Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT December 09, 2024 FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, HOUSTON DIVISION POINTEAST PHARMA § CONSULTING, INC., § § Plaintiff, § § v. § CIVIL ACTION NO. 4:21-CV-3654 § LENZING AKTIENGESELLSCHAFT, § PALMERS TEXTIL § AKTIENGESELLSCHAFT, § HYGIENE AUSTRIA LP GMBH, § STEPHAN TRUBRICH, § TINO WIESER, § § Defendants. § ORDER GRANTING MOTION FOR DEFAULT JUDGMENT Pending before the Court is Plaintiff PointEast Pharma Consulting, Inc.’s (“Plaintiff or “PointEast”) Amended Motion for Default Judgment against Defendants Palmers Textil Aktiengesellschaft (“Palmers”) and Tino Wieser (“Wieser”). (Doc. No. 121). The Court has considered the evidence, the pleadings on file, and the relevant authorities. (Doc. Nos. 121 and 122). Plaintiff dismissed its claims against Defendant Hygiene Austria LP GmbH (“HALP”), and has resolved its claims against Lenzing AG (“Lenzing”) and Stephan Trubrich (“Trubrich”). As such, Plaintiffs only remaining claims are against Palmers and Wieser. Neither Defendant answered the Original Complaint nor filed any responsive pleadings or briefs. The Court concludes that PointEast has established that it is entitled to the requested judgment and GRANTS Plaintiff's Amended Motion for Default Judgment. (Doc. No. 121). I. Background PointEast is a United States-hased pharmaceutical consulting company. (Doc. No. 121-1 at 3). PointEast is owned by Dr. Georg Fischer (“Dr. Fischer”) and Mr. Leonard Fischer (Mr.

Fischer”). (/d.). Defendants Lenzing and Palmers, both textile manufacturers, are entities based in Austria. (7d). In 2020, Lenzing and Palmers jointly created HALP, also an Austrian entity. (/d. at 5). Defendant Trubrich, a citizen of Austria, is a Vice President of Lenzing. (/d. at 3-4). Defendant Wieser is part-owner of Palmers. (/d. at 4). At issue in this case is an alleged contract whereby Plaintiff was to be the exclusive distributor of HALP’s “Made in Austria” masks in the United States. Plaintiff alleges that amid the COVID-19 pandemic, Lenzing and Palmers created HALP to sell personal protective products, principally face masks. (/d. at 5). HALP allegedly undertook to produce “hundreds of millions of masks” for distribution outside of Austria. (/d. at 6). In July 2020, HALP contacted PointEast. (/d. at 5). Plaintiff claims that HALP inquired as to whether PointEast was interested in a long-term, exclusive distribution deal for the United States. Plaintiff responded that it was indeed interested. at 7). HALP allegedly promised Plaintiff that it would create a joint venture in the United States that would be headquartered in Houston, Texas. (/d. at 6). Leonard Fischer was to act as lead manager of the United States venture. (/d.). Plaintiff claims that HALP told Mr. Fischer that he “could name [his] salary and title.” (Jd). Over the next couple of months, the parties exchanged terms sheets and eventually agreed to finalize the term sheet during a meeting in Vienna, Austria. (id. at 7). At this meeting, Dr. Fischer and Mr. Fischer, on behalf of PointEast, met with Trubrich, on behalf of Lenzing and HALP, and Wiser, on behalf of Palmers and HALP. (/d.). When Dr. Fischer inquired about finalizing the term sheet, Wieser assured him that no written contract was needed and that their verbal contract, accompanied by a handshake, is hinding. (/@.). The parties then agreed to make PointEast HALP’s exclusive distributor in the United States of HALP’s “Made in Austria” face masks. (/d. at 8).

