American Orthodontics Corporation v. MidAtlantic Orthodontics, Inc. et al

Filing 29

ORDER Granting Motion to Dismiss. Signed by Judge Roger T. Benitez on 9/18/2017.(All non-registered users served via U.S. Mail Service)(knb)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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AMERICAN ORTHODONTICS
CORPORATION,

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ORDER GRANTING MOTION TO
DISMISS

Plaintiff,

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Case No.: 3:17-cv-01129-BEN-AGS

v.
MIDATLANTIC ORTHODONTICS,
INC., ATLANTIC DENTAL, INC., AND
MIDATLANTIC DENTAL, INC. ,
Defendants.

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Now before the Court is a motion to dismiss brought by Defendants MidAtlantic

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Orthodontics, Inc., Atlantic Dental, Inc. and MidAtlantic Dental, Inc. (collectively

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“Defendants” or “Atlantic”).1 (Mot., ECF No. 22.) Plaintiff opposed. (Opp’n, ECF No.

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24.) For the reasons stated below, the Court GRANTS the motion to dismiss.
BACKGROUND

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Plaintiff American Orthodontics Corporation (“AO”) is a privately-held

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manufacturer of orthodontic appliances, incorporated and operated in Wisconsin.

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Atlantic Dental, Inc. contends that MidAtlantic Orthodontics, Inc. and MidAtlantic
Dental, Inc. are incorrectly named DBAs.
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3:17-cv-01129-BEN-AGS

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(Compl. ¶ 11.) Beginning February 21, 2013, AO used the mark IFIT in association with

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the marketing, promotion, and sale of its orthodontic goods, including but not limited to,

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orthodontic tubes. (Id. ¶ 14.) AO is an owner of United States Federal Trademark

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Registration No. 4,437,574 for the trademark IFIT, listing goods as “orthodontic tubes

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and brackets.” (Id. ¶ 20.)

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Atlantic operates an orthodontic supply business primarily through internet

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commerce via the web domain www.midatlanticortho.com. (Id. ¶ 27.) It is incorporated

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in New Jersey, with its principal place of business in New Jersey. (Id. ¶ 4.) Atlantic is

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owned and operated, at least in part, by Anthony Prusich. (Id. ¶ 28.) Atlantic introduced

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a new orthodontic product in March 2017 under the name “FiT.20.” (Id. ¶ 29.) Atlantic

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uses the FiT.20 name on orthodontic goods, namely, orthodontic brackets and tubes. (Id.

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¶ 30.)

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On March 21, 2017, AO, through its attorneys, sent a letter to Mr. Prusich, alerting

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him to AO’s ownership of the U.S. Trademark Registration for the mark IFIT and

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demanding that Atlantic cease and desist from use of the FiT.20 name. (Id. ¶ 40.)

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Despite the letter, Atlantic prominently advertised and promoted orthodontic goods

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bearing the FiT.20 name at the American Association of Orthodontists (“AAO”) Annual

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Session in San Diego, California from April 21 to April 25, 2017. (Id. ¶ 41.) AO also

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attended the AAO Annual Session. (Id. ¶ 43.)

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On April 25, 2017, Atlantic’s counsel sent a letter responding to AO’s March

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letter, advising that “we do not believe there is any likelihood of confusion between IFIT

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and FiT.20” and refusing to cease and desist from its infringing activity. (Id. ¶ 44.) On

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May 3, 2017, AO’s counsel replied to Atlantic’s counsel and requested that Atlantic stop

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use of the FiT.20 name by May 10, 2017. (Id. ¶45.) On May 10, 2017, Atlantic’s

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counsel responded, saying that they would consider AO’s position and would need time

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to discuss the matter with their client. (Id. ¶46.) AO’s counsel replied on the same day,

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stating that Atlantic should stop marketing FiT.20 products until the company discusses

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the issue with its counsel. (Id. ¶ 47.) Atlantic did not respond. (Id. ¶ 48.) On May 17,
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2017, Atlantic launched a “FiT Self-Ligating Promotion” via email and on its website.

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(Id. ¶ 49.)

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AO now brings suit, alleging two claims for relief. AO’s first claim for relief

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alleges a violation of 15 U.S.C. § 1114 for trademark infringement. AO’s second claim

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for relief alleges violation of 15 U.S.C. § 1125(a) for false designation of origin and

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unfair competition. Defendants move to dismiss for lack of personal jurisdiction or,

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alternatively, improper venue pursuant to Federal Rules of Civil Procedure 12(b)(2) and

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12(b)(3).

