Arcona, Inc. v. Farmacy Beauty, LLC, et al, No. 2:2017cv07058 - Document 33 (C.D. Cal. 2018)
Court Description: ORDER DENYING, IN PART, AND GRANTING, IN PART, INDIVIDUAL DEFENDANTS MOTION TODISMISS WITH LEAVE TO AMEND 20 . To the extent Plaintiff wishes to amend the Complaint, Plaintiff must do so before April 11, 2018. Plaintiff must also lodge a redlined copy of any amended complaint for the Court and Defendants review by Judge Otis D. Wright, II (lc)
Download PDF
<![CDATA[
Arcona, Inc. v. Farmacy Beauty, LLC, et al Doc. 33 O 1 2 3 4 5 6 United States District Court Central District of California 7 8 9 10 11 ARCONA, INC., a California corporation, Plaintiff, 12 13 Case No. 2:17-cv-07058-ODW-JPR ORDER DENYING, IN PART, AND v. 14 FARMACY BEAUTY, LLC, a New Jersey GRANTING, IN PART, INDIVIDUAL 15 limited liability company, DAVID C. DEFENDANTS’ 16 CHUNG, an individual, and MARK DISMISS WITH LEAVE TO AMEND 17 VEEDER, an individual, 18 19 MOTION TO [20] Defendants. I. INTRODUCTION 20 Plaintiff Arcona, Inc., brings the instant action against Farmacy Beauty, LLC 21 (“Farmacy”), together with individual Farmacy business officers David C. Chung 22 (“Chung”) and Mark Veeder (“Veeder”) (collectively, “Individual Defendants”). (See 23 Compl., ECF No. 1.) Plaintiff alleges various trademark infringement claims against 24 Farmacy and Individual Defendants for infringement of Plaintiff’s EYE DEW mark. 25 (Id. ¶¶ 20–56.) Individual Defendants filed this motion to dismiss the complaint for 26 lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil 27 Procedure; improper venue, pursuant to Rule 12(b)(3); and failure to state a claim, 28 pursuant to Rule 12(b)(6). (Mot. 1–2, ECF No. 20.) For the reasons discussed below, Dockets.Justia.com 1 the Court DENIES Individual Defendants’ Motion to Dismiss for lack of personal 2 jurisdiction and improper venue and GRANTS Individual Defendants’ Motion to 3 Dismiss for failure to state a claim with leave to amend. II. 4 5 FACTUAL BACKGROUND Plaintiff is a California corporation with its principle place of business in 6 Valencia, California. (Compl. ¶ 1.) Plaintiff specializes in the formulation, 7 manufacture, and distribution of high quality skin care products, including several lines 8 of eye creams and serums. (Id. ¶¶ 10–11.) As early as January 1, 2002, Plaintiff began 9 promoting several of its eye creams under the designations EYE DEW and EYE DEW 10 PLUS. (Id. ¶ 11.) Plaintiff holds a registered trademark, Registration No. 4,706,079, 11 in the United States for the EYE DEW mark. (Id. ¶ 13; Id., Ex. 1, ECF No. 1-1.) This 12 International Class 003 trademark includes “cosmetic creams for skincare; cosmetic 13 preparations for skin renewal; eye cream; non-medicated stimulating lotions for the 14 skin; skin conditioning creams for cosmetic purposes; skin moisturizer; [and] wrinkle 15 removing skin care preparations.” (Id. ¶ 13.) 16 Farmacy is a New Jersey limited liability company with its principle place of 17 business in New York, New York. (Id. ¶ 2.) Farmacy also sells skin care products and 18 began distributing an eye cream under the designation EYE DEW. (See id. ¶ 14.) 19 Farmacy’s EYE DEW mark is identical to Plaintiff’s registered mark and is applied on 20 the same type of product. (Id. ¶ 15.) Farmacy’s product is also marketed in many of 21 the same retailers as Plaintiff’s, including national beauty retail store Sephora. (Id. 22 ¶ 16.) However, despite being sold in the same stores and under the same designation, 23 Farmacy’s eye cream has no other relation to Plaintiff’s eye cream. (Id. ¶ 14.) 24 Individual Defendants founded Farmacy in 2014. (Declaration of David C. 25 Chung (“Chung Decl.”) ¶ 3, ECF No. 20-2.) Plaintiff alleges the Individual Defendants 26 are controlling members of Farmacy. (Compl. ¶ 17.) Plaintiff further alleges that they 27 directed and authorized Farmacy’s adoption, promotion, and sales use of the counterfeit 28 mark. (Id. ¶ 17.) Defendants assert that Chung works and resides in New Jersey, 2 1 (Chung Decl. ¶ 2), and Veeder resides and works in New York, (Declaration of Chuck 2 Veeder (“Veeder Decl.”) ¶ 2, ECF No. 20-3). Individual Defendants assert that they 3 hired a beauty consultant, Caroline Fabrigas (“Fabrigas”), to “advise Farmacy on how 4 to develop, describe, launch, and market Farmacy’s products prior to 2014.” (Chung 5 Decl. ¶ 5.) Fabrigas developed Farmacy’s name as well as several product lines, 6 including “eye dew total eye cream.” (Id. ¶ 6.) Individual Defendants assert that they 7 neither advised Fabrigas in naming the line nor during the subsequent marketing plan 8 development. (Id. ¶ 7; Veeder Decl. ¶ 6.) 9 Plaintiff learned about Defendants’ use of the mark and sent a letter to Farmacy 10 on or about August 4, 2016, demanding that Farmacy “cease and desist from its 11 infringing conduct and using counterfeit EYE DEW mark.” (Compl. ¶ 18.) The parties 12 subsequently attempted to negotiate a sell-off period.1 (Id.) On or about January 13, 13 2017, Plaintiff, finding that Farmacy had continued to sell products bearing the 14 counterfeit EYE DEW mark, sent a second cease-and-desist letter, demanding the 15 Farmacy cease all infringing activity no later than February 28, 2017. (Id.) As of 16 September 18, 2017—over a year after receiving notice of the infringement—Farmacy 17 continued to sell eye cream bearing the counterfeit EYE DEW mark. (Id. ¶ 19.) 18 On September 25, 2017, Plaintiff filed suit against Farmacy and Individual 19 Defendants, alleging five claims for trademark counterfeiting, federal trademark 20 infringement, and federal, state, and common law unfair competition violations. (See 21 generally id.) Plaintiff served the complaint and summons on Farmacy and Chung on 22 October 5, 2017. (Proof Service, ECF No. 16.) Plaintiff served Veeder on October 24, 23 2017. (Id.) Farmacy filed its answer and counterclaim on December 12, 2017. (ECF 24 No. 19.) That same day, Individual Defendants moved to dismiss the case pursuant to 25 26 27 28 1 Based on the allegations asserted in the complaint, whether an agreement was ever reached remains unclear. (See id. ¶ 18.) 