HERBAL BRANDS, INC. V. PHOTOPLAZA, INC., ET AL, No. 21-17001 (9th Cir. 2023)
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Herbal Brands, Inc., which has its principal place of business in Arizona, brought suit in Arizona against New York residents that sell products via Amazon storefronts. Herbal Brands alleged that Defendants’ unauthorized sale of Herbal Brands products on Amazon to Arizona residents and others violated the Lanham Act and state law. The district court dismissed for lack of personal jurisdiction over Defendants.
The Ninth Circuit reversed. The panel held that if a defendant, in its regular course of business, sells a physical product via an interactive website and causes that product to be delivered to the forum, then the defendant has purposefully directed its conduct at the forum such that the exercise of personal jurisdiction may be appropriate. The panel applied the Arizona long-arm statute, which provides for personal jurisdiction co-extensive with the limits of federal due process. Due process requires that a nonresident defendant must have “certain minimum contacts” with the forum such that the exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice.
The panel held that Herbal Brands met its initial burden of showing that Defendants purposefully directed their activities at the forum because, under the Calder effects test, Defendants’ sale of products to Arizona residents was an intentional act, and Herbal Brands’ cease-and-desist letters informed defendants that their actions were causing harm in Arizona. The court held that Defendants had sufficient minimum contacts with Arizona, Herbal Brands’ harm arose out of those contacts, and the exercise of personal jurisdiction would be reasonable in the circumstances.
Court Description: Personal Jurisdiction. Reversing the district court’s dismissal for lack of personal jurisdiction over defendants in an action under the Lanham Act, the panel held that, if a defendant, in its regular course of business, sells a physical product via an interactive website and causes that product to be delivered to the forum, then the defendant has purposefully directed its conduct at the forum such that the exercise of personal jurisdiction may be appropriate.
Herbal Brands, Inc., which has its principal place of business in Arizona, brought suit in Arizona against New York residents that sell products via Amazon storefronts. Herbal Brands alleged that defendants’ unauthorized sale of Herbal Brands products on Amazon, to Arizona residents and others, violated the Lanham Act and state law.
The panel applied the Arizona long-arm statute, which provides for personal jurisdiction co-extensive with the limits of federal due process. Due process requires that a nonresident defendant must have “certain minimum contacts” with the forum such that the exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice.
Addressing the first prong of the specific jurisdiction inquiry, the panel applied a purposeful direction analysis, rather than a purposeful availment analysis, because Herbal Brands brought tortious claims for trademark infringement, false advertising, and tortious interference with business relationships. The panel held that Herbal Brands met its initial burden of showing that defendants purposefully directed their activities at the forum because, under the Calder effects test, defendants’ sale of products to Arizona residents was an intentional act, and Herbal Brands’ cease- and-desist letters informed defendants that their actions were causing harm in Arizona. In addition, defendants “expressly aimed” their conduct at the forum because an interactive website plus “something more” constitutes “express aiming.” Defendants’ Amazon storefronts were interactive websites, and defendants’ sales of products to Arizona residents were the requisite “something more” because the sales occurred as part of defendants’ regular course of business, and defendants exercised some level of control over the ultimate distribution of their products beyond simply placing their products into the stream of commerce. Recognizing a range of approaches adopted by other circuits in response to similar questions, the panel stated that it did not attempt to reconcile the split among the circuits.
Addressing the second prong of the specific jurisdiction inquiry, the panel held that Herbal Brands’ harm arose out of defendants’ contacts with Arizona. Addressing the third prong, the panel held that defendants failed to show that the exercise of jurisdiction would not be reasonable. Thus, in sum, defendants had sufficient minimum contacts with Arizona, Herbal Brands’ harm arose out of those contacts, and the exercise of personal jurisdiction would be reasonable in the circumstances.
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