PointEast applied for and obtained, on behalf of HALP, permission from the United States Food & Drug Administration (“FDA”) to import and sell the masks within the United States. Ud. at 13). This application required PointEast to identify the masks’ production location, which PointEast listed as Austria. (/d.). PointEast claims it spent hundreds of hours: advising HALP, conducting market, pricing and federal grant research, creating a logistics plan, distributing mask samples, conceptualizing and providing branding and design work, developing N95/FFP2 prototypes, registering internet domains, business names and bank accounts, building an online store, establishing federal and state supplier accounts, corresponding with testing laboratories and hospitals, collecting competitor masks and sending them to Hygiene Austria, corresponding with FDA regulators, submitting FDA Emergency Use Authorization (*EUA”) paperwork, and serving as Hygiene Austria’s FDA import agent, all in an effort to prepare for promised distribution of “Made in Austria” masks in the United States. (/d.). Plaintiff states that HALP, and thus Palmers and Wieser, benefited significantly from PointEast’s work. (/d. at 9). On August 18, 2020, PointEast recommended that HALP use a red nosepiece on its masks to create brand recognition and “confer strong product quality identification in the United States.” (/d.). HALP agreed to, and in fact did, use a red nosepiece on its masks. (Jd. at 9, 11). PointEast alleges that, as a result of the “instantly recognizable” red nosepiece forged via “countless hours and considerable branding and design work,” HALP earned over $609 million USD in sales. (fd. at 11-12). Wieser, on behalf of HALP, allegedly made repeated statements claiming that the masks HALP sold were made in Austria. See (/d. at 12, 14-15), Tbe masks, however, were actually made in China but labeled as “Made in Austria.” (/d. at 15; Doc. No. 121-2 at 3). At the same time HALP offered to supply PointEast 500,000 of its “Made in Austria” masks, Austrian police were investigating HALP for the use of the false labels. (Doc. No. 121-1 at 15; Doc. No. 121-3). HALP allegedly never imported any masks to PointEast, nor did it create its United States venture or hire Mr. Fischer at his desired salary. (Doc. No. 121-1 at 16). HALP, instead, attempted to deflect the bad publicity from the police investigation by issuing a statement that it was correct in labeling its

masks “Made in Austria” because the masks were “made for Austria.” Ud). Plaintiff argues that this deflection shows that HALP knowingly contracted for masks that it had no plans to produce. (/d.). PointEast filed this lawsuit in the 333rd Judicial District of Harris County, Texas. Lenzing removed the case to the Southern District of Texas. (Doc. No. 1). Plaintiff brings claims for fraud, fraud in the inducement, negligent misrepresentation, breach of express or implied contract, unjust enrichment, and violations of the Texas Theft Liability Act. (Doc. No. 121-1 at 21-24). Plaintiff further alleges that liability amongst or between defendants should be shared through theories of joint venture or joint enterprise and civil conspiracy. (/d. at 24-26). Plaintiff alleges that the Defendants breached the parties’ verbal contract by failing to import any masks at all (let alone masks actually made in Austria), failing to establish the United States venture as promised, and failing to pay Plaintiff for the work it put into their business arrangement. (/d. at 18-19). Most significantly, Plaintiff states that Defendants wrongfully profited from an idea they took from PointEast—the red nosepiece—while refusing to pay Plaintiff anything. (/d. at 19). As noted above, Plaintiff dismissed its claims against Defendant HALP. and has resolved its claims against Lenzing and Trubrich. Therefore, Plaintiff's only remaining claims are against Palmers and Wieser. Despite having been served with process, Defendants Wieser and Palmers have not appeared in the case or filed any responsive pleadings.' The Clerk entered default as to Palmers on April 16, 2024 (Doc. No. 115) and default as to Wieser on November 22, 2024 (Doc. No. 123) pursuant to Federal Rule of Civil Procedure 55(a). Plaintiff subsequently filed its

' As residents of Austria, Defendants were served in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Nov. 15, 1965, 20 U.S.T. 361: see FED. R. Civ. P, 4(F)(1), (h)(2) (authorizing service under the Hague Convention); (Doc. Nos. 120 and 120-1).

Amended Motion for Default Judgment pursuant to Federal Rule of Civil Procedure 55(b). (Doc. No. 121). Il. Legal Standard After default is entered, a plaintiff may seek default judgment under Federal Rule of Civil Procedure 55(b). See N.Y. Life ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). The plaintiff must submit evidence supporting that the defendant has been properly served with the summons, complaint, and the default judgment motion. James Avery Craftsman, Inc. v. Sam Moon Trading Enters., Ltd., No. 16-CV-463, 2018 WL 4688778, at *3 (W.D. Tex. July 5, 2018) (citing Bludworth Bond Shipyard, Inc. vy. M/V Caribbean Wind, 841 F.2d 646, 649-51 (5th Cir. 1988)); Hazim v. Schiel & Denver Book Grp., No. H-12-1286, 2013 WL 2152109, at *1 (S.D. Tex. May 16, 2013). Absent proper service, a district court does not haye personal jurisdiction over the defendant, and any default judgment is void. See Recreational Props., Inc. v. Sw. Mortg. Serv. Corp., 804 F.2d 311, 314 (Sth Cir. 1986). “A default judgment is unassailable on the merits but only so far as it is supported by the well-pleaded allegations, assumed to be true.” Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 496 (5th Cir. 2015) (quoting Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (Sth Cir. 1975)). “There must be a sufficient basis in the pleadings for the judgment entered.” Nishimatsu Constr. Co., 515 F.2d at 1206. For the court to enter default judgment, the complaint must satisfy Federal Rule of Civil Procedure 8. See Wooten, 788 F.3d at 497-98. “On appeal, the defendant, although he may not challenge the sufficiency of the evidence, is entitled to contest the sufficiency of the complaint and its allegations to support the judgment.” Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).

