Unreported / Non-Citable
Background
GS Holistic, LLC initiated this trademark action on February 25, 2023, asserting claims for federal trademark counterfeiting and infringement under 15 U.S.C. § 1114 and federal false designation of origin and unfair competition under 15 U.S.C. § 1125(a) against Maher Nagi, individually and doing business as Cigarette Outlet Smoke Shop. Defendant has never appeared in the action. After the court granted leave to file a First Amended Complaint in June 2023, Plaintiff moved for default judgment in December 2023; the court denied that motion without prejudice because Plaintiff failed to satisfy the second and third Eitel factors concerning the merits of the substantive claim and the sufficiency of the complaint.
Plaintiff filed a Second Amended Complaint on May 28, 2024, and again moved for default judgment in January 2025. On June 10, 2025, the court again denied the motion without prejudice on the same Eitel grounds. After more than six months of inactivity, the court ordered Plaintiff to advise it of the case posture, and Plaintiff filed a status report in December 2025. On March 6, 2026, the court directed Plaintiff to file any motion for leave to amend and a proposed amended complaint within thirty days. Plaintiff filed the instant motion and proposed Third Amended Complaint on April 27, 2026.
The Court’s Holding
The court granted the motion to amend, but expressly found that the Rule 15 standard was only just met. Applying the Ninth Circuit's policy of freely giving leave to amend absent undue delay, bad faith, repeated failure to cure deficiencies, undue prejudice, or futility, the court found no evidence of bad faith and no undue prejudice to the non-appearing Defendant. However, the court acknowledged that the number of amendments and the potential futility of amendment gave it pause, because Plaintiff did not follow through on the commitments in its own status report.
Specifically, Plaintiff failed to streamline the duplicative defendant designation—continuing to name Maher Nagi individually and doing business as Cigarette Outlet Smoke Shop despite the court's prior ruling that such claims are duplicative—and failed to file the promised supporting investigator declarations, attaching the same exhibits used with the SAC. The proposed TAC did add some specific factual allegations regarding the basis for counterfeit identification and the timing and manner of use. Because the proposed TAC contained some additional factual allegations and Rule 15's policy favoring amendment should be applied with liberality, the court did not find amendment futile and declined to prohibit Plaintiff from another bite at the apple. The court ordered Plaintiff to file the third amended complaint within seven days of the order.
Key Takeaways
- Leave to amend under Rule 15(a)(2) remains discretionary, and this court emphasized that the standard was only just satisfied where the plaintiff had already amended twice and repeated previously identified defects.
- A plaintiff's failure to follow through on its own status-report commitments—such as streamlining duplicative defendant designations or supplying promised investigator declarations—can bring an amendment request to the brink of denial.
- The court reiterated that claims against a defendant individually and doing business as a named shop are duplicative, yet granted leave anyway because the proposed pleading contained some new factual allegations.
- Even where a defendant has never appeared and cannot claim prejudice, repeated failure to cure pleading deficiencies may eventually render further amendment futile under the Foman factors.
- The order gives the plaintiff a firm seven-day deadline to file the third amended complaint, signaling that the court expects prompt compliance after multiple rounds of amendment.
Why It Matters
This order illustrates the outer limits of Rule 15's liberal amendment policy in the default-judgment context. Even where a defendant has never appeared and no prejudice exists, a court may warn that repeated failure to cure substantive pleading deficiencies—particularly those identified in prior Eitel-factor denials—brings future amendments close to futility.
For trademark plaintiffs seeking default judgment, the decision underscores the importance of actually delivering on promised evidentiary support, such as investigator declarations and non-duplicative defendant designations, rather than simply repackaging prior allegations. The court's willingness to grant a third amendment while flagging its reservations suggests that further failures to cure may finally exhaust the court's discretion.