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Aecom Energy & Constr., Inc. v. Ripley
Citation: 348 F. Supp. 3d 1038Docket: CV 17-5398-RSWL-SSx
Court: District Court, C.D. California; November 7, 2018; Federal District Court
Plaintiff AECOM Energy Construction, Inc. has successfully filed a Motion for Summary Judgment and Permanent Injunction against Defendants Gary Topolewski and various Morrison-Knudsen entities. The Court has granted this motion after reviewing all submitted materials. The background details reveal that Morrison Knudsen Corporation (MK) was a prominent multinational construction and engineering firm, known for major projects like the Hoover Dam. MK held trademarks, including MORRISON KNUDSEN and the MKO logo, until February 2016 and still uses these in its promotional efforts. Following a series of mergers and acquisitions, AECOM became the parent company of Plaintiff AECOM Energy Construction, Inc. The Defendants allegedly initiated a scheme in 2008 to impersonate MK and exploit its established reputation. Specifically, Morrison-Knudsen Services, Inc. was initially formed in 1982 but was dissolved by MK in 2002. In 2008, Todd Hale filed a Certificate of Revival for this entity without proper authority. Meanwhile, Defendants Topolewski and Blum revived Morrison Knudsen Corporation and changed its name to "Morrison Knudsen Corporation" after obtaining a Certificate of Revival for MK Viet Nam, which had been dissolved in 2002. The addresses listed for these entities were consistent, suggesting a coordinated effort to misrepresent their affiliation with the original MK. Morrison-Knudsen International Inc. and "Morrison-Knudsen Company" allege that E Planet Communications, Inc. and Westland Petroleum Corporation were renamed to mislead others into believing they were affiliated with Morrison-Knudsen. E Planet, incorporated in 2011, had its name changed to "Morrison-Knudsen International Inc." in 2016 by Defendant Zukaloff. Westland, originally incorporated in 1926 and losing good standing in 2013, was reinstated in 2016 and subsequently renamed "Morrison-Knudsen Company, Inc." by Defendant Ripley. Additionally, on March 25, 2008, Morrison Knudsen Corporation registered domains associated with its brand and promoted its projects online. The company issued three press releases between 2016 and 2017 regarding significant contracts, including a $1.2 billion construction project. In terms of trademark issues, on November 10, 2014, Defendant Hale altered contact information for two of the Plaintiff's registered trademarks with the USPTO. Subsequently, on November 11, 2015, Defendant Zukaloff attempted to assign the trademark "MKCO MORRISON KNUDSEN" to Morrison Knudsen Corporation. On March 26, 2016, Morrison Knudsen Corporation filed for a new trademark registration for "MORRISON KNUDSEN," claiming ownership dating back to 1933. The Plaintiff filed a complaint on July 21, 2017, alleging multiple claims including False Designation of Origin and Cyberpiracy. A preliminary injunction was granted on September 28, 2017, and defaults were entered against several defendants by December 4, 2017. The Plaintiff filed for Summary Judgment and a Permanent Injunction on July 24, 2018, against remaining defendants, with a stipulated deadline for opposition set for August 17, 2018. Plaintiff responded on August 20, 2018, asserting that its Motion should be granted due to Defendants' failure to timely submit their Opposition. Defendants filed a Memorandum justifying their late Opposition on the same day and then submitted the actual Opposition on August 21, 2018. Plaintiff filed its Second Reply on September 4, 2018. According to Federal Rule of Civil Procedure 56(a), summary judgment is warranted when there is no genuine dispute regarding any material fact, and the movant is entitled to judgment as a matter of law. A fact is deemed material if it could influence the outcome of the case, and a genuine issue exists if reasonable evidence could lead a fact-finder to a verdict for the nonmovant. The court's role in summary judgment is to determine if a genuine issue of material fact exists, not to assess the evidence. Defendants' late Opposition was allowed despite the August 17, 2018 deadline set by a court stipulation, as the Plaintiff had sufficient time to reply. The court opted to consider the late-filed Opposition rather than dismiss it based solely on the missed deadline, per Local Rule 7-12. Regarding evidentiary objections, Defendants challenged several declarations presented by Plaintiff, but the Court overruled these objections, finding them to be generic and lacking specific rationale. Defendants also contested Exhibit 4 from Plaintiff's Reply, consisting of press releases disclosing contracts worth $1.806 billion, arguing that these were disclosed post-discovery. However, the Court determined that Plaintiff's delay in presenting the press release was justified due to Defendants' history of bad faith litigation practices, and there was no resulting prejudice to Defendants. Consequently, the Court overruled Defendants' objection to the press releases. Plaintiff raises multiple evidentiary objections regarding the Declaration of Drew Sherman supporting Defendants' Opposition. Firstly, Plaintiff contests the inclusion of a Senior Thesis from Boise State University, asserting