Dahdoul Textiles, Inc. et al v. Zinatex Imports, Inc. et al, No. 2:2015cv04011 - Document 26 (C.D. Cal. 2015)
Court Description: ORDER DENYING DEFENDANTS MOTION TO DISMISS AND GRANTING DEFENDANTS MOTION TO TRANSFER 16 . This matter is hereby transferred to the Northern District of Illinois for further proceedings. The Clerk of the Court will close this case. by Judge Otis D. Wright, II.(MD JS-6. Case Terminated). (lc) Modified on 8/26/2015 (lc).
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Dahdoul Textiles, Inc. et al v. Zinatex Imports, Inc. et al Doc. 26 O JS-6 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 DAHDOUL TEXTILES, INC.; IMAD 12 Case 2:15-cv-04011-ODW(ASx) DAHDOUL, Plaintiffs, 13 14 ORDER DENYING DEFENDANTS’ v. MOTION TO DISMISS AND 15 ZINATEX IMPORTS, INC.; MOUSA 16 ABUHADBA; and DOES 1–10, inclusive, MOTION TO TRANSFER [16] 17 GRANTING DEFENDANTS’ Defendants. I. 18 INTRODUCTION 19 Defendants Zinatex Imports, Inc. and Mousa Abuhadba (collectively 20 “Defendants”) move to dismiss the Complaint for lack of personal jurisdiction and 21 improper venue. Abuhadba also moves to dismiss the Complaint for insufficient 22 service of process. Additionally, Defendants move in the alternative to transfer the 23 matter to the Northern District of Illinois. For the reasons discussed below, the Court 24 DENIES Defendants’ Motion to Dismiss, but GRANTS Defendants’ Motion to 25 Transfer. (ECF No. 16.) 26 II. FACTUAL BACKGROUND 27 Plaintiff Imad Dahdoul created a rug design known as “Design #501,” the 28 copyright for which was registered by Plaintiff Dahdoul Textiles, Inc. (Compl. ¶¶ 2, Dockets.Justia.com 1 22–23.) At some point, Plaintiffs allegedly discovered that Defendants were selling 2 rugs with designs that bore a “remarkable resemblance” to Design #501. (Id. ¶ 5.) 3 During further investigation, a person employed by Plaintiffs “saw a large 4 number of rugs bearing Design #501 packaged up with Defendants’ name on them” at 5 a rug manufacturer’s premises in Turkey. (Id. ¶ 6.) The manufacturer previously 6 informed Defendants that the rug design was copyrighted, but Defendants allegedly 7 insisted that the design “could not be copyrighted.” 8 Defendants a cease-and-desist letter by certified mail, to which Defendants failed to 9 timely respond. (Id. ¶¶ 8, 26; Decl. Dahdoul ¶ 6.) Plaintiffs filed this lawsuit shortly 10 thereafter, alleging one cause of action for willful copyright infringement under the 11 Copyright Act. (ECF No. 1.) Plaintiffs’ Proof of Service of Summons indicates that 12 they served Zinatex by personally delivering the Summons and Complaint to its 13 president, Abuhadba. (ECF No. 22.) (Id. ¶ 7.) Plaintiffs sent 14 Dahdoul Textiles is a California corporation, with its principal place of business 15 in Commerce, California. (Compl. ¶ 15.) Zinatex is an Illinois corporation, with its 16 only two offices located in Cook County, Illinois. (Decl. Abuhadba ¶ 14.) Zinatex 17 has no employees in California, does not own or lease real property in California, and 18 does not otherwise have any assets in California. (Id. ¶¶ 16–18.) Abuhadba is a 19 resident of Illinois. (Id. ¶¶ 2, 3.) Neither Defendant has sold rugs bearing Design 20 #501 in California (id. ¶ 21), although there is conflicting evidence on whether or not 21 Zinatex sells other rugs in California. (Compare Decl. Abuhadba ¶ 28, with Decl. 22 Rodriquez ¶ 4.) 23 On July 16, 2015, Defendants moved to dismiss the Complaint, or in the 24 alternative, to transfer the case to the Northern District of Illinois. (ECF No. 16.) On 25 August 3, 2015, Defendants submitted a “Reply” that rehashed the arguments made in 26 its Motion and pointed out Plaintiffs’ failure to file an Opposition. (ECF No. 19.) 27 /// 28 /// 2 1 Later that day, Plaintiffs filed their Opposition. (ECF No. 20.)1 Defendants did not 2 file a subsequent response. 