Natural Wellness Centers of America, Inc. v. Golden Health Products, Inc. et al

Filing 40

ORDER by Judge Claudia Wilken DENYING ( 19 , 20 MOTION TO DISMISS AND 10 REQUEST TO TRANSFER. (ndr, COURT STAFF) (Filed on 1/22/2013)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 NATURAL WELLNESS CENTERS OF AMERICA, INC., v. 8 GOLDEN HEALTH PRODUCTS, INC., et al., 9 Defendants. ________________________________/ 10 United States District Court For the Northern District of California ORDER DENYING MOTION TO DISMISS (Docket Nos. 19 & 20) AND REQUEST TO TRANSFER (Docket No. 10) Plaintiff, 6 7 No. C 12-05586 CW 11 Defendants Golden Health Products, Inc. and Mary Faith Hunt 12 move to dismiss for lack of personal jurisdiction or to transfer 13 to the Central District of Illinois. 14 Centers of America, Inc. opposes the motion and requests in the 15 alternative that the case be transferred to the Central District 16 of California. 17 and oral argument, the Court denies Defendants’ motion to dismiss 18 or transfer and denies Plaintiff’s alternative request to 19 transfer. Having considered all of the parties’ submissions 20 21 Plaintiff Natural Wellness BACKGROUND Plaintiff is a nutritional supplements company based in 22 Laguna Hills, California. 23 In 2002, it launched its “PRO-BIOTICS PLUS” dietary supplement and 24 began marketing and selling the supplement under that mark through 25 websites and other retail channels. 26 obtained a certificate of registration, Registration No. 27 2,767,607, from the U.S. Patent and Trademark Office (PTO) for the 28 mark in September 2003. Declaration of John R. Taylor ¶¶ 3-6. Id. Id. ¶ 6. The company 1 Defendant GHP is a nutritional supplements company based in 2 Quincy, Illinois, that markets and sells its supplements over the 3 internet. 4 shareholder, director, and employee is Defendant Hunt, who 5 operates the business out of her residence. 6 selling certain supplements under the mark “Flora Probiotic Plus” 7 in 2008. 8 registration for the mark, Registration No. 3,918,597, after the 9 PTO “found no conflicting marks that would bar registration.” United States District Court For the Northern District of California 10 Declaration of Mary F. Hunt ¶¶ 2, 5. Id. ¶ 8. Its sole Id. ¶ 4. GHP began In February 2011, it obtained a certificate of Id. ¶¶ 12-14, Ex. A, PTO Records, at 2. 11 In November 2010, Plaintiff learned that Defendants were 12 selling nutritional supplements under the “Flora Probiotic Plus” 13 mark. 14 infringing its “PRO-BIOTICS PLUS” mark, Plaintiff sent a cease- 15 and-desist letter to one of Defendants’ online retailers later 16 that month. 17 one of its distributors and informed Defendants about Plaintiff’s 18 concerns. 19 Taylor Decl. ¶ 14. Id. Believing that Defendants were The retailer responded that the mark belonged to Id., Ex. 6. On October 31, 2012, Plaintiff filed this action against 20 Defendants alleging that they are infringing Plaintiff’s “PRO- 21 BIOTICS PLUS” mark. 22 2012, Plaintiff requested that this case be transferred to the 23 Central District of California in order to preempt Defendants’ 24 forthcoming request for a transfer to the Central District of 25 Illinois. 26 dismiss Plaintiff’s complaint or, in the alternative, to transfer 27 the action to the Central District of Illinois. Docket No. 1, Compl. ¶ 1. On November 27, Three days later, on November 30, Defendants moved to 28 2 1 2 LEGAL STANDARD I. Personal Jurisdiction 3 Under Federal Rule of Civil Procedure 12(b)(2), a defendant 4 may move to dismiss an action for lack of personal jurisdiction. 5 The plaintiff then bears the burden of demonstrating that the 6 court has jurisdiction. 7 374 F.3d 797, 800 (9th Cir. 2004). 8 plaintiff “need only demonstrate facts that if true would support 9 jurisdiction over the defendant.” Schwarzenegger v. Fred Martin Motor Co., To satisfy this burden, the Ballard v. Savage, 65 F.3d United States District Court For the Northern District of California 10 1495, 1498 (9th Cir. 1995). 11 complaint must be taken as true. 12 Lambert, 94 F.3d 586, 588 (9th Cir. 1996). 13 not assume the truth of such allegations if they are contradicted 14 by affidavit. 15 F.2d 1280, 1284 (9th Cir. 1977). 16 admissible evidence, conflicts in the evidence must be resolved in 17 the plaintiff’s favor. 18 Uncontroverted allegations in the AT & T v. Compagnie Bruxelles However, the court may Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 If the plaintiff also submits AT & T, 94 F.3d at 588. There are two independent limitations on a court’s power to 19 exercise personal jurisdiction over a non-resident defendant: the 20 applicable state personal jurisdiction rule and constitutional 21 principles of due process. 