MEMORANDUM & ORDER ON INQUEST FOR DAMAGES Following entry of a default judgment, Plaintiffs Abbott Laboratories, Abbott Diabetes Care Inc., and Abbott Diabetes Care Sales Corp. (collectively, “Abbott”) seek actual damages against H&H Wholesale Services, Inc. (“H&H”), Howard Goldman, and Lori Goldman (collectively, the “H&H defendants”) in the amount of $13,245,690 trebled for a total of $39,737,070, attorneys’ fees and costs, and prejudgment interest at a rate of 9 percent. For the reasons set forth herein, Abbott’s request is granted in part and denied in part. BACKGROUND Abbott initiated this action in October 2015, asserting claims against multiple defendants, including the H&H defendants, in connection with the unlawful sale of Abbott’s international FreeStyle test strips in the United States. (See ECF Docket Entry (“D.E.”) # 1.) Following extensive discovery, Abbott moved for summary judgment against the defendants, seeking, inter alia, summary judgment on its claims against the H&H defendants under the Lanham Act for willful trademark infringement. (See D.E. # 1415.) I granted in part Abbott’s motion for summary judgment as to liability, finding that H&H had willfully infringed Abbott’s trademarks and that Howard Goldman was personally liable for the infringement. Abbott Lab’ys v. Adelphia Supply USA, No. 15-cv-5826 (CBA) (LB), 2019 WL 5696148, at *9, *17, *24 (E.D.N.Y. Sept. 30, 2019). I denied Lori Goldman’s motion for summary judgment in which she had sought to relieve herself of individual liability for H&H’s infringement, finding that “Abbott has adduced sufficient evidence to allow a reasonable jury to conclude that she was a moving, active, conscious force behind H&H’s infringing activities.” Id. at *18. While Abbott was preparing its motion for summary judgment, it commenced a related action against the H&H defendants for their sale of international FreeStyle strips repackaged in counterfeit U.S. packaging. See Abbott Lab’ys v. H&H Wholesale Servs. Inc., No. 17-cv-3095 (CBA) (LB) (E.D.N.Y. May 23, 2017). In that action, Abbott conducted a Court-authorized search of H&H’s premises, which resulted in the seizure of their email server. (See D.E. # 1613 at 4.) Review of the contents of that server revealed that the H&H defendants had engaged in a calculated pattern of discovery misconduct in this action that amounted to a fraud upon the Court. (Id. at 4-6.) Abbott moved for case-ending sanctions against the H&H defendants in the instant action, and the motion was referred to Magistrate Judge Lois Bloom for report and recommendation (“R&R”). (See Order dated Jan. 14, 2019.) On May 2, 2019, Magistrate Judge Bloom issued an R&R recommending that I grant Abbott’s motion and enter a default judgment against the H&H defendants. (D.E. # 1545.) After receiving objections to the R&R and Abbott’s reply to those objections, I adopted Magistrate Judge Bloom’s R&R in its entirety and entered a default judgment against the H&H defendants. (D.E. # 1613.) Among my findings were that “the H&H defendants — including the Goldmans — had a duty to comply with the Court’s orders, and each willfully and grossly failed to do so.” (Id. at 15; see also id. at 16-19 (finding the Goldmans “individually liable for the willful discovery fraud and cover-up they undertook personally or that was undertaken by their agents in their name”).) On December 23, 2020, I determined that the damages inquest against the now-defaulted H&H defendants should proceed immediately pursuant to Federal Rule of Civil Procedure 55(b)(2), prior to the damages trial against the remaining non-defaulting defendants. (D.E. # 1633.) I directed Abbott and the H&H defendants to file briefing and relevant documentary evidence regarding the proper calculation and amount of damages to be entered against the H&H defendants. (Id.) Abbott filed an opening brief in support of damages, with accompanying documentary evidence, (D.E. # 1637 (“Abbott Mem.”)); the H&H defendants filed a brief in opposition, (D.E. # 1647 (“H&H Opp’n”)); and Abbott filed a reply, (D.E. # 1659 (“Abbott Reply”)).1 Because I have sufficient information to resolve the question of damages based upon the parties voluminous submissions both on this motion and on summary judgment, see Fed. R. Civ. P. 55(b)(2); Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991), I deny the request of the H&H defendants to conduct an evidentiary hearing. DISCUSSION I. Standard of Review A default constitutes an admission of all the well-pleaded factual allegations in the complaint, except for those relating to damages. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). Still, looking to the facts alleged, a court should “satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed.” Santillan v. Henao, 822 F. Supp. 2d 284, 290 (E.D.N.Y. 2011); see also Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). “A default also effectively constitutes an admission that damages were proximately caused by the defaulting party’s conduct; that is, the acts pleaded in a complaint violated the laws upon which a claim is based and caused injuries as alleged.” Santillan, 822 F. Supp. 2d at 290 (citing Greyhound, 973 F.2d at 159). As to damages, a court need only determine “that there is a reasonable basis for the damages requested in a default judgment motion.” Gutierrez v. Taxi Club Mgmt., No. 17-cv-532 (AMD) (VMS), 2018 U.S. Dist. LEXIS 106808, at *7 (E.D.N.Y. June 25, 2018); Gomez v. El Rancho De Andres Carne De Tres Inc., No. 12-cv-1264 (CBA) (MDG), 2014 U.S. Dist. LEXIS 45580, at *4 (E.D.N.Y. Mar. 11, 2014) (same). Additionally, the moving party, here Abbott, is entitled to all reasonable inferences from the evidence it offers. Finkel, 577 F.3d at 84; Gutierrez, 2018 U.S. Dist. LEXIS 106808, at *7. II. Liability Liability has been undisputedly established. In my decision on summary judgment, I granted Abbott’s motion for summary judgment as to liability for willful infringement under 15 U.S.C. §1114(1) against H&H and Howard Goldman. Abbott Lab’ys, 2019 WL 5696148, at *9, *17, *24. Summary judgment was not granted as to Lori Goldman because I found disputed issues of fact, id. at *18, but it is well settled that a default constitutes an admission of all the wellpleaded allegations in the complaint, see Mickalis Pawn Shop, LLC, 645 F.3d at 137, and I have previously found the allegations in the Second Amended Complaint to have plausibly supported claims for willful infringement against all the H&H defendants, including Lori Goldman, (see D.E. # 892 at 29-31 (denying motion to dismiss and crediting allegations that Lori Goldman is “‘the marketing manager of H&H’ who ‘exercises control over H&H and is a moving, conscious, active force behind H&H’s unlawful conduct.’”) (quoting D.E. # 307 (“Second Am. Compl.”) 35); see also Second Am. Compl. 568 (alleging that “Defendants’ acts [of infringement] have been committed deliberately and willfully…”)).2 III. Actual Damages A. Standard of Law Abbott seeks recovery for its actual damages in the amount of $13,245,690. (Abbott Mem. at 1.) The Lanham Act authorizes prevailing plaintiffs, “subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 15 U.S.C. §1117(a). Actual damages “may include compensation for (1) lost sales or revenue; (2) sales at lower prices; (3) harm to market reputation; or (4) expenditures to prevent, correct, or mitigate consumer confusion.” Int’l Star Class Yacht Racing Ass’n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996) (citing Restatement (Third) of Unfair Competition §36(2) (Am. L. Inst. 1995)). As stated in my prior summary judgment opinion, a plaintiff must prove with “‘reasonable probability,’ not absolute certainty, that it suffered damages due to the trademark infringement.” Abbott Lab’ys, 2019 WL 5696148, at *45 (quoting Innovation Ventures, LLC v. Ultimate One Distrib. Corp., 176 F. Supp. 3d 137, 162 (E.D.N.Y. 2016)). Moreover, courts “distinguish between proof of the fact of damages and the amount of damages because a mark holder is held to a lower standard in proving the exact amount of actual damages.” Id. at *46 (citations and internal quotation marks omitted) (emphasis removed). B. Abbott’s Damages Application at Inquest Abbott has satisfied its burden at inquest to prove $13,245,690 in actual damages. It is first important to note that the H&H defendants were placed in default after extensive summary judgment briefing and entry of a decision on cross motions from the parties as to both liability and damages. My conclusions of law in that decision foreshadowed the conclusion reached here. As to the issue of damages, which involved arguments and evidence largely identical to that presented at this inquest, I denied both parties’ motions because: the record allows a reasonable jury to find in favor of Abbott or to find in favor of Defendants. Specifically, a jury could conclude — relying on Abbott’s statistics regarding FreeStyle in general and pharmacists’ testimony that they intermingled their stock — that 95 percent of international strips were dispensed through insurance and literally substituted for domestic strips. But a reasonable jury could also conclude, based on defendants’ evidence of cash sales, that Abbott has failed to prove this fact. Id. at *50. As to any infringing strips that may have been sold for cash, I further concluded that “[o]n this record, a jury could credit either Abbott’s theory (that absent international strips, patients would have purchased Abbott’s full price domestic strips by cash) or Defendants’ theory (that absent international strips, patients would have turned to different, cheaper alternatives).” Id. In sum, I concluded — upon considering the same evidence presented now — that a reasonable jury could find for Abbott under the same damages theory it presses upon default. The legal standards at the summary judgment and inquest stage, of course, differ in a manner that redounds to Abbott’s benefit: all reasonable inferences must now be drawn in Abbott’s favor in assessing whether there is a reasonable basis for the award sought. Finkel, 577 F.3d at 84; Gutierrez, 2018 U.S. Dist. LEXIS 106808 