3 1 Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). 2 Individual Defendants’ Motion is now before the Court.2 III. 3 4 A. (See Mot.) LEGAL STANDARD Dismissal for Lack of Personal Jurisdiction 5 Dismissal for lack of personal jurisdiction is governed by Rule 12(b)(2) of the 6 Federal Rules of Civil Procedure. See Fed. R. Civ. P. 12(b)(2). Personal jurisdiction is 7 proper when it is permitted by the long-arm statute of the relevant state and does not 8 violate due process. Gordon v. APM Terminals N. Am., Inc., Case No. 17-cv-03970, 9 2017 WL 3838092, at *2 (N.D. Cal. Sept. 1, 2017). California’s long-arm statute allows 10 the exercise of personal jurisdiction so long as it comports with due process. See Cal. 11 Civ. P. Code § 410.10. 12 “[u]ncontroverted allegation in the complaint must be taken as true, and conflicts over 13 statements contained in affidavits must be resolved in the [plaintiff’s] favor.” Love v. 14 Associated Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 2010). However, “[t]he 15 plaintiff bears the burden of establishing that the court has jurisdiction over the 16 defendant.” Gordon, 2017 WL 3838092, *at 2. To show this, a plaintiff must 17 “demonstrate facts that if taken as true would support jurisdiction over the defendant.” 18 Ballard v. Savage, 65 F.3d 1496, 1498 (9th Cir. 2005). 19 B. In reviewing whether personal jurisdiction exists, all Dismissal for Improper Venue 20 Under Rule 12(b)(3), a party may file a motion for the dismissal of complaint 21 where venue is “wrong” or “improper.” Atl. Marine Constr. Co., Inc. v. U.S. Dist. Ct. 22 for W. Dist. of Texas, 134 S. Ct. 568, 576–77 (2013); see Fed. R. Civ. P. 12(b)(3). The 23 plaintiff must establish that venue is proper as to each defendant. Royal Haw. Orchards, 24 L.P. v. Olson, No. CV 14-8984 RSWL (RZx), 2015 WL 3948821, at *1–2 (C.D. Cal. 25 June 26, 2015) (“A plaintiff has the burden of showing by a preponderance of the 26 27 28 2 After considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. 4 1 evidence that venue is proper.”). In considering such a motion, a “court is not required 2 to accept the pleadings as true and may consider facts outside the pleadings.” Id. 3 C. Dismissal for Failure to State a Claim 4 A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint. 5 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering a motion to dismiss 6 for failure to state a claim, “the court must accept as true all factual allegations in the 7 complaint, as well as all reasonable inferences that may be drawn from such 8 allegations.” LSO, Ltd. v. Stroh, 205 F.3d 1146, 1150 n. 2 (9th Cir. 2000). All such 9 allegations are to be construed in the light most favorable to the nonmoving party. 10 Schwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). “In general, the court 11 should only look to the contents of the complaint during its review of a Rule 12(b)(6) 12 motion to dismiss. However, the court may consider documents attached to the 13 complaint or referred to in the complaint whose authenticity no party questions.” World 14 Chess Museum, Inc. v. World Chess Fed’n, Inc., No. 2:13-cv-00345-RCJ-GWF, 2013 15 WL 5663091, at *1 (D. Nev. Oct. 15, 2013). IV. 16 17 A. DISCUSSION Existence of Proper Personal Jurisdiction 18 A plaintiff bears the burden of establishing personal jurisdiction over each 19 defendant in a case. Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1187 20 (9th Cir. 2002). To determine whether this is satisfied, the Court looks first to the long- 21 arm statute of the state where the case is brought. See Data Disc, Inc. v. Sys. Tech. 22 Assocs., Inc., 557 F.2d 1280, 1286 (9th Cir. 1977). Accordingly, this Court looks to 23 California’s long-arm statute, which provides for jurisdiction on any basis that does not 24 conflict with due process under the U.S. Constitution. See Cal. Code Civ. P. § 410.10 25 (providing for jurisdiction so long as it is “not inconsistent with the Constitution of this 26 state or of the United States”). Constitutional due process limits the ability of California 27 courts to exercise personal jurisdiction over non-resident defendants to circumstances 28 where (1) the defendant has “certain minimum contacts” with the forum state and (2) 5 1 “maintenance of the suit does not offend traditional notions of fair play and substantial 2 justice.” Data Disc, 557 F.2d at 1287 (quoting Int’l Shoe Co v. Washington, 326 U.S. 3 310, 316 (1945)). 4 To survive a motion to dismiss, a plaintiff must make a prima facie showing of 5 jurisdictional facts. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). This may 6 be established by showing either general or specific personal jurisdiction over the 7 defendant. Data Disc, 557 F.2d at 1287. However, in determining whether this 8 requirement is satisfied, the Court must consider—not only the allegations in the 9 complaint—but evidence presented in affidavits. Id. at 1285. The Court cannot 10 “assume the truth of allegations in a pleading which are contradicted by affidavit.” Id. 11 at 1284. 12 1. 13 General jurisdiction provides personal jurisdiction over a defendant in all suits, 14 including those not arising out of or relating to the defendant’s contacts with the forum. 15 Wolf Designs, Inc. v. DHR Co., 322 F. Supp. 2d 1065, 1070 (C.D. Cal. 2004). The 16 Court may exercise general jurisdiction over a defendant with “substantial” or 17 “continuous and systematic” contacts that “approximate physical presence” within the 18 forum state. Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th 19 Cir. 2000). It can be established by in-state service, domicile, or consent. Wolf Designs, 20 322 F. Supp. 2d at 1070. General Jurisdiction 21 It is undisputed that Chung and Veeder live and work outside of California. (See 22 Compl. ¶¶ 3–4; Chung Decl. ¶ 2; Veeder Decl. ¶ 2.) They assert by affidavit that they 23 do not own property in California. (Chung Decl. ¶ 9; Veeder Decl. ¶ 8.) They do not 24 hold bank accounts, driver’s licenses, or pay taxes within the state. (Chung Decl. ¶ 9; 25 Veeder Decl. ¶ 8.) They do, however, have contacts with the state in their respective 26 roles with Farmacy. (See Chung Decl. ¶ 8; Veeder Decl. ¶ 7.) But no facts alleged 27 come close to the substantial, continuous, and systematic level of contacts required for 28 general jurisdiction. 6 1 2. Specific Jurisdiction 2 The Court next considers whether specific jurisdiction may be exercised over a 3 defendant for purposes of a specific suit. Ochoa, 287 F.3d at 1188. To establish specific 4 jurisdiction, a plaintiff must show (1) the nonresident defendant did some act or 5 consummated some transaction with the forum state or otherwise purposefully availed 6 itself of the privilege of conducting activities in the forum state; (2) the claim arose out 7 of or resulted from the defendant’s forum-related activity; and/or (3) the exercise of 8 jurisdiction is reasonable. Id. at 1188–89. a. 9 Purposeful Availment 10 Purposeful availment requires the defendant to engage in some affirmative 11 conduct, allowing or promoting the transaction of business within the forum state. 12 Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir. 1986). 13 “This focus upon the affirmative conduct . . . is designed to ensure that the defendant is 14 not haled into court as the result of random, fortuitous, or attenuated contacts, or on 15 account of the unilateral activities of third parties.” Wolf Designs, 322 F. Supp. 2d at 16 1071. 17 corporation that causes injury in the forum state is not sufficient to permit the forum to 18 assert jurisdiction over the person.” Wolf Designs, 322 F. Supp. 2d at 1072 (citing Davis 19 v. Metro Prods., Inc., 885 F.2d 515, 520 (9th Cir. 1989). However, employees acting 20 in official capacities are not inherently shielded from suit in their individual capacities. 21 Keeton v. Hustler Mag., Inc., 465 U.S. 770, 781 & n.13 (1984); see also Davis, 885 22 F.2d at 521 (noting that “the existence of a state-created corporate form [did not] . . . 23 create a due process limit on jurisdiction.”). They may be held individual liable when 24 (1) the corporation is the agent or alter ego of the individual defendant or (2) the 25 individual controlled or directly participated in the alleged activities. Wolf Designs, 322 26 F. Supp. 2d at 1072. “[T]he central determination is whether [an individual defendant] 27 is a primary participant or ‘guiding spirit’ in the alleged wrongdoing intentionally 28 directed at California.” Id. Under the fiduciary shield doctrine, a person’s mere association with a 7 1 Individual Defendants argue that the fiduciary shield doctrine protects them from 2 liability for Farmacy’s actions, asserting that personal jurisdiction must be established 3 over each defendant independently. (See Mot. 5; Reply 2.) It is true that jurisdiction 4 must be established as to each defendant. See Davis, 885 F.2d at 515 (requiring each 5 corporate officer’s contacts to be individually assessed). However, this does not mean 6 jurisdiction over them may not be established by considering their contact with the 7 forum in their capacity as corporate officers.3 “Personal jurisdiction over the individual 8 may be exercised based upon ‘the individual’s control of, and direct participation in the 9 alleged activities’ of the corporation.” Adobe Sys. Inc. v. Childers, No. 5:10-cv-03571- 10 JF/HRL, 2011 WL 566812, at *6 (N.D. Cal. Feb. 14, 2011) (quoting Wolf Designs, 322 11 F. Supp. 2d at 1065). 12 Chung is the co-founder, Chief Executive Officer, and President of Farmacy. 13 (Chung Decl. ¶ 3.) Chung is a controlling member of the company. (See Answer ¶ 17, 14 ECF No. 19.) Chung has travelled to Los Angeles on business several times since 2014. 15 (Chung Decl. ¶ 8.) These visits were “in connection with performance of [his] duties 16 as an officer of Farmacy.” (See id.) He claims that he did not know Plaintiff existed at 17 the time Farmacy decided to use the phrase “eye dew total eye cream.” (Id. ¶ 7.) 18 However, Chung applied for all of Farmacy’s trademarks. (Declaration of Hee Jae J. 19 Yoon (“Yoon Decl.”), Exs. 1–2, ECF Nos. 23-4, 23-5.) They were all filed by Respect 20 Nature, LLC, a company of which Chung is the sole listed member. (Id.) Chung also 21 hired and supervised Fabrigas, the marketing specialist who created the infringing mark. 22 (Chung Decl. ¶ 5.) 23 The connection between Veeder and Farmacy’s infringing actions is even clearer. 24 Veeder visited California specifically to train Farmacy managers about “the benefits of 25 Farmacy products.” (Veeder Decl. ¶ 7.) This included training individuals to promote 26 27 28 3 The Ninth Circuit has clearly stated that the fiduciary shield doctrine may not serve as a “jurisdictional limit” where sufficient contacts would otherwise exist to establish personal jurisdiction. See Davis, 885 F.2d at 522 (noting that jurisdiction was appropriate over corporate officers so long as sufficient contacts existed). 8 1 the eye cream bearing the allegedly counterfeit EYE DEW mark. (Id.) The purpose of 2 these trainings was to prepare the managers to introduce customers and distributors to 3 the benefits of Farmacy’s “entire product line,” including the EYE DEW eye cream. 