Young Pharmaceuticals Inc v. Marchese et al
ORDER (1) denying 89 Motion to Dismiss for Lack of Jurisdiction; and (2) granting 90 Motion to Amend/Correct. See attached memorandum of decision. Signed by Judge Vanessa L. Bryant on 2/6/2017. (Hoffman, S)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
YOUNG PHARMACEUTICALS, INC.
and SKINLUMA, LLC,
PETER MARCHESE and
AMP MEDICAL PRODUCTS, LLC,
CIVIL ACTION NO.
February 6, 2017
MEMORANDUM OF DECISION
DENYING DEFENDANT AMP MEDICAL PRODUCTS, LLC’S MOTION TO
DISMISS OR TRANSFER VENUE [DKT. 89] AND GRANTING PLAINTIFF
YOUNG PHARMACEUTICALS, INC.’S MOTION TO AMEND [DKT. 90]
The Plaintiffs, Young Pharmaceuticals, Inc. (“Young”) and Skinluma
LLC (“Skinluma”), bring this action for trademark infringement, trade dress
infringement, unfair competition, and tortious interference against
Defendants Peter Marchese and AMP Medical Products LLC (“AMP”).
Defendant AMP has moved to dismiss for lack of personal jurisdiction,
pursuant to Federal Rule of Civil Procedure 12(b)(2), or to transfer this case
to the District of Nevada pursuant to 28 U.S.C. §§ 1404(a) or 1406(a). [Dkt.
89-1 at 1-2, 15.] Thereafter, Young moved for leave to file a third amended
complaint. [Dkt. 90.] For the reasons that follow, Plaintiffs’ Motion for
Leave to Amend is GRANTED and AMP’s Motion to Dismiss or Transfer
Venue is DENIED.
Defendant AMP is a corporation organized and existing under the
laws of Nevada and having its principal place of business in Nevada. [Dkt.
89-2 (“Marchese Aff.”) ¶ 2.] Defendant Peter Marchese is AMP’s Managing
Member, and is domiciled in Nevada. Id. AMP sells skincare products to
doctors and medical spas, at trade shows, and through AMP sales
representatives. Id. ¶ 5. AMP has never participated in a trade show in
Connecticut. Id. ¶ 6. AMP maintains a website but does not sell its
products on this website, therefore no Connecticut residents have
purchased any AMP products or services through this website. Id. ¶ 15.
Similarly, AMP has never advertised in Connecticut, and maintains no bank
accounts in Connecticut. Id. ¶¶ 17-18. Prior to this lawsuit, AMP had never
been sued in any Connecticut court. Id. ¶ 19.
Although AMP maintains no offices, owns no property, and has no
registered agent in Connecticut, id. ¶¶ 13-14, on two separate occasions,
AMP sold products using the allegedly infringing mark, “Anti-Redness
Foaming Cleanser,” to a reseller of dermatological products. [Id. ¶ 12; Dkt.
92, Exh. 4, Invoices dated 9/25/14 and 3/12/15.] This allegedly infringing
product was shipped to Connecticut on two separate occasions. Id. From
the date of AMP’s formation on or about May 14, 2014 until the instant suit
was filed, AMP’s gross worldwide sales totaled $198,827. [Dkt. 84-1 at 10.]
Of this amount, $11,613 were made in Connecticut, of which $450 were of
the two allegedly infringing products. [Dkt. 84-1 at 10.] As such, nearly 6%
of AMP’s sales were made in Connecticut.
Mr. Marchese, whom Plaintiffs aver is AMP’s “sole owner and agent,”
also travels regularly to Connecticut to “check in” with a Connecticut
customer, and can be reached at telephone numbers with Connecticut area
codes. [Dkt. 92-1 (“Kasper Aff.”) ¶¶ 6-7.] Plaintiffs also allege that a
different company that Mr. Marchese owns, called Metro Labels & Marking
Systems, LLC, is headquartered in Connecticut, that Mr. Marchese
maintains a residence in Connecticut, and that AMP has done business
with a second Connecticut client. [Dkt. 92-2 (“Kulesza Aff.”) ¶¶ 6-8.] The
record contains no evidence regarding the nature or frequency of Mr.
Marchese’s use of the Connecticut residence, or what if any connection
Metro Labels has with this case.
II. Motion for Leave to Amend the Pleadings
The Court first addresses whether Plaintiffs should be permitted to
file a third amended complaint. Rule 15 of the Federal Rules of Civil
Procedure provides that leave to amend the pleadings should be “freely
give[n] . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). Within the
Second Circuit, leave will be given unless the non-movant establishes
prejudice or bad faith. Gas Holding Co. v. Bank of Am., N.A., 626 F.3d 699,
725–26 (2d Cir. 2010) (citing Block v. First Blood Assocs., 988 F.2d 344, 350
(2d Cir. 1993)). Of these, prejudice to the non-movant is the more important
factor. Id. “Amendment may be prejudicial when, among other things, it
would ‘require the opponent to expend significant additional resources to
conduct discovery and prepare for trial’ or ‘significantly delay the
resolution of the dispute.’” Id. (quoting State Teachers Ret. Bd. v. Fluor
Corp., 654 F.2d 843, 856 (2d Cir. 1981)).
