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Inc. v. Musclegen Research, Inc.

United States District Court, E.D. Missouri, Southeastern Division

December 12, 2017

SI03, INC., Plaintiff,
v.
MUSCLEGEN RESEARCH, INC., et al., Defendants.

          MEMORANDUM AND ORDER

          RONNIE L. WHITE, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on SI03, Inc.'s Motion and Renewed Motion for Default Judgment and Entry of Permanent Injunction (ECF No. 19, 25). Plaintiff SI03, Inc. ("SI03"), a manufacturer and seller of SYNTRAX-branded protein powder, brings this action alleging false advertising under the Lanham Act, 15 U.S.C. § 1125(a) (Count I); unfair competition under Missouri common law (Count II); and unjust enrichment under Missouri common law (Count III). SI03 contends that Defendant, MuscleGen Research, Inc. ("MuscleGen") falsely represents that its GenePro protein powder product contains 30 grams of protein per tablespoon serving, when a tablespoon serving only contains 10 or less grams of protein. (Compl. ¶¶ 18-19, ECF No. 1) Plaintiff seeks an injunction permanently enjoining MuscleGen from falsely advertising its products, damages in the amount of $145, 000, and costs "to prevent ongoing consumer confusion and harm to SI03 as a result of Defendant's ongoing and continuous false advertising of its GenePro products." (ECF No. 25-1 p. 9) Upon consideration of the record and the applicable law, the court will enter default judgment against MuscleGen.

         I. Procedural History

         Plaintiff filed suit in federal court on November 22, 2016, and MuscleGen, a North Carolina corporation, was served through the North Carolina Secretary of State on January 4, 2017. (ECF No. 8) Under Rule 12 of the Federal Rules of Civil Procedure, MuscleGen was required to file an answer or other responsive pleading within twenty-one (21) days of being served with the Complaint. Fed.R.Civ.P. 12(a)(1)(A)(i). Because MuscleGen failed to timely file a responsive pleading, the Clerk of the Court entered default against MuscleGen on April 19, 2017. (ECF No. 14) Thereafter, Plaintiff filed a Motion for Default Judgment and Entry of Permanent Injunction. (ECF No. 19) On May 19, 2017, the Court, on review of the record, ordered the Clerk of the Court to mail a copy of the Clerk's Entry of Default to Defendant MuscleGen at the North Carolina Secretary of State and a P.O. Box address found on MuscleGen's website. (ECF No. 20) The Order was received by the North Carolina Secretary of State but returned unclaimed from the second address. (ECF Nos. 22, 24) Plaintiff then renewed its motion on October 6, 2017. (ECF No. 25)

         Because default judgments are generally disfavored, the Court once again order the Clerk of the Court to mail copies of certain documents to Defendant at a new mailing address posted on Defendant's website. In the Order dated October 18, 2017, the Court stated, "[o]ut of an abundance of caution, the Court will make one last attempt to notify Defendant MuscleGen of the Complaint and pending motions for default judgment seeking injunctive and monetary relief." (ECF No. 26) The record reflects that on November 8, 2017, Defendant's representative received copies of the Complaint; Clerk's Entry of Default; Plaintiff SI03, Inc.'s Motion and Renewed Motion for Default Judgment and Entry of Permanent Injunction; and the October 18, 2017 Order via certified mail. (ECF No. 27) Over one month has passed and Defendant MuscleGen has failed to respond to the pending motions for default judgment.

         II. Legal Standard

         Under Rule 55 of the Federal Rules of Civil Procedure, a court may enter default judgment for failure "to plead or otherwise defend." Fed.R.Civ.P. 55(a). "Default judgment for failure to defend is appropriate when the party's conduct includes 'willful violation of court rules, contumacious conduct, or intentional delays.'" Ackra Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 856 (8th Cir. 1996) (quoting United States v. Harre, 983 F.2d 128, 130 (8th Cir. 1993)). "In considering a motion for default judgment, the Court is mindful that, by defaulting, defendant is deemed to have admitted for purposes of this action all well-pleaded factual allegations in the complaint." Terry v. Legal Asset Fin. Grp., LLC, No. 4:13-CV-1674-JAR, 2014 WL 502173, at *3 (E.D. Mo. Feb. 7, 2014) (citation omitted). "[W]hen a default judgment is entered, facts alleged in the complaint may not be later contested." Marshall v. Baggett, 616 F.3d 849, 852 (8th Cir. 2010). However, '"it remains for the [district] court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.'" Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010) (quoting 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2688 at 63 (3d ed. 1998)). Further, "[a] party seeking damages under a default judgment must.. . prove its rights to such damages with affidavits or other supporting documentation." Joe Hand Promotions, Inc. v. Kickers Corner of the Americas, Inc., No. 4:12CV02387 AGF, 2014 WL 805731, at *2 (E.D. Mo. Feb. 28, 2014) (citations omitted).