that Sherman lacks the personal knowledge necessary to authenticate it, as he cannot identify the author, their qualifications, or the thesis's creation process. Plaintiff argues that according to Rule 56, such documentary evidence must be authenticated by someone with personal knowledge. While Sherman claims it is a true copy of the thesis, Defendants have not sufficiently demonstrated Sherman's personal knowledge. Furthermore, Plaintiff objects to the use of the Senior Thesis for a quote attributed to a former MK employee regarding the value of the MK name, emphasizing that the objection stands because the Court does not rely on this evidence. Additionally, Plaintiff objects to several exhibits, including Trademark Registrations, State of Ohio Forms, and USPTO Registration, as they were not produced during discovery. The Court deems this objection moot because it does not rely on the contested evidence. Lastly, Plaintiff objects to forty pages of the Szurgot Deposition Transcript provided by Defendants, claiming a lack of specificity in referencing the relied-upon portions. However, since Defendants clarify in their Statement of Genuine Disputes, the Court overrules this objection. In seeking summary judgment on all claims, Plaintiff specifically addresses the false designation of origin under Section 43(a) of the Lanham Act. To prevail on a "passing off" claim, Plaintiff must establish that Defendants used in commerce any misleading designation likely to cause confusion regarding the characteristics of goods or services. Plaintiff asserts that Defendants used the MK Marks on their websites to falsely represent themselves as "Morrison-Knudsen." Plaintiff argues that it is an undisputed fact that all Defendants collectively used the MK Marks on the websites. Defendants attempt to contest this by stating that Plaintiff did not specify which facts pertain to each Defendant, but they fail to dispute the collective usage. Consequently, Defendants' vague argument does not create a genuine issue of material fact. Moreover, Plaintiff provides evidence that Defendants' website misappropriates the original MK’s accomplishments, including notable projects, and is selling used construction equipment displaying the MK logo. Representation of MK's history on a website fulfills the requirements for establishing potential liability under section 43(a) for false or misleading representations, particularly when uncredited references to another entity's history are involved. Defendants' claims regarding the Plaintiff's ownership and senior use of the mark are deemed irrelevant to the determination of false designation, as ownership is not a required element. In assessing the likelihood of confusion, courts apply the Sleekcraft factors, where identical use of a mark on the same goods and services can be decisive. Evidence shows that Defendants' website uses markings identical to those of the Plaintiff in the same market for construction contracts and equipment, prominently featuring the MKO logo. The strength of the MK brand is supported by its significant historical reputation since 1912, with notable projects enhancing its legacy. Actual confusion has occurred, exemplified by a former employee of AECOM mistaking Defendants' website for the original MK, indicating that future confusion is probable. Defendants' intention in using the MK Marks appears aimed at misleading consumers into believing they are associated with MK. Defendants' abandonment defense is unsubstantiated; they must demonstrate both discontinuance of trademark use and intent not to resume. Although Defendants claim a prima facie case of abandonment due to alleged "token use" over sixteen years, Plaintiff presents substantial evidence of ongoing use of the MK Marks in various promotional contexts. This includes marketing efforts and participation in industry events, which counter the claim of abandonment. Defendants have failed to show any intent by Plaintiff to cease using the MK Marks, leading to the conclusion that their abandonment defense is without merit. For the false advertising claim under the Lanham Act, Plaintiff must establish that Defendants made a false statement of fact in a commercial advertisement about their own or another's product, and that this statement deceived or had the potential to deceive a significant portion of the audience. The excerpt outlines the elements required to establish a false advertising claim under the Lanham Act. Key points include: 1. **Material Deception**: The false statements made by the defendants are material, meaning they are likely to influence consumer purchasing decisions. 2. **Interstate Commerce**: The defendants caused their false statements to be disseminated in interstate commerce through their website and email communications. 