Rule 8(a) requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” FED. R. Civ. P. 8(a)(2). A complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 573 (2007). Rule 8 “does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the- defendant-unlawfully-harmed-me accusation.” Ashcroft v. Igbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” /d. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ hut it asks for more than a sheer possibility than a defendant has acted unlawfully.” /d. (citing TwomAly, 550 U.S. at 556). Il. Analysis Courts in the Fifth Circuit have developed a three-part analysis to determine whether a default judgment should be entered. The Court must consider three questions: (1) if a default judgment is procedurally appropriate; (2) if the plaintiff has presented a colorable claim in its pleadings; and (3) how to calculate damages or equitable relief. Vela v. M&G USA Corp., 2020 WL 421188, at *1 (S.D. Tex. Jan. 27, 2020). The Court finds that each of these requirements has been met. A. PointEast has shown that default judgment is procedurally warranted. As a matter of longstanding Fifth Circuit law, default judgments are generally disfavored. See Sun Bank vy, Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (Sth Cir. 1989) (“Default judgments are a drastic remedy, not favored by the Federal Rules and resorted by courts only in extreme situations.”). The Court must consider relevant factors, including: (1) whether material issues of fact are at issue; (2) whether there has been substantial prejudice; (3) whether the grounds

for default are clearly established; (4) whether the default was caused by a good faith mistake or excusable neglect; (5) the harshness of the default judgment based on the circumstances; and (6) whether the court would think itself obliged to set aside the default on the [defaulting party’s] motion. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). The Court finds that each of these considerations weigh in favor of default judgment in this case. First, there are no material facts at issue. Defendants have not filed an answer or any responsive pleadings since being served in this case; consequently, there are no material facts in dispute. See Nishimatsu Constr. Co., 515 F.2d at 1206 (‘The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established.”). Second, there does not seem to he any threat of substantial prejudice to the Defendant. Moreover, Defendants’ “failure to respond threatens to hring the adversary process to a halt, effectively prejudicing Plaintiff's interests.” Ins. Co. of the W. v. H & G Contractors, Inc., No. C— 10-390, 2011 WL 4738197, at *3 (S.D. Tex. Oct. 5, 2011). Third, the grounds for default are well estahlished by Defendants failure to “plead or otherwise defend” against PointEast’s claims, despite being properly served. Fed. R. Civ. Pro. 55(a). Further, none of the typical exceptions to default apply, reflected in the Clerk’s entry of default. This factor weighs in favor of default judgment. Fourth, the question of good faith mistake or excusable neglect is slightly more difficult. Defendant Wieser is a citizen of, and resides in, Austria. (Doc. No. 121-1 at 4). Defendant Palmers is an entity incorporated in Austria with its principal place of business in Vienna, Austria. (/d. at 3). The requisite documents have heen mailed first class to Palmers’s Austrian address. (Doc. No. 21). Wieser was served via both first-class mail and email after the Court permitted alternative

service of process in its prior order. (Doc. No. 90). The service is deemed legally sound, even if the Plaintiff cannot show Defendants have actual notice of the suit. Thus, the Court finds that this factor 1s neutral. Fifth, default judgment is not harsh under the circumstances. PointEast seeks only the relief to which it is entitled under the law, mitigating the harshness of a default judgment against Defendants. See Lindsey, 161 F.3d at 893. Sixth, and finally, absent a compelling reason the Court does not find itself likely to set aside the default upon Defendants’ motion. Defendants have failed to answer or appear at any time during the pendency of this suit—now pending over three years—despite being served numerous ways over the course of several months. Further, based on the Defendants’ lack of appearance or response, the likelihood of the Defendants making such a motion seems remarkably low. Thus, this factor also weighs in favor of default judgment. All of the Lindsey factors weigh in Plaintiffs favor. Therefore, the Court concludes that default judgment is procedurally warranted. B. PointEast has pled substantively meritorious claims. Next, the Court must determine whether the pleadings provide a “sufficient basis” for entering default judgment. Nasufi, 2017 WL 6497762, at *2. Due to their default, Defendants are deemed to have admitted the well-pleaded facts alleged in the Complaint. See United States v. Shipco Gen., Ine., 814 F.2d 1011, 1014 (Sth Cir. 1987) (finding that the well-pleaded factual allegations are assumed to be true, except regarding damages). Nonetheless, the Court must review the pleadings to determine the substantive merits of PointEast’s claims for relief. Nishimatsu Constr. Co., 515 F.2d at 1206. As noted above, Plaintiff brings claims for fraud, fraud in the

inducement, negligent misrepresentation, breach of express or implied contract, unjust enrichment, and violations of the Texas Theft Liability Act.

