Mission Trading Company, Inc. v. Lewis et al, No. 4:2016cv03368 - Document 56 (S.D. Tex. 2016)
Court Description: ORDER GRANTING MOTION TO TRANSFER by Judge Jon S. Tigar granting 42 Motion to Dismiss for Lack of Jurisdiction. (wsn, COURT STAFF) (Filed on 11/14/2016)
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Mission Trading Company, Inc. v. Lewis et al Doc. 56 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MISSION TRADING COMPANY, INC., Plaintiff, 8 v. 9 10 ORDER GRANTING MOTION TO TRANSFER Re: ECF No. 42 DAVID VINCENT LEWIS, et al., Defendants. 11 United States District Court Northern District of California Case No.16-cv-01110-JST 12 Before the Court is Defendant David Lewis’s motion to dismiss for lack of personal 13 14 jurisdiction, improper venue, and failure to state a claim. ECF No. 42. Alternatively, Defendant 15 requests transfer of venue. Id. The Court finds that it lacks personal jurisdiction over Defendant 16 and therefore grants Defendant’s motion to transfer without reaching Defendant’s motion to 17 dismiss. 18 I. 19 BACKGROUND On March 4, 2016, Plaintiff Mission Trading Company, Inc. (“MTC”) filed this action 20 against Defendants David Lewis and Sandra Lewis, making claims for false advertising and 21 designation of origin, trademark infringement, unjust enrichment, negligent interference with 22 contractual relations, intentional interference with prospective economic advantage, and unfair 23 competition. ECF No. 2. MTC alleges that “Defendants have used Amazon.com and other 24 websites to sell their own products using the MTC trademarks.” Id. ¶ 24. As a result, Defendants 25 are “redirect[ing] MTC’s clients to Defendants”; “promot[ing] [its] own company”; and 26 “deceiving and confusing consumers into believing that they are receiving MTC products, when in 27 reality Defendants sen[d] their own ‘Professorfoam’ brand products instead.” Id. ¶¶ 23-25. 28 MTC is a California corporation with its principal place of business in the County of Dockets.Justia.com 1 Alameda, California. Id. ¶ 1. Defendants reside in Texas and also conduct business in Texas 2 through a variety of aliases, including “Professorfoam” on Amazon. Id. ¶¶ 2-3. MTC asserts that 3 there is personal jurisdiction over Defendants because “Defendants are conducting business in this 4 District and . . . using numerous internet service providers and online sales channels some of 5 whom are based in California with full knowledge that the damage caused by their acts are 6 directed towards residents of this venue.” Id. ¶ 10. On April 1, 2016, Sandra Lewis answered the complaint. ECF No. 8. MTC then filed a 7 8 motion to strike Sandra Lewis’s affirmative defenses and counterclaims on April 26, 2016, which 9 the Court granted on September 13, 2016 with leave to amend. ECF Nos. 14, 47. Defendant filed 10 an amended answer on October 7, 2016. ECF No. 48. As to David Lewis, who did not answer the complaint, the Clerk of the Court entered United States District Court Northern District of California 11 12 default on June 10, 2016. ECF No. 25. On June 29, 2016, Lewis filed a motion to vacate default, 13 ECF No. 29, which the Court granted on August 15, 2016, ECF No. 36. On August 24, 2016, 14 Lewis filed a motion to dismiss the complaint for lack of personal jurisdiction, improper venue, 15 and failure to state a claim, or in the alternative, to transfer venue, ECF No. 42, which motion the 16 Court now considers.1 17 II. LEGAL STANDARD “In opposition to a defendant’s motion to dismiss for lack of personal jurisdiction, the 18 19 plaintiff bears the burden of establishing that jurisdiction is proper.” Boschetto v. Hansing, 539 20 F.3d 1011, 1015 (9th Cir. 2008). Absent an evidentiary hearing, the plaintiff need only make a 21 “prima facie showing” of personal jurisdiction. Id. (quoting Sher v. Johnson, 911 F.2d 1357, 1361 22 (9th Cir. 1990)). “Uncontroverted allegations in the plaintiff’s complaint must be taken as true.” 23 Id. Where there are “[c]onflicts between the parties over statements contained in affidavits,” they 24 25 26 27 28 1 Defendant also requests that the Court take judicial notice of three documents. ECF No. 42-1. Exhibit 1 is “from the United States Trademark Office” and “reflect[s] trademarks owned by Mission Trading Company.” Exhibit 2 is a “[p]rint-out reflecting Amazon’s headquarters is in Seattle[,] Washington.” Exhibit 3 contains “[p]rintouts from Amazon demonstrating the common practice of listing multiple sellers for O-Rings [the products at issue].” The Court finds that Exhibits 1-3 are unnecessary to the decision of the present motion, and therefore denies Defendant’s requests for judicial notice. 