whether the “Falafel 26 Flare” entities are different entities, and if so, whether the “Falafel Flare” entities are the successors in interest to these defendants. Although Mr. Faizi asks for “the Court’s advice on 27 whether to add” the “Falafel Flare” entities to this litigation (Dkt. No. 113 at 3), it is not the 1 6069511, at *7 (N.D. Cal. Nov. 20, 2018) (award of prejudgment interest “in a case under federal 2 law is left to the sound discretion of the trial court.”). But see Am. Honda Motor Co., Inc. v. Two 3 Wheel Corp., 918 F.2d 1060, 1064 (2d Cir. 1990) (award of prejudgment interest “is normally 4 reserved for ‘exceptional’ cases.”). 5 Post-judgment interest is mandated by 28 U.S.C. § 1961, which provides that “[i]nterest 6 shall be allowed on any money judgment in a civil case recovered in a district court.” See Air 7 Separation, Inc. v. Underwriters at Lloyd’s of London, 45 F.3d 288, 290 (9th Cir. 1995) (“Under 8 the provisions of 28 U.S.C. § 1961, postjudgment interest on a district court judgment is 9 mandatory.”). However, post-judgment interest is calculated, not from May 14, 2024 as proposed 10 by Mr. Faizi, but “from the date of the entry of the judgment, at a rate equal to the weekly average 11 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal 12 Reserve System, for the calendar week preceding[] the date of the judgment.” 28 U.S.C. 13 § 1961(a). In cases such as the present litigation, involving multiple claims and parties, the Court 14 generally does not enter final judgment until all claims, rights, and liabilities of all parties are 15 adjudicated. See Fed. R. Civ. P. 54(b). Mr. Faizi shall clarify whether he seeks entry of partial 16 judgment under Rule 54(b) as to Falafel Flame Hayward, Falafel Flame Sunnyvale, and Falafel 17 Flame San Jose. If he does, he must file an appropriate motion for such relief and must provide a 18 proposed form of judgment that specifies the relief sought, consistent with this order. 19 III. CONCLUSION 20 Based on the foregoing, Mr. Faizi’s renewed motion for default judgment, seeking 21 modified remedies on behalf of Falafel Flame, is granted in part and denied in part as follows: 22 1. Falafel Flame is awarded damages based on the Company’s $1,000 monthly license fee. 23 For Falafel Flame Hayward, the payment period runs from February 23, 2021 through the date that 24 defendant ceases using the Company’s FALAFEL FLAME® mark. For Falafel Flame Sunnyvale, 25 the payment period runs from March 31, 2021 through the date that defendant ceases using the 26 Company’s FALAFEL FLAME® mark. For Falafel Flame San Jose, the payment period runs 27 from March 31, 2021 through the date that defendant ceases using the Company’s FALAFEL ] defendant’s months of use of the FALAFEL FLAME® mark (see Dkt. No. 111-1 § 3 & Ex. A), 2 || and absent evidence that defendants have ceased using that mark—Falafel Flame Hayward owes 3 total damages of $40,800; Falafel Flame Sunnyvale owes total damages of $39,000; and Falafel 4 || Flame San Jose owes total damages of $39,000. 5 2. The motion for prejudgment interest is denied. 6 3. Post-judgment interest shall be calculated at a rate equal to the weekly average □□□□□□ 7 || constant maturity Treasury yield for the calendar week preceding the date of the judgment. 8 IT IS SO ORDERED. 9 || Dated: July 1, 2024 10 Vearagui 1] Virginia K. DeMarchi 2 12 United States Magistrate Judge 13

Oo Z 18 19 20 21 22 23 24 25 26 27 28