3. **Injury to Plaintiff**: The plaintiff has suffered, or is likely to suffer, injury due to the false statements, either through direct loss of sales or damage to goodwill associated with its products. The excerpt cites case law indicating that statements can be considered literally false if they misrepresent facts either directly or by implication. Specific instances of false claims by the defendants regarding historical projects attributed to MK are noted, with a reference to various projects listed on their website. It is asserted that these statements are literally false, with no contrary evidence from the defendants. The text further explains that if statements are found literally false, actual deception and materiality are presumed, negating the need for further proof. Testimony from AECOM’s former employee supports the claim of material deception. Regarding the fourth element, the defendants' use of an online platform that connects to interstate commerce is undisputed. Lastly, the defendants argue that the plaintiff has not demonstrated injury due to a lack of damages calculation, but the excerpt clarifies that injury under the Lanham Act can occur without a monetary basis, including damage to business reputation. Injuries to commercial interests are protected under the Lanham Act, specifically the loss of goodwill and control over reputation. Evidence indicates that Defendants' false statements online have diminished the goodwill associated with the MK brand, affecting AECOM’s reputation. As no counter-evidence from Defendants exists, the Court grants Plaintiff's Motion for Summary Judgment on the false advertising claim and related claims for California Common Law Unfair Competition, California Statutory Unfair Competition, and California Statutory False Advertising. For the cyberpiracy claim under 15 U.S.C. § 1125(d), Plaintiff must demonstrate that Defendants registered or used a domain name confusingly similar to a distinctive mark with bad faith intent. Defendants registered two domain names in 2008 that are identical or confusingly similar to MK Marks. Despite Defendants' claims of current trademark ownership, the analysis focuses on the distinctiveness of the mark at the time of domain registration, which is confirmed by the presumption of distinctiveness for registered trademarks. Thus, the status of the trademark as of 2008, when the domains were registered, is the critical factor, not current ownership. Plaintiff holds a valid registered trademark for MORRISON KNUDSEN, predating Defendant Morrsion Knudsen Corporation's trademark registration in 2016. It is established that the mark was distinctive at the time the domains were registered. To prove "bad faith intent to profit" under 15 U.S.C. § 1125(d)(1)(A)(i), Plaintiff must demonstrate that Defendants acted with such intent when registering their domain. Although the statute outlines nine factors to consider, courts are not restricted to these factors, as they serve as indicators rather than an exhaustive list. Key factors include: 1. **Intellectual Property Rights**: Plaintiff owned the MORRISON KNUDSEN mark when Defendants registered the domain names. 2. **Common Use**: The mark was widely recognized as referring to the original MK and its notable projects, such as the Hoover Dam. 3. **Prior Use**: Defendant Topolewski acknowledged a lack of knowledge or use of MK prior to 2008, and records show Corporate Defendants had no prior use of the name before then. 4. **Intent to Divert Consumers**: Defendants used websites to claim accomplishments associated with the MK marks, potentially misdirecting consumers and harming the mark’s goodwill. Overall, the evidence indicates a bad faith intent to profit from the MORRISON KNUDSEN mark, supporting Plaintiff's position in this legal matter. The defendant must demonstrate intent to profit from the goodwill of another's trademark. The defendants failed to provide evidence disputing their bad faith intent to profit from the MK Marks, merely arguing that the plaintiff had begun the cancellation process in 2002, a defense that was rejected. Consequently, the court granted summary judgment against all defendants on this claim. Regarding the cancellation of a registered trademark under the Lanham Act, the plaintiff must prove the registration was obtained through fraud, necessitating evidence of: (1) a false representation of material facts by the defendant, (2) knowledge of the falsity, (3) intent to induce reliance, (4) reasonable reliance, and (5) resulting damages. The plaintiff presented undisputed facts indicating that the defendant Morrison Knudsen Corporation made false representations to the USPTO concerning the MK Marks, including falsely claiming ownership and misrepresenting the first use of the mark as 1933. Defendants argued a genuine issue existed about their knowledge of the falsity. However, deposition testimony from defendant Topolewski indicated that he was unaware of Morrison Knudsen until 2007 and that the other defendants had not used the MK Marks prior to 2008. The court noted that Topolewski’s testimony, given his role as an officer for the corporate defendants, was credible and unchallenged by the defendants, who did not provide evidence of prior use of the MK Marks. Thus, the court found no genuine issue regarding the defendants' knowledge of the false representations, nor was there a dispute over the remaining elements needed to prove fraud. False representations were made to the USPTO to obtain trademark registration, which the USPTO granted based on those false statements, resulting in harm to the Plaintiff through loss of control over MK's identity, goodwill, and intellectual property rights. The Court granted the Plaintiff's Motion for Summary Judgment and canceled the Defendants' trademark registration. The Defendants argued that the Plaintiff's nine-year delay in bringing