The plaintiff AirDoctor sued the defendant under the Lanham Act for advertising and selling filters for use in AirDoctor purifiers. While the defendant advertised its filters as “compatible” and “replacements” for the original filters, third-party testing allegedly revealed they did not meet the same HEPA filtration standards or properly fit into the air purifiers.
AirDoctor sought injunctive relief and “actual, compensatory, consequential, statutory, special, and/or punitive damages in an amount to be proven at trial,” without demanding a specific amount in the complaint. The defendant failed to respond after being served, and AirDoctor sought default judgment. With the aid of a third-party tool to approximate the defendant’s sales, AirDoctor calculated around $2.5 million in damages from lost sales (and approximately $50,000 in attorneys’ fees based on that figure).
In the Central District of California, the district court entered default judgment and permanently enjoined the defendant. However, the court declined to award damages. Rule 54(c) prohibits a default judgment award of damages greater than “what is demanded in the pleadings,” and the district court read this to prohibit monetary awards where the complaint does not quantify damages. And because the district court’s local rules provide a formula for calculating attorneys’ fees in default judgments, the court also declined to award attorneys’ fees.
The Ninth Circuit reversed on April 11. They found that because the AirDoctor sought damages in an amount to be determined at trial, a default judgment awarding actual damages would be “consistent” with the language of Rule 54(c), which only prohibits awards “greater” than the amount demanded in the complaint. The court also drew from the rule’s language requiring a default judgment to adhere “in kind” to the relief sought in the complaint, concluding that courts would not serve this purpose by treating an amount-to-be-proven demand as equivalent to a demand for $0. The court remanded to the district court to determine an appropriate award of damages and attorneys’ fees.
This ruling compounds risk and uncertainty for defendants that fail to respond to litigation, and it highlights the stakes of proving damages in default proceedings. Though this appeal concerned a Lanham Act claim, the decision rested on Rule 54 and its reasoning is not limited to a particular cause of action. The ruling also leaves open the question of what role experts may play in default judgment proceedings, potentially incentivizing plaintiffs to introduce unrebutted expert testimony to estimate broad reputational, licensing, or other harm.
For plaintiffs suing in federal court, the AirDoctor ruling exposes a weakness to self-limiting monetary remedies in the complaint. Plaintiffs can leave open their options for default judgments by demanding damages in an amount to be determined at trial. Where plaintiffs do plead an amount certain in damages, they can also demand “additional amounts not yet fully determined,” which the Ninth Circuit held in Henry v. Sneiders, 490 F.2d 315 (9th Cir. 1974), can sidestep the limit imposed by Rule 54(c).
Defendants have always faced risks of monetary and injunctive relief from default judgments, but this ruling confirms that cases demanding indeterminate damages can result in any amount of damages plaintiffs prove with their default judgment motion. And when plaintiffs present evidence ex parte, even speculative evidence often goes unchallenged. These factors escalate the stakes of default judgments, either through inadvertence or an intentional strategy for fielding serial litigation (including copyright, ADA, privacy, or other claims often brought by repeat plaintiffs). By the time a court determines and awards damages, a defendant who realizes the stakes are higher than anticipated faces a much more difficult task of vacating a default judgment.
Failing to defend against lawsuits that lack a self-imposed limit on damages in the complaint could lead to unpredictable, and potentially high, monetary liability. Parties can defend against these risks by continuing to diligently monitor for litigation, engage counsel early, and prepare strategies in advance to detect and defend against lawsuits across jurisdictions.