4 (Id.) 5 Individual Defendants argue that Plaintiff failed to assert that Farmacy qualified 6 as their “alter-ego” or otherwise served as a conscious central force behind the 7 infringing activity. (Reply 3.) However, the facts offered by Plaintiff show just such a 8 central connection. Chung and Veeder are the only listed members of Farmacy. (See 9 Yoon Decl., Ex. 1.) They both also hold roles as corporate officers. (Chung Decl. ¶ 3; 10 Veeder Decl. ¶ 3.) Chung played a central role in trademark development, as well as in 11 Farmacy’s business in California. (Chung Decl. ¶ 8.) Veeder educated managers in 12 California regarding the infringing product. (Veeder Decl. ¶ 7.) Moreover, neither 13 Individual Defendant challenged Plaintiff’s allegation that Farmacy had actual notice 14 of the infringement as of August 2016—and still continued to sell the product over a 15 year. (See Compl. ¶ 18.) “A corporate officer . . . is, in general, personally liable for 16 all torts which he authorizes or directs or in which he participates, notwithstanding that 17 he acted as an agent of [a] corporation . . . .” Coastal Abstract Serv., Inc. v. First Am. 18 Title Ins. Co., 173 F.3d 725, 734 (9th Cir. 1999). By allowing Farmacy’s alleged 19 infringing activities to be directed towards California, aiding in their furtherance, and 20 choosing not to make a change even after receiving notice, Individual Defendants 21 purposefully availed themselves of this forum. 22 b. Relatedness 23 “The second requirement for specific jurisdiction is that the contacts constituting 24 purposeful availment must be the ones that give rise to the current suit.” Wolf Designs, 25 322 F. Supp. 2d at 1071. In the Ninth Circuit, this is measured in terms of “but-for” 26 causation. See Zeigler v. Indian River County, 64 F.3d 470, 474 (9th Cir. 1995). Here, 27 but for Individual Defendants’ authorization of Farmacy’s alleged infringements, no 28 infringing product would have been sold to California customers, and Plaintiff would 9 1 not have been injured in California by the loss of sales and customer confusion caused 2 by the alleged infringing mark.4 c. 3 Reasonableness 4 The third requirement for establishing specific jurisdiction is reasonableness. 5 Wolf Designs, 322 F. Supp. 2d at 1073. “The relationship between the defendant and 6 the forum must be such that ‘it is reasonable . . . to require the corporation to defend the 7 particular suit which is brought there.’” World-Wide Volkswagen Corp. v. Woodson, 8 444 U.S. 286, 292 (1980). To determine the reasonableness of specific jurisdiction, the 9 14 Ninth Circuit considers and balances: (1) The extent of a defendant’s purposeful interjection; (2) the burden on the defendant in defending in the forum; (3) the extent of the conflict with the sovereignty of the defendant’s state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternative forum. 15 Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998). 10 11 12 13 i. 16 Purposeful Interjection 17 Even where the Court finds there to be sufficient interjection to satisfy purposeful 18 availment, “the degree of interjection is [also] a factor to be weighed in assessing the 19 overall reasonableness of jurisdiction under the reasonableness prong. Core-Vent Corp. 20 v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993). However, “once purposeful 21 availment has been established, the forum’s exercise of jurisdiction is presumptively 22 reasonable.” Wolf Designs, 322 F. Supp. 2d at 1074 (citation omitted). It is the 23 24 25 26 27 28 4 Individual Defendants allege that they could not reasonably anticipate being sued in California because “[t]o the extent Chung and Veeder travelled in California, it was unrelated to . . . development of the terms and marketing plans for ‘eye dew total eye cream’.” (Mot. 9.) However, Veeder himself admits to travelling to California to train individuals in marketing—including marketing for the alleged infringing line. (Veeder Decl. ¶ 7.) Moreover, Individual Defendants intentionally marketed and sold the product here, making it unreasonable for them not to anticipate being haled into court here—particularly after receiving notice of the infringement. 10 1 defendant’s burden to provide a “compelling case” that would rebut this presumption. 2 Id. 3 Here, Individual Defendants offer only a summary restatement of the previous 4 argument that no purposeful availment exists. (See Mot. 9–10.) This does not overcome 5 the presumption. 6 purposefully availed themselves of the benefits of conducting business in California. 7 Therefore, this factor weighs in favor of exercising jurisdiction over Individual 8 Defendants. As the Court has already noted, the Individual Defendants ii. 9 Defendants’ Burden in Litigating 10 The second factor considered by the Court is a defendant’s burden in litigating in 11 the forum. Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 128–29 (C.D. Cal. 12 2004). However, this factor cannot overcome sound reasons for exercising jurisdiction 13 unless the “inconvenience is so great as to constitute a deprivation of due process.” 14 Roth v. Marquez, 942 F.2d 617, 623 (9th Cir. 1991). A defendant must show that 15 litigating this case in California would place the party at a severe disadvantage. Sher v. 16 Johnson, 911 F.2d 1357, 1365 (9th Cir. 1990). 17 Individual Defendants argue that requiring them to litigate in this Court would 18 place a “significant burden” on them, as they would be required to travel across the 19 country and would need to hire local counsel. (Mot. at 10.) While the Court recognizes 20 that this is a significant inconvenience, it is not so great as to deprive them of due 21 process. See Sher, 911 F.2d at 1365 (“In this era of fax machines and discount air travel, 22 requiring the [party] to defend itself in California . . . would not be so unreasonable as 23 to violate due process.”); see also Wolf Designs, 322 F. Supp. 2d at 1074 (finding that 24 “in light of modern advances in transportation and communications, the burden of 25 defending this suit in California would not be overwhelming”). Accordingly, this factor 26 also supports exercising personal jurisdiction over Individual Defendants. 