Skydive Arizona, Inc. v. Quattrocchi

Full title: SKYDIVE ARIZONA, INC., Plaintiff, v. CARY QUATTROCCHI; BEN BUTLER; USSO…

Court: United States District Court, D. Arizona

Date published: Feb 2, 2009

Case No. CV 05-2656-PHX-MHM (D. Ariz. Feb. 2, 2009)

Opinion

Case No. CV 05-2656-PHX-MHM.

February 2, 2009

SEALED ORDER

MARY MURGUIA, District Judge

Currently pending before the Court are (1) Defendants Cary Quattrocchi ("Quattrocchi") and Ben Butler's ("Butler") (collectively, the "Individual Defendants") Renewed Motion to Dismiss (Dkt. #175), (2) Plaintiff Skydive Arizona, Inc.'s ("Skydive") Motion for Partial Summary Judgment (Dkt. #183), (3) Third-Party Defendant Larry Hill's ("Hill") Sealed Motion for Summary Judgment (Dkt. #185), and (4) Defendants USSO, LLC d/b/a 1800SKYRIDE ("USSO"), Atlanta SC, Inc. ("Atlanta SC"), CASC, Inc. ("CASC"), IGOVincent, Inc. ("IGOVincent"), and 1800SKYRIDE.com's (collectively, the "Corporate Defendants" or "Counterclaimants") Sealed Motion for Summary Judgment (Dkt. #188).

Also before the Court are (5) the Individual and Corporate Defendants' (also referred to collectively as "Defendants") Motion to Strike Evidence in Support of Third-Party Defendant Larry Hill's Motion for Summary Judgment (Dkt. #196), (6) Defendants' Motion to Strike Evidence in Support of Plaintiff's Motion for Partial Summary Judgment (Dkt. #198), (7) Plaintiff's Motion to Strike the Affidavits of Cary Quattrocchi and Yvonne Cline (Dkt. #201), (8) Plaintiff's Motion to Enforce the Court's Scheduling Order and Strike the Renewed Motion to Dismiss (Dkt. #228), (9) Plaintiff's Motion to Strike Defendants' Response to Plaintiff's Motion to Strike (Dkt. #229), (10) Non-Party Jan Meyer's Motion to Intervene and Unseal Court Records (Dkt. #230), (11) Plaintiff's Motion to Freeze Defendants' Assets (Dkt. #244), and (12) Plaintiff's Motion to Re-Open Discovery for Limited Purpose (Dkt. #249). After reviewing the pleadings and holding oral argument on December 12, 2008, the Court issues the following order.

I. BACKGROUND

Plaintiff Skydive Arizona, Inc., located in Eloy, Arizona, is the largest skydiving center in the world. (Plaintiff's Statement of Facts ("PSOF") ¶ 141). Plaintiff has continuously operated under the mark "SKYDIVE ARIZONA" since 1986 and is well-known throughout the skydiving community. (PSOF ¶¶ 134, 136). Plaintiff hosts national skydiving competitions and has been featured on a various television programs; Plaintiff also advertises extensively on the Internet and in, among other things, national and international skydiving magazines, Phoenix hotels, the Yellow Pages, and in the University of Arizona and Arizona State University's college newspapers. (PSOF ¶¶ 137-38, 142; Plaintiff's Controverting Statement of Facts ("PCSOF") ¶ 13).

Individual Defendants Butler and Quattrocchi opened the Atlanta Skydiving Center in Cedartown, Georgia in 1997. (Defendants' Separate Statement of Facts ("DSSOF") ¶ 1). The Atlanta Skydiving Center is owned by Defendant Atlanta SC, Inc., a Georgia corporation that was jointly owned and operated by Individual Defendants Butler and Quattrocchi until May 2007; it is now solely owned by Defendant Quattrocchi. (DSSOF ¶¶ 2, 3). In 2000, Quattrocchi and Butler expanded their operations and opened the Alabama Skydiving Center in Pell City, Alabama (the Center is now located in Prattville, Alabama). (DSSOF ¶¶ 5, 6). The Alabama Skydiving Center is owned by Defendant CASC, Inc., a Georgia corporation that was jointly owned and operated by Butler and Quattrocchi until May 2007; it is now solely owned by Defendant Quattrocchi. (DSSOF ¶¶ 6, 7). In 2002, Quattrocchi and Butler created Defendant USSO LLC, which did business as "1800Skyride" (also referred to as "1800SKYRIDE") until May 2007; Butler is the sole owner of USSO LLC. (DSSOF ¶¶ 9, 10). In May 2007, USSO LLC sold its assets to Defendant IGOVincent, Inc.; Quattrocchi is the sole owner of IGOVincent. (DSSOF ¶¶ 11, 13). Although USSO still exists as a legal entity, IGOVincent has assumed USSO's business operations and is currently doing business as 1800SKYRIDE. (DSSOF ¶ 12).

1800SKYRIDE "provide[s] national advertising services . . . to individually owned and operated drop zones in exchange for a nominal fee"; Defendants make skydiving arrangements for consumers and issue them certificates that may be redeemed at various locations within a "national network of drop zones," referred to as the "1800Skyride Adventure Sports Network." (DSSOF ¶¶ 15, 16, 25). Defendant USSO LLC (and now Defendant IGOVincent) own and operate numerous websites describing "skydiving opportunities generally in multiple, geographical locations without reference to specific drop zones," and specifically in Arizona, websites named "PhoenixSkydiving, ScottsdaleSkydiving, TempeSkydiving, ChanglerSkydiving, MesaSkydiving, GlendaleSkydiving, GilbertSkydiving, PeoriaSkydiving, TucsonSkydiving, YumaSkydiving, and FlagstaffSkydiving." (DSSOF ¶ 19; Dkt. #203, Ex. E). In addition, Individual Defendant Quattrocchi registered numerous domain names for use with the 1800SKYRIDE business, including skydivearizona.net, arizonaskydive.com, and skydivingarizona.com. (PSOF ¶ 25). The websites advertise that customers may contact USSO LLC by email or telephone to make reservations to skydive at drop zones in the customer's preferred geographic location. (DSSOF ¶¶ 19, 20).

On August 26, 2005, Plaintiff filed a Complaint against the Corporate and Individual Defendants, asserting claims of (1) False Designation or Origin and Unfair Competition Under Section 43(a) of the Lanham Act, 15 U.S.C. § 1115(a), (2) Trademark Infringement Under 15 U.S.C. § 1125(a), and (3) False Designation of Origin and Unfair Competition Under Section 43(d) of the Lanham Act, 15 U.S.C. § 1125(d). (Comp., Dkt. #1). Plaintiff Skydive's claims derive from Defendants' implementation and use of allegedly false and misleading statements on websites directed towards consumers wishing to skydive in the State of Arizona. (Id., ¶ 13). For instance, Plaintiff alleges that Defendants maintain websites that misrepresent that Defendants operate as, among other things, "Arizona Skydiving," "Skydiving Arizona," and the "Skydiving Arizona Center," and own skydiving facilities in various towns and cities throughout Arizona, when in fact Defendants own and operate no such facilities. (Id., ¶¶ 16, 42-141). Plaintiff also alleges that Defendants sold redeemable skydiving certificates to Arizona consumers and misrepresented the certificates as being redeemable at Plaintiff's location, when in fact Plaintiff does not accept the certificates sold by Defendants. (Compl. at ¶ 19).

On November 14, 2005, Individual Defendants Quattrocchi and Butler filed a Motion to Dismiss Plaintiff's claims against them for lack of personal jurisdiction or, in the alternative, failure to state a claim pursuant to Rule 12(b)(2) or (6) of the Federal Rules of Civil Procedure ("FRCP"). (Dkt. #7). In addition, Defendants filed a Counterclaim, asserting a claim for Unfair Competition under Arizona Law. (Dkt. #13). The Court granted the Individual Defendants' motion and dismissed Plaintiff's claims against them on August 22, 2006, finding no personal jurisdiction over the Individual Defendants due to their lack of personal contact with the State of Arizona. (Dkt. #26). In the alternative, the Court found that Plaintiff's claims, which were based on an alter ego and conspiracy theory involving the Individual Defendants, failed to state a claim under FRCP 12(b)(6). (Id.).

On September 8, 2006, Plaintiff filed a Motion for Reconsideration and Motion for Leave to File a First Amended Complaint. (Dkt. #31). The Court granted both of Plaintiff's motions on March 13, 2007, permitting Plaintiff to assert claims against the Individual Defendants based on a theory of aiding and abetting, and finding that personal jurisdiction was satisfied because "the Individual Defendants, as corporate officers of the Corporate Defendants, had control of and participated in the activities alleged in Arizona, such as implementing and directing websites for use by Arizona consumers." (Dkt. #48, p. 6). Then, on March 30, 2007, the Corporate Defendants filed an Amended Answer, Counterclaim, and Third-Party Complaint. (Dkt. #51). Defendants assert claims against Plaintiff and Third-Party Defendant Larry Hill for Unfair Competition under Arizona Law (Count I), Tortious Interference with Contract (Count II), Tortious Interference with Business Expectancy (Count III), and Declaratory Judgment of Non-Infringement, and For Injunctive Relief Against Plaintiff's Acts of Reverse Domain Name Hijacking Pursuant to 15 U.S.C. § 1114(2)(D)(v) (Count IV). Third-Party Defendant Hill filed a Motion to Dismiss Defendants' Third-Party Complaint on April 23, 2007 (Dkt. #54); the Court denied the motion on September 6, 2007, finding that the Corporate Defendants adequately stated claims against Mr. Hill under FRCP 13(h) and 20(a) for independent relief in the form of counterclaims as opposed to derivative or secondary relief in the form of a third-party complaint under FRCP 14(a). (Dkt. #68).

On March 3, 2008, Plaintiff moved to file a Second Amended Complaint to name IGOVincent, Inc. as a defendant because Plaintiff learned through discovery that Defendant USSO, LLC ceased doing business as 1-800-SKY-RIDE in early 2007 and was replaced by IGOVincent, Inc. d/b/a 1-800-SKY-RIDE. (Dkt. #119). The Court granted Plaintiff's motion to add IGOVincent, Inc. as a defendant in this action. (Dkt. #133). Then, on March 13, 2008, Plaintiff sought leave to file a Third Amended Complaint (Dkt. #169) in order to reinstate Defendants USSO, LLC and Atlanta SC, Inc., who had been inadvertently terminated as parties when the Second Amended Complaint was filed. (Dkt. #138). The Court granted the motion on April 8, 2008. (Dkt. #168).

On April 21, 2008, Individual Defendants Quattrocchi and Butler filed the instant Renewed Motion to Dismiss Plaintiff's Third Amended Complaint against them, reasserting their contention that the Court lacks personal jurisdiction. (Dkt. #175). Then, on April 29, 2008, Plaintiff Skydive filed a Motion for Partial Summary Judgment on its claims for violations of Section 43(a) of the Lanham Act (Count I) and trademark infringement (Count II) (Dkt. #183), and Third-Party Defendant Larry Hill filed a Motion for Summary Judgment on the Corporate Defendants/Counterclaimants claims against him. (Dkt. #185). Plaintiff subsequently filed a Motion to Strike Affidavits (Dkt. #201), Motion to Enforce Scheduling Order and Strike Defendants' Renewed Motion to Dismiss (Dkt. #228), and Motion to Strike Defendants' Response in Opposition to Plaintiff's Motion to Strike (Dkt. #229). In addition, on July 17, 2008, nonparty Jan Meyer filed a Motion to Intervene for the limited purpose of unsealing Exhibit E to the Statement of Facts in Support of Larry Hill's Motion for Summary Judgment. (Dkt. #230).

The Corporate Defendants filed a Motion for Summary Judgment on May 2, 2008. (Dkt. #188). Defendants subsequently filed a Motion to Strike Evidence in Support of Defendant Larry Hill's Motion for Summary Judgment (Dkt. #196) and Motion to Strike Evidence in Support of Plaintiff's Motion for Partial Summary Judgment (Dkt. #198). Then, on July 23, 2008, Defendants' attorneys filed a Motion to Withdraw, which the Court granted on August 19, 2008. Plaintiff most recently filed a Motion for Preliminary Injunction to Freeze Defendants' Assets (Dkt. #244), as well as a Motion to Re-Open Discovery for Limited Purpose (Dkt. #249).

II. THE INDIVIDUAL DEFENDANTS' RENEWED MOTION TO DISMISS PLAINTIFF'S MOTION TO ENFORCE SCHEDULING ORDER

A. Motion to Enforce Scheduling Order

Plaintiff filed a Motion to Enforce Scheduling Order and Strike the Renewed Motion to Dismiss on July 16, 2008, arguing that Individual Defendants Butler and Quattrocchi violated FRCP 16(b) because they did not seek leave of Court for an extension of the Court's July 27, 2007 deadline for filing Rule 12(b) motions. (Dkt. #228). Plaintiff also requests a court order pursuant to FRCP 16(f) that the Individual Defendants pay the reasonable expenses incurred because of Defendants' noncompliance. However, having considered the merits of the Individual Defendants' Motion below, Plaintiff's Motion is now moot. Further, under FRCP 15(a), once the Court permitted Plaintiff to amend its Complaint, Defendants are entitled to plead in response unless the Court orders otherwise. And, under FRCP 12(h), a defense of lack of personal jurisdiction must be raised/preserved in the responsive pleading permitted by Rule 15(a).

Although the Court's Rule 16 Scheduling Order set a deadline for filing Rule 12(b) motions (and it would have been more appropriate for Defendants' FRCP 15(a) responsive pleading to take the form of an Answer rather than a renewed motion to dismiss), FRCP 15(a) and 12(h) do not indicate the particular form that Defendants' pleading must take in response to Plaintiff's Amended Complaint. The Court recognizes the inherent ambiguity in the present situation and finds that it would be unjust to make an award of expenses under these circumstances. As such, the Court denies Plaintiff's Motion to Enforce Scheduling Order and request for sanctions pursuant to FRCP 16(f).