3 consideration. Defendants’ Motion is now before the Court for III. 4 DISCUSSION 5 Defendants move to dismiss the Complaint for lack of personal jurisdiction and 6 improper venue. Abuhadba also moves to dismiss the Complaint for insufficient 7 service of process. In the alternative, Defendants move to transfer the matter to the 8 Northern District of Illinois. The Court will address each issue in turn. 9 A. Personal Jurisdiction 10 Defendants contend that they are not subject to personal jurisdiction in 11 California because they did not “purposefully direct” their activities toward this state. 12 (Mot. at 8–10.) The Court disagrees. 13 To satisfy due process, a non-resident defendant must be subject to either 14 general jurisdiction in the state or have “certain minimum contacts with [a state] such 15 that the maintenance of the suit does not offend ‘traditional notions of fair play and 16 substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In 17 copyright cases, such minimum contacts exist where (1) the defendant “purposefully 18 direct[s]” their activities toward the forum state, (2) the claim arises out of the 19 defendant’s forum-related activities, and (3) the exercise of jurisdiction is reasonable.2 20 Marvix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227–28 (9th Cir. 2011). 21 Purposeful direction, in turn, is determined using the Calder effects test. That test 22 “requires that ‘the defendant . . . have (1) committed an intentional act, (2) expressly 23 aimed at the forum state, (3) causing harm that the defendant knows is likely to be 24 25 26 27 28 1 Not only was Plaintiffs’ Opposition brief filed a week late, but Plaintiffs continued filing supplemental documents in support of their Opposition for several days. However, Defendants did not request an opportunity to respond to Plaintiffs’ untimely Opposition, and counsel appeared unprepared to discuss the legal precedent cited by Plaintiffs at the Motion hearing. Given these circumstances, the Court exercises its discretion to consider the Opposition documents. 2 Defendants contest only the “purposeful direction” prong of the test. 3 1 suffered in the forum state.’” Id. at 1228 (citation omitted). 2 Despite Defendants’ apparent lack of connection with California, Ninth Circuit 3 law is clear: the willful infringement of a copyright held by a company known to do 4 business in the forum state is sufficient to satisfy the Calder effects test. Wash. Shoe 5 Co. v. A-Z Sporting Goods, Inc., 704 F.3d 668, 673 (9th Cir. 2012). 6 defendant in Washington Shoe, Defendants here (1) performed intentional acts by 7 purchasing the Design #501 rugs from the manufacturer in Turkey, copying the 8 design, and selling the rugs, id. at 674, (2) expressly aimed their conduct at the forum 9 state by willfully infringing the copyright of a California corporation after being 10 informed of the copyright by the manufacturer, and after being sent the cease-and- 11 desist letter by Plaintiffs,3 id. at 678, and (3) knew or should have known that the 12 economic loss from their infringement would be felt in California, which is where 13 Plaintiffs are doing business, id. at 679. 14 personal jurisdiction in California. 15 B. Like the As a result, Defendants are subject to Insufficient Service of Process 16 The Court also rejects Abuhadba’s argument that serving him with only one 17 copy of the Summons and Complaint on behalf of both himself and his company 18 constitutes insufficient service. (Mot. at 10–12.) “[A]n individual . . . may be served 19 in a judicial district of the United States by . . . delivering a copy of the summons and 20 of the complaint to the individual personally.” Fed. R. Civ. P. 4(e)(2)(A). “Rule 4 is 21 a flexible rule that should be liberally construed so long as a party receives sufficient 22 notice of the complaint.” Direct Mail Specialists, Inc. v. Eclat Computerized Tech., 23 Inc., 840 F.2d 685, 688 (9th Cir. 1988) (internal citations and quotations omitted). 24 Abuhadba clearly received sufficient notice of the lawsuit when he was hand- 25 delivered a Summons and Complaint identifying both him and Zinatex as defendants 26 3 27 28 As the cease-and-desist letter was sent by certified mail to Defendants and requested a response from them, it is reasonable to infer that Plaintiffs’ address in California was included somewhere on the letter or envelope. 