Case 0:08-cv-61401-WJZ Document 79 Entered on FLSD Docket 08/13/2009 Page 1 of 15

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 08-61401-CIV-ZLOCH

JOHN DALY ENTERPRISES, LLC,

and JOHN DALY,

Plaintiffs,
O R D E R
vs.

HIPPO GOLF COMPANY, INC.,

Defendant.
/

THIS MATTER is before the Court upon Plaintiffs’ Motion For

Partial Summary Judgment (DE 21). The Court has carefully reviewed

said Motion and the entire court file and is otherwise fully

advised in the premises.

Plaintiffs filed this diversity action seeking redress for

Defendant’s breach of contract and infringement of their

intellectual property rights protected by federal and state law.

The instant Motion seeks summary judgment on four of the six Counts

in the Complaint (DE 1). They are: Count I1 (infringement of

federally registered marks), Count IV (violation of Florida

Statutes § 540.08), Count V (breach of contract), and Count VI

(alter ego liability). For the reasons expressed more fully below,

the Court finds that the instant Motion should be granted as to

liability on Counts I, IV, and V, and denied as to Count IV and

1
Count I is erroneously referred to as “Count V” in both
Plaintiffs’ Motion (DE 21, p. 3) and Statement Of Undisputed Facts
(DE 22, p. 1).
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damages as to Counts I, IV, and V.

I. Background

Plaintiff John Daly is a professional golfer and the principal

of Plaintiff John Daly Enterprises, LLC, which owns all of Daly’s

intellectual property rights, including three trademarks at issue

in this action: U.S. Trademark Reg. 2,559,785 (John Daly signature

and Lion swing design), U.S. Trademark Reg. 3,138,914 (John Daly

signature), and U.S. Trademark Reg. 3,200,989 (Lion head design).

They were registered with the United States Patent and Trademark

Office on April 9, 2002, September 5, 2006, and January 23, 2007,

respectively.

The Parties entered into a contract for Daly to act as the

principal spokesman for Hippo. See Declaration of David J. Dixon,

DE 31, Ex. F. The period of the contract ran from January 1, 2001,

through December 31, 2003, and guaranteed Daly $50,000 per quarter.

In return, Daly would make various public appearances and display

Defendant’s logo on his clothing and equipment during golf

tournaments. After the endorsement contract ended, Defendant

displayed Daly’s name and likeness on its website, noting that he

formerly was affiliated with Hippo Golf. Daly gave no permission

for the use of his name and likeness.

Plaintiffs and Defendant also negotiated a second contract in

2002 (hereinafter “2002 Letter Agreement”) for the licensing of

Daly’s name, likeness, and marks to Defendant for use in the sale

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of golf clubs and related equipment.2 Declaration of John Daly, DE

21, Ex. A, p. 14-15. The memorandum of the 2002 Letter Agreement

itself did not spell out the terms of royalty payments to be made;

instead, the Parties separately negotiated the rates to be paid

based on merchandise sold. The contract period ended on December

31, 2003, but because Defendant had inventory remaining, Plaintiffs

gave it until March 31, 2004, to divest itself of all John Daly-

branded merchandise in its possession. Between April 1, 2004, and

January 31, 2005, Defendant continued to sell merchandise and

equipment bearing John Daly’s signature. In addition, Defendant

failed to make all royalty payments due under the 2002 Letter

Agreement.

Plaintiffs filed suit to recover for Defendant’s breach of the

2002 Letter Agreement, unauthorized use of Daly’s name and

likeness, and violation of their federal trademark rights. In

addition, Plaintiffs seek to recover from Defendant on a judgment

they obtained several years ago against Defendant’s parent company,

Hippo Holdings, Ltd.3 As stated above, the instant Motion only

2
These facts, unless otherwise noted, are taken from
Plaintiffs’ Statement Of Undisputed Facts (DE 22). Due to
Defendant’s total failure to comply with the requirements of Local
Rule 7.5.C, the facts as stated in Plaintiffs’ Statement are deemed
admitted to the extent supported clearly by the record. S.D. Fla.
L.R. 7.5.D; Josendis v. Wall to Wall Residence Repairs, Inc., 606
F. Supp. 2d 1376, 1380-81 (S.D. Fla. Mar. 30, 2009).
3
The Parties do not consistently distinguish between
Defendant and Hippo Holdings, Ltd. when referring to contractual
negotiations in the past. Thus, the Court takes their lead in

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seeks the entry of summary judgment on four of the six counts of

the Complaint.