B. Renewed Motion to Dismiss

On August 22, 2006, the Court granted Individual Defendants Quattrocchi and Butler's November 14, 2005 Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, for Failure to State a Claim (Dkt. #7), finding that "personal jurisdiction does not exist over the individual Defendants based upon Plaintiff's theories set forth in its Complaint." (Dkt. #26). However, on March 12, 2007, based on Plaintiff's September 8, 2006 Motion for Reconsideration (Dkt. #31) and Proposed First Amended Complaint (Dkt. #s 30, 48), the Court found that Plaintiff properly alleged personal jurisdiction over the Individual Defendants based on their connection to the Corporate Defendants. (Dkt. #48). In addition, on March 3, 2008, Plaintiff moved to file a Second Amended Complaint (Dkt. #119); Plaintiff also moved to file a Third Amended Complaint on March 28, 2008, in order to amend/correct a mistake that had been made in the Second Amended Complaint (Dkt. #s 138, 139). The Court allowed Plaintiff to file both Complaints. (Dkt. #s 133, 168). The Individual Defendants now renew their motion to dismiss and again request that the Court dismiss Plaintiff's Complaint against them for lack of personal jurisdiction and failure to state a claim pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. (Dkt. #175).

Individual Defendants Quattrocchi and Butler argue in the instant motion that "Plaintiff has still not met its burden to establish that this Court has personal jurisdiction with regard to each of them." (Dkt. #175, p. 5). However, the Court has already ruled on this issue, finding that Plaintiff established its prima facie burden of demonstrating that Defendants Quattrocchi and Butler are subject to personal jurisdiction in the State of Arizona. See 3/12/07 Order at Dkt. #48; see, e.g.,Wells Fargo Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 430 n. 24 (9th Cir. 1977) (noting that "[i]t is clear that plaintiffs bear the burden both of making an initial, prima facie showing of jurisdictional facts at the pleading stage and of proving those facts by a preponderance at trial"). In addition, the Court has reviewed the instant motion and remains unpersuaded by Defendants' arguments; the Court will not depart from its previous finding that "there is a sufficient basis for the Court to find that the Individual Defendants, as corporate officers of the Corporate Defendants, had control of and participated in the activities alleged in Arizona, such as implementing and directing websites for use by Arizona consumers." (Dkt. #48, p. 6); see Wolf Designs, Inc. v. DHR Co., 322 F.Supp.2d 1065, 1072 (C.D.Cal. 2004) (stating that personal jurisdiction over an individual may be found based on "the individual's control of, and direct participation in the alleged activities" of the corporation); see also Colt Studio, Inc. v. Badpuppy Enterprise, 75 F.Supp.2d 1104, 1111 (C.D.Cal. 1999) ("If the corporation is the `alter ego' of the individual defendants so as to justify disregard of the corporate entity, then a finding of personal jurisdiction over the corporation will support a finding of personal jurisdiction over the individuals.").

Although "[t]he mere fact that a corporation is subject to general jurisdiction does not mean that its non-resident officers and directors are subject to jurisdiction as well," a corporation's contact with the forum state can establish jurisdiction over its non-resident officer or director when the corporation is the alter ego of that officer or director. LeDuc v. Ky. Cent. Life Ins. Co., 814 F.Supp. 820, 824 (N.D.Cal. 1995);see U.S. v. Standard Beauty Supply Stores, Inc., 561 F.2d 774, 777 (9th Cir. 1977 ("Before a court can hold that a corporation is the mere alter ego of its shareholders, two particular findings must be made. First, the court must determine that there is such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist. Second, however, it must be shown that the failure to disregard the corporation would result in fraud or injustice.") (internal quotations omitted); but see Sidco Indus., Inc. v. Wimar Tahoe Corp., 768 F.Supp. 1334, 1349 (D.Or. 1991) (it is inappropriate to exercise personal jurisdiction over "a corporate officer who has contact with a forum only in the performance of his official duties"). In addition, the corporate form may be ignored "by virtue of the individual's control of, and direct participation in the alleged activities." Wolf Designs, Inc. v. DHR Co., 322 F.Supp.2d 1065, 1072 (C.D.Cal. 2004) (citingTransgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir. 1985)).

The Individual Defendants cite the Court to their "uncontroverted" Affidavits and argue that "neither Quattrocchi nor Butler individually own or operate any of the websites cited in Plaintiff's Complaint, and neither defendant has personally transacted business in Arizona." (Dkt. #221, p. 6). They also state that "[t]o the extent that Quattrocchi and Butler have had any contact with the State of Arizona, it was at most pursuant to their respective obligations as officers and employees of the Corporate Defendants, and not in their individual capacities." (Id., pp. 6-7). However, the Individual Defendants fail to address any of the statements made in their own deposition testimony cited to in Plaintiff's response to the instant motion in support of finding personal jurisdiction. (Dkt. #203). That deposition testimony appears to establish that Defendants Quattrocchi and Butler created and controlled/directed an intricate web of corporate entities that engaged in conduct directed at the State of Arizona and were intimately involved in the day-to-day operations of the Corporate Defendants.

The parties do not dispute that the Court has personal jurisdiction over the Corporate Defendants. (Dkt. #221, p. 8). Defendant Quattrocchi stated that 1800SKYRIDE and its related corporate entities, businesses some of which appear to have been owned separately and jointly at various times Defendants Butler and Quattrocchi (Dkt. #203, p. 4), have "regular and established skydiving centers in the State of Arizona that currently accept 1800SKYRIDE certificates." (Dkt. #203, p. 11; Quattrocchi Depo., Ex. B, at 56:24-57:4). The Corporate Defendants also maintain a number of websites that target consumers in the State of Arizona, such as "PhoenixSkydiving, ScottsdaleSkydiving, TempeSkydiving, ChandlerSkydiving, MesaSkydiving, GlendaleSkydiving, GilbertSkydiving, PeoriaSkydiving, TucsonSkydiving, YumaSkydiving, and FlagstaffSkydiving." (Dkt. #203, p. 8).

Importantly, for purposes of personal jurisdiction over the individual defendants, Defendant Quattrocchi apparently directs the personnel who worked on the websites for 1-800-SKYRIDE (Dkt. #203, p. 7; Butler Depo., Ex. A, at 21:14-22:16), and has control over determining the content of those websites. (Id.; Quattrocchi Depo., Ex. B, at 15:9-25, 17:23-19:1; see also Dkt. #244, p. 2). In addition, Defendant Butler periodically accessed the 1-800-SKYRIDE websites using various search engines to review content and determine how the web pages were ranked. (Dkt. #203, Ex. A, at 52:9-23, 53:9-15). He also entered into a contractual relationship with Plaintiff Skydive Arizona to use one of Skydive Arizona's aircrafts in 1999 on site at Corporate Defendant Atlanta SC's facilities in Georgia. (Dkt. #203, p. 11; Butler Depo., Ex. A, at 62:3-63:11). Those statements, among others, including the fact that two of Defendants' former employees stated that both Defendants Butler and Quattrocchi knew that their websites were potentially deceptive (Dkt. #203, p. 7; Vance Depo., Ex. C, at 12:26-14:25; Carbone Depo., Ex. D, at 28:7-15), appears sufficient to allow the Court to ignore the corporate form and exercise personal jurisdiction over the Individual Defendants. See Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 734 (9th Cir. 1999) (corporate officers cannot "hide behind the corporation where [the officer was] an actual participant in the tort").

It is disconcerting and dispiriting that the Individual Defendants bring the instant renewed motion to dismiss and assert that "Plaintiff has not produced one piece of evidence to establish [that Defendants conducted themselves in a manner so as to blur the line between their roles as officers and employees of the Corporate Defendants and owners of the same in their individual capacities] as required for alter-ego liability" (Dkt. #221, p. 8), while failing to address Plaintiff's myriad citations to the deposition testimony of Defendants Quattrocchi and Butler (Dkt. #203, pp. 4-11).¹ Again, the facts alleged in Plaintiff's Third Amended Complaint, and the statements made by Defendants Quattrocchi and Butler in their deposition testimony (as cited to in Plaintiff's Response to the instant motion), are sufficient to support the Court's finding of personal jurisdiction over the Individual Defendants. ²See Davis v. Metro Productions, Inc., 885 F.2d 515, 520-21 (9th Cir. 1989) ("[T]he corporate form may be ignored in cases in which the corporation is the agent or alter ego of the individual defendant, or where there is an identity of interests between the corporation and the individuals."); see also Wolf Designs, Inc. v. DHR Co., 322 F.Supp.2d 1065, 1072 (C.D.Cal. 2004) (stating personal jurisdiction may be exercised over officers and directors where the individual defendant was the "guiding spirit" behind the wrongful acts or the "central figure" in the challenged corporate activity, and finding sufficient evidence to establish that the corporate individual "personally directed, participated in, and authorized the alleged infringing activity"); Jabczenski v. Souther Pacific Mem. Hospital, Inc., 119 Ariz. 15, 20 (Ariz. App. 1978) (stating that for liability to attach to officers and directors in their personal capacity, "the directors or officers must participate in or have knowledge amounting to acquiescence or be guilty of negligence in the management or supervision of the corporate affairs causing or contributing to the injury"). As such, the Court denies the Individual Defendants' Renewed Motion to Dismiss and affirms its March 12, 2007 Order finding personal jurisdiction over Individual Defendants Quattrocchi and Butler.

1 The Individual Defendants specifically mentioned discovery and matters outside of the pleadings. As such, the Court will accept and consider Plaintiff's uncontested citations to the deposition testimony of the Individual Defendants. Further, as the Individual Defendants also note that they join in the Corporate Defendants' Motion for Summary Judgment if the Court does not dismiss them (Dkt. # 188, p. 1, fn.2), the Court finds no need to discuss the issue of converting the Individual Defendants' Motion to one for summary judgment pursuant to Fed.R.Civ.P. 12(c).

2 That Defendants Butler and Quattrocchi apparently transferred the assets of Defendant USSO LLC (solely owned by Defendant Butler) to Defendant IGOVincent, Inc. (solely owned by Defendant Quattrocchi) without consideration also weighs in favor of finding that the Individual Defendants have disregarded the corporate formalities. (Dkt. #203, p. 20).

III. MOTION TO INTERVENE

On February 6, 2008, the Court entered a Protective Order for the Protection of Confidential Information (Dkt. #98) based upon the parties' Stipulated Motion for Entry of a Protective Order (Dkt. #93). On July 17, 2008, Jan Meyer, a member of the Board of Directors of the United States Parachute Association ("USPA"), filed a Motion to Intervene and Unseal Court Records. (Dkt. #230). Ms. Meyer requests that the Court allow her to intervene in this case pursuant to Rule 24(b)(2) of the Federal Rules of Civil Procedure for the limited purpose of unsealing Exhibit E to the Statement of Facts in Support of Larry Hill's Motion for Summary Judgment. In addition, on August 4, 2008, Plaintiff Skydive and Third-Party Defendant Larry Hill filed a Response in Support of Jan Meyer's Motion to Unseal Court Records and Joinder in Motion to Unseal Court Records. (Dkt. #236).

"Nonparties seeking access to a judicial record in a civil case may do so by seeking permissive intervention under Rule 24(b)(2)." San Jose Mercury News, Inc. v. U.S. District Court — Northern District (San Jose), 187 F.3d 1096, 1100 (9th Cir. 1999). Rule 24(b) provides, in pertinent part:

Upon timely application anyone may be permitted to intervene in an action: . . . (2) when an applicant's claim or defense and the main action have a question of law or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.

Fed.R.Civ.P. 24(b). In general, "[p]ermissive intervention to litigate a claim on the merits under Rule 24(b) requires (1) an independent ground for jurisdiction; (2) a timely motion; and (3) a common question of law and fact between the movant's claim or defense and the main action." Beckman Industries, Inc. v. International Ins. Co., 966 F.2d 470, 474 (9th Cir. 1992). However, an independent jurisdictional basis and strong nexus of fact or law are not required where an intervenor merely seeks to challenge a protective order. San Jose Mercury News, 187 F.3d at 1100. Nonetheless, an intervenor must satisfy the commonality of law or fact requirement under FRCP 24(b). Beckman, 966 F.2d at 474.

In her motion, Ms. Meyer seeks to intervene for the sole purpose of unsealing Exhibit E to the Statement of Facts in Support of Third Party Defendant Larry Hills' Motion for Summary Judgment. Exhibit E is the November 29, 2007 Confidential Settlement Release Agreement entered into between the Corporate and Individual Defendants and the United States Parachute Association ("USPA") in Atlanta, SC, Inc., Tandora, Inc., USSO, LLC d/b/a 1-800-Skyride, Inc., Cary V. Quattrocchi and Benny W. Butler v. United States Parachute Association, Cause No. 1-05-CV-266-TWT, in the United States District Court for the Northern District of Georgia, Atlanta Division. That Exhibit was filed in accordance with the Court's stipulated-to February 6, 2008 Protective Order for the Protection of Confidential Information. Ms. Meyer argues that intervention is appropriate in this case to challenge the Court's protective order and unseal the Exhibit because "the document is highly relevant to claims that the Defendants have alleged against Ms. Meyer." (Dkt. #230, p. 1). However, although Ms. Meyer asserts that there is "an existing dispute" and that Defendants have asserted claims against her, there is no collateral or existing litigation between Ms. Meyer and Defendants. Instead, as Plaintiff and Third-Party Larry Hill recognize in their Response in Support of Jan Meyer's Motion, Ms. Meyer is preemptively seeking to intervene in this action because "[t]his Court's decision on the effect of the release concerning the claims asserted against Larry Hill . . . will [allegedly] apply equally to the alleged `viable claims' that Defendants have against Jan Meyer." (Dkt. #236, p. 2). Regardless, this is not a case where "the importance of access to documents prepared for similar litigation involving the same parties satisfie[s] the commonality requirement of 24(b)."Beckman, 966 F.2d at 474 (emphasis added).