27 /// 28 /// 11 1 iii. Sovereignty 2 The third factor considers “the extent to which this court’s exercise of jurisdiction 3 in California would conflict with the sovereignty of [another state].” Wolf Designs, 322 4 F. Supp. 2d at 1074. No substantive arguments are made by either party with regard to 5 this factor, and there are no apparent sovereign conflicts implicated by it. Accordingly, 6 this factor is neutral. 7 iv. Forum State’s Interest 8 “California maintains a strong interest in providing an effective means of redress 9 for its residents tortuously injured.” Gordy v. Daily News, L.P., 95 F.3d 829, 836 (9th 10 Cir. 1996) (citation omitted). Where the plaintiff’s principle place of business is in the 11 forum state, this factor weighs in favor of granting jurisdiction. See Panavision Int’l, 12 141 F.3d at 1323. Plaintiff is a California corporation with its principle place of 13 business in Valencia, California. (Compl. ¶ 1.) Thus, this factor weighs in favor of 14 jurisdiction in California. 15 v. Efficient Resolution 16 The fifth factor, efficient judicial resolution, focuses on the location of evidence 17 and witnesses. Caruth, 59 F.3d at 129. It is given less weight today due to “modern 18 advances in communication and transportation.” Panavision Int’l, 141 F.3d at 1323– 19 24. While Individual Defendants assert that most of their witnesses and documents will 20 be located at Farmacy’s New Jersey office, this does not take into account evidence and 21 witnesses from Plaintiff’s California offices or those individuals who sold Farmacy’s 22 alleged infringing products in California. (Mot. 10.) Accordingly, the factor is neutral. 23 vi. Convenient & Effective Relief for Plaintiff 24 The sixth factor focuses on the significance of the forum to Plaintiff’s interest in 25 “convenient and effective relief.” Panavision Int’l, 141 F.3d at 1323. There is no 26 evidence that Plaintiff could not recover, if this case were litigated in an alternative 27 forum. It is true that it would likely be more inconvenient for Plaintiff to litigate this 28 case outside of California. However, “neither the Supreme Court nor [the Ninth Circuit] 12 1 has given much weight to inconvenience to the Plaintiff.” Ziegler v. Indian River Cty., 2 64 F.3d 470, 476 (9th Cir. 1995). Even so, this factor weighs in favor of Plaintiff. vii. 3 Alternative Forum 4 It is Plaintiff’s burden to demonstrate the unavailability of an alternative forum. 5 Wolf Designs, 322 F. Supp. 2d at 1075. Courts have found that, even where it is more 6 costly or inconvenient for the Plaintiff to litigate in an alternative forum, this factor still 7 weighs in favor of the defendants. See id. Here, Individual Defendants propose two 8 reasonable alternative forums, New Jersey and New York. (See generally Mot.) 9 Accordingly, this factor weighs in favor of the Individual Defendants. viii. Weighing the Reasonableness Factors 10 Four factors favor Plaintiff, two are neutral, and only the seventh favors 11 12 Individual Defendants. Given the balance of the factors, Individual Defendants’ 13 inconvenience and the existence of alternative forums are not sufficient to establish that 14 exercising personal jurisdiction over the Defendant would be unreasonable. 15 Because all three requirements—purposeful availment, relatedness, and 16 reasonableness—weigh in favor of specific jurisdiction, the Court finds exercise of 17 personal jurisdiction over Individual Defendants proper. 18 DENIES Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction. 19 B. 20 21 Accordingly, the Court Choice of Venue Defendants next moved to dismiss or transfer on the grounds that the Central District of California is both an improper venue and an inconvenient one. (Mot. 11.) 22 1. 23 Plaintiff alleges jurisdiction based upon both federal question and diversity. 24 (Compl. ¶ 8.) Under 28 U.S.C. § 1391(b), when jurisdiction for a civil action is not 25 brought solely on diversity of citizenship, it may be brought in (1) a judicial district where any defendant resides, if all defendants reside in the same state, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred or a substantial part of property that is the subject of the action is situated, or (3) a judicial 26 27 28 Improper Venue 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 district in which any defendant may be found, if there is no other district in which the action may otherwise be brought. “In a trademark suit brought under the Lanham Act, a ‘substantial part’ of the events giving rise to the claims occur in any district where consumers are likely to be confused by the accused good, ‘whether that occurs solely in one district or in many.’” Allstar Mktg. Grp. v. Your Store Online, LLC, 666 F. Supp. 2d 1109, 1128 (C.D. Cal. 2009) (quoting Golden Scorpio Corp. v. Steel Horse Bar & Grill, 596 F. Supp. 2d 1282, 1286 (D. Ariz. 2009)); see also Sutter Home Winery, Inc. v. Madrona Vineyards, L.P., No. C 05-0587, 2005 WL 701599, at *4 (N.D. Cal. Mar. 23, 2005) (finding the possibility of confusion to a substantial number of consumers in a region “sufficient to establish th[at] this jurisdiction is a proper venue for the adjudication of plaintiff’s claims”); Woodke v. Dahm, 70 F.3d 983, 985 (8th Cir. 1995) (“The place where the alleged passing off occurred . . . provides an obviously correct venue[.]”) Individual Defendants argue that “Plaintiff fails to assert any facts showing . . . alleged acts giving rise to Plaintiff’s trademark infringement claims occurred in California” because all claims “alleged [arose from] the selection, use and promotion of the mark ‘EYE DEW’,” and those acts occurred outside of California. (Mot. 12.) However, this is inaccurate. (Id.) The alleged infringing product was promoted and sold in California. (See Answer ¶ 5.) Veeder himself acknowledged he trained managers in California to market and sell the infringing product. (Veeder Decl. ¶ 7.) In light of this, it is reasonable to anticipate the creation of confusion among consumers in this region. Accordingly, venue is proper. 