the action supported defenses of estoppel, waiver, laches, unclean hands, and acquiescence. However, the Court found this argument insufficient, as the Defendants failed to provide evidence for the necessary elements of these defenses. The Defendants relied on testimony from Plaintiff's witness Charles Szurgot, asserting that the Plaintiff should have known about the Defendants' actions due to counsel managing the trademark portfolio. However, the evidence indicated that the address changes with the USPTO occurred in 2014, not 2008, and Szurgot did not specifically mention any knowledge of infringement related to the MK Marks prior to the action. The Court determined that the Defendants' arguments were speculative and did not establish a genuine issue of material fact. For a permanent injunction, a prevailing plaintiff must show irreparable injury, inadequate legal remedies, a balance of hardships favoring the plaintiff, and that the public interest would not be disserved. The Plaintiff demonstrated success on the merits and argued that without an injunction, it would suffer irreparable harm due to ongoing damage to its goodwill from the Defendants' deceptive actions regarding the MK brand. Evidence of loss of business reputation and goodwill was deemed sufficient to constitute irreparable harm. Substantial evidence indicates that the Plaintiff has experienced irreparable harm to its brand control, goodwill, and intellectual property rights, which cannot be quantified. The balance of hardships is in favor of the Plaintiff, as the Defendants' potential hardship is merely economic, while the Plaintiff faces a total loss of brand and historical control. A permanent injunction is warranted since the marks in question are identical and have already caused actual consumer confusion. Regarding damages under the Lanham Act, the Plaintiff seeks disgorgement of the Defendants' profits due to willful infringement. The Ninth Circuit allows for the recovery of the infringer's profits, the Plaintiff's damages, and litigation costs when there is willful infringement. Justifications for awarding profits include compensating the Plaintiff for lost sales, preventing unjust enrichment, and deterring future infringement. The court has indicated that mere injunctive relief is insufficient for willful infringement, which requires a connection between a defendant's awareness of competitors and their actions to exploit that advantage. In this case, the Plaintiff has provided sufficient evidence that each Defendant engaged in willful infringement by adopting the MK brand identity. Specifically, Defendants Morrison-Knudsen Services and Morrison Knudsen Corporation (formerly MK Viet Nam) assumed the original MK entities' identity, and Topolewski was involved in reviving MK Viet Nam in 2014 under questionable authority. Additionally, Defendants Morrison-Knudsen International Inc. and Morrison Knudsen Company, Inc. changed their names to reflect an MK identity. No individuals associated with MK, URS, or AECOM authorized the Defendants' actions. Under 15 U.S.C. 1117(a), a plaintiff must prove the defendant's sales, while the defendant must substantiate any claimed costs. The Plaintiff presented three press releases revealing that Defendants generated $1.806 billion in revenue via contracts under the MK name. These press releases include: 1) a $570 million environmental cleanup project awarded on March 16, 2016; 2) a $36 million mine engineering contract awarded on June 30, 2016; and 3) a $1.2 billion construction and engineering contract awarded on April 11, 2017. The Plaintiff's evidence is limited to these press releases due to the Defendants’ inadequate documentation of financial data despite repeated discovery requests. The Defendants exhibited a consistent failure to comply with discovery obligations and court orders, leading to a contempt motion filed by the Plaintiff on May 29, 2018, after the Defendants failed to provide required financial information by a court-imposed deadline. The court deemed the Defendants' financial summary inadequate and mandated comprehensive financial disclosures by July 9, 2018. However, the Defendants missed this deadline and only submitted inadequate responses on July 18, 2018, refusing to provide documents dated after January 1, 2017, despite court orders. Ultimately, faced with the Defendants' lack of cooperation, the Plaintiff submitted a Supplemental Disclosure on July 17, 2018, relying on the press releases and accepting the Defendants' previously inadequate financial summary for costs from 2013-2016. A two-page financial summary submitted by the four Corporate Defendants indicated their shared expenses from 2013 to 2016. The Plaintiff claims damages totaling $1.806 billion in revenue, minus undisclosed costs, resulting in an unspecified total. The Court is cautious in accepting the press releases due to the substantial damages sought but notes that Defendants failed to contest the Plaintiff's revenue calculations or provide alternatives. The Plaintiff asserts, as an uncontroverted fact, that the Defendants claimed revenue based on three press releases, which the Defendants did not dispute. The only issue raised by the Defendants pertained to the timing of the press releases' disclosure, which the Court has already deemed admissible. The Court emphasizes that damages