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General Steel Domestic Sales, LLC v. Chumley

United States District Court, D. Colorado

September 9, 2014

GENERAL STEEL DOMESTIC SALES, LLC, a Colorado limited liability company, doing business as General Steel Corporation, Plaintiff,
v.
ETHAN DANIEL CHUMLEY, individually; ATLANTIC BUILDING SYSTEMS, LLC, a Delaware corporation, doing business as Armstrong Steel Corporation; GOTTFRID SWARTHOLM, individually; and PRQ INTERNET KOMMANDITBOLAG (LIMITED PARTNERSHIP), doing business as PRQ Inet KB, Defendants.

OPINION AND ORDER ADOPTING RECOMMENDATION AND DENYING MOTION FOR DEFAULT JUDGMENT

MARCIA S. KRIEGER, Chief District Judge.

THIS MATTER comes before the Court on the Magistrate Judge's Recommendation (#335) to deny the "Motion for Default Judgment Against Defendants PRQ and Swartholm" (#108) filed by the Plaintiff General Steel Domestic Sales, LLC ("General Steel"). General Steel filed a timely Objection (#357).

ISSUES PRESENTED

As relevant to the instant motion, General Steel asserts a claim for False Advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), against PRQ Internet Kommanditbolag (Limited Partnership) d/b/a PRQ Inet KB ("PRQ"), Mr. Swartholm, Mr. Chumley, and Atlantic Building Systems, LLC d/b/a Armstrong Steel Corporation ("Armstrong Steel").

PRQ and Mr. Swartholm were personally served with the Summons and Complaint in this action on April 4, 2013. They failed to respond and the Clerk entered default against both PRQ and Mr. Swartholm on July 11, 2013.

General Steel moves for an entry of default judgment against PRQ and Mr. Swartholm. The matter was referred to the Magistrate Judge, who concluded that entry of default judgment is inappropriate until liability of the nondefaulting parties is determined.

FACTS

General Steel asserts that the Defendants created websites containing "significantly false, misleading, and defamatory content about General Steel and its employees" for the purpose of attacking General Steel's business. The domain name of the first website- www.generalsteelscam.com- was transferred to General Steel after a World Intellectual Property Organization ("WIPO") decision concluding that Mr. Chumley used the website in bad faith. General Steel alleges that, after the WIPO decision, a new website was created with nearly identical content using the domain name www.steelbuildingscomplaints.com.

Mr. Swartholm is the managing partner of PRQ, which is a company that provides web hosting services. PRQ and Mr. Swartholm are the Registrants of www.steelbuildingscomplaints.com and were previously the Registrants of www.generalsteelscam.com.

General Steel asserts that "[t]he registration, establishment and maintenance of these websites were acts taken as a direct result of one or more agreement(s) among all Defendants to undertake false advertising against General Steel." In addition, General Steel alleges that "PRQ and [Mr.] Swartholm are acting as agents of [Mr.] Chumley and Armstrong Steel, and in concert with [Mr.] Chumley and Armstrong Steel" to host these websites.

General Steel seeks injunctive relief against all of the Defendants and seeks an award of damages from Mr. Chumley and Armstrong Steel.

STANDARD OF REVIEW

When a magistrate judge issues a recommendation on a dispositive motion, the parties may file specific, written objections within fourteen days after being served with a copy of the recommendation. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). The district court reviews de novo determination those portions of the recommendation to which a timely and specific objection is made. See ...


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