2. Inconvenient Venue Individual Defendants also argue that, even if the Court finds that California could be a proper venue, the Court still should transfer the case for the convenience of Individual Defendants. (Mot. 12.) Under 28 U.S.C. § 1404(a), [f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” This is a matter in which the district court is granted broad discretion. See Sparling v. Hoffman 14 1 Constr. Co., 864 F.2d 635, 639 (9th Cir. 1988). “The district court must adjudicate 2 motions for transfer [of venue] according to an individualized, case-by-case 3 consideration of convenience and fairness.” Allstar Mktg. Grp., 666 F. Supp. 2d at 1130 4 (citation omitted). In deciding a motion to transfer venue, the Court weighs several 5 8 factors, including, (1) the plaintiff’s choice of forum; (2) the convenience of the parties; (3) the convenience of the witnesses; (4) the location of books and records; (5) which forum’s law applies; (6) the interests of justice; and (7) administrative considerations. 9 Id. 6 7 To show cause for transfer, a defendant must make a strong showing of 10 inconvenience under these factors. Decker Coal Co., 805 F.2d at 834, 842. “Under 11 Ninth Circuit law, . . . courts generally will not transfer an action unless the 12 ‘convenience’ and ‘justice’ factors strongly favor venue elsewhere.” Florens Container 13 v. Cho Yang Shipping, 245 F. Supp. 2d 1086, 1092 (N.D. Cal. 2002). A transfer should 14 not be ordered if the result is merely to shift the inconvenience from defendant to 15 plaintiff. Decker Coal Co., 805 F.2d at 843. 16 a. Plaintiff’s Choice of Forum 17 “A plaintiff’s choice of venue is generally accorded deference.” Allstar Mktg. 18 Co., 666 F. Supp. 2d at 1131. This is particularly true when the plaintiff chooses to 19 litigate in their home forum. See, e.g., GTE Wireless, Inc. v. Qualcomm, Inc., 71 F. 20 Supp. 2d 517, 519 (E.D. Va. 1999) (“[P]laintiff’s choice of its home forum is given 21 more weight than its choice of a foreign forum.”) Plaintiff is a California company with 22 its principle place of business in California. 23 (“McLemore Decl.”) ¶ 2, ECF No. 23-2.) Accordingly, California is Plaintiff’s home 24 forum. Thus, this factor weighs against transfer. 25 b. (Declaration of Mary McLemore Convenience of the Parties & Witnesses 26 “The Court . . . should generally ‘not order a transfer which would merely switch 27 the burden of inconvenience from one party to the other.’” See Hernandez v. Graebel 28 Van Lines, 761 F. Supp. 983, 988 (E.D.N.Y. 1991). Individual Defendants assert that 15 1 they would be greatly inconvenienced because they reside in New Jersey and New 2 York, respectively, and the majority of Farmacy’s resources are located outside of 3 California. (Mot. 13.) However, the Court has already established that Farmacy sells 4 its alleged infringing products in California and that Individual Defendants, in their 5 roles as Farmacy executives, regularly travel to California. (See Chung Decl. ¶ 8; 6 Veeder Decl. ¶ 7.) 7 While it is certainly true that it would be more convenient for the Individual 8 Defendants to transfer this case to either New York or New Jersey, it would create a 9 significant inconvenience for the Plaintiff, shifting the burden of travel and transport to 10 Plaintiff’s shoulders without providing any evidence as to why this is more reasonable. 11 Cf. Allstar Mktg. Grp, 666 F. Supp. 2d at 1131–32 (finding the factor weighed slightly 12 in favor of transfer specifically because defendants allege that the business of the party 13 company requesting transfer would be more significantly disrupted because that 14 company had only two employees). Ultimately, it would be the exchange of one party’s 15 convenience for another’s, making this factor neutral. 16 c. Convenience of the Witnesses 17 The Court gives less weight to the inconvenience of party witnesses than key 18 third-party witnesses. Id. at 1132. Convenience of third-party witnesses is often the 19 most important consideration in deciding a motion to transfer for convenience. See 20 Hawkins v. Gerber Products Co., 924 F. Supp. 2d 1208, 1215 (S.D. Cal. 2013). To be 21 able to effectively determine whether this factor favors transfer, “the [C]ourt must 22 consider not simply how many witnesses each side has and the location of each, but, 23 rather, the [C]ourt must consider the importance of the witnesses.” Saleh v. Titan Corp., 24 361 F. Supp. 2d 1152, 1160 (S.D. Cal. 2005). Accordingly, “[i]n support of a motion 25 to transfer[,] a party must identify potential witnesses by name and describe their 26 testimony.” Clark v. Sprint Spectrum L.P., No. C 10-03625 SI, 2010 WL 5173872, at 27 *3–4 (N.D. Cal. Dec. 15, 2010). 28 16 1 Individual Defendants argue that their witnesses will be located in New Jersey or 2 New York. (Mot. 13.) However, they fail to provide any substantive or specific 3 evidence as to who these witnesses would be, offering no names or information upon 4 which the Court may conduct the relevant consideration. See Clark, 2010 WL 5173872, 5 at *4 (finding “only speculative and general predictions” unpersuasive). Moreover, 6 Individual Defendants also admit Farmacy has employees in the state of California 7 (Veeder Decl. ¶ 7), and as Plaintiff points out, all of Plaintiff’s employee witnesses and 8 relevant documents are located in this district. (Opp’n 16.) It is the burden of Individual 9 Defendants to show that transfer is warranted, which they have not done. See Elite 10 Apparel, LLC v. Dallas Cowboys, Case No. 13-cv-1038H (WVG), 2013 WL 12116606, 11 at *3 (S.D. Cal. Nov. 5, 2013). Accordingly, this factor weighs slightly against 12 transfer.5 d. 13 Location of Evidence 14 When a motion to transfer venue is based upon the location of relevant documents 15 or records, the defendant must demonstrate “with particularity the location, difficulty 16 of transportation, and importance of such record[s].” Bohara v. Backus Hosp. Med. 17 Benefit Plan, 390 F. Supp. 2d 957, 963 (C.D. Cal. 2005). With regard to this issue, 18 Individual Defendants argue that the relevant documents and records are “located 19 outside of California.” (Mot. 13.) However, this falls far short of the particularity 20 required to meet the burden on a motion to transfer venue. Accordingly, this weighs 21 against transfer. e. 22 Applicable Law 23 Where the primary claims to be litigated are federal trademark claims, the 24 applicable law factor carries little weight. Allstar Mktg. Grp., 666 F. Supp. 2d at 1133. 