2 1 “must be resolved in the plaintiff’s favor.” Id. (internal quotation marks omitted) (quoting 2 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). 3 “When no federal statute governs personal jurisdiction, the district court applies the law of 4 the forum state.” Id. Because “California’s long-arm statute is co-extensive with federal 5 standards, . . . a federal court may exercise personal jurisdiction if doing so comports with federal 6 constitutional due process.” Id. (citing Panavision Int’l L.P. v. Toppen, 141 F.3d 1316, 1320 (9th 7 Cir. 1998)). The relevant question here is whether nonresident Defendant David Lewis has “at 8 least ‘minimum contacts’ with the relevant forum such that the exercise of jurisdiction ‘does not 9 offend traditional notions of fair play and substantial justice.’” See id. at 1015-16 (quoting 10 United States District Court Northern District of California 11 Schwarzenegger, 374 F.3d at 801)). There are two types of personal jurisdiction: “general or all-purpose” and “specific or case- 12 linked.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (citing 13 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn.8-9 (1984)). When a 14 defendant’s affiliations with the forum state are so “continuous and systematic” as to render the 15 defendant “at home” in the state, a court may assert general jurisdiction to “hear any and all 16 claims” against that defendant. Id. MTC does not argue that the Court has general jurisdiction 17 over Lewis. ECF No. 50 at 11-14. 18 “Specific jurisdiction, on the other hand, depends on an affiliatio[n] between the forum and 19 the underlying controversy, principally, activity or an occurrence that takes place in the forum 20 State and is therefore subject to the State’s regulation.” Goodyear, 564 U.S. at 919 (internal 21 quotation marks omitted). In contrast to general jurisdiction, specific jurisdiction is also “confined 22 to adjudication of issues deriving from, or connected with, the very controversy that establishes 23 jurisdiction.” Id. (internal quotation marks omitted). The Ninth Circuit has established a “three- 24 prong test for analyzing a claim of specific personal jurisdiction:” 25 26 27 28 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must 3 comport with fair play and substantial justice, i.e. it must be reasonable. 1 2 Schwarzenegger, 374 F.3d at 802 (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)). 3 “The plaintiff bears the burden of satisfying the first two prongs of the test.” Id. (citing Sher, 911 4 F.2d at 1361)). If the plaintiff succeeds in doing so, “the burden then shifts to the defendant to 5 ‘present a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (quoting 6 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). 7 III. 8 9 10 DISCUSSION A. Personal Jurisdiction 1. Purposeful Direction or Purposeful Availment The first prong of the Ninth Circuit’s test for specific personal jurisdiction asks whether United States District Court Northern District of California 11 the defendant “purposefully direct[ed]” its activities at the forum or “purposefully avail[ed]” itself 12 of the privilege of conducting activities in the forum. Id. Purposeful direction and availment are 13 “two distinct concepts.” Id. While the “purposeful availment analysis is most often used in suits 14 sounding in contract,” a “purposeful direction analysis, on the other hand, is most often used in 15 suits sounding in tort,” such as this one. See id. Courts determine whether a defendant 16 purposefully directed its actions at the forum by applying the three-part “effects” test from Calder 17 v. Jones, 465 U.S. 783 (1984). Id. at 803. The test requires that “the defendant allegedly have (1) 18 committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the 19 defendant knows is likely to be suffered in the forum state.” Id. (quoting Dole Food Co., Inc. v. 20 Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)). “Under this ‘effects test,’ it is not sufficient that the 21 defendant took action with a foreseeable effect in the forum state.” Boschetto, 539 F.3d at 1021. 22 23 a. Intentional Act The Ninth Circuit “construe[s] ‘intent’ in the context of the ‘intentional act’ test as 24 referring to an intent to perform an actual, physical act in the real world, rather than an intent to 25 accomplish a result or consequence of that act.” Schwarzenegger, 374 F.3d at 806. In its 26 complaint, MTC alleges that “Defendants have used Amazon.com and other websites to sell their 27 own products using the MTC trademarks.” ECF No. 2 ¶ 24. The alleged use of MTC trademarks 28 on the websites constitutes “intentional acts” under the effects test. See Sanho Corp. v. Cimo 4 1 Techs., Inc., No. C 11-2473, 2012 WL 3075094, at *4 (N.D. Cal. July 30, 2012) (“[T]he 2 intentional act requirement is easily satisfied, as [the defendant] performed the actual, physical act 3 of posting the copyrighted images on its website and web-based storefronts.”). 