00264-CV, 2015 WL 1623541, at *1 (Tex. App.—Fort Worth, Apr. 9, 2015, pet. denied) (finding that unjust enrichment is not an independent cause of action); see also Perales v. Bank of Am., N.A., No. CIV.A. H-14-1791, 2014 WL 3907793, at *3 (S.D. Tex. Aug. 11, 2014). Nevertheless, whether unjust enrichment is characterized as a cause of action or a theory of recovery, the elements are clear. “A party may recover under the unjust enrichment theory when one person has obtained a henefit from another by fraud, duress, or the taking of an undue advantage.” Digital Drilling Data Sys., LLC. v. Petrolink Servs., Inc., 965 F.3d 365, 384 (Sth Cir. 2020) (citing Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992)). Unjust enrichment claims are based on quasi-contract and are predicated on the absence of an express contract controlling the circumstances. See Fortune Production Co. v. Conoco, Inc., 52 S.W.3d 671, 683 (Tex. 2000). PointEast alleges Defendants benefited, either by fraud or by taking of an undue advantage, from PointEast’s work on the branding and designs of the face masks. (Doc. No. 121 at 13). Plaintiff states that it explicitly recommended Defendants use a red nosepiece to build brand recognition. (Doc. No. 121-1 at 9). The red nosepiece is claimed to be the cause of Defendants’ earning hundreds of millions of Euros. (/d. at 22). Plaintiff alleges that Palmers and Wieser unjustly obtained the revenue generated from the design and wrongfully retained such benefits to the detriment of PointEast. (/d. at 22). Still, the Court is uncertain whether Plaintiff, as pleaded, can recover under both a breach of contract cause of action and an unjust enrichment cause of action. See Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 454 (5th Cir. 2001) (citing Woodard v. Southwest States, Inc., 384 S.W.2d 674, 675 (Tex. 1964)) (“In Texas, unjust enrichment is based on quasi-contract and is unavailable when a valid, express contract governing the subject matter of the dispute exists.”).

Pursuant to Federal Rule of Civil Procedure 55(b), the Court “may conduct hearings when, to enter or effectuate judgment, it needs to: . . . establish the truth of any allegation by evidence or investigate any other matter.” FED. R. Civ. P. 55(b)(2). Thus, the Court will conduct a hearing to determine whether Plaintiff may recover under just one or both causes of action.

plaintiff bears the burden of proving the amount of damages. U.S. for Use of M-CO Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (Sth Cir, 1987). The plaintiff must establish the necessary facts, either through detailed affidavits or an evidentiary hearing, to show its damages are “capable of mathematical calculation.” United Artists Corp. v. Freeman, 605 F.2d 854, 857 (Sth Cir. 1979). If a calculation can be made “with certainty by reference to the pleadings and supporting documents,” a hearing to determine damages is unnecessary. James v. Frame, 6 F.3d 307, 311 (Sth Cir. 1993) (quoting Frame v. S-H, Inc., 967 F.2d 194, 204 (5th Cir. 1992)). Federal Rule of Civil Procedure 55(b){2) also allows the Court to conduct hearings when it needs to determine the amount of damages. The general rule is “unliquidated damages normally are not awarded without an evidentiary hearing.” Leedo Cabinetry v. James Sales & Distribution, Inc., 157 F.3d 410, 414 (Sth Cir. 1998). While there is an exception when the amount claimed is “one capahle of mathematical calculation,” the Court finds that the exception is not applicable. /d. (citing James v. Frame, 6 F.3d 307, 309-10 (5th Cir. 1993)). Therefore, ihe Court will conduct a hearing to determine the amount of damages to which PointEast is entitled. IV. Conclusion For the foregoing reasons, the Court GRANTS PointEast’s Motion for Default Judgment on the issue of liability against the remaining Defendants. (Doc. No. 121). The Court will set a hearing to determine: (1) whether Plaintiff may recover on both its breach of contract and unjust enrichment claims; and (2) the amount of damages to which PointEast is entitled. tn SIGNED at Houston, Texas this 1 day of December, 2024.

AndrewS.Hanen OS™” United States District Court Judge