25 However, where state law claims are also brought, there is a presumption that the state 26 under whose laws the claims are brought will be more familiar with the relevant law. 27 5 28 Because Plaintiff also failed to provide specific information regarding its witnesses, this factor does not weigh as heavily against transfer as it generally would. See Elite Apparel, LLC, 2013 WL 12116606, at * 3. 17 1 Elite Apparel, 2013 WL 12116606, at *4. Here, Plaintiff brings three claims under 2 federal law and two state law claims under California statutory and common law. (See 3 generally Compl.) Thus, while not heavily weighted, this factor also favors denial of 4 transfer. 5 f. Interests of Justice 6 “The ‘interests of justice’ include such concerns as ensuring speedy trials, trying 7 related litigation together, and having a judge who is familiar with the applicable law 8 try the case.” Allstar Mktg. Grp., 666 F. Supp. 2d at 1134 (citing Heller Financial, Inc. 9 v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293 (7th Cir. 1989)). “To permit a 10 situation in which two cases involving precisely the same issues are simultaneously 11 pending in different District Courts leads to the wastefulness of time, energy and money 12 that § 1404(a) was designed to prevent.” Cont’l Grain Co. v. FBL-585, 364 U.S. 19, 26 13 (1960). Farmacy did not join with the Individual Defendants in the instant motion. (See 14 generally Opp.) If the Court granted the motion to transfer to either venue Individual 15 Defendants propose, it would require litigation of the same claims against the parties in 16 two—or possibly even three—different venues, creating precisely the type of waste that 17 § 1404 is intended to prevent. Individual Defendants do not dispute this substantial 18 inconvenience, instead relying on the assertion that venue in California is improper. 19 (Reply 7.) However, as the Court has already recognized, California is an appropriate 20 venue. This factor weighs heavily against transfer. 21 g. Administrative Considerations 22 Finally, the court looks to administrative considerations like docket congestion. 23 Allstar Mktg. Grp., 666 F. Supp. 2d at 1134. This factor is never heavily weighted. 24 Here, where neither party chooses to address it, the Court declines to take it into account 25 in deciding the motion. 26 Because California is a proper venue for this action—and because all factors 27 considered for a transfer under § 1404 are either neutral or weigh against transfer— 28 Individual Defendants have failed to establish the facts necessary to warrant either 18 1 dismissal or transfer. Accordingly, the Court DENIES Individual Defendants’ Motion 2 to Dismiss pursuant to Rule 12(b)(3) and also DENIES Individual Defendants’ Motion 3 to Transfer pursuant to 28 U.S.C. § 1404. 4 C. Failure to State a Claim 5 Finally, Individual Defendants moved for dismissal under Rule 12(b)(6) on all 6 claims asserted by Plaintiff. (Mot. 14.) In the Ninth Circuit, “a corporate officer or 7 director is . . . personally liable for all torts which he authorizes or directs . . . or 8 participates [in], notwithstanding that he acted as an agent of the corporation.” Comm. 9 for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 823–24 (9th Cir. 1996). Participation 10 may be a direct action but is also satisfied by the “knowing approval or ratification of 11 unlawful acts.” Murphy Tugboat Co. v. Shipowners & Merchants Tugboat Co., 467 F. 12 Supp. 841, 852 (N.D. Cal. 1979), aff’d sub nom. Murphy Tugboat Co. v. Crowley, 658 13 F.2d 1256 (9th Cir. 1981). In order to sufficiently plead claims against Individual 14 Defendants for trademark infringement, Plaintiff must allege facts sufficient to show 15 plausible claims against Farmacy and facts that demonstrate that Individual Defendants 16 approved, ratified, or directly contributed to the infringing conduct. See generally id. 17 Plaintiff alleged five claims for relief against all Defendants for trademark 18 counterfeiting, federal trademark infringement, and federal, state, and common law 19 unfair competition violations for trademark infringement. (See generally Compl.) 20 Under the Lanham Act, a plausible claim for trademark infringement requires the 21 plaintiff to plead “(1) that it has a valid, protectable trademark, and (2) that defendant’s 22 use of the mark is likely to cause confusion.” Kythera Biopharm., Inc. v. Lithera, Inc., 23 998 F. Supp. 2d 890, 898 (C.D. Cal. 2014); see also 15 U.S.C. § 1404(a). Actions for 24 the unfair business practice of trademark infringement brought under California law 25 may be satisfied by pleading the same facts. CYBERsitter, LLC v. Google Inc., 905 F. 26 Supp. 2d 1080, 1087 (C.D. Cal. 2012); Vallavista Corp v. Amazon.com, Inc., 657 F. 27 Supp. 2d 1132, 1136 (N.D. Cal. 2008). 