4 b. Express Aiming 5 “[M]aintenance of a passive website alone cannot satisfy the express aiming prong.” 6 Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1129 (9th Cir. 2010). “Something 7 more,” namely “conduct directly targeting the forum,” is required to confer personal jurisdiction. 8 Id. The Supreme Court has “reinforced the traditional understanding that our personal jurisdiction 9 analysis must focus on the defendant’s contacts with the forum state, not the defendant’s contacts with a resident of the forum.” Picot v. Weston, 780 F.3d 1206, 1214 (9th Cir. 2015) (citing 11 United States District Court Northern District of California 10 Walden v. Fiore, 134 S. Ct. 1115 (2014)). 12 In Adobe Systems Inc. v. Cardinal Camera & Video Center, Inc., this Court concluded that 13 Adobe failed to establish that Cardinal expressly aimed its conduct at California in a trademark 14 and copyright infringement suit. No. 15-cv-02991-JST, 2015 WL 5834135, at *5 (N.D. Cal. Oct. 15 7, 2015). Cardinal had allegedly used its own website and its Amazon.com merchant account to 16 sell unauthorized versions of Adobe’s software. Id. at *1. In concluding that there was no 17 personal jurisdiction over Cardinal, a Pennsylvania corporation, the Court rejected Adobe’s 18 argument that the “expressly aimed” prong was met because Cardinal was “aware of Adobe’s 19 domicile in the Northern District of California and . . . , through its infringing conduct, targeted 20 Adobe therein.” Id. at *4 (internal quotation marks omitted). In so holding, the Court noted its 21 agreement with the reasoning in Erickson v. Nebraska Machinery Co., that “Walden rejected the 22 idea . . . that a defendant’s knowledge of a plaintiff’s forum connections and the foreseeability of 23 harm there are enough in themselves to satisfy the minimum contacts analysis.” Id. (internal 24 quotation marks omitted) (quoting No. 15-cv-01147-JD, 2015 WL 4089849, at *3 (N.D. Cal. July 25 6, 2015)). Adobe also asserted a second argument for why the express aiming prong was 26 satisfied—that “Cardinal advertises for sale and sells infringing software on its website and 27 through its Amazon.com account.” Id. at *5. The Court dismissed this argument because Adobe 28 failed to “sufficiently allege[] that Cardinal’s website directly targets California,” as Adobe did not 5 1 allege the direct sale of infringing products to California residents through the website or any 2 website content tailored for California residents. Id. Here, MTC argues that “[e]xpress aiming exists” because Lewis “knew Plaintiffs’ business 3 4 was located in Northern California, targeted Plaintiffs’ business, and directly competed with 5 Plaintiff because Defendant was aware its infringing website likely would be seen by Northern 6 California residents.” ECF No. 50 at 11-12.2 This Court previously rejected a similar argument in 7 Adobe. See 2015 WL 5834135, at *4 (concluding that the defendant did not expressly aim its 8 conduct at California by merely being “aware of Adobe’s domicile in the Northern District of 9 California and . . . , through its infringing conduct [of selling unauthorized versions of Adobe’s software], target[ing] Adobe therein”). As in Adobe, here Plaintiff’s allegations of “knowledge of 11 United States District Court Northern District of California 10 a plaintiff’s forum connections” and “foreseeability of harm” in the forum are insufficient to 12 satisfy the second prong of the effects test. See id. 13 MTC also alleges that “Defendants have used Amazon.com and other websites to sell their 14 own products using the MTC trademarks.” ECF No. 2 ¶ 24. The Court finds that Plaintiff merely 15 alleges the “maintenance of a passive website” without “conduct directly targeting the forum,” 16 which is insufficient to confer personal jurisdiction. See Brayton, 606 F.3d at 1129. As in Adobe, 17 18 19 20 21 22 23 24 25 26 27 28 2 Attached to its opposition to the motion to dismiss, MTC submits a declaration in support and two exhibits of Defendants’ Amazon.com listings. ECF No. 50-1. In his reply brief, Defendant requests that the Court strike the declaration on the ground that the Court may consider only the allegations of the complaint when ruling on a motion to dismiss. ECF No. 51 at 13-14. In determining whether there is personal jurisdiction over a defendant, “the court may consider evidence presented in affidavits.