Nonetheless, Ms. Meyer argues that collateral litigation is unnecessary because "[t]he right of access to court documents belongs to the public." San Jose Mercury News, 187 F.3d at 1101;see Foltz v. State Farm Mutual Automobile Insurance Co., 331 F.3d 1122 (9th Cir. 2003) (stating that "[t]his right extends to pretrial documents filed in civil cases, including materials submitted in connection with motions for summary judgment."). However, "although the common law right [of access] creates a strong presumption in favor of access, the presumption can be overcome by sufficiently important interests." San Jose Mercury News, 187 F.3d at 1102. "The factors relevant to a determination of whether the strong presumption of access is overcome include the `public interest in understanding the judicial process and whether disclosure of the material could result in improper use of the material for scandalous or libelous purposes or infringement upon trade secrets.'" Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995) (quoting EEOC v. Erection Co., Inc., 900 F.2d 168, 170 (9th Cir. 1990)).

Here, unlike in San Jose Mercury News, there is no compelling public interest; the request to intervene in this case is fully self-interested as Ms. Meyer seeks to obtain the confidential settlement agreement because "Defendants have accused [her] of engaging in conduct that could give rise to viable claims." (Dkt. #235, p. 3) (emphasis added). In addition, Ms. Meyer does not respond to Defendants' "concern that Ms. Meyer's motive for obtaining the confidential settlement agreement is disingenuous and that she would conceivably improperly use or circulate the confidential settlement agreement in furtherance of her own agenda." (Dkt. #235, p. 6). Further, "the federal policy of encouraging settlements by safeguarding the confidentiality of settlement agreements," Abbott Diabetes Care Inc. v. Roche Diagnostics Corp., 2007 WL 4166030, at *4 (N.D. Cal. 2007), acts as an important countervailing interest to the instant request to intervene.

However, the Court also notes that Ms. Meyer and Third-Party Defendant Larry Hill seek permissive intervention in order to test whether the "good cause" requirements of Rule 26(c) have been met with respect to Exhibit E to the Statement of Facts in Support of Third Party Defendant Larry Hills' Motion for Summary Judgment. See Dkt. #230, p. 7; Dkt. #236, p. 2; see San Jose Mercury News, 187 F.3d at 1103 ("This circuit has held that a nonparty may seek permissive intervention in order to test whether the `good cause' requirements of Rule 26(c) have been met with respect to a particular item of discovery."). The Court recognizes that the February 6, 2008 Protective Order amounts to a blanket stipulated protective order under FRCP 26(c), and that "[s]uch blanket orders are inherently subject to challenge and modification, as the party resisting disclosure generally has not made a particularized showing of good cause with respect to any individual document." San Jose Mercury News, 187 F.3d at 1103. Thus, when faced with a Rule 26(b) motion to modify the Court's blanket protective order, "[t]hose who seek to maintain the secrecy of documents attached to dispositive motions must meet the high threshold of showing that `compelling reasons' support secrecy." Foltz, 331 F.3d at 1136; cf. Beckman, 966 F.2d at 476 ("`Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.'") (quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3rd Cir. 1986)).

"The central concern in determining whether access should be granted to documents sealed under a protective order is whether that order was relied upon in the decision to produce documents."Foltz, 331 F.3d at 1137; Beckman, 966 F.2d at 475 (noting that "[t]he extent to which a party can rely on a protective order should depend on the extent to which the order induced the party to allow discovery"). Here, Defendants state that they "reasonably relied on the protective order issued in this case when they agreed to disclose the confidential settlement agreement executed in the settlement of a separate lawsuit." (Dkt. #235, pp. 7-8). Although Ms. Meyer, Plaintiff, and Third-Party Defendant Larry Hill argue that such reliance is insufficient due to the blanket nature of the protective order, the Court notes that Defendants' decision to disclose the Settlement Agreement appears to have been specifically based on the fact that the Agreement would be filed under seal. See Dkt. #s 133, 150. Indeed, in arguing for the production of the Settlement Agreement, Plaintiff stated that "Defendants should not be permitted to shield the production of relevant documents under a claim of `confidentiality,' especially when a protective order exists in this action." (Dkt. #147, p. 2). As such, the Court's protective order was specifically relied on in the Defendants' decision to produce the Settlement Agreement; that is a compelling enough reason to support secrecy in light of the fact that there is no collateral ligation or compelling public interest. For the foregoing reasons, the Court denies Jan Meyer's Motion to Intervene and Motion to Unseal Court Records.

IV. MOTIONS TO STRIKE

On June 13, 2008, Defendants filed a Motion to Strike Evidence in Support of Third-Party Defendant Larry Hill's Motion for Summary Judgment (Dkt. #196), and a Motion to Strike Evidence in Support of Plaintiff's Motion for Partial Summary Judgment (Dkt. #198). Also on June 13, 2008, Plaintiff filed a Motion to Strike Affidavits submitted by Defendants in support of their Motion for Summary Judgment. (Dkt. #201). Then, on July 16, 2008, Plaintiff filed a Motion to Strike Defendants' Untimely Response to Plaintiff's June 13, 2008 Motion to Strike Affidavits. (Dkt. #229).

The Court refers the parties to LRCiv 7.2(m); separate motions to strike evidentiary submissions are not permitted in this Court.³ As such, the Court denies the parties' motions to strike (Dkt. #s 196, 198, 201). Nonetheless, "[i]t is well settled that only admissible evidence may be considered by the trial court in ruling on a motion for summary judgment." Beyene v. Coleman Sec. Serv., Inc., 854 F.2d 1179, 1181 (9th Cir. 1988). "[A]ffidavits [must] be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e); see In re Kaypro, 218 F.3d 1070, 1075 ("Personal knowledge may be inferred from a declarant's position."). As such, conclusory and speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and to defeat summary judgment. Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).

3 LRCiv 7.2(m)(2) states that "[a]n objection to the admission of evidence offered in support of or opposition to a motion must be presented in the objecting party's responsive or reply memorandum (or, if the underlying motion is a motion for summary judgment, in the party's response to another party's separate statement of material facts) and not in a separate motion to strike or other separate filing. Any response to the objection must be included in the responding party's reply memorandum for the underlying motion and may not be presented in a separate responsive memorandum."

However, "[a]t the summary judgment stage, [courts] do not focus on the admissibility of the evidence's form. [Courts] instead focus on the admissibility of its contents." Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003) (citation omitted). "[H]earsay evidence produced in an affidavit . . . may be considered if the out-of-court declarant could later present that evidence through direct testimony, i.e. in a form that would be admissible at trial." See, e.g., J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1542 (3d Cir. 1990). In addition, the "self-serving" nature of testimony does not disqualify it under Fed.R.Civ.P. 56(e). In re Kaypro, 218 F.3d at 1075.

The Court will consider the parties' motions as objections to the admission of evidence, and, if necessary, will discuss those objections throughout this Order to the extent that the Court's findings rely on that evidence. In general, with respect to relevancy objections, the Court will not consider something that it considers irrelevant to the issues presented before it; with respect to hearsay objections, the Court notes, as previously stated, that hearsay may be considered if it can be presented in an admissible form at trial; with respect to objections regarding conclusory, vague, or ambiguous assertions, the Court notes that if faced with such assertions, the Court is required on summary judgment to draw all reasonable inferences in favor of the nonmoving party.

A. Plaintiff's Motion to Strike Response

Plaintiff moves to strike Defendant's "untimely" response to Plaintiff's June 13, 2008 Motion to Strike. Pursuant to Local Rule of Civil Procedure 7.2(c) and Rule 6 of the Federal Rules of Civil Procedure, Defendants had until June 27, 2008 to respond to Plaintiff's Motion to Strike (which, as stated above, violated LRCiv 7.2(m)). However, Defendants did not respond to Plaintiff's motion until July 14, 2008. As such, Plaintiff asks that the Court deem Defendants' failure to timely file an opposition to Plaitniff's Motion to Strike as "consent to the denial or granting of the motion and [] dispose of the motion summarily" pursuant to LRCiv 7.2(i).

The parties then proceed to engage in contentious and unpleasant bickering over whether Defendants' Response was in fact untimely. See Dkt. #s 233, 239. However, the Court will resist the urge to be drawn to the parties' siren song of timeliness. Instead, irrespective of the issue of timeliness, the Court finds that Plaintiff has not been prejudiced by Defendants' July 14, 2008 filing of their response to Plaintiff's Motion to Strike. Although Plaintiff contends that Defendants' response contained an admission that Individual Defendant Cary Quattrocchi "was involved in [USSO] . . . and was intimately familiar with its operations," which Plaintiff argues supports its claim of aiding and abetting tortious conduct, there is nothing in the various pleadings to indicate that Defendants dispute that Defendant Quattrocchi was involved in USSO and was familiar with its operations. Defendants seem to admit as much in their Response to Plaintiff's Motion for Partial Summary Judgment, stating that Defendant Quattrocchi was intimately involved in the creation of USSO's business model and operations. See Dkt. #197, p. 3. As such, the Court denies Plaintiff's Motion to Strike Defendants' Untimely Response.

V. STANDARD OF REVIEW ON SUMMARY JUDGMENT

Summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of establishing the absence of any genuine issue of material fact; it must present the basis for its motion and identify those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001); see also Nissan Fire Marine Ins. Co. v. Fritz Co., 210 F.3d 1099, 1105 (9th Cir. 2000) ("Even after Celotex it is never enough simply to state that the non-moving party cannot meet its burden at trial.").

A material fact is one that might affect the outcome of the case under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In addition, in order to preclude summary judgment, a dispute about a material fact must also be "genuine," such that a reasonable jury could find in favor of the non-moving party. Id.; Anheuser-Busch, Inc. v. Natural Beverage Distrib., 69 F.3d 337, 345 (9th Cir. 1995). In determining whether the moving party has met its burden, the Court views the evidence in the light most favorable to the nonmovant. Allen v. City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995). The Court may not make credibility determinations or weigh conflicting evidence.Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990). Further, the Court must draw all reasonable inferences in favor of the nonmovant. Gibson v. County of Washoe, 290 F.3d 1175, 1180 (9th Cir. 2002).

If the moving party meets its burden with a properly supported motion for summary judgment, then the burden shifts to the non-moving party to present specific facts that show there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Matsushia Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). The nonmovant may not rest on bare allegations or denials in his pleading, but must set forth specific facts, by affidavit or as otherwise provided by Rule 56, demonstrating a genuine issue for trial. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 248-49. Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).

In sum, the question on summary judgment is whether the evidence "presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52. A district court is not required to probe the record in search of a genuine issue of triable fact. Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996). The nonmovant has the burden of identifying with reasonable particularity the evidence that precludes summary judgment. Id.; see Carmen v. San Francisco Unified School District, 237 F.3d 1026, 1028-29 (9th Cir. 2001) (even if there is evidence in the record that creates a genuine issue of material fact, a district court may grant summary judgment if the opposing party's papers do not include or conveniently refer to that evidence). The mere existence of a scintilla of evidence supporting the nonmovant's petition is insufficient; there must be evidence from which a trier of fact could reasonably find for the non-movant. Anderson, 477 U.S. at 252; see Matsushita Elec., 475 U.S. at 586 (nonmovant's showing of "some metaphysical doubt" as to material facts is insufficient).

VI. LARRY HILL'S MOTION FOR SUMMARY JUDGMENT

On April 29, 2008, Third-Party Defendant Larry Hill moved for summary judgment on Defendants' counterclaims of unfair competition (Count I), tortious interference with contract (Count II), and tortious interference with business expectancy (Count III). (Dkt. #185).

A. Tortious Interference

4 ⁴ Although tortious interference with contract (Count II) and tortious interference with business expectancy (Count III) are separate causes of action, the elements to prove each are virtually identical. See Southern Union Co. v. Southwest Gas Corp., 180 F.Supp.2d 1021, 1047 n. 41 (D. Ariz. 2002). Thus, the analysis for both will be combined in this subsection.

To establish a claim for tortious interference, Plaintiff must establish the following: (a) the existence of a valid contractual relationship, at-will or otherwise, or business expectancy; (b) the interferer's knowledge of the contractual relationship or expectancy; (c) intentional interference inducing or causing a breach or termination of the relationship or expectancy; (d) that such interference was improper as to motive or means; (e) resultant damage to the party whose relationship or expectancy was disrupted. Villadoas v. HealthSouth Corp., 338 F.Supp.2d 1096, 1105 (D. Ariz. 2004) (citing Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of Governors, 184 Ariz. 419, 427 (App. 1995)); see also Wagenseller v. Scottsdale Memorial Hospital, 147 Ariz. 370, 387 (1985) ("[A] cause of action in tort is available to a party to any contract, at-will or otherwise, when a third party improperly and intentionally interferes with the performance of that contract."), superseded in other respects by Ariz.Rev. Stat. § 23-1501 (1996). Third-Party Defendant Larry Hill contends that Defendants have submitted nothing in the record to establish that Mr. Hill either intentionally or improperly interfered with any of Defendants' contractual relationships or expectancies.