II. Standard of Review

Under Federal Rule of Civil Procedure 56, summary judgment is

appropriate

if the pleadings, the discovery and disclosure materials

on file, and any affidavits show that there is no genuine
issue as to any material fact and that the movant is
entitled to a judgment as a matter of law.

Fed. R. Civ. P. 56(c); see also Eberhardt v. Waters, 901 F.2d 1578,

1580 (11th Cir. 1990). The party seeking summary judgment “always

bears the initial responsibility of informing the district court of

the basis for its motion, and identifying those portions of the

pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, which it believes

demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)(quotation

omitted). Indeed,

the moving party bears the initial burden to show the

district court, by reference to materials on file, that
there are no genuine issues of material fact that should
be decided at trial. Only when that burden has been met
does the burden shift to the non-moving party to
demonstrate that there is indeed a material issue of fact
that precludes summary judgment.

Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991);

Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir. 1991).

denoting who is a party to what contract.

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The moving party is entitled to “judgment as a matter of law”

when the non-moving party fails to make a sufficient showing of an

essential element of the case to which the non-moving party has the

burden of proof. Celotex Corp., 477 U.S. at 322; Everett v.

Napper, 833 F.2d 1507, 1510 (11th Cir. 1987). Further, the

evidence of the non-movant is to be believed, and all justifiable

inferences are to be drawn in his favor. Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 255 (1986).

III. Analysis

A.

Plaintiffs first move for summary judgment as to Count I of

the Complaint, which alleges infringement of federally registered

trademarks. The Complaint sets forth three registrations: U.S.

Trademark Reg. 2,559,785 (John Daly signature and Lion swing

design), U.S. Trademark Reg. 3,138,914 (John Daly signature), and

U.S. Trademark Reg. 3,200,989 (Lion head design). DE 1, ¶¶ 12-14.

Plaintiffs complain of Defendant’s supposed infringement during the

period of April 1, 2004, through January 31, 2005. The latter two

marks were registered after this period. See id. ¶¶ 13 (noting

registration date of September 5, 2006), 14 (noting registration

date of January 23, 2007). Therefore, any infringement during this

period cannot be redressed by relief under § 32 of the Lanham Act.

See 15 U.S.C. § 1114(1) (prohibiting the infringement of “a

registered mark”).

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Thus, only the mark registered under U.S. Trademark Reg.

2,559,785 (hereinafter “the 385 mark”) is at issue in Count I. It

is reproduced in the Complaint in the following form:

Defendant admitted to selling merchandise bearing “the John Daly

Trademarks” after April 1, 2004. DE 10, ¶ 33. While it is unclear

which particular mark was on which particular piece of merchandise

when it was sold, Defendant’s President and CEO David Dixon

admitted in deposition testimony that Defendant continued to sell

golf clubs bearing the John Daly signature after April 1, 2004. DE

21, Ex. D, p. 202.

Infringement of a federally registered mark does not require

use of the actual mark or a counterfeit thereof. Rather, it may

include only a “colorable imitation” of the mark. 15 U.S.C. §

1114(1)(a). A mark is a colorable imitation if it “so resembles a

registered mark as to be likely to cause confusion.” Id. § 1127.

A mark may thus infringe a registered mark without using the

entirety of the registered mark. In other words, “[i]t is not

necessary that the alleged infringer use all aspects of the

registered mark for likely confusion to result. For example, under

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the likelihood of confusion test, defendant is an infringer where

it reproduces the words, but not the background design logo, of the

plaintiff’s registered composite mark.” 4 J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition § 23.76 (4th ed.