4 1 in the action; the fact that he received only one copy of each is inconsequential. Such 2 service constitutes substantial compliance with Rule 4(e). 3 C. Venue 4 Defendants request that the Court dismiss the action for improper venue. 28 5 U.S.C. § 1406(a). In the alternative, Defendants request that the Court transfer the 6 matter to the Northern District of Illinois under 28 U.S.C. § 1404(a). (Mot. at 12–19.) 7 Because venue is proper in this district, the Court cannot dismiss the action under 8 § 1406. However, as the matter would be more conveniently litigated in the Northern 9 District of Illinois, the Court will transfer the case to that district under § 1404. 10 1. Dismissal for Improper Venue 11 Section 1406 “authorize[s] dismissal only when venue is ‘wrong’ or ‘improper’ 12 in the forum in which it was brought.” Atl. Marine Const. Co. v. U.S. Dist. Court for 13 W. Dist. of Texas, 134 S. Ct. 568, 577 (2013). Actions arising under the Copyright 14 Act are properly brought in the district where the defendants reside. 28 U.S.C. 15 § 1400(a). “This circuit interprets this provision to allow venue in any judicial district 16 where, if treated as a separate state, the defendant would be subject to personal 17 jurisdiction.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1126 18 (9th Cir. 2010). 19 jurisdiction in California because they infringed on a copyright held by Plaintiffs, 20 whom they knew to reside in this state. (See supra Part III.A.) Because Defendants 21 allegedly further knew that Dahdoul Textiles’ place of business is within this judicial 22 district, the Court’s personal jurisdiction analysis applies with equal force if we treat 23 this district as a separate state. As venue is proper in this district, the case cannot be 24 dismissed under § 1406(a). As previously discussed, Defendants are subject to personal 25 2. Convenience Transfer 26 Transfer to the Northern District of Illinois is appropriate here under § 1404. 27 “For the convenience of parties and witnesses, in the interest of justice, a district court 28 may transfer any civil action to any other district or division where it might have been 5 1 brought . . . .” 28 U.S.C. § 1404(a). “This provision gives a district court broad 2 discretion to transfer a case to another district where venue is also proper.” Amini 3 Innovation Corp. v. JS Imports, Inc., 497 F. Supp. 2d 1093, 1108 (C.D. Cal. 2007) 4 (footnote omitted); see also Commodity Futures Trading Comm’n v. Savage, 611 F.2d 5 270, 279 (9th Cir. 1979) (“Weighing of the factors for and against transfer involves 6 subtle considerations and is best left to the discretion of the trial judge.”). 7 Analysis under § 1404 is two-fold. First, it must be shown that subject matter 8 jurisdiction, personal jurisdiction, and proper venue exist in the transferee court. Metz 9 v. U.S. Life Ins. Co. in City of New York, 674 F. Supp. 2d 1141, 1145 (C.D. Cal. 10 2009); see also Hoffman v. Blaski, 363 U.S. 335, 344 (1960). All three clearly exist 11 here. Subject matter jurisdiction for claims under the Copyright Act exists in all 12 district courts. 28 U.S.C. §§ 1331, 1338. Defendants concede they are subject to 13 personal jurisdiction in Illinois. Finally, venue is proper in the Northern District of 14 Illinois because Defendants reside in Cook County, Illinois. See 28 U.S.C. § 1400(a). 15 Second, the court must weigh a multitude of factors to determine whether 16 transfer is appropriate, including: (1) the convenience of the parties; (2) the 17 convenience of the witnesses; (3) the location where the relevant agreements were 18 negotiated and executed, (4) the state that is most familiar with the governing law, (5) 19 the plaintiff’s choice of forum, (6) the respective parties’ contacts with the forum, (7) 20 the contacts relating to the plaintiff’s cause of action in the chosen forum, (8) the 21 differences in the costs of litigation in the two forums, (9) the availability of 22 compulsory process to compel attendance of unwilling non-party witnesses, and (10) 23 the ease of access to sources of proof. Metz, 674 F. Supp. 2d at 1145; Jones v. GNC 24 Franchising, Inc., 211 