5 ⁵ Hill also contends that "[Defendants] cannot establish the existence of any valid contractual relationship or business expectancy with which Larry Hill interfered." (Dkt. #185, pp. 4-5). However, in response, Defendants cite the Court to cases that support the proposition that a defendant can be liable for intentional interference with an at-will contract; such contracts exist here because "each of the drop zones in the 1800Skyride Adventure Sports Network specifically agreed to accept 1800Skyride's certificates before 1800Skyride would (or could) send customers to those drop zones." (Dkt. #207, p. 13; DSSOF ¶ 23). Hill does not respond in his Reply.

Defendants respond that Mr. Hill is liable for tortious interference because he "specifically targeted [Defendants'] relationships with the drop zones in its 1800Skyride Adventure Sports Network when Hill and Skydive Arizona were trying to put [Defendants] out of business in 2004." (Dkt. #207, p. 13). To support this contention, Defendants direct the Court to the fact that Mr. Hill forwarded a December 6, 2006 email from Rose and Tim Eakins (the "Eakins email"), owners of a drop zone in Minnesota, to Betsy Barnhouse, who worked for Skydive Arizona "as an independent contractor." (Defendants' Contravening Statement of Facts in Opposition to Larry Hill's Motion for Summary Judgment, "LHCSOF" ¶¶ 82-86). The Eakins wrote that they "would like to see all of the USPA drop zones band together, refuse [to take 1800Skyride's] certificates, and eliminate the [] so-called middle men." (LHCSOF ¶ 83). After receiving the email, Ms. Barnhouse replied, writing that "Skydive Arizona is in full agreement with [the Eakins]," and that "[1800Skyride's] practices can only be stopped if the [drop zone operators] join together in a unified effort. Please do not accept their certificates." (LHCSOF ¶ 89). Ms. Barnhouse also wrote in her email, which identified her as a "Manager" at Skydive Arizona, that "[t]hree small drop zones that have supported [1800]Skyride in the past have a drop zone open next door to them owned and operated by [1800Skyride]." (LHCSOF ¶¶ 90-91).

The Eakins and Barnhouse emails initiated an email chain amongst various drop zone operators (and their employees) who primarily agreed with and built on the statements made in the Eakins and Barnhouse emails concerning issues surrounding 1800Skyride. (LHCSOF ¶¶ 93-103). In a December 7, 2004 email, Tony Frost, owner and operator of Skydive Marana, wrote that although his company was still accepting 1800Skyride certificates, he was amenable to a "multilateral agreement to stop doing business with [1800Skyride]." (LHCSOF ¶¶ 104-05). Ms. Barnhouse replied that "Skydive Arizona is committed to a multilateral agreement. It will take all of us working together unified to get [1800Skyride] out of Arizona before they open their own drop zone [in Arizona]." (LHCSOF ¶ 109). Barnhouse also stated that she "would like to schedule a meeting of all Arizona [drop zone operators] to discuss the Skyride issue." (LHCSOF ¶ 118). Approximately one week later, Third-Party Defendant Larry Hill and Ms. Barnhouse met with Tony Frost. (LHCSOF ¶ 120). After the meeting, Ms. Barnhouse sent an email to other drop zone operators to inform them that "[Skydive Marana] will no longer accept Skyride certificates. Wahoooo!" (LHCSOF ¶ 124).

Defendants point out that Third-Party Defendant Larry Hill apparently never told Ms. Barnhouse to stop sending emails to other drop zone operators on behalf of Skydive Arizona. (Dkt. #207, p. 8; LHCSOF ¶ 112). Defendants also ask the Court to draw an inference that Mr. Hill was involved in Tony Frost's decision to stop accepting Skyride certificates because he attended a meeting with Mr. Frost and Ms. Barnhouse, after which Mr. Frost did in fact stop accepting Skyride certificates. Further, Defendants cite to Defendant Hill's deposition for the contention that Hill met with other drop zone operators about 1800Skyride (LHCSOF ¶¶ 125-26); but Mr. Hill merely stated that he probably spoke with a few drop zone operators about 1800Skyride but could not remember whether he had any specific discussions about no longer accepting Skyride certificates (Dkt. #226, p. 6, Ex. 1 at 120:9-15; LHSOF, Ex. A at 118:3-12). As such, Defendants' argument that Defendant Hill intentionally and improperly interfered with Defendants' contractual relationships or business expectancies boils down to (1) that Hill forwarded the Eakins email to Betsy Barnhouse, (2) Hill did not tell Ms. Barnhouse to stop sending emails on behalf of Skydive Arizona to other drop zone operators, (3) Hill attended a meeting with Tony Frost and Ms. Barnhouse, after which Mr. Frost stopped accepting Skyride certificates, and (4) Hill may have attended a few meetings with other drop zone operators during which the issue of 1800Skyride certificates were discussed. Although Defendants contend that these facts amount to "ample evidence" in the record from which a jury could find (or otherwise infer) that Hill improperly interfered with Defendants' contractual and business relationships (Dkt. #207, p. 15), the Court disagrees.

Defendants cannot establish that Larry Hill's conduct or "interference" was a significant cause of the termination of Defendant's contractual relationships/expectancies. See Southern Union Co. v. Southwest Gas Corp., 180 F.Supp.2d 1021, 1050 (D. Ariz. 2002) ("Arizona courts have not interpreted `inducing or causing' to be limited to situations in which a defendant either initiates interference or physically prevents a third party from performing its contractual obligations, but instead have relied on the `but for' causation standard.") (citing Caudle v. Bristow Optical Co., 224 F.3d 1014, 1024 (9th Cir. 2000) (applying Arizona law and requiring plaintiff to show that defendant's conduct was "significant cause of her termination"); 45 Am.Jur.2d Interference § 10 (1999) ("To establish causation in a tortious interference action, the plaintiff must prove that the defendant's wrongful or unlawful conduct proximately caused the injury alleged, although it need not be the sole cause.")). Although the Court views the evidence in the light most favorable to Defendants, and draws all reasonable inferences in their favor, there must nevertheless be evidence on which a trier of fact could reasonably find for Defendants.

Defendants cite to no authority in support of their contention that Larry Hill's failure to intervene and prevent Ms. Barnhouse from emailing other drop zone operators somehow constitutes interference with Defendants' business relationships/expectancies. The Court will not otherwise impose Ms. Barnhouse's conduct with respect to Defendants business relationships/expectancies onto Larry Hill. Second, it is unreasonable to infer, without more, that because Larry Hill forwarded an email to Ms. Barnhouse, and then attended a meeting with her and Tony Frost, the owner of Skydive Marana who subsequently stopped accepting 1800Skyride certificates, that Hill himself was a significant cause of the termination of Defendant's contractual relationship with Skydive Marana. In addition, to the extent that Defendants raise Hill's meetings with other drop zone operators, Defendants present no evidence with respect to what was discussed at those meetings or whether those operators had or terminated any sort of contractual relationships/expectancies with Defendants after meeting with Hill.

The scant evidence regarding Larry Hill's personal conduct with respect to Defendants' business relationships is insufficient to establish or draw a reasonable inference that Hill's conduct was a significant cause of the termination of Defendants' business relationship/expectancies.⁶ As such, the Court finds that Defendants cannot establish a genuine issue of material fact with respect to their claims for tortious interference against Third-Party Defendant Larry Hill. And because the Court finds that Defendants have presented insufficient evidence to establish intentional interference inducing or causing a breach or termination of Defendants' business relationships or expectancies, the Court need not address whether Larry Hill's interference was improper.

6 At oral argument, Defendants' counsel raised for the first time the argument that Larry Hill should be held personally liable for tortious interference because Ms. Barnhouse acted as his agent; "[w]hen confronted, during her deposition, with the e-mail that she sent, Barnhouse agreed that `[i]t appears' that she was `responding [to the Eakins e-mail] as [Hill's] representative'" because she signed her e-mail "Betsy Barnhouse, Manager Skydive Arizona." (Dkt. #261, p. 1) (quoting LHCSOF ¶¶ 92, 119). However, the title "Manager Skydive Arizona" merely indicates that Ms. Barnhouse was acting as Skydive Arizona's representative. Without further evidentiary support of Larry Hill's personal involvement with either Defendants' business relationships or Ms. Barnhouse's conduct, the Court finds this line of reasoning unpersuasive.

B. Unfair Competition

In Arizona, "the doctrine of unfair competition is based on principles of equity"; "[t]he general purpose of the doctrine is to prevent business conduct that is contrary to honest practice in industrial or commercial matters." Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 123 (App. 1998) (internal quotations omitted). Third-Party Defendant Larry Hill contends that "[t]he record is devoid of any evidence that Larry Hill solicited any employees or independent contractors of [Defendants], or paid any compensation to any former employee of affiliate of [Defendants]." (Dkt. #185, p. 7). Defendants respond without citations that summary judgment may not be granted in favor of Third-Party Defendant Larry Hill because the facts establish that "Hill, directly and through his agents, devised a scheme to put USSO and its related entities out of business." (Dkt. #207, p. 21). Defendants also state that "Hill contacted the drop zones in USSO's network, and pressured them to stop accepting 1800Skyride's certificates," and that he "proposed and promoted a group boycott of not only USSO and its related entities, but also all drop zones that continued to be friendly to USSO and that continued to accept 1800Skyride's certificates." (Id.).

Presumably, Defendants support these contentions with the same facts used to support their tortious interference claims against Larry Hill. But again, those facts establish only that Hill forwarded the Eakins email to an employee, Betsy Barnhouse, that he did not prevent Ms. Barnhouse from communicating with various drop zone operators via email, and that he attended a few meetings with various drop zone operators, one of which was Tony Frost, owner of Skydive Marana, who subsequently stopped accepting 1800Skyride certificates. As such, Defendants' evidentiary support for their claim of unfair competition against Larry Hill personally, is a potential inference that he cajoled or influenced Mr. Frost into deciding to stop accepting 1800Skyride certificates.

However, Defendants submit no evidence indicating what was specifically discussed at that meeting; but more importantly, the meeting was also attended by Ms. Barnhouse, who had previously spoken with Mr. Frost about 1800Skyride. And although it might be reasonable to infer that Ms. Barnhouse had something to do with Mr. Frost's decision to stop accepting 1800Skyride certificates, there is nothing to support the inference that Larry Hill had anything to do with Mr. Frost's decision, or otherwise engaged in unfairly competitive or predatory conduct, let alone the expansive allegations asserted against Hill in Defendants' response.⁷ There is insufficient evidence set forth from which a trier of fact could reasonably find for the Defendants, and the Court cannot find that Defendants have established a genuine issue of material fact with respect to their claim for unfair competition against Third-Party Defendant Larry Hill. Accordingly, the Court will grant Third-Party Defendant Larry Hill's Motion for Summary Judgment.

7 The Court makes no finding with respect to Ms. Barnhouse's conduct. In addition, the Court notes that Defendants do not mention Larry Hill in either their Motion for Summary Judgment or Response to Plaintiff's Motion for Partial Summary Judgment in connection with Plaintiff Skydive Arizona's alleged "campaign against USSO"; Defendants only mention Ms. Barnhouse and her heretofore-relayed conduct. (Dkt. #188, p. 4; Dkt. #197, pp. 4-5).

VII. CROSS-MOTIONS FOR SUMMARY JUDGMENT

On April 29, 2008, Plaintiff filed a Motion for Partial Summary Judgment on its claims for trademark infringement (Count II) and violation of § 43(a) of the Lanham Act (Count I). (Dkt. #183). Defendants filed a Motion for Summary Judgment on all three of Plaintiff's claims (and Plaintiff's request for monetary damages and injunctive relief) on May 2, 2008. (Dkt. #188).

A. Trademark Infringement

"To establish a trademark infringement claim under section 32 of the Lanham Act or an unfair competition claim under section 43(a) of the Lanham Act, ⁸ [Plaintiff Skydive] must establish that [Defendants are] using a mark confusingly similar to a valid, protectable trademark of [Skydive's]." Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1046 (9th Cir. 1999). Plaintiff contends that it has a valid, protected trademark for the mark "SKYDIVE ARIZONA," and that Defendants have infringed on its exclusive right to use that mark in commerce in connection with skydiving services. (Dkt. #183, p. 11). The Court must first determine whether Plaintiff has a has a valid, protectable trademark interest in the mark "SKYDIVE ARIZONA." See Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925, 928 (9th Cir. 2005) ("A necessary concomitant to proving infringement is, of course, having a valid trademark; there can be no infringement of an invalid mark. . . . The validity of the trademark is a threshold issue. . . .") (quotations omitted).

8 Section 32 of the Lanham Act provides protection to registered marks; "section 43(a) protects against infringement of unregistered marks and trade dress as well as registered marks, . . . and protects against a wider range of practices such as false advertising and product disparagement." Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1047 n. 8 (9th Cir. 1999) (citations omitted).

i. Burden of Proof

The plaintiff bears the ultimate burden of proof in a trademark infringement action. Yellow Cab, 419 F.3d at 928. However, "[i]n cases involving properly registered marks, a presumption of validity places the burden of proving genericness upon the defendant." Filipino Yellow Pages, 198 F.3d at 1146-47 (citing 15 U.S.C. § 1057(b) ("A certificate of registration of a mark . . . shall be prima facie evidence of the validity of the registered mark. . . ."); see Yellow Cab, 419 F.3d at 928 ("[A] plaintiff alleging infringement of a federally-registered mark is entitled to a presumption that the mark is not generic."). Nevertheless, a defendant may overcome the presumption of validity "by a showing by a preponderance of the evidence that the term was or has become generic." Anti-Monopoly, Inc. v. General Mills Fun Group, Inc., 684 F.2d 1316, 1319 (9th Cir. 1982).