2009) (quotation omitted).

As stated above, the mark registered under U.S. Trademark Reg.

3,138,914 bears only the John Daly signature and was used on

Defendant’s merchandise after April 1, 2004. The John Daly

signature is a portion of the 385 mark. Compare DE 1, ¶ 13, with

id. ¶ 12. The Court finds that use of the John Daly signature on

merchandise after April 1, 2004, constitutes infringement of the

385 mark because it is a colorable imitation likely to cause

confusion. 15 U.S.C. §§ 1127, 1114(1)(a).

Though liability is established, there is no evidence as to

Plaintiffs’ damages. By separate Order, the Court is denying

Plaintiffs’ Motion To File Documents Under Seal (DE 23) and

striking that evidence from the record. Plaintiffs do not point to

any other item as evidence of their damages under Count I. See DE

21, ¶ 8. Thus, genuine issues of material fact remain as to the

question of damages caused by Defendant’s infringement of the 385

mark. Therefore, the instant Motion will be granted as to

liability on Count I, with damages to be established at trial.

B.

Plaintiffs’ second ground for the entry of summary judgment is

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Count IV of their Complaint, which alleges the unauthorized use of

Plaintiff John Daly’s name and likeness. Defendant admits that

Daly’s name and photograph appeared on its website after the

endorsement agreement ended, but characterizes it as a fair use.

It argues that Daly appears in a list with seventeen other

professional golfers who, like Daly, were formerly associated with

Defendant and the website so notes. DE 30, p. 10. In other words,

Daly’s name and likeness is merely a factual statement: He has used

our clubs.

Florida law prohibits the display or other public “use for

purposes of trade or for any commercial or advertising purpose the

name, portrait, photograph, or other likeness of any natural person

without the express written or oral consent to such use.” Fla. St.

§ 540.08(1).

In an effort to show its fair use, Defendant included a copy

of the website featuring Daly. The website displays Daly’s name

and likeness under the heading “PLAYERS PREVIOUSLY ASSOCIATED WITH

HIPPO.” DE 31, Ex. E, p. 2. It shows a picture of Daly,

presumably on a golf course, and states the following:

The twice major winner and golfing superstar, John Daly,

will continue to be synonomous [sic] with Hippo.
Renowned as the longest hitter in the professional game,
Daly truly had the power of Hippo behind his game,
working closely with the Hippo design teams over the
years to produce some of the most technologically
advanced woods to hit the golf market.

Id. Defendant argues that its use of Daly as a player previously

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associated with it is simply a true factual statement. The law is

clear that “[u]se of a name is not harmful simply because it is

included in a publication sold for profit.” Valentine v. C.B.S.,

Inc., 698 F.2d 430, 433 (11th Cir. 1983).

However, Daly’s name and likeness are not simply included on

Defendant’s website. It is rather a commercial exploitation of

Daly’s name and likeness to promote Defendant’s golf equipment.

Informing the public that Daly, the “twice major winner and golfing

superstar” that he is, will continue to be synonymous with

Defendant directly promotes Defendant’s products. Without his

consent, that is what Fla. Stat. § 540.08 prohibits. Id.; Tyne v.

Time Warner Entertainment Co., L.P., 901 So. 2d 802, 808 (Fla.

2005) (noting legislative approval of prior decisions requiring

“the statute to apply to a use that directly promotes a product or

service”). The Court finds that the website uses Daly’s name and

likeness to directly promote Defendant’s equipment. No consent was

given for the use of Daly’s name and likeness; thus, Plaintiff is

entitled to judgment as a matter of law on the question of

liability as to Count IV.

On the question of damages for Defendant’s violation of Fla.

Stat. § 540.08, Plaintiffs offer the Declaration of John

Mascatello, Daly’s agent from 2004 through 2006. In it, he

estimates the fair market value of Daly’s name and likeness to be

at least $300,000 per year and “in some instances” $600,000 per

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quarter. DE 21, Ex. C, ¶ 7. While Mascatello lists Daly’s

victories in various golf tournaments and his rank on various golf

rankings, no calculations are put forward to support these figures.