22 (9th Cir. 1990). 23 co-extensive with federal due process requirements, jurisdictional 24 inquiries under state law and federal due process standards merge 25 into one analysis. 26 (9th Cir. 1993). 27 jurisdiction over a non-resident defendant will violate due 28 process unless the defendant has established such “minimum Sher v. Johnson, 911 F.2d 1357, 1361 Because California’s jurisdictional statute is Rano v. Sipa Press, Inc., 987 F.2d 580, 587 Under that analysis, the exercise of 3 1 contacts” with the forum state that the exercise of jurisdiction 2 “does not offend traditional notions of fair play and substantial 3 justice.” 4 Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The court’s exercise of personal jurisdiction may be either 5 general or specific. 6 defendant maintains significant contacts with the forum state, 7 even if the cause of action is unrelated to those contacts. 8 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 9 414 (1984). General jurisdiction exists when the Specific jurisdiction, in contrast, exists when the United States District Court For the Northern District of California 10 cause of action arises out of the defendant’s contacts with the 11 forum state, even if those contacts are isolated and sporadic. 12 Data Disc, 557 F.2d at 1287 (9th Cir. 1977). 13 II. 14 Transfer of Venue A district court may grant a discretionary change of venue 15 pursuant to 28 U.S.C. § 1404(a), which provides: “For the 16 convenience of parties and witnesses, in the interest of justice, 17 a district court may transfer any civil action to any other 18 district or division where it might have been brought.” 19 statute identifies three basic factors for district courts to 20 consider in determining whether a case should be transferred: 21 (1) convenience of the parties; (2) convenience of the witnesses; 22 and (3) the interests of justice. 23 identified numerous additional factors a court may consider in 24 determining whether a change of venue should be granted: 25 26 27 28 The The Ninth Circuit has (1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts with the forum, (5) the contacts relating to the plaintiff’s cause of action in the chosen forum, (6) the differences in the costs of litigation in the two 4 forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof. 1 2 Jones v. GNC Franchising Inc., 211 F.3d 495, 498–99 (9th Cir. 3 2000). 4 The burden is on the movant to show that the convenience of 5 parties and witnesses and the interests of justice require 6 transfer to another district. Commodity Futures Trading Comm’n v. 7 Savage, 611 F.2d 270, 279 (9th Cir. 1979). The Supreme Court has 8 ruled that the § 1404(a) analysis should be an “individualized, 9 case-by-case consideration of convenience and fairness.” Van 10 United States District Court For the Northern District of California Dusen v. Barrack, 376 U.S. 612, 622 (1964). 11 DISCUSSION 12 I. Personal Jurisdiction 13 Defendants contend that their contacts with California are 14 too tenuous to support personal jurisdiction in this forum. Hunt 15 highlights the fact that she resides and operates GHP in Illinois, 16 where the company is incorporated. Hunt Decl. ¶¶ 19-20. She has 17 never registered GHP as a foreign corporation in California or 18 designated an agent for service of process there. Id. 19 Furthermore, neither she nor GHP owns or leases any property in 20 California. Id. ¶¶ 16-17. Hunt asserts that she has never 21 travelled to California for business, used the California court 22 system (outside of this case), or operated any facilities -23 whether for GHP or any other company -- in California. Id. ¶¶ 18, 24 27-28. 25 Defendants’ sole contact with California residents is through 26 GHP’s websites, which are “equally accessible to all residents of 27 the United States and to persons worldwide.” 28 5 Id. ¶¶ 25-26. GHP 1 accepts orders through these sites and ships its products to 2 customers around the country, including in California. 3 ¶¶ 29-30. 4 reside in California and that sales to these customers have 5 generated roughly $191,000 in total revenue since April 2008. 6 ¶ 30. 