Plaintiff Skydive Arizona contends that it is entitled to a presumption of distinctiveness under 15 U.S.C. §§ 1115(a) and 1057(b) because "SKYDIVE ARIZONA" is a federally registered trademark. (Dkt. #204, p. 15). But Plaintiff's mark was not registered until June 6, 2006, approximately one year after Plaintiff brought this case (DSSOF ¶ 43); consequently, the presumption of distinctiveness, i.e., that the mark "SKYDIVE ARIZONA" acquired secondary meaning, did not arise until June 6, 2006. See 2 J. Thomas McCarthy, Trademarks and Unfair Competition § 11:53 (4th ed. 2008) ("The presumption to which a § 2(f) registration is entitled is not that the designation is inherently distinctive, but that it had acquired secondary meaning as of the date of the registration.") (emphasis added). However, "[t]he crucial date for the determination of genericness is the date on which the alleged infringer entered the market with the disputed mark or term." Yellow Cab, 419 F.3d at 928. Here, that date is approximately June 2003, when Defendants first started using the words "skydive" and "Arizona" in their internet advertisements. (DSSOF ¶ 30). As such, because the mark "SKYDIVE ARIZONA" was not registered until approximately one year after this case was filed, the Court finds that Plaintiff is not entitled to a presumption of distinctiveness and retains the burden of proof of establishing that "SKYDIVE ARIZONA" was a valid mark as of June 2003, when Defendants entered the market with the disputed marks.

9 ⁹ Because the crucial date for the determination of validity is June 2003, the issue of whether the mark "SKYDIVE ARIZONA" is valid post-June 2003 (and whether the presumption of validity that arose in June 2006 can be overcome) is beyond the scope of the Court's present inquiry.

ii. Secondary Meaning

A trademark is defined in 15 U.S.C. § 1127 as "any word, name, symbol, or device or any combination thereof" used by any person "to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." A valid trademark must be distinctive, i.e., capable of distinguishing the applicant's goods from those of others. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). The Ninth Circuit recognizes four categories of terms of increasing distinctiveness with respect to trademark protection: "(1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful." Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d 1143, 1146-47 (9th Cir. 1999) (quoting Surgicenters of America, Inc. v. Medical Dental Surgeries Co., 601 F.2d 1011, 1014 (9th Cir. 1979)). The latter two categories are deemed inherently distinctive and entitled to protection because their intrinsic nature identifies a particular source of a product. Two Pesos, 505 U.S. at 768. In contrast, generic marks — those that "refe[r] to the genus of which the particular product is a species" — are not registrable as trademarks, and descriptive marks — those that, "[w]hen used to describe a product, do not inherently identify a particular source" — are only registrable if they acquire "secondary meaning." Id. at 768-69 (quoting Park `N Fly, Inc. v. Dollar Park Fly, Inc., 469 U.S. 189, 194 (1985)). A descriptive mark may acquire secondary meaning over time if the mark has become distinctive of the applicant's goods in commerce. Id. at 769 (citing 15 U.S.C. § 1052(e), (f)). As such, "[t]he general rule regarding distinctiveness is clear: An identifying mark is distinctive and capable of being protected if it either (1) is inherently distinctive or (2) has acquired distinctiveness through secondary meaning." Id. (citingRestatement (Third) of Unfair Competition § 13, pp. 37-38).

"Whether a mark is generic is a question of fact." Stuhlbarg Int'l Sales Co., Inc. v. John D. Brush Co., Inc., 240 F.3d 832, 840 (9th Cir. 2001). "A `generic' term is one that refers, or has come to be understood as referring, to the genus of which the particular product or service is a species. It cannot become a trademark under any circumstances." Surgicenters of America, Inc. v. Medical Dental Surgeries Co., 601 F.2d 1011, 1014 (9th Cir. 1979) (citation omitted); McCarthy, supra, at § 12:1 (a generic term is "the name of the product or service itself — what [the product] is, and as such . . . the very antithesis of a mark"). To determine whether a term is generic, courts employ an anti-dissection rule, whereby the distinctiveness of a composite trademark is determined by viewing the trademark as a whole.Filipino Yellow Pages, 198 F.3d at 1150; California Cooler, Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1455 (9th Cir. 1985) ("[Plaintiff's] mark is a composite term, and its validity is not judged by an examination of its parts. Rather, the validity of a trademark is to be determined by viewing the trademark as a whole.").

The Ninth Circuit also relies on the "who-are-you/what-are-you" test. Yellow Cab, 419 F.3d at 929; McCarthy, supra, at § 12:01 ("A mark answers the buyer's questions `Who are you?' `Where do you come from?' `Who vouches for you?' But the [generic] name of the product answers the question `What are you?'"). "Under this test, `[i]f the primary significance of the trademark is to describe the type of product rather than the producer, the trademark [is] a generic term and [cannot be] a valid trademark."Filipino Yellow Pages, 198 F.3d at 1147 (quoting Anti-Monopoly, Inc. v. General Mills Fun Group, 611 F.2d 296, 304 (9th Cir. 1979)) (emphases added); see also KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 604 (9th Cir. 2005) ("To determine whether a term has become generic, we look to whether consumers understand the word to refer only to a particular producer's goods or whether the consumer understands the word to refer to the goods themselves.").

Here, Defendants assert that as of June 2003, the term "Skydive Arizona" was either generic or descriptive without acquired secondary meaning, and therefore is not entitled to trademark protection. (Dkt. #188, pp. 7-11). However, the term "Skydive Arizona" does not appear to be generic. The term, as Plaintiff's operating name, answers the buyer's question, "Who are you?" But if faced with the question "What are you?," Plaintiff, like its in-state competitors, would most likely respond that it is a skydiving facility located in Arizona. Although the individual words of the term used to answer the question "Who are you?" are (basically) contained in that answer to the question "What are you?," the composite term "Skydive Arizona" appears to be sufficiently distinct from the description of Plaintiff's services to establish that the mark is not necessarily generic. Regardless, the parties' main point of contention is whether the term "Skydive Arizona" is merely descriptive without acquired secondary meaning as of June 2003, the date when Defendants began using the terms "skydive" and "Arizona" in their internet advertising.

A descriptive term does not inherently identify a particular source when used to describe a product, and thus cannot be protected unless it has acquired secondary meaning, i.e., the distinctiveness that will allow it to be protected under the Lanham Act. Two Pesos, 505 U.S. at 769; Filipino Yellow Pages, 198 F.3d at 1148 ("Although descriptive terms generally do not enjoy trademark protection, a descriptive term can be protected provided that it has acquired `secondary meaning' in the minds of consumers, i.e., it has become distinctive of the trademark applicant's goods in commerce.") (internal quotations omitted). "[T]he question of secondary meaning is one of fact." Levi Strauss Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355 (9th Cir. 1985) (en banc). To determine whether a descriptive mark has acquired secondary meaning, the finder of fact considers: (1) whether actual purchasers of the product bearing the claimed trademark associate the trademark with the producer; (2) the degree and manner of advertising under the claimed trademark; (3) the length and manner of use of the claimed trademark; (4) whether use of the claimed trademark has been exclusive." Yellow Cab, 419 F.3d at 930 (citing Levi Strauss, 778 F.32d at 1358);Filipino Yellow Pages, 198 F.3d at 1151 ("Secondary meaning can be established in many ways, including (but not limited to) direct consumer testimony; survey evidence; exclusivity, manner, and length of use of a mark; amount and manner of advertising; amount of sales and number of customers; established place in market; and proof of intentional copying by the defendant.").

It is evident that the mark "Skydive Arizona" suggests the basic nature of the service to be rendered, i.e., skydiving in Arizona. As such, the mark can only be valid with a strong showing of secondary meaning. See, e.g., American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 12 (5th Cir. 1974) ("The evidentiary burden necessary to establish secondary meaning is substantial where the proposed mark's original or primary meaning suggests the basic nature of the service to be rendered."); McCarthy, supra, at § 15:33 ("more evidence is required to prove secondary meaning for highly descriptive terms"). "There must be proof that a `significant number' of prospective purchasers identify the term as a trademark." McCarthy, supra, at § 15:33; see also American Scientific Chemical, Inc. v. American Hosp. Supply Corp., 690 F.2d 791, 792 (9th Cir. 1982) ("In order to obtain protection for its trade name, plaintiff must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.'") (quoting Kellogg Co. v. National Biscuit Co., 205 U.S. 111, 118 (1938)). Although "[a]n expert survey of purchasers can provide the most persuasive evidence of secondary meaning," Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 615 (9th Cir. 1989), indirect evidence can also be used to establish secondary meaning; "consumer testimony is not required to prove secondary meaning." American Scientific, 690 F.2d at 793; Heartland Bank v. Heartland Home Finance, Inc., 335 F.3d 810, 819 (8th Cir. 2003) ("[S]urvey data is not a requirement and secondary meaning can be, and most often is, proven by circumstantial evidence.") (Smith, J., concurring).

Indirect or "[c]ircumstantial evidence is evidence from which consumer association might be inferred, such as years of use, extensive amount of sales and advertising, and any additional evidence showing wide exposure of the mark to consumers."Heartland Bank, 335 F.3d at 819 (Smith, J., concurring); see also American Scientific, 690 F.2d at 793 (finding that extensive advertising data can indicate secondary meaning); but see Turtle Wax, Inc. v. First Brands Corp., 781 F.Supp. 1314, 1324 (N.D. Ill. 1991) ("Even where a party has engaged in extensive advertising and promotional efforts, those efforts do not necessarily indicate that consumers would associate plaintiff's trade dress with a particular source if the advertising does not itself emphasize the trade dress."). In this case, Plaintiff presents a substantial amount of uncontested circumstantial evidence concerning the history of Skydive Arizona and its continued use of the "SKYDIVE ARIZONA" mark since 1986, as well as advertising data ranging from advertisements in the Yellow Pages, college newspapers, and Skydiving magazines to segments on local and national Television programming. (PCSOF ¶ 13; Dkt. #204, pp. 11-15). There is no dispute over Plaintiff's continued use of the "SKYDIVE ARIZONA" mark since 1986. (Dkt. #260, ¶ 1);see 15 U.S.C. § 1052(f) (substantially exclusive and continuous use of a mark for five years may serve as prima facie evidence that the mark has become distinctive).

However, Defendants raise two contentions with respect to Plaintiff's extensive advertising with the mark "SKYDIVE ARIZONA." Defendants first remark that Plaintiff's circumstantial evidence consists of self-serving statements made by Plaintiffs "employees and business cronies." (Dkt. #197, p. 18). Certainly, to the extent that Plaintiff's evidence consists of unsupported statements that the "SKYDIVE ARIZONA" mark has acquired is "well-known," those statements are inadmissible for lack of foundation; even that evidence which is admissible carries little weight. See Filipino Yellow Pages, 198 F.3d at 1151-52 ("Evidence of secondary meaning from a partial source possesses very limited probative value.") (citations omitted). Next, with respect to Plaintiff's evidence of its myriad advertising, Defendants assert that Plaintiff's "primary advertisements — in Skydiving Magazine, Parachutist Magazine, during professional skydiving competitions, and through sponsorship of professional skydiving teams — are directed at experienced jumpers, not first time, potential jumpers," which Defendants contend are the relevant class of consumers. (Dkt. #197, p. 17; DSSOF ¶¶ 37, 38). Importantly, Plaintiff does not appear to dispute that the relevant consumer group is primarily restricted to first-time or relatively inexperienced skydivers. (DSSOF ¶ 33).

Nonetheless, it is unclear why first-time or inexperienced skydivers would not see or obtain information about a skydiving company such as Plaintiff through an advertisement placed in magazines geared towards more experienced skydivers. In addition, Defendants fail to address Plaintiff's other evidence of advertising in, among other things, the Yellow Pages and college newspapers (as well as reports on local and national television, and the fact that Skydive Arizona hosts national and international parachuting events).

On the other hand, Plaintiff does not indicate what portion of its advertisements were directed, or likely reached, the relevant consumer group. Also, as Defendants point out, the direct evidence in this case seems to weigh against finding that the mark "SKYDIVE ARIZONA" had acquired secondary meaning by 2003; Hillarie Leverett "testified that although she had `heard' of Plaintiff prior to purchasing her USSO skydiving certificate in 2005, she did not know Plaintiff by name." (Dkt. #197, p. 17). As such, viewing the evidence in the light most favorable to Defendants, questions of fact remain as to whether Plaintiff's circumstantial evidence of secondary meaning establishes that an association between Plaintiff and the mark "SKYDIVE ARIZONA" existed in the minds of a substantial number of the relevant consumer group at the time Defendants allegedly started using the mark in 2003. ¹⁰See McCarthy, supra, at § 15:33 ("Secondary meaning may be proven by a fair preponderance of the evidence of an association between the mark and the seller in the minds of a substantial number of the relevant buyer group."); see also Heartland Bank, 335 F.3d at 820 ("Various circuits and authorities recognize that in the absence of direct proof, the court must draw reasonable inferences from the evidence of money spent in advertising to establish that the mark is from a particular source, of the type of advertising used, of long-term usage of the mark, and of sales volume.") (Smith, J., concurring). Summary judgment is inappropriate at this time.

10 To support a finding of secondary meaning, Plaintiff points the Court to Skydive Arizona v. Mullins, Case No. CIV 01-1854-PHS-SMM (March 26, 2004) (McNamee, J.), in which Judge Stephen McNamee granted summary judgment in favor of Plaintiff, finding that Plaintiff had submitted sufficient circumstantial evidence to establish secondary meaning. (Dkt. #260, Ex. 4, p. 21). However, in that case, Defendants did not contest any of the facts set forth by Plaintiff to establish secondary meaning, and Judge McNamee specifically limited his holding to the facts of the case due to "the unique evidence left before the Court and the equitable findings as a matter of law after consideration of the evidence." (Id., pp. 21, 29-30). Here, Defendants do dispute Plaintiff's circumstantial evidence supporting secondary meaning; the cases are not analogous.

iii. Likelihood of Confusion

In order to prevail on a trademark infringement claim, Plaintiff must also show a likelihood of confusion exists between the "SKYDIVE ARIZONA" mark and Defendants' use of the mark or the words "skydive" and "Arizona" in their Internet advertisements.See McCarthy, supra, § 15:25 ("Once secondary meaning is established, the scope of protection is commensurate with the degree and strength of that secondary meaning and consumer association."). To determine whether a likelihood of confusion exists, courts may look to the pliant "Sleekcraft" eight-factor test: (1) strength of the mark; (2) proximity or relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and degree of care likely to be exercised by the purchaser; (7) defendants' intent in selecting the mark; (8) likelihood of expansion of the product line. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979); see also GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000) ("[O]nly a subset of the Sleekcraft factors are needed to reach a conclusion as to whether there is a likelihood of confusion.") (citation omitted).