Defendant points to the endorsement agreement for the period of

January 1, 2001, to December 31, 2003, between Daly and Hippo

Holdings, Ltd., Defendant’s parent company, which guaranteed Daly

at least $50,000 per quarter, which equals $200,000 per year.

Declaration of David J. Dixon, DE 31, ¶ 14; id. DE 31, Ex. F, ¶ 6.

While it is understandable that the royalties and endorsement fees

a professional can command will fluctuate and may increase,

Plaintiffs fail to counter these figures provided by Defendant.

See DE 40, pp. 7-8. Thus, the record is unclear and the Court

cannot determine the value of Daly’s name and likeness as a matter

of law. Therefore, the instant Motion will be granted as to

liability on Count IV, with damages to be established at trial.

C.

Plaintiffs argue in their third claim for relief that they are

entitled to judgment as a matter of law on Count V for Defendant’s

breach of contract. The 2002 Letter Agreement, authorizing

Defendant’s use of Plaintiffs’ trademarks on equipment sold,

governed the Parties’ obligations regarding the sale of John Daly

branded merchandise by Defendant. When that agreement expired,

Plaintiffs agreed to give Defendant until March 31, 2004, to sell

off its remaining inventory; Defendant was still required to make

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royalty payments on these sales. Plaintiffs claim that Defendant

never made these payments.

In its Answer (DE 10), Defendant has admitted the following:

as of the filing of its Answer, it had ceased making payments under

the 2002 Letter Agreement; Defendant sold 9,694 John Daly branded

golf kits between January 1, 2004, and January 31, 2005; Plaintiffs

were owed $5.00 per kit; Plaintiffs have not received any portion

of the royalty amount due; Plaintiffs have not received any form of

payment or consideration in relation to Defendant’s sales during

the sell-off period of January 1, 2004, through March 31, 2004; and

Plaintiff John Daly Enterprises, LLC has suffered damages as a

result of Defendant’s breaches. DE 10, ¶¶ 87, 90-94, 96. These

admissions by Defendant in its Answer are controlling. Fed. R.

Civ. P. 8(b)(6) (“An allegation . . . is admitted if a responsive

pleading is required and the allegation is not denied.”); see also

United States v. Neal, 255 F.R.D. 638, 640-41 (W.D. Ark. 2008).

Thus, liability is established as to Count V.

Regarding the issue of damages, the Declaration of John

Mascatello states that Defendant and its parent company Hippo

Holdings, Ltd. collectively owe Plaintiffs $125,000.00 in

royalties. DE 21, Ex. C, ¶ 8. Defendant, however, argues that all

required royalty payments were made, and that Plaintiffs were even

overpaid by $1,191. See Declaration of David J. Dixon, DE 31, ¶

16; id. DE 31, Ex. G. While Defendant has admitted liability on

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the breach of contract claim, it obviously disagrees with

Plaintiffs’ calculation of damages. Plaintiffs do not counter

these arguments by Defendant. See generally DE 40 (omitting any

argument on Count V). Thus, Plaintiffs have failed to establish

their damages as a matter of law as to Count V. Therefore, the

instant Motion will be granted as to liability on Count V, with

damages to be established at trial.

D.

Plaintiffs’ final claim is that Defendant should be held

accountable under Count VI of the Complaint in the instant action

for the judgment Plaintiffs obtained against Defendant’s parent

company in a prior action. In Case No. 05-61505-CIV-Zloch, DE 47,

this Court entered its Default Final Judgment Re: Damages in the

amount of $2,734,842.22 in favor of Plaintiffs and against Hippo

Holdings, Ltd. The Parties agree that Hippo Holdings, Ltd. is an

English company and that Defendant was at all relevant times its

wholly owned subsidiary. Plaintiffs argue that Defendant should be

held liable on that judgment because it and Hippo Holdings, Ltd.

are merely alter egos of one another.

Florida courts have a very strict test for piercing the

corporate veil to collect from a shareholder.