28 19 1 Here, it is undisputed by Individual Defendants that Plaintiff holds a valid, 2 protectable trademark for EYE DEW. The mark is registered by Plaintiff as Trademark 3 Registration No. 4,709,079. (See Compl., Ex. A, ECF No. 1-1; see also Compl. ¶¶ 13, 4 21, 29.) Plaintiff uses the EYE DEW mark in conjunction with an eye cream line. 5 (Compl. ¶ 11.) Plaintiff alleges that Farmacy utilized a mark identical to Plaintiff’s 6 registered EYE DEW mark on Farmacy’s eye cream. (Id. ¶¶ 14, 31.) Plaintiff also 7 provided additional support for this by providing photos from Farmacy’s website that 8 show the allegedly infringing product offered for sale. (Id., Ex. B, ECF No. 1-2.) The 9 Ninth Circuit has established that, where virtually identical marks are used with 10 identical products or services, “likelihood of confusion follows as a matter of course.” 11 Brookfield Comm., Inc., v. W. Coast Entm’t Corp., 174 F.3d 1036, 1056 (9th Cir. 1999). 12 Plaintiff has sufficiently pled there is a likelihood of confusion caused by Farmacy’s 13 use of the mark. Accordingly, Plaintiff has also sufficiently pled that Farmacy infringed 14 Plaintiff’s mark. 15 Additionally, Plaintiff asserts that Farmacy not only infringed their copyright but 16 actively employed a counterfeit mark. (Compl. ¶¶ 20–28.) A counterfeit mark, for 17 purposes of the Lanham Act, is the counterfeit of a registered trademark listed on the 18 United States Patent and Trademark Office (“USPTO”) Principal Register for “such 19 goods or services sold, offered for sale, or distributed.” 15 U.S.C. § 1116(1)(d)(B)(i). 20 Use of a counterfeit mark occurs when an infringer “intentionally us[es] a mark or 21 designation, knowing such mark or designation is a counterfeit, . . . in connection with 22 the sale, offering for sale, or distribution of goods or services[.]” 23 § 1117(b)(1). Plaintiff alleges using the EYE DEW mark on eye cream. (Compl. ¶ 11.) 24 Farmacy used the identical mark on an eye cream, the same type of good sold by 25 Plaintiff. (Id. ¶ 17.) Thus, Plaintiff sufficiently pled a plausible claim for counterfeiting 26 against Farmacy. 15 U.S.C. 27 Individual Defendants argue, however, that even if Plaintiff pled plausible claims 28 against Farmacy, it still failed to allege facts stating a claim against Individual 20 1 Defendants. (Mot. 14.) Liability for individuals in a trademark infringement action 2 does not require facts showing direct action, but some affirmative action is required. 3 See United Tactical Systems, LLC v. Real Action Paintball, Inc., 143 F. Supp. 3d 982, 4 1016 (N.D. Cal. 2015); Murphy Tugboat, 467 F. Supp. at 852. Individual Defendants 5 correctly assert that mere legal conclusions are not taken as fact. See Ashcroft v. Iqbal, 6 556 U.S. 662 (2009) (“[F]or the purposes of a motion to dismiss, . . . [the court] is not 7 bound to accept as true a legal conclusion couched as a factual allegation.”) (citation 8 omitted). In the Complaint, Plaintiff relies upon summary assertions that “Chung and 9 Veeder directed and authorized Farmacy’s adoption of the counterfeit EYE DEW mark, 10 and directed and authorized the promotion and sales of Farmacy’s EYE DEW cream 11 with the counterfeit EYE DEW mark.” (Compl. ¶ 17.) 12 As Plaintiff acknowledged (Opp’n 8), in a Rule 12(b)(6) analysis, the Court must 13 rely on the pleadings and may not consider affidavits or declarations unless they are 14 attached as an exhibit to the Complaint or incorporated by reference. U.S. v. Ritchie, 15 342 F.3d 903, 907–08 (9th Cir. 2003). If the Court moves beyond these sources, it must 16 “convert the 12(b)(6) motion into a Rule 56 motion for summary judgment[] and . . . 17 give the nonmoving party an opportunity to respond. Id. at 907. Looking solely to the 18 Complaint and its related affidavits, the facts are insufficient to establish the liability of 19 Individual Defendants for trademark infringement by Farmacy’s use of the EYE DEW 20 mark. 21 Defendants’ motion to dismiss under Rule 12(b)(6). 22 D. (See generally Compl.) Accordingly, the Court GRANTS Individual Leave to Amend 23 While Plaintiff failed to properly plead facts showing liability for Individual 24 Defendants, the Court “should freely give leave when justice so requires.” Fed. R. Civ. 25 P. 15(a)(2). “This policy is ‘to be applied with extreme liberality.’” Ketab Corp. v. 26 Mesriani Law Grp., No. 2:14-cv-07241-RSWL (MRW), 2015 WL 2085523, at *4 (C.D. 27 Cal. May 5, 2015). In making this determination, the Court should consider (1) undue 28 delay, (2) bad faith, (3) dilatory motive of the Plaintiff, (4) failure to cure deficiencies 21 1 by previous amendments, (5) undue prejudice to the opposing party, and (6) futility of 2 the amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). There has been no undue 3 delay, display of bad faith, or demonstration of dilatory motive. Plaintiff simply failed 4 to plead facts sufficiently specific to establish Individual Defendants’ liability. (See 5 generally Compl.) The Complaint has never been amended, and—in light of the 6 arguments made in the Motion to Dismiss, Opposition to Motion to Dismiss, and Reply 7 to the Opposition to the Motion to Dismiss—as well as the declarations and exhibits 8 attached to all three filings—the defect in the pleadings will likely be cured by 9 amendment. In the interest of justice, the Court grants Plaintiff leave to amend. V. 10 CONCLUSION 11 For the reasons discussed above, the Court DENIES Individual Defendants’ 12 Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue. (ECF No. 13 20.) The Court GRANTS Plaintiff’s Motion to Dismiss for Failure to State a Claim 14 against Individual Defendants with leave to amend. (Id.) To the extent Plaintiff wishes 15 to amend the Complaint, Plaintiff must do so before April 11, 2018. Plaintiff must also 16 lodge a redlined copy of any amended complaint for the Court and Defendants’ review. 17 18 IT IS SO ORDERED. 19 20 March 22, 2018 21 22 23 24 25 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 26 27 28 22
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