Plaintiff contends that the declarations of James Flynn and Brian Cherry establish proof of actual confusion.¹¹ (Dkt. #227, pp. 10-11); see Lisa Frank, Inc. v. Impact International, Inc., 799 F.Supp. 980, 994-95 (D. Ariz. 1992) (two incidents of actual confusion considered "strong evidence" of confusion). However, neither Mr. Flynn nor Mr. Cherry appear to have actually confused 1800SKYRIDE with Skydive Arizona; both men simply believed that they were purchasing skydiving certificates from 1800SKYRIDE that could be redeemed at a location in Arizona, but not that they were purchasing tandem jumps from Skydive Arizona. (PSOF ¶¶ 41-48). And even if Mr. Flynn or Mr. Cherry were falsely informed that they could redeem their 1800SKYRIDE certificates at Skydive Arizona or that 1800SKYRIDE had locations within Arizona that fit the advertised description, that does not establish that Mr. Flynn or Mr. Cherry in fact confused 1800SKYRIDE (or the "1800Skyride Adventure Sports Network") with Skydive Arizona; such facts appear to merely support Plaintiff's claim for false advertising under § 43(a) of the Lanham Act.

11 Plaintiff also submits evidence of "actual confusion" of unnamed customers. (PSOF ¶¶ 49-56). However, even if these customers' statements are properly admissible as evidence of actual confusion, or at the very least admissible as present sense impressions under Fed.R.Evid. 803(3), those statements merely establish that customers thought they could redeem 1800Skyride certificates at Skydive Arizona. The statements do not establish that the customers believed that they were purchasing certificates from Skydive Arizona, as opposed to 1800Skyride. The latter type of confusion is what matters for purposes of trademark infringement; the former relates to false adverting under Section 43(a) of the Lanham Act.

Regardless, Plaintiff also points out that "[i]n the context of the Web in particular, the three most important Sleekcraft factors are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the simultaneous use of the Web as a marketing channel." GoTo.com, 202 F.3d at 1205 (citation omitted); see Perfumebay.com v. eBay Inc., 506 F.3d 1165, 1174 (Fed. Cir. 2007) (discussing the "factors of Internet trilogy."). As such, the Court must determine whether the public is likely to be confused about the source or sponsorship of Plaintiff's mark.

First, the parties do not spend much time discussing the particulars of Defendants' use of the "SKYDIVE ARIZONA" mark; Plaintiff mainly references Defendants' use of the phrase "Arizona Skydiving" and the words "Skydive" and "Arizona" in their Internet advertising. (Dkt. #182, Ex. 20); but see Brookfield, 174 F.3d at 1054 (discussing the comparison of the mark and Defendants' use of the mark in detail; "[w]here the two marks are entirely dissimilar, there is no likelihood of confusion."). However, the Court cannot conclude that the terms "SKYDIVE ARIZONA" and "Arizona Skydiving" on their face, without more, are, for all intents and purposes, identical or confusingly similar in terms of sight, sound, and meaning. See Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1392 (9th Cir. 1993) ("The court assesses the similarity of the marks in terms of their sight, sound, and meaning."). But Plaintiff also points out that Defendants do in fact use the "SKYDIVE ARIZONA" mark on 1-800SKYRIDE's websites as purported links to Plaintiff's website. (PSOF ¶¶ 67-68, Ex. 20, p. 2). Nevertheless, Plaintiff fails to compare the two marks in terms of sight or meaning; the marks are not presented side-by-side, and to the extent that Plaintiff contends that the mark "SKYDIVE ARIZONA" was placed on Defendants' websites to fraudulently deceive consumers that Plaintiff was part of Defendants' network, that would seem to work against Plaintiff's contention that consumers would confuse Plaintiff and 1800SKYRIDE. As such, the Court cannot find at this time that the similarity factor weighs in favor of either party.

However, other factors, such as the relatedness of the goods, appear to favor Plaintiff. "Related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods." Brookfield, 174 F.3d at 1055. In addition, "[w]ith respect to Internet services, even services that are not identical are capable of confusing the public." GoTo.com, 202 F.3d at 1206. Thus, although Defendants only offer redeemable skydiving certificates, both parties offer the same services, i.e., they sell skydives. (Dkt. #227, p. 12). Further, with respect to the marketing channel factor, "the Web, as a marketing channel, is particularly susceptible to a likelihood of confusion. . . ." Id. at 1207 (citation omitted). Thus, two of the Internet factors weigh in favor of Plaintiff. Moreover, Defendants' intent in using Plaintiff's mark, as opposed to using variations of the mark, is highly questionable if it indeed used the Skydive Arizona mark as a link on its website (see below re: initial interest confusion).

Nonetheless, although those three factors appear to weigh in favor of Plaintiff, the lack of evidence of actual confusion seems to weigh against Plaintiff, especially when the individuals cited to by Plaintiff did not testify that they ever confused 1800SKYRIDE with Plaitniff Skydive Arizona. In addition, even if Plaintiff is able to establish secondary meaning, the strength of its mark is fairly weak due to its descriptive nature, which weighs in favor of Defendants. See Nutri/System, Inc. v. Con-Stan Industries, Inc., 809 F.2d 601, 605 (9th Cir. 1987) ("[D]escriptive or suggestive marks are `weak.'"); Sleekcraft, 599 F.2d at 349 ("A descriptive mark tells something about the product; it will be protected only when secondary meaning is shown."). Thus, because the Sleekcraft (and Internet trilogy) factors do not particularly favor either party, the Court is unable to determine likelihood of confusion at this time.¹² Summary judgment is not appropriate.

12 ¹³ The relevant consumers, as mostly novice and first-time skydivers, might exercise more care as first-time purchasers, but also are more likely to be deceived. That factor does not appear to favor either party over the other. However, with respect to likelihood of expansion, although both parties operate nationally, Defendants could expand by opening their own skydiving facilities, which would seem to favor Plaintiff. But see Brookfield, 174 F.3d at 1060 ("The likelihood of expansion in product lines factor is relatively unimportant where two companies already compete to a significant extent.").

13 Plaintiff is correct that "[i]n a close case amounting to a tie, doubts are resolved in favor of the senior user" of the mark. Dr. Seuss, 109 F.3d at 1394 n. 14. And on balance, theSleekcraft factors appear to favor Plaintiff. However, the lack of admissible evidence concerning actual confusion and the remaining questions concerning the similarity of the marks foreclose this from being "a close case" at this time. Further, even if the Court could determine likelihood of confusion in Plaintiff's favor, summary judgment remains inappropriate due to the remaining issues of fact with respect to whether Plaintiff's mark had acquired secondary meaning by 2003.

iv. Initial Interest Confusion

Plaintiff also raises the issue of "initial interest confusion." (Dkt. #183, pp. 13-15). Initial interest confusion occurs when a defendant uses a plaintiff's trademark "in a manner calculated `to capture initial consumer attention, even though no actual sale is finally completed as a result of the confusion.'"Brookfield, 174 F.3d at 1046 (quoting Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1405 (9th Cir. 1997)). Importantly, the "Lanham Act bars [a defendant] from including in its metatags¹⁴ any term confusingly similar with [the plaintiff's] mark." Id. at 1065. Clearly, it would seem that if Plaintiff has a valid, protectable trademark in "SKYDIVE ARIZONA", then Defendants would be barred from including in its metatags any term confusingly similar with Plaintiff's mark. However, although Defendants do not specifically respond to Plaintiff's argument concerning initial interest confusion, Defendants raise the defense of fair use under the Lanham Act; "[i]t is well established that the Lanham Act does not prevent one from using a competitor's mark truthfully to identify the competitor's goods. . . . This fair use doctrine applies in cyberspace as it does in the real word." Id. (citations omitted);see 15 U.S.C. § 1115(b)(4); see also KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 124 (2004) ("[T]he Defendant has no independent burden to negate the likelihood of any confusion in raising the affirmative defense that a term is used descriptively, not as a mark, fairly, and in good faith.").

14 See Brookfield, 174 F.3d at 1045 ("Search engines look for keywords in places such as domain names, actual text on the web page, and metatags. Metatags are HTML code intended to describe the contents of the web site. . . . The more often a term appears in the metatags and in the text of the web page, the more likely it is that the web page will be `hit' in a search for that keyword and the higher on the list of `hits' the web page will appear.").

Although Plaintiff dismisses without explanation Defendants' "fair use" argument as "specious" (Dkt. #227, p. 8), it would appear that the fair use doctrine might in fact allow Defendants to legitimately use descriptive phrases such as "Arizona Skydiving" and the descriptive words "Skydive" and "Arizona." See Brookfield, 174 F.3d at 1066 (stating that a party can legitimately use an appropriately descriptive term, such as "Movie Buff," that is routinely used in the English language). But Defendants also use the exact phrase "Skydive Arizona." See id. (drawing a distinction between legitimate use of the descriptive term "Movie Buff" and prohibitive use of the trademark "MovieBuff"). Nonetheless, summary judgment on the defense of fair use is improper where there are genuine issues of material fact regarding the degree of consumer confusion caused by Defendants' use of a term or phrase. See KP Permanent, 408 F.3d at 609. As stated above, questions of fact remain as to the validity of Plaintiff's mark (i.e., whether, and to what degree, secondary meaning was established by 2003), as well as the degree of confusion under the Sleekcraft factors (primarily with respect to the similarity of the marks). The Court cannot properly resolve the issues of initial interest confusion and fair use at this time. Summary judgment is inappropriate. B. Lanham Act § 43(a)

15 ¹⁵ Corporate and Individual Defendants Quattrocchi and Butler do not respond to Plaintiff's arguments concerning each entity or individual's liability (the latter for aiding and abetting under Arizona law). The Individual Defendants merely stated that they join in the Corporate Defendants' Motion for Summary Judgment and opposition to Plaitniff's Motion for Partial Summary Judgment if their Renewed Motion to Dismiss was denied. (Dkt. #197, p. 1 n. 2). As such, the Court will deem unopposed Plaintiff's request on summary judgment to hold Individual Defendants Quattrocchi and Butler liable for aiding and abetting the Corporate Defendants' alleged tortious conduct. (Dkt. #183, pp. 7-8). Plaintiff has submitted evidence to establish the elements of a claim for aiding and abetting tortious conduct under Arizona law. (Id.);see Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 485 (2002). In addition, although Corporate Defendants claim that Defendant Atlanta SC cannot be held liable as it only owns a single website, advertising the Atlanta Skydiving Center (Dkt. #188, p. 13 n. 6), Plaintiff claims that Defendant Atlanta SC is among those liable under the Lanham Act because it improperly used photographs of Plaintiff's aircraft, falsely portraying the aircraft as its own. (Dkt. #227, p. 7; Dkt. #183, p. 9). As such, Defendant Atlanta SC may be held liable to the extent that it is involved in the alleged Lanham Act violations.

The Lanham Act creates a civil remedy against persons or entities who engage in "false designations of origin, false descriptions, and false representation in the advertising and sale of goods and services." Waits v. Frito-Lay, 978 F.2d 1093, 1106 (9th Cir. 1992). Section 43(a) of the Lanham Act provides, in pertinent part:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

115 U.S.C. § 1125(a). The elements of a false advertising claim under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), are:

(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused the false statement to enter instate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by diversion of sales from itself to defendant or be a lessening of the goodwill associated with its products.

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997) (citations omitted); see Rice v. Fox Broadcasting Co., 330 F.3d 1170, 1180 (9th Cir. 2003). Defendants contend that Plaintiff cannot demonstrate any of the elements required to prove that Defendants have violated Section 43(a) of the Lanham Act.¹⁶ (Dkt. #197, p. 6; Dkt. #188, pp. 13-15).

16 The parties do not contest the fourth factor, i.e., that Defendants caused the allegedly false statement(s) to enter instate commerce.

i. False Statement

17 ¹⁷ In their Motion for Summary Judgment, Defendants' raise the defense of "puffery." (Dkt. #188, p. 14). "`'Puffing' is exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely and is not actionable under § 43(a).'" Southland Sod, 108 at 1145 (quoting 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27.04[4][d] at 27-52 (3d ed. 1994)). However, "[w]hile product superiority claims that are vague or highly subjective often amount to nonactionable puffery, misdescriptions of specific or absolute characteristics of a product are actionable." Id. (citations and quotations omitted). As discussed in this Section, Defendants' false statements are those of specific or absolute characteristics, and are therefore actionable.