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)). Indeed, a plaintiff is “obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction.” Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977) (citing Taylor v. Portland Paramount Corp., 383 F.2d 634, 639 (9th Cir. 1967)). Defendant argues that because “[n]othing in Mr. Misson’s declaration offers any facts, much less facts that alter the jurisdictional analysis,” the declaration “is improper and should be stricken or, in the alternative, disregarded.” The Court will deny the motion to strike, but finds nothing in the declaration to support Plaintiff’s position regarding jurisdiction. The sole paragraph on that subject states on information and belief that “Defendants have also used other websites to sell products to California residents by through [sic] multiple ebay accounts, and a shopify website.” ECF No. 501 at 3. This statement lacks evidentiary foundation and, even if it were true, is insufficient to confer jurisdiction on the Court for the reasons stated above. 6 1 where there was no indication that sales of infringing products were made to California residents 2 or that website content was tailored for California residents, here MTC also does not allege that 3 infringing products were sold to California residents through Amazon.com or other websites, or 4 that the websites had tailored content. See 2015 WL 5834135, at *5. Therefore, MTC has not 5 sufficiently alleged that Lewis “directly targets California” to establish express aiming. See id. 6 Finally, MTC alleges that there is personal jurisdiction because “Defendants are 7 conducting business in this District and . . . using numerous internet service providers and online 8 sales channels some of whom are based in California with full knowledge that the damage caused 9 by their acts are directed towards residents of this venue.” ECF No. 2 ¶ 10. The Court finds this allegation insufficient for two reasons. First, the Court is not convinced that the use of internet 11 United States District Court Northern District of California 10 service providers and online sales channels based in California is sufficient to demonstrate express 12 aiming. See Adobe Sys. Inc. v. Trinity Software Distribution, Inc., No. C 12-1614 SI, 2012 WL 13 3763643, at *6 (N.D. Cal. Aug. 29, 2012) (making the same conclusion and noting that if the use 14 of an internet service based in Northern California were sufficient to subject a defendant to 15 jurisdiction for a dispute unrelated to the internet service company, then “the limits on specific 16 jurisdiction would be meaningless and California courts would be overwhelmed”). Second, the 17 Court finds that MTC makes only a conclusory allegation and lacks description as to Defendants’ 18 use of these internet providers and online sales channels. “Mere bare bones assertions of 19 minimum contacts with the forum or legal conclusions unsupported by specific factual allegations 20 will not satisfy a plaintiff’s pleading burden.” See id. at *7 (internal quotation marks omitted) 21 (quoting Fiore v. Walden, 657 F.3d 838, 846-47 (9th Cir. 2011)). As such, MTC insufficiently 22 alleges that personal jurisdiction is met. Because MTC has failed to establish that Lewis expressly aimed his conduct at California, 23 24 the Court finds that it lacks personal jurisdiction over Defendant David Lewis.3 25 26 27 28 3 Because the Court has determined that MTC fails the express aiming prong, the Court need not examine the remaining elements to determine whether specific personal jurisdiction is lacking for alternative reasons. See Schwarzenegger, 374 F.3d at 807 n.1. 7 1 B. Jurisdictional Discovery 2 MTC requests leave to conduct jurisdictional discovery. ECF No. 50 at 13-14. The 3 decision whether to grant jurisdictional discovery is within the discretion of the district court. 4 Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977). “[W]here 5 pertinent facts bearing on the question of jurisdiction are in dispute, discovery should be allowed.” 