7 supports both general and specific jurisdiction in California. Id. Hunt estimates that fourteen percent of GHP’s customers Id. Plaintiff contends that this online commercial activity 8 A. 9 A defendant implicitly consents to personal jurisdiction in a General Jurisdiction United States District Court For the Northern District of California 10 foreign state by undertaking “continuous and systematic” 11 activities within that state. 12 Compagnie des Bauxites de Guinee, 456 U.S. 694, 703-04 (1982). 13 Here, Plaintiff argues that Defendants consented to this Court’s 14 jurisdiction by marketing and selling their products to California 15 residents through their websites. 16 Insurance Corp. of Ireland, Ltd. v. The Ninth Circuit rejected this argument in CollegeSource, 17 Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1075-76 (9th Cir. 2011).1 18 There, the court held that the mere maintenance of an interactive 19 website is insufficient to support general jurisdiction over a 20 foreign defendant, even if residents of the forum state visit the 21 website and make purchases through it. 22 reasoned, “If the maintenance of an interactive website were 23 sufficient to support general jurisdiction in every forum in which Id. at 1075-76. The court 24 25 26 27 28 1 Plaintiff recently made the same argument in another case in this district. The court, relying on CollegeSource, rejected the argument. Natural Wellness Ctrs., Inc. v. J.R. Andorin, Inc., 2012 WL 216578, at *4 (N.D. Cal.) (“The maintenance of an interactive business website that can be accessed by California residents is not sufficient to support general jurisdiction.”). 6 1 users interacted with the website, ‘the eventual demise of all 2 restrictions on the personal jurisdiction of state courts’ would 3 be the inevitable result.” 4 Id. (citations omitted). Although CollegeSource recognized that a defendant could be 5 subject to general jurisdiction in a foreign court if its website 6 generated “substantial and continuous commerce with the forum,” 7 id. at 1075, Defendants’ online activities do not meet this 8 standard. 9 California sales revenue over the past four and a half years -- an Their website has generated less than $191,000 in United States District Court For the Northern District of California 10 average of roughly $3400 per month. 11 than fifteen percent of Defendants’ total product sales. 12 more, these sales have not prompted Defendants to travel to 13 California, send sales agents there, or tailor their marketing 14 towards the state in any way. 15 Circuit decisions make clear that Defendants’ activities are 16 insufficient to support general jurisdiction. 17 Hustler Magazine, Inc., 465 U.S. 770, 772, 779 & n.11 (1984) 18 (finding no general jurisdiction despite defendant’s circulation 19 of 10,000–15,000 magazine sales in the forum state every month); 20 Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240, 1242 21 (9th Cir. 1984) (refusing to find general jurisdiction even when 22 defendants’ forum-state activities included soliciting orders, 23 promoting products to potential customers through the mail, 24 maintaining a showroom display, and attending trade shows and 25 sales meetings). These sales constitute less What’s Past Supreme Court and Ninth Cf. Keeton v. 26 B. 27 Courts in this circuit use a three-prong test to determine 28 Specific Jurisdiction whether they may assert specific jurisdiction in a particular 7 1 case: (1) the foreign defendant must purposefully direct its 2 activities or consummate some transaction with the forum or a 3 resident thereof, or perform some act by which it purposefully 4 avails itself of the privilege of conducting business in the 5 forum, thereby invoking the benefits and protections of its laws; 6 (2) the claim must be one which arises out of or results from the 7 defendant’s forum-related activities; and (3) the exercise of 8 jurisdiction must be reasonable. 9 1421 (9th Cir. 1987). Lake v. Lake, 817 F.2d 1416, Each of these conditions must be satisfied United States District Court For the Northern District of California 10 to assert jurisdiction. 11 Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981). 12 13 1. Insurance Co. of N. Am. v. Marina Salina Purposeful Direction or Availment The Ninth Circuit relies on a “sliding scale analysis” to 14 determine whether a defendant’s online activities constitute 15 “purposeful direction or availment.” 16 F.3d 1011, 1018 (9th Cir. 2008). 17 examines “the ‘level of interactivity and commercial nature of the 18 exchange of information that occurs on the [defendant’s] Web site’ 19 to determine if sufficient contacts exist to warrant the exercise 20 of jurisdiction.” 21 414, 418 (9th Cir. 1997) (citations omitted). 