Plaintiff contends that Defendants' 1800SKYRIDE and related web sites "used false designations of origin, false and misleading descriptions of fact, and false and misleading representations of fact that misrepresent the nature, characteristics, qualities, and geographic origin of their skydiving services and commercial activities." (Dkt. #183, p. 5). It appears that Defendants employ numerous websites purporting to have skydiving centers in geographic locations where Defendants in fact have no skydiving centers.¹⁸ (SOF ¶¶ 17-18, 21-24, 26-32). Those websites include a website for "Arizona Skydiving" (Dkt. #182, Ex. 20), as well as ones for fictitious skydiving centers in Phoenix, Tempe, Scottsdale, Mesa, Glendale, Yuma, Flagstaff, Chandler, Peoria, and Tucson. (Dkt. #203, p. 8; Dkt. #170, Exs. B, C, O, and Z). The following language obtained from the "Arizona Skydiving" website falsely purports to own and operate physical skydiving centers within Arizona: "Skydiving Arizona operates seven day [sic] as [sic] week and is available now to assist you with your reservation. Because we are the busiest skydive center serving Arizona, we run multiple turbine aircraft, but tend to book up quickly. So call us now." (Dkt. #204, p. 7; Dkt. #182, Ex. 20).

18 Defendants object to Plaintiff's evidence of "numerous 1800SKYRIDE websites" as irrelevant because the Court's August 22, 2006 Order stated that Plaintiff only had standing to bring claims against Defendants for conduct for which Plaintiff could demonstrate that it has suffered a "realistic and identifiable injury." (DCSOF ¶ 17). As both parties compete nationally for business and more than 92 percent of Plaintiff's customers come from outside the State of Arizona to skydive (Dkt. #182, Ex. 24), it would seem reasonable to infer that even websites purporting to offer skydiving in other parts of the country might adversely impact Plaintiff's ability to attract customers. Regardless, and consistent with the Court's August 22, 2006 Order, in order to obtain damages for any false statements made on Defendants' websites based on locations outside of the State of Arizona, Plaintiff would have to prove an identifiable injury based on the misrepresentations in those websites, i.e., that consumers were mislead by false statements on non-Arizona-based websites and otherwise would have done business with Plaintiff. However, Plaintiff may, at the very least, point to Defendants' use of any websites purporting to have Arizona-based skydiving facilities or that offer skydiving in the State of Arizona.

Defendants object to these quotations, arguing that "the more recent version of the website does not include the claimed objectionable language." (DCSOF ¶ 28) (emphasis in original). However, Defendants cite the Court to no authority for the proposition that they can avoid liability under the Lanham Act simply by claiming that they removed any "claimed objectionable language" from their websites. Although Defendants deletion of all false and misleading statements from their websites might arguably moot the need for an injunction (if Defendants are able to prove that they have removed all objectionable material from their websites), remedies for Lanham Act violations, especially in direct competition cases, may include an accounting of profits. See, e.g., Playboy Enterprises, Inc. v. Baccarat Clothing Co., Inc., 692 F.3d 1272, 1274 (9th Cir. 1982) (an accounting of profits remedy serves as a proper remedy for violations of the Lanham Act). As such, the Court finds that those statements are indeed relevant to establish false advertising under the Lanham Act. Moreover, as Defendants implicitly concede that those sorts of false and misleading statements were made on their websites (since they state that the statements were taken off the websites), Plaintiff's have clearly established that Defendants made false statements of fact in a commercial advertisement about its own product.

Although belied by the quoted language above, Defendants state that their websites merely contain advertisements for skydiving opportunities at nearby geographic locations that are operated by participants in 1800Skyride's network of participating drop zones. (Dkt. #197, pp. 6-7). However, James Flynn testified, among other things, that he located one of Defendants' websites and that it represented that it was for a skydiving center located in Arizona, not that Defendants merely offered redeemable certificates for skydiving drop zones owned and operated by businesses other than 1800SKYRIDE. (PSOF, Ex. 2, at ¶¶ 5-6). Mr. Flynn's testimony also constitutes evidence that Defendants made false statements or misrepresentations of fact on their websites.¹⁹ Moreover, Plaintiff submits additional testimony from other individuals that Defendants' websites contained language like that referenced above, falsely indicating that Defendants had physical skydiving center in various locations and States.²⁰ As such, the Court finds that Plaintiff has satisfied the first element with respect to its false advertising claim under Section 43(a) of the Lanham Act.

19 The misrepresentation noted by Mr. Flynn here is separate from the issue of actual confusion discussed in relation to likelihood of confusion. In the latter case, confusion must be based on Defendants' use of Plaintiff's trademark, not simply Defendants' use of false statements regarding their business on their websites.

20 Defendants object to the numerous statements made by "Plaintiff's own employees and business cronies." (Dkt. #197, p. 6 n. 4). Although the Court will not consider conclusory or speculative statements, there is no prohibition on otherwise admissible statements made by one's employees. See In re Kaypro, 218 F.3d at 1075 ("[T]he `self-serving' nature of the testimony [does] not disqualify it under Fed.R.Civ.P. 56(e)). Thus, any testimony submitted by Plaintiff's employees or so-called "business cronies" will be considered as long as it is based on personal knowledge. For example, the Court will consider testimony from Jan Meyer in which she states she accessed some of Defendants' websites and they portrayed themselves as having actual drop zones. (Dkt. #182, Ex. 14). However, the Court will not consider speculative testimony such as that from Besty Barnhouse that "[t]hese people lie. They cheat people out of money." (PSOF ¶ 19). The Court will also not consider testimony from Plaintiff's employees regarding statements made by unnamed customers if offered to prove the truth of the matter asserted, i.e. that Defendants' websites contained false or misleading statements. (Dkt. #182, Exs. 4, 23, 29).

Further, "using a photograph of another's product to sell one's own cheaper product is unfair competition under Section 43(a)."Sublime Products, Inc. v. Gerber Products, Inc., 579 F.Supp. 248, 250 (D.C.N.Y. 1984) (citing L'Aiglon Apparel v. Lana Lobell, 214 F.2d 649 (3d Cir. 1954)). Defendants not only used photographs of Plaintiff's airplane and falsely advertised the plane as Defendants' aircraft (PSOF ¶¶ 59-65), but used photographs of Plaintiff's skydiving instructors as well, falsely advertising the instructors as their own. (PSOF ¶ 66). In response, Defendants simply contend that any information with respect to the photographs and Defendants' non-Arizona based websites was dismissed under the Court's August 22, 2006 Order. But the intent of that Order was to strike those allegations in Plaintiff's Complaint that did not in fact relate to Plaintiff or allege a discernible competitive injury to Plaintiff. Given Plaintiff's unchallenged citation to the proposition that using a photograph of another's product to sell one's own cheaper product is unfair competition under Section 43(a), the Court will amend its previous order to the extent that it found that Defendants' use of Plaintiff's photographs was not actionable under the Lanham Act. Regardless, as Plaintiff has not established a discernible and identifiable competitive injury with respect to Defendants' use of Plaintiff's photographs, Plaintiff would only be entitled at this time to an injunction to prevent further use of the aforementioned photographs on Defendants' websites.

ii. Deception

In addition to presenting evidence that a defendant made false statements of fact about its own or another's product, a plaintiff must ordinarily present evidence that the defendant's false statements "actually deceived or have the tendency to deceive a substantial segment of their audience." Rice, 330 F.3d at 1180 (citing Cook, Perkiss, and Liehe, Inc. v. N. Cal. Collection Serv., 911 F.2d 242, 244 (9th Cir. 1990)). For comparative false advertising claims under Section 43(a) of the Lanham Act, "the [Ninth Circuit] has held that `[p]ublication of deliberately false comparative claims gives rise to a presumption of actual deception and reliance.'" Southland Sod, 108 F.3d at 1146 (quoting U-Haul Int'l, Inc. v. Jartan, Inc., 793 F.2d 1034, 1040-41 (9th Cir. 1986)). Importantly, this rebuttable presumption of actual consumer deception and reliance also applies to non-comparative false advertising claims under the Lanham Act. See Harper House, 889 F.2d at 209 ("[T]he presumption that consumers were, in fact, deceived into purchasing a product different than that advertised is no less or more justified."). Thus, if Plaintiff establishes that Defendants' Internet advertisements contained false statements about its goods, then Plaintiff is entitled to a presumption that consumers were actually deceived by Defendants' false statements.

Here, as stated above, Plaintiff has established that Defendants' advertisements contained false statements about Defendants' goods (i.e., that Defendants had skydiving facilities in the locations advertised when in fact they did not, or alternatively, that consumers could redeem Defendants' certificates at locations where they in fact could not). As such, the burden falls on Defendants to rebut the accompanying presumption that consumers were actually deceived by Defendants' false statements (or that the statements had the tendency to deceive consumers). Defendants do nothing to rebut the presumption that consumers were actually deceived by Defendants' false statements, other than to state that Plaintiff fails to establish that Defendants' false statements were deceptive. That is insufficient. In addition, James Flynn testified that he bought skydiving certificates from 1800Skyride based on the representations made on their websites and the misrepresentation that he could redeem his certificates at Plaintiff's skydiving facility. (Dkt. #183, Ex. 2). Contrary to Defendants' contention that Mr. Flynn was not deceived because he received the services he sought, i.e., an opportunity to Skydive at one of a number of places in Arizona (Dkt. #197, p. 9), the fact that Mr. Flynn was in fact not able to Skydive at some of the facilities that were falsely advertised as available, does in fact constitute deception. And certainly the Court would be hard pressed to find that Defendants' false statements and misrepresentations concerning the available skydiving locations and the quality of the skydiving facilities did not have the tendency to deceive a substantial segment of consumers. Regardless, Defendant submits no evidence to affirmatively rebut the aforementioned presumption. Therefore, the Court finds that Defendants' false statements actually deceived or had the tendency to deceive a substantial segment of their audience.

iii. Materiality

Plaintiff must also establish that the "deception is material, in that it is likely to influence the purchasing decision." 15 U.S.C. § 1125(a)(1)(B); see Johnson Johnson, 299 F.3d at 1247, 1250 ("The plaintiff must establish materiality even when a court finds that the defendant's advertisement is literally false.") (citing Cashmere Camel Hair Mfrs. Institute v. Saks Fifth Ave., 284 F.3d 302, 312 n. 10 (1st Cir. 2002)). A statement is material if it is likely to affect the target consumers' choice of, or conduct, regarding a product, i.e., if it is likely to influence the consumers' purchasing decision. See Rice, 330 F.3d at 1181;Kraft, Inc. v. Federal Trade Commission, 970 F.2d 311, 322 (7th Cir. 1992). Therefore, Plaintiff must present evidence that Defendants' allegedly false statements are likely to influence consumers' purchasing decisions.

Defendants argue that Plaintiff has no evidence that consumers' purchasing decisions were actually influenced by its false statements because it did not conduct a consumer survey. However, although consumer surveys are perhaps the most effective way to establish the materiality of deception under the Lanham Act, especially when dealing with ambiguous misrepresentations of fact as opposed to unambiguous false statements of fact, materiality may be established through direct consumer testimony. Southland Sod, 108 F.3d at 1140 (stating that "[r]eactions of the public are typically tested through the use of consumer surveys" when dealing with "literally true but misleading" advertisements) (emphasis added). Here, Defendants' advertisements included false statements of fact and James Flynn's testimony constitutes direct evidence that Defendant's statements were likely to influence consumers' purchasing decisions. See Flynn Decl., Dkt. #182, Ex. 2 (stating that he brought 1800Skyride certificates based on the misrepresentations made on Defendants' websites and the fact that 1800Skyride representatives falsely stated that he could redeem the certificates at SkyDive Arizona). As such, the Court finds that Plaintiff has established that Defendants' deception was material, in that it was likely to influence consumers' purchasing decision.

iv. Injury

"In a suit for damages under section 43(a), [] actual evidence of some injury resulting from the deception is an essential element of the plaintiff's case." Harper House, 880 F.3d at 210 (emphasis in original). However, "an inability to show actual damages does not alone preclude a recovery under section 1117."Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1411 (9th Cir. 1993) (quotation omitted); Badger Meter, Inc. v. Grinnell Corp., 13 F.3d 1145, 1157 (7th Cir. 1994) (even if a plaintiff is unable to demonstrate damages resulting from the defendant's § 43(a) violation, § 1117 allows the district court to award the plaintiff any just monetary award so long as it constitutes "compensation" for the plaintiff's losses or the defendant's unjust enrichment and is not simply a "penalty" for the defendant's conduct). "Additionally, when, as in this case, a § 43(a) claim involves false advertising rather than `palming off,' courts have been more willing to allow monetary damages even without a showing of actual consumer confusion." Southland Sod, 208 F.3d at 1146. Moreover, "because of the possibility that a competitor may suffer injury, as well as that additional rationale underlying section 43(a) — consumer protection — a competitor need not prove injury when suing to enjoin conduct that violates section 43(a)." Id. Thus, even if a plaintiff fails "to raise a triable issue as to causation and injury, [his or her] Lanham Act claim would still be viable to the extent it sought an injunction." Southland Sod, 108 F.3d at 1145-46.

Defendants assert that "Plaintiff has not presented any evidence that it suffered harm" and is without support for its assertion that it has had sales diverted away from it in instances where customers were specifically looking for Skydive Arizona. (Dkt. #197, p. 12). In response, Plaintiff points to, among other things, James Flynn's declaration that he purchased 1800Skyride certificates because Defendants told him that the certificates could be redeemed at Skydive Arizona, and the fact that a number of individuals arrived at Plaintiff's facility attempting to redeem 1800Skyride certificates and as a result Plaintiff sold skydives to those individuals at a substantial discount (i.e., loss of profit). (Dkt. #204, pp. 6-7; Dkt. #182, Exs. 2, 4, and 23; Dkt. #260, II-¶ 2, p. 3). The Court finds that evidence sufficient to establish that Plaintiff suffered at least some injury resulting from Defendants' false statements. In addition, Plaintiff has submitted evidence that it has suffered loss of goodwill. (Dkt. #260, II-1, p. 2); see Southland Sod, 108 F.3d at 1139 (plaintiff can establish that it "has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products"). Moreover, as this case involves false advertising, and in light of the totality of the circumstances, the Court is willing to allow monetary damages even without a showing of actual consumer confusion. See Southland Sod, 108 F.3d at 1146; Lindy Pen, 982 F.2d at 1411.