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DISCUSSION
Atlantic moves to dismiss the complaint for lack of personal jurisdiction pursuant

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to Federal Rule of Civil Procedure 12(b)(2). On a Rule 12(b)(2) motion, the plaintiff

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bears the burden of establishing personal jurisdiction. Wash. Shoe Co. v. A-Z Sporting

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Goods, Inc., 704 F.3d 668, 671-72 (9th Cir. 2012). Where, as here, the motion is based

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on written materials and affidavits rather than an evidentiary hearing, a plaintiff is only

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required to make a “prima facie showing of jurisdictional facts to withstand the motion to

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dismiss.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2014) (quoting

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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). A

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“prima facie” showing means that the plaintiff need only demonstrate facts that, if true,

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would support jurisdiction over the defendant. Lindora, LLC v. Isagenix Int’l, LLC, 198

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F. Supp. 3d 1127, 1135 (S.D. Cal. 2016). In determining whether a plaintiff has met his

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burden, “uncontroverted allegations in [the] complaint must be taken as true, and

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‘conflicts between the facts contained in the parties’ affidavits must be resolved in [the

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plaintiff’s] favor for purposes of deciding whether a prima facie case for personal

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jurisdiction exists.’” Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586,

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588-89 (9th Cir. 1996) (quoting WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir. 1989)

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(internal citations omitted)).

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“Where, as here, no federal statute authorizes personal jurisdiction, the district
court applies the law of the state in which the court sits.” Mavrix Photo, Inc. v. Brand
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Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (internal citations omitted).

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California’s long-arm statute permits its courts to exercise personal jurisdiction “on any

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basis not inconsistent with the Constitution of this state or of the United States.” Daimler

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AG v. Bauman, 134 S. Ct. 746, 753 (2014) (quoting Cal. Civ. Proc. Code § 410.10).

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Thus, “California’s long-arm statute allows the exercise of personal jurisdiction to the

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full extent permissible under the U.S. Constitution,” and the Court must ensure that its

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assertion of personal jurisdiction over a party comports with the limits imposed by

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federal due process. Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464

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(1985)). The traditional bases of personal jurisdiction that comport with due process are

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service while physically present in the forum, domicile, or consent. None of the

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traditional bases of jurisdiction are at issue here. Absent the traditional bases, a

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defendant must have such “minimum contacts” with the forum state that “maintenance of

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the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe

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Co. v. Washington, 326 U.S. 310, 316 (1945).

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Personal jurisdiction can be either “general” or “specific.” See Helicopteros

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Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415–16 (1984). Atlantic argues that

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AO has not met its burden to show that the Court has either general or specific

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jurisdiction over Atlantic. AO concedes that this Court lacks general jurisdiction over

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Defendants. The issue is whether the Court may exercise specific personal jurisdiction

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over Defendants.

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Specific jurisdiction exists “when a case ‘aris[es] out of or relate[s] to the

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defendant’s contacts with the forum.’” Martinez, 764 F.3d at 1066 (quoting

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Helicopteros, 466 U.S. at 414 n.8); Bristol-Myers Squibb Co. v. Super. Ct. of Cal., San

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Francisco Cnty., 137 S. Ct. 1773, 1780 (2017) (“In order for a state court to exercise

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specific jurisdiction, ‘the suit’ must ‘aris[e] out of or relat[e] to the defendant’s contacts

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with the forum.’” (emphasis in original)); Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014)

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(“For a State to exercise jurisdiction consistent with due process, the defendant’s suit-

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related conduct must create a substantial connection with the forum State.”).
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The Ninth Circuit uses a three-part test to determine whether a defendant’s

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contacts with the forum state are sufficient to subject it to specific jurisdiction:

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(1) The non-resident defendant must purposefully direct his activities or

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consummate some transaction with the forum or resident thereof, or perform

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some act by which he purposefully avails himself of the privilege of conducting

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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-

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related activities; and

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(3) The exercise of jurisdiction must comport with fair play and substantial justice,

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i.e., it must be reasonable.

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Picot v. Weston, 780 F.3d 1206, 1212 (9th Cir. 2015). The Supreme Court has

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emphasized that “it is the defendant, not the plaintiff or third parties, who must create

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contacts with the forum State” itself, not with persons who reside there. Walden, 134 S.

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Ct. at 1123-26. The plaintiff has the burden of proving the first two prongs and, if met,

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the burden shifts to the defendant to “set forth a compelling case” as to the third. Picot,

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780 F.3d at 1212.

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Here, AO argues that this Court has jurisdiction over Atlantic because of Atlantic’s

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voluntary presence and participation at the AAO tradeshow in San Diego. According to

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AO, Atlantic used the AAO Annual Session to market and sell its products with the

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FiT.20 mark, which constitutes purposeful direction. (See Opp’n at 7 (citing Greenbroz,

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Inc. v. Laeger Built, LLC, No. 16-cv-2946-CAB, 2017 WL 1427139, at *3 (S.D. Cal.