6 Am. W. Airlines, Inc. v. GPA Grp., Ltd., 877 F.2d 793, 801 (9th Cir. 1989). However, “[d]istrict 7 courts in the Ninth Circuit require a plaintiff to establish a ‘colorable basis’ for personal 8 jurisdiction before granting jurisdictional discovery.” Google Inc., v. Egger, No. C-08-03172 9 RMW, 2009 WL 1228485, at *1 (N.D. Cal. Apr. 30, 2009) (citing Chapman v. Krutonog, 256 F.R.D. 645, 649 (D. Haw. 2009)). A “‘colorable basis’ could be understood to require the plaintiff 11 United States District Court Northern District of California 10 to come forward with ‘some evidence’ tending to establish personal jurisdiction over the 12 defendant.” Id. (quoting Chapman, 256 F.R.D. at 649). “[W]here a plaintiff’s claim of personal 13 jurisdiction appears to be both attenuated and based on bare allegations in the face of specific 14 denials made by the defendants, the Court need not permit even limited discovery.” Pebble Beach 15 Co. v. Caddy, 453 F.3d 1151, 1160 (9th Cir. 2006) (quoting Terracom v. Valley Nat’l Bank, 49 16 F.3d 555, 562 (9th Cir. 1995)); see also Getz v. Boeing Co., 654 F.3d 852, 860 (9th Cir. 2011) 17 (finding the denial of discovery appropriate when the plaintiffs “fail[ed] to identify any specific 18 facts, transactions, or conduct that would give rise to personal jurisdiction” and offered only 19 “purely speculative allegations of attenuated jurisdictional contacts”). 20 Here, the Court finds that MTC has not established a colorable basis for personal 21 jurisdiction. MTC’s allegation of Defendant’s use of MTC trademarks on Amazon.com and other 22 websites to sell products, without asserting any conduct indicating direct targeting of California, 23 does not constitute “‘some evidence’ tending to establish personal jurisdiction.” See Google, 2009 24 WL 1228485, at *1. Because MTC’s claim of personal jurisdiction involves only “attenuated 25 jurisdictional contacts” and “speculative allegations,” denial of jurisdictional discovery is 26 appropriate. See Getz, 654 F.3d at 860. 27 C. Transfer 28 “Once a Court determines that it lacks personal jurisdiction, it may dismiss the case or, in 8 1 the interest of justice, transfer the case under 28 U.S.C. § 1406(a).” Adobe Sys. Inc. v. Cardinal 2 Camera & Video Ctr., Inc., 2015 WL 5834135, at *6 (internal quotation marks omitted) (quoting 3 Wickline v. United Micronesia Dev. Ass’n, Inc., No. C 14-00192 SI, 2014 WL 2938713, at *9 4 (N.D. Cal. June 30, 2014)); see 28 U.S.C. § 1406(a) (“The district court of a district in which is 5 filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of 6 justice, transfer such case to any district or division in which it could have been brought.”). Lewis 7 argues that transfer is appropriate here, where “all of Defendants’ witnesses are in Texas,” 8 “Plaintiff could have . . . brought the case there,” and “the majority of the acts alleged in the 9 Complaint would have been done, if at all, in Texas.” ECF No. 42 at 17-18. The Court finds Defendant’s argument persuasive and concludes it is in the interest of justice to transfer the action 11 United States District Court Northern District of California 10 to the Southern District of Texas.4 See Aluminal Indus., Inc. v. Newtown Commercial Assocs., 89 12 F.R.D. 326, 330 (S.D.N.Y. 1980) (noting that two factors courts commonly consider in deciding 13 whether to transfer a case under 28 U.S.C. § 1406(a) are “the convenience of parties and 14 witnesses” and “where the relevant events took place”). 15 The Court further concludes that it is appropriate to transfer the entire case, and not only 16 the claims against David Lewis. Like the court in Bar T Timber, Inc. v. Pacific Fibre Products, 17 No. CV-13-30-BLG-CSO, 2013 WL 5209962 (D. Mont. Sept. 13, 2013), this Court finds that 18 partial transfer would result in “the same issues [being] litigated in two different places,” as the 19 conduct of the defendant subject to transfer is “integrally related” to the plaintiff’s claims against 20 both defendants. Id. at *7. Thus, the Court will transfer the entire case to avoid “an unnecessary 21 waste of judicial resources,” because otherwise partial transfer may result in litigation of the same 22 issues in two places, as “David and Sandra jointly run [the company,] Professor Foam.” See id.; 23 ECF No. 42 at 17 n.3. CONCLUSION 24 For the foregoing reasons, the Court finds that it lacks personal jurisdiction over Defendant 25 26 27 28 4 Defendant does not specify the district to which he is requesting transfer. Because Defendant resides and works in Harris County, the Court finds that the Southern District of Texas is appropriate. See ECF No. 2 ¶ 2; ECF No. 42 at 17. 9 1 David Lewis and that transfer pursuant to 28 U.S.C. § 1406(a) is warranted. The Court grants 2 Defendant’s motion to transfer, and the clerk is directed to transfer the entire case to the United 3 States District Court for the Southern District of Texas. 4 5 IT IS SO ORDERED. Dated: November 14, 2016 6 7 8 ______________________________________ JON S. TIGAR United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10
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