need only be established with reasonable certainty and are allowable even if not calculated with absolute precision, especially when a defendant obstructs discovery. The Court cites precedents indicating that less precise estimates can be accepted when a defendant fails to cooperate. The burden of any uncertainty in damages lies with the wrongdoer. Additionally, the Court notes that the Defendants control the evidence of their profits but did not provide this information or challenge the Plaintiff's calculations. Consequently, the Plaintiff has satisfied its burden of proof regarding the Defendants' revenue, and the Court accepts the Plaintiff's profit calculation due to the Defendants' lack of evidence or argument against it. The Court has granted the Plaintiff's request for disgorgement of profits, the amount of which has been redacted. It also determined that the case is exceptional, warranting the award of reasonable attorney fees to the Plaintiff, given the Defendants' willful and deliberate infringement of the MK Marks. As a result, the Court has granted the Plaintiff's Motion for Summary Judgment and Permanent Injunction against Defendants Gary Topolewski and several corporations associated with Morrison-Knudsen. All scheduled court dates have been vacated, and a final judgment will not be entered until a Motion for Default Judgment is filed regarding the remaining defaulting Defendants: Todd Hale, John Ripley, Bud Zukaloff, and Henry Blum. The Clerk had previously entered a default against Todd Hale and the other defaulting Defendants on December 4, 2017. The Plaintiff sought profits and advantages gained from using the MK brand and requested revenue calculations from the Defendants, who failed to comply despite court orders and extensions. The Court rejected the Defendants' argument regarding the necessity to prove ownership of the MK Marks for a false designation claim, clarifying that this ownership is not required for the claim of "passing off." The MK Marks include the word mark "MORRISON KNUDSEN," the MK logo, and the combined mark "MKCO MORRISON KNUDSEN." Additionally, the Defendants did not respond to requests regarding the registration of certain domain names, leading to admissions that support the Plaintiff's position in the summary judgment. Plaintiff's failure to respond on time resulted in the automatic admission of facts without further court action, as established in Conlon v. United States. Unanswered requests for admissions can justify summary judgment. The term "Corporate Defendants" encompasses Morrison Knudsen Corporation and its affiliates. Defendants claim uncertainty regarding Plaintiff's acquisition of MKCO's 1993 registration, but this is countered by the undisputed fact that WGI merged with Morrison Knudsen Corporation in 1996, thus acquiring the registration. The analysis of trademark disputes involves eight factors from AMF Inc. v. Sleekcraft Boats, including the strength of the mark, relatedness of goods, similarity of marks, actual confusion, marketing channel convergence, consumer care, intent behind the mark selection, and potential product line expansion. Defendant Topolewski served as an officer for Morrison-Knudsen Services and Morrison Knudsen Corporation during this matter. Defendants do not contest that false documents were submitted under oath to the USPTO regarding the MK Marks, notably a change of address form submitted by Defendant Hale in November 2016 seeking to alter the ownership address of the MORRISON KNUDSEN mark. Plaintiff presented twenty-one instances of MK Marks usage in promotional materials from 2008 to 2016, emphasizing its historical connection to MK as a heritage company. Plaintiff also alleges violations of California Business and Professions Code sections 17200 and 17500, which pertain to misleading advertising, but these claims are largely aligned with the Lanham Act claims and not deeply examined. By 2008, Plaintiff was the registered owner of two specific registration numbers associated with the Morrison Knudsen mark through its heritage companies. Topolewski held various positions in Morrison-Knudsen Services, Inc. from 2010 to 2017, including President and Secretary, and served as Chairman in 2011 and 2014. He was also the Secretary of E Planet, which became Morrison Knudsen International Inc. Defendants must demonstrate a clear intent by Plaintiff to waive trademark rights and establish estoppel by proving five elements, including Plaintiff's awareness of Defendants' actions and the belief that Plaintiff would not enforce its rights. The Court highlighted Defendants' defiance by previously being found in civil contempt for violating a preliminary injunction against using names associated with the MK brand. Instead of distancing themselves from the MK brand, Defendants merely abbreviated it, which the Court interpreted as a deliberate attempt to mislead the public regarding their affiliation with Morrison Knudsen. Discovery requests sought financial documentation related to the use of the Morrison Knudsen name, including tax returns and bank statements. Defendants responded to discovery requests after being threatened with civil contempt for non-compliance, and the Court noted that their lack of transparency regarding financial information raised concerns that they may have received unreported revenue.