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Apr. 21, 2017) (“By attending a convention to market the Product in California,

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Defendant’s purposefully directed their alleged infringement activities to California.”))).

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AO argues that its claims arise out of and relate to Atlantic’s activities in the San Diego

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tradeshow: “It is difficult to grasp how Atlantic Dental can believe that these intentional,

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infringing activities in California could somehow not be expected to give rise to [AO’s]

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claims of trademark infringement and unfair competition, particularly when Atlantic

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Dental was put on notice of plaintiff’s infringement claims before the show.” (Opp’n at

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13.)

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This Court has previously rejected the notion that “a single appearance at an

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international trade show constitutes ‘purposefully direct[ing] its activities’ at California

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residents.” ASM Assembly Sys. Switz. GmbH v. QTS Eng’g, No. 15-cv-714-BEN, 2016

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WL 278734, at *2 (S.D. Cal. Jan. 22, 2016) (granting motion to dismiss for lack of

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personal jurisdiction where defendant’s only contact with California was its appearance

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at a trade show in San Diego). In an attempt to distinguish this case from ASM, Plaintiff

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contends that ASM is not relevant because Atlantic’s conduct “involved much more

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tha[n] a happenstance appearance at a trade show.” (Opp’n at 8). Plaintiff states that

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Atlantic not only attended the AAO Annual Session, it also “actively promoted their San

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Diego appearance prior to the show,” “displayed the infringing ‘FiT’ product at the show

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for the purposes of selling the product,” and even made two sales to California residents

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as a result of its efforts at the trade show. (Id.; Decl. of Tony Prusich ¶ 27.)

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Even assuming these activities distinguish this case from ASM such that Atlantic’s

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participation in the tradeshow is sufficient to satisfy the first prong in the specific

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jurisdiction analysis, AO has not demonstrated that its claims arise out of or relate to

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Atlantic’s exhibition at the show. The Ninth Circuit applies a “but for” test to determine

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whether a claim arises out of or relates to defendant’s forum-related activities. Menken v.

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Emm, 503 F.3d 1050, 1058 (9th Cir. 2007). AO must show that but for Defendants’

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contacts with California, AO’s claims against Defendants would not have arisen. It

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cannot satisfy that test because it admits that its claim arose in March 2017, before the

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tradeshow, when Atlantic first started using the mark FiT.20 to promote its products.

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(Compl. ¶ 29.) AO even sent a cease and desist letter to Atlantic on March 21, 2017, a

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month before the AAO Annual Session. (Id. ¶ 40.)

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Furthermore, even if the Court assumed AO met its burden as to the first two

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prongs, this is the rare case where the Court still lacks personal jurisdiction because the

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exercise of jurisdiction would not comport with fair play and substantial justice. The
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third prong—the reasonableness determination—requires the Court to consider several

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factors: (1) the extent of the defendant’s purposeful interjection into the forum state, (2)

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the burden on the defendant in defending in the forum, (3) the extent of the conflict with

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the sovereignty of the defendant’s state, (4) the forum state’s interest in adjudicating the

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dispute, (5) the most efficient judicial resolution of the controversy, (6) the importance of

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the forum to the plaintiff’s interest in convenient and effective relief, and (7) the

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existence of an alternative forum. Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223

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F.3d 1082, 1088 (9th Cir. 2000); see also Burger King, 471 U.S. at 476-77.

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Here, the exercise of personal jurisdiction is not reasonable. There is a significant

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burden in having a New Jersey corporation with no connection to California beyond its

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incidental attendance at a national and international tradeshow in San Diego, which

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resulted in two sales reflecting approximately 0.1% of Atlantic’s total sales in the first

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half of 2017, defend an action on the other side of the country when all the documents

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and witnesses related to this action are in New Jersey and Wisconsin. See ASM, 2016

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WL 278734, at *2 (same); Decl. of Tony Prusich ¶¶ 10-27; Opp’n at 16. The forum state,

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California, has no interest in adjudicating a dispute between two foreign corporations that

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have no to little connection to California. There is no reason this forum is more

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convenient than another given the insignificant connection between California and any of

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the parties. Indeed, an alternative, more convenient forum exists in the District of New

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Jersey. “In short, it does not comport with fair play and substantial justice to subject a

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defendant to personal jurisdiction on the other side of the country based solely on

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attendance at one international trade show when the plaintiff does not even have a

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connection to the forum.” ASM, 2016 WL 278734, at *2.

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The Court lacks personal jurisdiction.

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CONCLUSION
The Court GRANTS Defendants’ motion to dismiss for lack of personal
jurisdiction. The case is DISMISSED without prejudice.
IT IS SO ORDERED.
Dated: September 18, 2017

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