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Choice Hotels International Inc. v. Key Hotels of Atmore II LLC

United States District Court, S.D. Alabama, Southern Division

May 3, 2017

CHOICE HOTELS INTERNATIONAL, INC., Plaintiff,
v.
KEY HOTELS OF ATMORE II, LLC; ANAND PATEL; DIPAN PATEL; and SARJU PATEL; Defendants.

          CONTEMPT AND SEIZURE ORDER

          CALLIE V. S. GRANADE SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the Court based on the failure of Defendant Key Hotels of Atmore II, LLC; Defendant Anand Patel; Defendant Dipan Patel; and Defendant Sarju Patel (collectively, “Defendants”) to respond to the March 28, 2017 Show Cause Order (Doc. 25), which the undersigned issued as a result of a notice of Defendants' non-compliance with this Court's November 9, 2016 Order and Default Judgment filed by Plaintiff Choice Hotels International, Inc. (“Choice Hotels”) (Doc. 24). Choice Hotels filed a second notice of non-compliance upon Defendants' failure to timely respond to the Show Cause Order and now asks the Court find Defendants in civil contempt. (Doc. 29). Upon consideration of the following, the Court finds Defendants IN CIVIL CONTEMPT and ORDERS as fully set forth below.

         1. LEGAL STANDARD

         This Court is empowered by 18 U.S.C. § 401 to punish parties who violate its orders, injunctions, and judgments. “A party seeking civil contempt bears the initial burden of proving by clear and convincing evidence that the alleged contemnor has violated an outstanding court order.” CFTC v. Wellington Precious Metals, Inc., 950 F.2d 1525, 1529 (11th Cir. 1992). Upon a prima facie showing of a violation, the burden shifts to the alleged contemnor to defend his or her failure to comply by showing that, although he or she may have taken all reasonable steps to comply, he or she was unable to comply. United States v. Rylander, 460 U.S. 752, 757 (1983). If the alleged contemnor makes a sufficient showing, the burden shifts back to the party seeking contempt who bears the ultimate burden of ability to comply. Combs v. Ryan's Coal Co., 785 F.2d 970, 984 (11th Cir.), cert. denied, 479 U.S. 853 (1986). Under normal circumstances a hearing is necessary before an alleged contemnor may be found in contempt; however, “when there are no disputed factual matters that require an evidentiary hearing, the court might properly dispense with the hearing prior to finding the defendant in contempt and sanctioning him.” Mercer v. Mitchell, 908 F.2d 763, 769 n.11 (11th Cir. 1990).

         2. ANALYSIS

         The Order and Default Judgment included (1) a permanent injunction with both a removal and compliance requirement; (2) a surrender order; and (3) an accounting requirement. Specifically, the Court ordered the following:

b. Defendants, their officers, agents, employees, representatives, subsidiaries, successors, assigns, and any persons or entities in active concert or participation with Defendants, shall be and hereby are PERMANENTLY ENJOINED and restrained from operating or doing business under any name or mark that is likely to give the impression that the Motel is licensed by Plaintiff.
c. Defendants are required to IMMEDIATELY remove any and all QUALITY® branded signs, placards, and source indicators from the Motel located at 1610 South Main Street, Atmore, Alabama 36502.
d. Within thirty (30) days of this Order, Defendants shall file with the Court and serve on counsel for Plaintiff a written statement made under oath setting forth all of the steps taken to comply with this Order.
4. Defendants are ORDERED to deliver up to Plaintiff for destruction all items, products, labels, signs, prints, packages, wrappers, receptacles, and/or advertisements in their possession or control bearing any of the QUALITY® family of marks as described in footnote 1 or any mark confusingly similar thereto within thirty (30) days of receiving service of notice from Plaintiff as to where such items are to be delivered.
5. Defendants are ORDERED to submit within thirty (30) days of this Order a report in writing and under oath setting forth the following: (1) the date upon which Defendants ceased use of the QUALITY® family of marks at the Motel and (2) an accounting of all gross profits received at the Motel from August 29, 2013 through the date Defendants ceased use of the QUALITY® family of marks.

(Doc. 20, pp. 16-18).

         On December 23, 2016, Choice Hotels filed its initial Notice of Non-Compliance with the Court. (Doc. 24). Therein, Choice Hotels supplied affidavit and photographic evidence that Defendants failed to remove any and all QUALITY® branded material. Id. Given Defendants' non-compliance, the Court ordered Defendants show cause, no later than April 10, 2017 why they should not be held in contempt. (Doc. 25, p. 2). Three of the four Defendants were properly noticed of the Court's order by way of certified mail, return receipt requested. (Doc. 26; Doc. 27; Doc. 28). April 10, 2017 came and went with no appearance or response by Defendants. And Choice Hotels has, yet again, supplied affidavit and photographic evidence showing Defendants still make use of the QUALITY® family of marks in violation of the Order and Default Judgment, at least as recently as April 11, 2017. (Doc. 29). Nevertheless, on April 17, 2017, Defendant Sarju Patel, Defendant Anand Patel, and Defendant Dipan Patel made some attempt at an appearance and filed with the Court a handwritten “response” to the Show Cause Order. (Doc. 30). Even so, the Court finds this “response” insufficient to show Defendants should not be held in civil contempt for two reasons.[1] First, Defendants' filing is untimely. Second, the “response” is vague, contains inconsistencies, and does not satisfy the Court that Defendants have taken all reasonable steps to comply with the Court's Order or intend to do so within a reasonable time.

         Therefore, Choice Hotels has carried its burden and established by clear and convincing evidence that Defendants' continued use of the QUALITY® family of marks constitutes both a direct violation of the Court's Order and an on-going infringement of Choice Hotels' trademark rights. Further, Defendants' own “response” shows they do not dispute their lack of compliance with the Court's Order. Given this, a ...


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