         III. Discussion

          In the Complaint, Plaintiff claims that Defendant MuscleGen markets its GenePro product by falsely claiming it contains 30 grams of protein in a roughly 11.15 gram (1 tablespoon) serving when GenePro has 10 or fewer grams of protein per 11.15 gram (1 tablespoon) serving. (Compl. ¶¶ 17-22, ECF No. 1) Further, Plaintiff maintains that GenePro's marketing and packaging statement that it contains "medical grade" protein is incorrect, false, and misleading, as no industry or FDA standard for "medical grade" protein exists. (Id. at ¶¶ 23-24) Plaintiff SI03 asserts that purchasers of MuscleGen's products are likely to be misled and deceived by MuscleGen's product labeling, marketing, and advertising. (Id. at¶25) Further, Plaintiff contends that the false and misleading advertising is damaging to Plaintiff SI03's reputation and goodwill, as MuscleGen's false and misleading representations are designed to deceive and entice consumers to purchase MuscleGen's products over SI03's products based upon the false belief that GenePro is superior to other protein powders. (Id. at ¶¶ 26-27) According to Plaintiff, MuscleGen's wrongful conduct has caused confusion in the protein market, deprived Plaintiff of business, injured Plaintiffs relationships with current and prospective customers, and resulted in increased sales of MuscleGen's protein powder product. (Id. at ¶¶ 28-29)

         A. The Lanham Act and Unfair Competition

         In Count I, Plaintiff alleges false advertising under § 43(a) of the Lanham Act for false designations of origin and false deceptions. 15 U.S.C. § 1125(a). In Count II, Plaintiff S103 raises a claim of unfair competition under Missouri common law.[1] To establish a claim of false advertising under the Lanham Act, SI03 must demonstrate: (1) a false statement of fact by MuscleGen in a commercial advertisement about its product; (2) the statement actually deceived or has a tendency to deceive a significant portion of its audience; (3) such deception is material in that it is likely to influence the decision to purchase the product; (4) MuscleGen caused the false statement of fact to enter interstate commerce; and (5) SI03 has been injured, or is likely to be injured, as a result of the false statement, either by direct diversion of sales from SI03 to MuscleGen or by a loss of goodwill associated with SI03's products. United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998). "A statement may be literally false, conveying an explicit factual message and in fact be false ..., or may be implicitly false, conveying the implied message and thereby deceiving] a significant portion of its recipients ...." Fair Isaac Corp. v. Experian Info. Sols., Inc., 650 F.3d 1139, 1151 (8th Cir. 2011) (internal quotations and citations omitted).

         Plaintiff SI03 alleges that MuscleGen's claim that its GenePro product has 30 grams of protein in a 1 tablespoon serving size and its use of the term "medical grade" in labeling, marketing, and advertising are false statements of fact that deceive, or have a tendency to deceive, a substantial segment of SI03's customers and potential customers and likely influences the purchasing decisions of SI03's customers. (Compl. ¶¶ 32) Defendant MuscleGen has failed to appear in this case and thus concedes Plaintiff S103's allegations. Neal Techs., Inc. v. Craven Performance & Off Road, LLC, No. 4:15-cv-800-AGF, 2015 WL 9583395, at *3 (E.D. Mo. Dec. 31, 2015). Therefore, based on the uncontested factual allegations, the Court finds that Plaintiff SI03 has stated a violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and is entitled to default judgment on Counts I and II of the Complaint. Id.

         B. Permanent Injunctive Relief

         "The Lanham Act permits courts to enter permanent injunctive relief to prevent future trademark infringement." Id. at *3 (citing 15 U.S.C. § 1116). To obtain a permanent injunction, Plaintiff SI03 must demonstrate: "(1) its actual success on the merits; (2) that it faces irreparable harm; (3) that the harm to it outweighs any possible harm to others; and (4) that an injunction serves the public interest." Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ's Church,634 F.3d 1005, 1012 (8th Cir. 2011) ...


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