PRL USA Holdings, Inc. v. Prestige America LLC
- P. Castel
- 1:20-cv-10201
- U.S. District Court · Southern District of New York
- 9
In PRL USA Holdings v. Prestige America, Judge Castel granted reconsideration, entered default judgment against Zeshan Syed, and denied default judgment against Zara Linen.
PRL USA Holdings, Inc. may enforce the separate judgment awarding $800,000 in statutory damages and injunctive relief against Zeshan Syed. Zara Linen LLC obtained denial of default judgment and dismissal of all claims against it. The order also lifted the earlier dismissal of PRL’s claims against Zeshan Syed. Nighat A. Syed and Hashim R. Syed remain subject to the bankruptcy stay described in the opinion.
What happened
In PRL USA Holdings, Inc. v. Prestige America LLC, PRL asked the court to reconsider its earlier dismissal of claims against Zeshan Syed and Zara Linen LLC because PRL had not pursued a default judgment for more than two years. PRL said it misunderstood the bankruptcy stay affecting two other defendants and incorrectly believed it needed the court’s permission to seek default judgment.
The court granted reconsideration because PRL’s delay had not caused apparent prejudice and its request for permission had been ambiguous. The court then examined whether PRL’s allegations supported default judgment. It found that the allegations were sufficient to support counterfeiting, trademark infringement, and unfair-competition claims against Zeshan Syed, but insufficient to support any claim against Zara Linen LLC.
Judge Castel granted default judgment against Zeshan Syed and awarded $800,000 in statutory damages and injunctive relief, with the details to be included in a separate judgment. The court denied default judgment against Zara Linen LLC and dismissed all claims against Zara.
The detailed version
- PRL USA Holdings, Inc. v. Prestige America LLC · No. 1:20-cv-10201
- P. Castel
- Feb. 20, 2025
Background
PRL USA Holdings, Inc. sued Prestige America LLC, Nighat A. Syed, Hashim R. Syed, Zeshan Syed, Zara Linen LLC, and other defendants over alleged use of PRL’s Ralph Lauren and Polo trademarks. The amended complaint asserted counterfeiting, trademark infringement, and unfair competition claims under the federal trademark law known as the Lanham Act and under common law. It also asserted negligent supervision against Zara Linen LLC.
Zeshan Syed and Zara Linen LLC did not answer or appear. The Clerk issued certificates of default against them on June 27, 2022, but PRL did not move for default judgment. Two other defendants, Nighat A. Syed and Hashim R. Syed, became subject to an automatic bankruptcy stay. The court had previously granted PRL’s unopposed summary-judgment motion against Prestige America LLC.
In March 2024, the court ordered PRL to explain why the claims against the non-bankrupt defendants should not be dismissed for failure to prosecute, meaning failure to move the case forward. After PRL did not promptly file a default-judgment motion, the court dismissed the claims against Zeshan Syed and Zara Linen LLC in July 2024.
Motion for reconsideration
PRL moved under Rule 59(e) of the Federal Rules of Civil Procedure for reconsideration of the July 2024 dismissal. PRL explained that it had misunderstood the scope of the bankruptcy stay and believed that court permission was required before it could seek default judgment. The court noted that no permission was required under the judge’s individual practices.
The court nevertheless granted reconsideration. Although the delay was lengthy and PRL had received notice that further delay could lead to dismissal, the court found no demonstrable prejudice to Zeshan Syed or Zara Linen LLC. It also considered that the bankruptcy stay remained in effect as to Nighat A. Syed and Hashim R. Syed and accepted PRL’s explanation that it mistakenly believed permission was required.
Default judgment
A default means that a party who was properly served and failed to respond admits well-pleaded factual allegations, but not legal conclusions. Before entering default judgment, the court must determine whether the admitted facts establish liability under the law.
The court found that the complaint did not state a valid claim against Zara Linen LLC. The complaint did not attribute counterfeiting, trademark infringement, or unfair competition to Zara with specific facts. It also did not plausibly allege negligent supervision because it described Zeshan Syed as Zara’s owner, officer, director, or managing agent while also alleging that he was Zara’s employee. The court concluded that Zara could not be liable for failing to supervise him if the allegations described him as the person responsible for Zara’s conduct. The motion for default judgment was therefore denied as to Zara Linen LLC, and all claims against Zara were dismissed.
As to Zeshan Syed, the court found the allegations sufficient to plausibly establish counterfeiting, trademark infringement, and unfair competition. The complaint alleged that he sold counterfeit Ralph Lauren products, used a Prestige warehouse and computer system, and made sales through Prestige without PRL’s consent. Because of his default, the court treated the alleged infringement as willful for purposes of statutory damages.
PRL requested $4 million in statutory damages for infringement of two marks. The court awarded $400,000 per mark, for a total of $800,000 against Zeshan Syed. It also awarded injunctive relief addressing his use of the Ralph Lauren marks. The court stated that the injunction and damages would be set out in a separate judgment.
Disposition
PRL’s motion for reconsideration was granted. Its motion for default judgment was denied as to Zara Linen LLC, and all claims against Zara were dismissed. Its motion for default judgment was granted as to Zeshan Syed.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.