at, *7. Succinctly, Abbott’s basic theory of lost revenue is as follows: for each box of international strips unlawfully sold in the United States, Abbott lost a sale of a box of domestic strips, on a one-to-one basis. (Abbott Mem. at 20-29.) Abbott’s costs of producing the two versions are essentially identical. (Id. at 10 n.5, 18-20.) Thus, according to Abbott, its actual damages are the difference between the U.S. wholesale price and the international wholesale price for each box sold. (Id. at 12.) Abbott has satisfied its burden to establish that its costs in producing the international and domestic boxes are equal or vary to a de minimis degree. (See id. at 18-19; P143 at 37:23-38:10; P4 at 129:20-130:9; P542 (“Bell Rpt.”) 20(b).) Abbott has also adequately established the relevant wholesale prices of the different boxes. (See, e.g., P4 at 166:22-167:22; P13 at 268:16-268:20; Bell Rpt.
20(a), 27.) These varying prices are published, (see P2; P3), and the H&H defendants do not contest the pricing data. Nor do they contest the affirmation of Dr. Gregory K. Bell — Abbott’s retained expert — that in producing his damages calculation, he employed conservative assumptions for many pricing variables for which he did not have data, such as prompt-payment discounts, uncertainties in the box size (i.e., 50-count or 100-count), and uncertainties in the country of origin. (See generally Bell Rpt.) These conservative assumptions had the effect of decreasing his damages calculations. The H&H defendants’ arguments consist of two principal contentions: (1) that Abbott’s damages theory overstates the number of international test strip boxes the H&H defendants sold; and (2) more significantly, that Abbott’s theory that it lost a sale of a domestic box for each sale of an international box is flawed. 1. Number of Boxes Abbott seeks damages against the H&H defendants for trafficking 333,887 infringing boxes (representing 320,682 50-count boxes and 13,205 100-count boxes). (See Abbott Mem. at 3.) The H&H defendants raise two objections to this figure. First, they argue that the evidence Abbott cites for this figure reflects the number of boxes purchased by the H&H defendants, whereas the relevant figure for Lanham Act liability is the number of boxes sold. (H&H Opp’n at 7.) Second, they argue that certain evidence indicates that the total number of boxes sold was no greater than 297,765. (Id.) Neither of these objections is meritorious. First, at summary judgment, Abbott’s statement of undisputed material facts stated that the H&H defendants “purchased, and then sold within the United States, at least 320,682 50-count boxes and at least 13,205 100-count boxes of international FreeStyle test strips.” (D.E. # 1457-1 216.) In response, the H&H defendants disputed only the attribution of those sales to Howard and Lori Goldman — they did not dispute the quantities of boxes that H&H sold. (Id.) This constitutes an admission concerning the total number of infringing boxes sold. See Fed. R. Civ. P. 56(g); Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003). Moreover, even were the H&H defendants somehow able to escape this concession, Abbott’s expert evidence independently establishes a reasonable basis for imposing damages on the H&H defendants for the specified quantity. (See P93 at 59:14-60:6, 95:15-96:2 (confirming purchases and sales of international strips); P112; P113; P552; P610.) Without citation to any authority, the H&H defendants argue that the “number of boxes purchased does not support a reasonable basis for a damages calculation under the Lanham Act.” (H&H Opp’n at 7.) But in assessing damages in cases of trademark infringement, courts may entertain “some degree of speculation in computing the amount of damages, particularly when the inability to compute them is attributable to the defendant’s wrongdoing.” Abbott Lab’ys, 2019 WL 5696148, at *46 (citations omitted). Relying on the purchase data here as a proxy for sales is particularly reasonable and does not constitute impermissible speculation. First, to the extent that sales data is not available, it is because the H&H defendants have not provided it. As Dr. Bell opined, “with respect to the contention that purchase data is insufficiently precise and that retail sales data would be more suitable, I note that the Defendants have not produced sufficient information to trace shipments through the supply chain to the end customer, and therefore reliance on retail sales is not an option.” (P543 (“Bell Suppl. Rpt.”) 24(a).) Second, Plaintiffs have made genuine efforts to address flaws identified by the H&H defendants. In advance of summary judgment, the H&H defendants had their testifying expert, Dr. Jesse David, identify flaws in Dr. Bell’s expert report, such as instances of double-counting, as well as purchased boxes that were sequestered, returned, or otherwise not sold. Dr. Bell considered and incorporated these criticisms in his supplemental report where he felt appropriate, and he accordingly revised the damages calculation against the H&H defendants. (See id.