Accordingly, for the reasons stated above, the Court finds that Plaintiff has satisfied the elements of its claim under Section 43(a) of the Lanham Act. There are no remaining genuine issues of material fact, and thus summary judgment is appropriate.

C. Lanham Act § 43(d)

Defendants move for summary judgment on Plaintiff's claim under Section 43(d) of the Lanham Act, 15 U.S.C. § 1125(d). Section 43(d) states, in pertinent part:

A person shall be liable in a civil action by the owner of a mark . . . if, without regard to the goods or services of the parties, that person (i) has a bad faith intent to profit from that mark . . .; and (ii) registers, traffics in, or uses a domain name [that is confusingly similar to another's mark or dilutes another's famous mark].

15 U.S.C. § 1125(d)(1)(A) (2006).

To establish a claim under Section 43(d), Plaintiff must establish that "`(1) it has a valid trademark entitled to protection; (2) its mark is distinctive or famous; (3) the defendant's domain name is identical or confusingly similar to, or in the case of famous marks, dilutive of, the owner's mark; and (4) the defendant used, registered, or trafficked in the domain name (5) with a bad faith intent to profit.'" Bosley Medical Institute, Inc. v. Kremer, 403 F.3d 672, 681 (9th Cir. 2005) (quoting DaimlerChrysler v. Net Inc., 388 F.3d 201, 204 (6th Cir. 2004)). Defendants contend that Plaintiff cannot establish either that it has a valid or distinctive trademark or that Defendants acted with bad faith intent. Further, Defendants state that "the only thing that Plaitniff has been able to establish is that the domain names were registered according to defendants' pattern and practice of combining the word `skydive,' or some variation thereof, and a geographical location to name websites for use in advertising the 1800Skyride national network to defendants' customers." (Dkt. #188, p. 19; DSSOF ¶ 79).

It is undisputed that Defendants have registered several domain names similar to Plaintiff's alleged trademark: arizona-skydiving.com, skydivingarizona.com, skydivearizona.net, arizonaskydive.com, skydivingaz.com, and arizonaskydive.net. (DSSOF ¶ 69). In addition, as previously stated in this order, there are genuine issues of material fact on whether Plaintiff has both a valid and distinctive trademark. See Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 876 (9th Cir. 1999) (noting an overlap between the requirements for statutory distinctiveness and whether a mark has acquired secondary meaning and is thus a valid trademark). In addition, Defendants do not appear to dispute that its registered domain names such as "skydivearizona.net" are confusingly similar to "Skydive Arizona." As such, the remaining factor is bad faith intent.

To determine a parties' intent, the Court may consider a number of factors, including the trademark rights of the party, if any, in the domain name, "the person's intent to divert consumer from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark . . . by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site," and "the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names." 15 U.S.C. § 1125(d)(1)(B).

Although Defendants are correct that Plaintiff's promise that it "will establish Defendants' bad faith in obtaining the subject domain names with evidence" (Dkt. #204, p. 18) is insufficient to survive summary judgment, Plaintiff clearly relies on evidence that it has presented throughout the pleadings and in support of its other claims for relief. In addition, many of the bad faith factors relate to whether Plaintiff has a valid trademark, which has yet to be established (and the Court notes that liability under Section 43(d) lives and dies with whether Plaintiff has a valid trademark).²¹ Based on the totality of the evidence presented elsewhere by Plaintiff, such as that concerning initial interest confusion, and drawing all reasonable inferences in favor of Plaintiff as the nonmoving party, the Court cannot find that no reasonable juror could find in favor of Plaintiff on the issue of bad faith intent. As such, summary judgement on Plaintiff's Section 43(d) claim is inappropriate at this time.

21 Also yet to be determined in the event that Plaintiff is found to possess a valid trademark in "SKYDIVE ARIZONA," is the issue of fair use, which is a defense to both trademark infringement and Section 43(d) of the Lanham Act — "Bad faith intent . . . shall not be found in any case in which the court determines that the use of the domain name was a fair use or otherwise lawful." 15 U.S.C. § 1125(d)(B)(ii).

D. Damages

The Lanham Act provides for both injunctive and monetary relief. 15 U.S.C. § 1117(a). Plaintiff seeks all forms of relief available under the Act; there is no dispute that Plaintiff is entitled to injunctive relief.²² "A plaintiff who successfully establishes a violation of § 43(a) is entitled to recover, `subject to the principles of equity, . . . (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.'" Southland Sod, 108 F.3d at 1145 (citing 15 U.S.C. § 1117(a)). Importantly, a remedy awarded under the Lanham Act "shall constitute compensation not a penalty." 15 U.S.C. § 1117(a).

22 Having granted summary judgment in favor of Plaintiff on its Section 43(a) false advertising claim, Plaintiff is entitled to injunctive relief with respect to the false and/or misleading statements and photographs (discussed above) on Defendants' websites (which Defendants appear to claim they have already taken down, see Dkt. #188, p. 25). However, because questions of fact remain with respect to Plaintiff's trademark infringement and Section 43(d) claims (and Defendants' fair use defense), Plaintiff is not entitled to further injunctive relief at this time.

An accounting of profits will be granted "only in those cases where the infringement is `willfully calculated to exploit the advantage of an established mark.'" Lindy Pen, 982 F.2d at 1405 (quoting Playboy Enterprises, Inc. v. Baccarat Clothing Co., Inc., 692 F.2d 1272, 1274 (9th Cir. 1982)). Although an accounting of profits may be used as a deterrence policy in response to trademark infringement, "an accounting is proper only where the defendant is `attempting to gain the value of an established name of another.'" Id. at 1406 (quoting Maier Brewing Co., 390 F.2d at 123)). Questions of fact remain as to both infringement and willfulness/fair use; these issues have not been established on summary judgment. As such, the Court cannot determine at this time whether an accounting of profits is either an available or proper remedy.

To recover damages under the Lanham Act, "[a] plaintiff must prove both the fact and the amount of damage." Lindy Pen, 982 F.2d at 1407. "Damages are typically measured by any direct injury which a plaintiff can prove, as well as any lost profits which the plaintiff would have earned but for the infringement"; "[t]o establish damages under the lost profits method, a plaintiff must make a `prima facie showing of reasonably forecast profits.'" Id. at 1407. Defendants contend that Plaintiff has "never provided any information, uncertain or otherwise, from which damages could reasonably be calculated." (Dkt. #197, p. 24). However, Plaintiff does point to at least some evidence of lost profits, such as James Flynn's testimony that he purchased certificates from 1800SKYRIDE because he was told that they were redeemable at Skydive Arizona, and testimony from Plaintiff's employees that they gave consumers that attempted to redeem Defendants' certificates at Skydive Arizona substantial discounts (i.e., sold them skydives at no profit to Plaintiff). It is reasonable to infer that Plaintiff could establish some damages, however minor, from that evidence (such as determining how many consumers attempted to redeem 1800SKYRIDE certificates at Skydive Arizona and then determining the lost profits from the discounted sale to those individuals).

Regardless, "[b]ecause proof of actual damage is often difficult, a court may award damages based on defendant's profits on the theory of unjust enrichment." Id. Proof of actual damages is difficult in this case; the damages here arise from, among other things, false statements of fact and misrepresentations on Defendants' websites intended to attract consumers, and in turn divert consumers who might otherwise have done business with Plaintiff. However, in keeping with the equitable principles of unjust enrichment and deterrence utilized by courts under the Lanham Act, it is reasonable to infer that Defendants were unjustly enriched by the profits obtained from sales made while Defendants were violating Section 43(a) of the Lanham Act. Further, per the Court's August 22, 2006 order, the Court agrees with Defendants that in the absence of bad faith and willful infringement (which has yet to be determined), the Court should limit Plaintiff's recovery to those profits obtained from Defendants' business operations in Arizona, i.e. Defendants' Arizona-related sales. See Maeir Brewing Co., 390 F.2d at 124 ("The dollar amount of the recovery in an accounting under an unjust enrichment rationale has no relation to the damages, if any, sustained by the plaintiff in the action."). Moreover, although Plaintiff is correct that "the trial court's primary function should center on making any violations of the Lanham Act unprofitable to the infringing party," Playboy Enterprises, 692 F.2d at 1274, because issues of fact still remain as to trademark infringement (as well as willfulness and fair use), the Court cannot determine at this time whether a further award of additional profits is necessary to ensure deterrence.

"In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed." 15 U.S.C. § 1117(a); see Lindy Pen, 982 F.2d at 1408 ("The plaintiff has only the burden of establishing the defendant's gross profits from the infringing activity with reasonable certainty. Once the plaintiff demonstrates gross profits, they are presumed to be the result of the infringing activity. The defendant thereafter bears the burden of showing which, if any, of its total sales are not attributable to the infringing activity, and, additionally, any permissible deductions for overhead.") (citations omitted). Plaintiff has submitted proof of Defendants' total revenues. (PSOF ¶ 176). As such, Defendants now bear the burden of showing which of its total sales are not attributable to their infringing activity with respect to their Arizona-related sales. Defendants have not yet produced evidence on this issue. Nonetheless, because questions of fact remain that affect the extent of damages available, the Court will not fault Defendants at this time. Instead, the Court will direct Defendants to account for their Arizona-related sales within 30 days after entry of this Order.

VIII. PLAINTIFF'S MOTIONS TO FREEZE DEFENDANTS' ASSETS AND REOPEN DISCOVERY FOR LIMITED PURPOSE

On August 29, 2008, Plaintiff filed a Motion to Freeze Defendants' Assets and Require Defendants to Submit a Report of All Recent Transfers of Assets, asserting that "Defendants are attempting to dissipate, transfer or hide their assets." (Dkt. #244). Plaintiff's motion is based, among other things, on the fact that during the pendency of this litigation, Defendants transferred assets from Defendant USSO LLC to (at that time) non-party IGOVincent Inc. without informing the Court. In addition, Plaintiff filed a Motion to Re-Open Discovery on September 26, 2008, to obtain various documents that it contends were requested during discovery but not disclosed. (Dkt. #249).

Importantly, Defendants' Response, and the representations made therein concerning Defendants' assets, led Plaintiff to state that "[i]f the representations set forth in the declarations concerning Defendants'/Counterclaimants' financial solvency are truthful and accurate, the full scope of the requested injunctive relief set forth on the Motion to Freeze Assets and Report Transfers may not be necessary if Defendants/Counterclaimants produce documentation (including as requested in the Motion to Re-Open Discovery for Limited Purpose)." (Dkt. #251, pp. 3-4). Further, Plaitniff recognizes that the essential component for relief sought in its Motion to Freeze Defendants' Assets is "the reporting or disclosure of any assets transferred since the pendency of this litigation" from any Defendant to another Defendant or third-party. (Id., p. 4). Having reviewed the pleadings, and based on Defendants previous failure to disclose a transfer of assets from Defendant USSO LLC to IGOVincent Inc. on May 1, 2007, the Court grants Plaintiff's Motion to Re-Open Discovery to the extent that Defendants must produce documentation to support the contentions made in their Response to Plaintiff's Motion to Freeze Assets concerning Defendants' financial assets and any transfer of assets between Defendants or between Defendants and third-parties. Defendants must produce said documents no later than 30 days after entry of this Order.

Accordingly,

IT IS HEREBY ORDERED that Individual Defendants' Quattrocchi and Butler's Renewed Motion to Dismiss is DENIED. (Dkt. #175).

IT IS FURTHER ORDERED that Plaintiff's Motion to Enforce Scheduling Order and Strike the Renewed Motion to Dismiss is DENIED. (Dkt. #228).

IT IS FURTHER ORDERED that Jan Meyer's Motion to Intervene and Unseal Court Records is DENIED. (Dkt. #230).

IT IS FURTHER ORDERED that Defendants' Motion to Strike Evidence in Support of Defendant Larry Hill's Motion for Summary Judgment (Dkt. #196) and Motion to Strike Evidence in Support of Plaitniff's Motion for Partial Summary Judgment (Dkt. #198) are DENIED. IT IS FURTHER ORDERED that Plaintiff's Motion to Strike Affidavits is DENIED. (Dkt. #201).

IT IS FURTHER ORDERED that Plaintiff's Motion to Strike Defendants' Untimely Response is DENIED. (Dkt. #229).

IT IS FURTHER ORDERED that Third-Party Defendant Larry Hill's Motion for Summary Judgment is GRANTED. (Dkt. #185).

IT IS FURTHER ORDERED that Corporate Defendants' Motion for Summary Judgment is DENIED. (Dkt. #188).

IT IS FURTHER ORDERED that Plaintiff's Motion for Partial Summary Judgment is GRANTED IN PART. (Dkt. #183). Summary judgment is granted in favor of Plaintiff on its claim for relief under Section 43(a) of the Lanham Act. Defendants are directed to account for its Arizona-related sales as discussed in this Order no later than 30 days after entry of this Order.

IT IS FURTHER ORDERED that Plaitniff's Motion to Freeze Defendants' Assets is DENIED. (Dkt. #244).

IT IS FURTHER ORDERED that Plaintiff's Motion to Re-Open Discovery For Limited Purpose is GRANTED IN PART. (Dkt. #249). Defendants must produce documentation in support of the contentions made in Response to Plaintiff's Motion to Freeze Assets concerning Defendants' financial assets, and any transfer of assets between Defendants or between Defendants and third-parties, no later than 30 days after entry of this Order. IT IS FURTHER ORDERED directing the Clerk of the Court to unseal this Order on February 12, 2009, unless counsel file a notice of opposition to unsealing the Order prior to that date.