The rule is that the corporate veil will not be pierced,

either at law or in equity, unless it be shown that the
corporation was organized or used to mislead creditors or
to perpetrate a fraud upon them. . . . In the absence of
pleading and proof that the corporation was organized for
an illegal purpose or that its members fraudulently used

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the corporation as a means of evading liability with

respect to a transaction . . . [a plaintiff] cannot be
heard to question the corporate existence but must
confine his efforts to the remedies provided by law for
satisfying his judgment from the assets of the
corporation, if any can be found.

Riley v. Fatt, 47 So. 2d 769, 773 (Fla. 1950), cited in Dania Jai

Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1119-20 (Fla. 1984).

Under Florida law, mere failure to observe corporate formalities

alone is not enough. Rather, Florida courts require “proof of

deliberate misuse of the corporate form——tantamount to

fraud——before they will pierce the corporate veil. Thus, absent

proof of fraud or ulterior motive by the shareholder, the corporate

veil shall not be pierced.” In re Hillsborugh Holdings Corp., 166

B.R. 461, 469 (Bankr. M.D. Fla. 1994) (citing Conant v. Blunt, 192

So. 481 (Fla. 1939)) (further citations omitted) (emphasis in

original). What is controlling is the parent company’s “subjective

motivation, not the effect of [its] actions” in observing or

failing to observe corporate formalities. Id.

Plaintiffs have not demonstrated that Defendant and Hippo

Holdings, Ltd. existed as separate corporate entities for an

improper purpose. In their Motion they argue, as they must, that

Defendant mislead Plaintiffs by making Hippo Holdings the nominal

party to the contract and the holder of debt and other obligations,

while Defendant enjoyed the revenues. DE 21, ¶ 44. For this

proposition, they cite only paragraphs 38 and 39 of their Statement

Of Undisputed Facts (DE 22). Those paragraphs read as follows:

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38. Defendant sold millions of dollars of John Daly

trademarked merchandise. . . . . All of the revenues
from Hippo products sold in North America and South
America were paid to Defendant. . . . .

39. Defendant does not know the percentage of the

debt actually paid from Defendant to Hippo Holdings nor
is Defendant aware if records still exist to reflect the
amounts paid.

DE 22, ¶¶ 38-39. These paragraphs lend no support for the

proposition that Defendant and Hippo Holdings operated or failed to

observe their separate corporate identities for the purpose of

injuring Plaintiffs. They say only that Defendant made a lot of

money in the relevant transactions and that it fails to keep good

records. That is not enough. Dania Jai Alai Palace, 450 So. 2d at

1119-20; In re Hillsborugh Holdings Corp., 166 B.R. at 469.

IV. Conclusion

Therefore, based on the foregoing analysis, the Court finds

that Plaintiffs have failed to establish their damages as a matter

of law as to Counts I, IV, and V, but they have established that

they are entitled to judgment as a matter of law as to liability

regarding those Counts. Moreover, Plaintiffs have failed to

establish that they are entitled to judgment as a matter of law as

to Count VI. Thus, the instant Motion (DE 21) shall be granted in

part and denied in part.

Accordingly, after due consideration, it is

ORDERED AND ADJUDGED that Plaintiffs’ Motion For Partial

Summary Judgment (DE 21) be and the same is hereby GRANTED in part

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and DENIED in part, as follows:

1. To the extent Plaintiffs’ Motion For Partial Summary

Judgment (DE 21) seeks the entry of summary judgment as to

liability on Counts I, IV, and V of the Complaint, it be and the

same is hereby GRANTED;

2. The Court finds that genuine issues of material fact remain

on the question of damages as to Counts I, IV, and V, and the

instant Motion is DENIED as to the same; and

3. To the extent Plaintiffs’ Motion For Partial Summary

Judgment (DE 21) seeks the entry of summary judgment as to Count IV

of the Complaint, it be and the same is hereby DENIED.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward

County, Florida, this 13th day of August, 2009.

WILLIAM J. ZLOCH
United States District Judge

Copies furnished:

All Counsel of Record

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