22 merely maintains a “passive website” and does “nothing to 23 encourage residents of the forum state to access [the] site” will 24 not be subject to jurisdiction on that basis. 25 Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1020 (9th Cir. 2000). 26 Rather, the plaintiff must show “‘something more’ to indicate that 27 the defendant purposefully (albeit electronically) directed his 28 activity in a substantial way to the forum state.” Boschetto v. Hansing, 539 Under that analysis, the court Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 8 A defendant who Rio Properties, Cybersell, 130 1 F.3d at 418; see also Pebble Beach Co. v. Caddy, 453 F.3d 1151, 2 1156 (9th Cir. 2006) (requiring “something more” than a passive 3 website to confer specific jurisdiction in a trademark 4 infringement action). 5 District courts in this circuit have generally found that 6 online product sales to residents of the forum are sufficient to 7 satisfy this “something more” requirement in trademark 8 infringement cases. 9 Grand Forks, Inc., 2012 WL 4755041, *4 (N.D. Cal.) (“Vanity Shop See, e.g.,, Inc. v. Vanity Shop of United States District Court For the Northern District of California 10 argues that merely selling to California customers via its website 11 is insufficient to confer personal jurisdiction. 12 disagrees.”); Smith Enter., Inc. v. Capital City Firearms, 2008 WL 13 2561882, at *5 (D. Ariz.) (finding purposeful direction where 14 “Defendant maintained an interactive website and consummated over 15 100 sales” with residents of the forum state); Salu, Inc. v. 16 Original Skin Store, 2008 WL 3863434, at *5 (E.D. Cal.) 17 (“[Defendant’s] sales to California customers . . . constituted 18 approximately 14% of its total business. 19 intentionally engaged in commercial transactions with California 20 residents.”).2 21 subject to personal jurisdiction in the forum even though online 22 sales to residents of the forum made up a relatively small share 23 of the defendant’s business. The Court As such, defendant These courts all concluded that the defendant was 24 25 26 27 28 2 One of the only cases to reach a different conclusion was the case that Plaintiff brought in this district last year. See Natural Wellness, 2012 WL 216578, at *7 (holding that the defendant’s “use of interactive websites is not sufficient to subject [it] to personal jurisdiction in California”). Nevertheless, the court in that case found other grounds to support specific jurisdiction. Id. 9 1 Here, Defendants concede that California residents make up 2 fourteen percent of their customers and that California sales 3 constitute sixteen percent of their revenue. 4 enough to satisfy the purposeful direction prong. 5 2012 WL 4755041, at *3 (finding specific jurisdiction where 6 defendant’s online sales to forum state made up “approximately 7 0.02% of [] total sales”); Smith Enter., 2008 WL 2561882, at *2 8 (“2.75% of Defendant’s total revenues”); Salu, 2008 WL 3863434, at 9 *5 (“14% of [defendant’s] total business”); Starlight Int’l, Ltd. This is more than Cf., United States District Court For the Northern District of California 10 v. Lifeguard Health, LLC, 2008 WL 2899903, at *2 (N.D. Cal.) 11 (“0.24% of sales”). 12 2. Arising from Defendants’ Forum-Related Activities 13 To determine whether the plaintiff’s claims arise from the 14 defendant’s forum-related activities -- the second prong of the 15 specific jurisdiction test -- courts use a traditional “but for” 16 causation analysis. 17 Inc., 223 F.3d 1082, 1088 (9th Cir. 2000). 18 recognized that, in trademark infringement actions, if the 19 defendant’s infringing conduct harms the plaintiff in the forum 20 state, this element is satisfied. 21 see also, 2012 WL 4755041, at *4 (“[Plaintiff]’s claims 22 arise out of defendant’s forum-related activities because 23 [defendant]’s dealings with California customers enable it to 24 profit from its alleged [trademark infringement].”). 25 Bancroft & Masters, Inc. v. Augusta Nat’l, The Ninth Circuit has Panavision, 141 F.3d at 1322; Here, Plaintiff alleges that Defendants’ alleged infringement 26 led to sales in California that ultimately harmed Plaintiff’s 27 business there. 28 specific jurisdiction. This allegation satisfies the second element of 10 1 2 3. Reasonableness If the court finds that the first two elements of specific 3 jurisdiction are satisfied, the defendant may escape the court’s 4 jurisdiction only by showing that other considerations would 5 render jurisdiction unreasonable. 