F.3d 495, 498–99 (9th Cir. 2000). Although “great weight is 25 generally accorded plaintiff’s choice of forum,” Lou v. Belzberg, 834 F.2d 730, 739 26 (9th Cir. 1987), such deference is “diminished ‘if the moving party establishes one or 27 more of the following factors: (1) the operative facts have not occurred within the 28 forum; (2) the forum has no particular interest in the parties or subject matter; (3) the 6 1 forum is not the primary residence of either the plaintiff or defendant; or (4) the 2 subject matter of the litigation is not substantially connected to the forum.’” Metz, 3 674 F. Supp. 2d at 1146 (citations omitted). 4 The Court feels that the factors tip in favor of transferring the matter. While 5 each party would obviously prefer to litigate the case in their respective districts, the 6 Court is inclined to give more weight to Defendants’ convenience given that they are 7 the ones being haled into court with little connection to California. Notably, Plaintiffs 8 are not due the significant deference typically afforded to their choice of forum 9 because the alleged infringement did not occur in California, and because this district 10 is clearly not the primary residence of the Defendants. Id. 11 The convenience of the relevant witnesses and location of relevant evidence 12 also favors transfer. In copyright infringement cases, “[a]bsent direct evidence of 13 copying, proof of infringement involves fact-based showings that the defendant had 14 ‘access’ to the plaintiff’s work and that the two works are ‘substantially similar.’” 15 Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir. 2000). Plaintiffs here 16 allege that Defendants had such access by purchasing rugs with the protected pattern 17 from the manufacturer in Turkey. 18 infringement was willful because Defendants sold infringing rugs after both the 19 manufacturer and Plaintiffs informed Defendants of the copyright. (Compl. ¶¶ 5–9.) (Compl. ¶ 6.) Plaintiffs also allege that the 20 The witnesses relevant to proving these allegations appear to be Abuhadba and 21 other Zinatex employees (who are located in Illinois), and the manufacturer in Turkey 22 (which neither favors nor disfavors transfer given the distance). They would also 23 appear to be the ones in possession of the relevant evidence, such as the infringing 24 rugs, the original copyrighted rugs allegedly sold to Defendants, and any related 25 documents. Finally, the evidence needed to establish Defendants’ profits attributable 26 to their sales of infringing rugs would obviously be in possession of Defendants. (See 27 Compl. ¶ 31 (requesting disgorgement of such profits from Defendants).) 28 Plaintiffs do not point to any relevant evidence or witness that may be in 7 1 California. Although Plaintiffs claim they found a Zinatex rug for sale in California, 2 there is no allegation that rugs with the copyrighted design are in California. 3 Moreover, the alleged discussions between Abuhadba’s brother and Dahdoul’s brother 4 and father (all of whom live in California) regarding possible resolution of the lawsuit 5 do not bear on whether or not Defendants infringed Plaintiffs’ rug designs in the first 6 place. 7 whether or not Defendants received the cease-and-desist letter, the Court finds that 8 such evidence does not outweigh the significant evidence located in Illinois. 9 (Decl. Dahdoul ¶¶ 10–13.) Even if such conversations are probative of Plaintiffs do not address the remaining factors under § 1404(a), which appear to 10 be inapplicable or further favor transfer for the above reasons. 11 circumstances, transfer to the Northern District of Illinois is appropriate. III. 12 Given these CONCLUSION 13 For the reasons discussed above, the Court DENIES Defendants’ Motion to 14 Dismiss, but GRANTS Defendants’ Motion to Transfer. (ECF No. 16.) This matter 15 is hereby transferred to the Northern District of Illinois for further proceedings. The 16 Clerk of the Court will close this case. 17 IT IS SO ORDERED. 18 19 August 25, 2015 20 21 22 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 8
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