6 303 F.3d 1104, 1114 (9th Cir. 2002) (citing Burger King Corp. v. 7 Rudzewicz, 471 U.S. 462, 477 (1985)). 8 courts consider several factors, including the potential burden on 9 the defendant, possible conflicts of law, the forum state’s Dole Foods Co., Inc. v. Watts, To evaluate reasonableness, United States District Court For the Northern District of California 10 interest in adjudicating the dispute, and various other factors to 11 “illuminate the considerations of fairness and due process.” 12 Hedrick v. Daiko Shoji Co., Ltd., 715 F.2d 1355, 1359 (9th Cir. 13 1983). 14 Defendants have not shown that this Court’s exercise of 15 jurisdiction would be unreasonable here. 16 have generally found it reasonable to exercise jurisdiction over a 17 foreign defendant on claims arising from that defendant’s 18 commercial activity in California. 19 4755041, at *4 (“[B]ecause Vanity Shop has purposefully injected 20 itself in the stream of commerce in California, exercise of 21 specific jurisdiction comports with fair play and substantial 22 justice.”); Starlight Int’l, 2008 WL 2899903, at *7 (“As 23 [defendant] has not presented a compelling reason to ignore 24 California’s legitimate interest in protecting against alleged 25 violations of a trademark registered to a California company, 26 through products sold to Californians, this factor must swing in 27 [plaintiff]’s favor.”). Courts in this district See, e.g.,, 2012 WL Thus, Defendants’ sales to California 28 11 1 customers support specific jurisdiction over Plaintiff’s trademark 2 infringement claims. 3 II. Transfer of Venue 4 A. 5 Defendants have not established that the Central District of Defendants’ Request for Transfer 6 Illinois is a more convenient forum for litigating this dispute. 7 Although Defendants note that two of their non-party witnesses 8 would benefit from a transfer, they fail to explain adequately how 9 these witnesses’ testimony is material to this dispute. See United States District Court For the Northern District of California 10 Cochran v. NYP Holdings, Inc., 58 F. Supp. 2d 1113, 1119 (C.D. 11 Cal. 1998) (“[T]he moving party must demonstrate, through 12 affidavits or declarations containing admissible evidence, who the 13 key witnesses will be and what their testimony will generally 14 include.” (emphasis added)). 15 Plaintiff’s witnesses, who reside in Southern California, would be 16 significantly inconvenienced if this case were transferred to an 17 Illinois court. 18 does not support a transfer here. 19 Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986) 20 (upholding denial of the transfer request where transfer would 21 “merely shift rather than eliminate the inconvenience”). 22 Moreover, they ignore the fact that Accordingly, Defendants’ convenience argument See Decker Coal Co. v. Defendants’ argument that the interests of justice weigh in 23 favor of transfer here because of judicial vacancies in this 24 district is similarly unavailing. 25 specifically rejected this argument in the past, reasoning that 26 “[n]either constitutional nor statutory rights of parties are 27 suspended when there are judicial vacancies in a district.” 28 v. Ashcraft & Gerel, 223 F.3d 1, 11 (1st Cir. 2000) (“While 12 The First Circuit has Coady 1 expressions of concern that the President and Congress fill 2 existing judicial vacancies are appropriate in other contexts, it 3 has no place in determining the rights of litigants under 28 4 U.S.C. § 1404(a), and is not ‘in the interest of justice.’” 5 (citations omitted)). 6 B. 7 Plaintiff only requested a transfer in the hopes of 8 forestalling a transfer to the Central District of Illinois. 9 Because Defendants’ request to transfer to that district is United States District Court For the Northern District of California 10 Plaintiff’s Request for Transfer denied, Plaintiff’s motion is denied as moot. 11 12 CONCLUSION For the reasons set forth above, the Court DENIES Defendants’ 13 motion to dismiss or transfer (Docket Nos. 19 & 20) and DENIES 14 Plaintiff’s request to transfer (Docket No. 10). 15 motion to strike Plaintiff’s supporting declarations (Docket No. 16 32) is also DENIED because the Court does not rely on any of 17 statements to which Defendants object. 18 evidentiary objections should be raised in the parties’ briefs, 19 pursuant to Civil Local Rule 7-3. 20 Defendants’ In the future, all IT IS SO ORDERED. 21 22 23 Dated: 1/22/2013 CLAUDIA WILKEN United States District Judge 24 25 26 27 28 13

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