Defendants offer no evidence that Young seeks leave to amend in
bad faith. Instead, Defendants claim that amendment is prejudicial,
because it precludes them from addressing Young’s new allegations in
their motion to dismiss. However, Young’s amended complaint was filed
on the same date as Young’s opposition to AMP’s motion to dismiss,
giving Defendants ample time to respond to the new allegations in a reply
brief. To the extent Defendants believed the page limit or time allotted was
inadequate to address these allegations, they could easily have sought
leave to file supplemental briefing. Defendants have offered no evidence
that they must expend significant additional resources to investigate the
new allegations, or that these allegations will delay the disposition of this
case. In light of these circumstances, the Court finds that Defendants will
suffer no prejudice if Young is permitted to amend. Plaintiff Young’s
motion for leave to amend is therefore GRANTED.
III. Motion to Dismiss for Lack of Personal Jurisdiction
A. Legal Standard
A civil action should be dismissed if the court lacks personal
jurisdiction over a party. Fed. R. Civ. P. 12(b)(2). “When responding to a
Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the
plaintiff bears the burden of establishing that the court has jurisdiction
over the defendant.” Am. Wholesalers Underwriting, Ltd. v. Am. Wholesale
Ins. Grp., Inc., 312 F. Supp. 2d 247, 251 (D. Conn. 2004) (citing Robinson v.
Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994)). Prior to
discovery, a plaintiff may defeat a motion to dismiss based on legally
sufficient allegations of jurisdiction and by making a prima facie case of
jurisdiction. Id. (citing Ball v. Metallurgie Hoboken–Overpelt, S.A., 902 F.2d
194, 197 (2d Cir. 1990)). Where, as here, the parties have conducted
discovery regarding the Defendants’ contacts with Connecticut, but no
evidentiary hearing has been held, “plaintiffs’ prima facie showing,
necessary to defeat a jurisdiction testing motion, must include an averment
of facts that, if credited by the ultimate trier of fact, would suffice to
establish jurisdiction over the defendant.” Chloe v. Queen Bee of Beverly
Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010) (citing Metro. Life Ins. Co. v.
Robertson–Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)) (quotations
omitted). “When considering a Rule 12(b)(2) motion, the court construes
any factual averments and resolves all doubts in the plaintiff’s favor.” Am.
Wholesalers Underwriting, 312 F. Supp. 2d at 251 (citing CutCo Indus., Inc.
v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986)). The same standard is
applicable to review of venue. Panterra Engineered Plastics, Inc. v. Transp.
SYS. Sols., LLC, 455 F. Supp. 2d 104, 108–09 (D. Conn. 2006) (citing Gulf
Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005)).
1. Personal Jurisdiction
“To determine personal jurisdiction over a non-domiciliary in a case
involving a federal question, the Court must engage in a two-step
analysis.” Chloe, 616 F.3d at 163. To establish a prima facie case of
personal jurisdiction, a plaintiff must (1) allege facts sufficient to show that
the forum state’s long-arm statute reaches a defendant; and (2) establish
that the Court’s exercise of jurisdiction will not violate due process. Id.;
Chirag v. MT Marida Marguerite Schiffarhrts, 933 F. Supp. 2d 349, 352 (D.
Conn. 2013), aff’d, 604 F. App’x 16 (2d Cir. 2015).
a. Connecticut Long-Arm Statute
Connecticut’s long-arm statute applicable to non-resident
individuals, Conn. Gen. Stat. § 52-59(b), has also been held to apply to nonresident LLCs. See Austen v. Catterton Partners V, LP, 729 F. Supp. 2d
548, 559 (D. Conn. 2010); see also Matthews v. SBA, Inc., 149 Conn. App.
513, 544-52, 555-61 (2014). Section 52-59(b) provides, in relevant part:
[A] court may exercise personal jurisdiction over any nonresident
individual, . . . who in person or through an agent:
(1) Transacts any business within the state;
(2) commits a tortious act within the state, except as to a cause of
action for defamation of character arising from the act;
(3) commits a tortious act outside the state causing injury to a
person or property within the state, except as to a cause of action
for defamation of character arising from the act, if such person or
agent (A) regularly does or solicits business, or engages in any
other persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered, in
the state, or (B) expects or should reasonably expect the act to
have consequences in the state and derives substantial revenue
from interstate or international commerce;
(4) owns, uses or possesses any real property situated within the
(5) uses a computer, . . . or a computer network, . . . located within
Conn. Gen. Stat. § 52-59(b).
“Under Connecticut law, trademark infringement is considered a
‘tort’ for the purposes of determining personal jurisdiction pursuant to the
state long-arm statute.” Broad. Mktg. Int’l, Ltd. v. Prosource Sales & Mktg.,
Inc., 345 F. Supp. 2d 1053, 1058 (D. Conn. 2004). “The tortious conduct in a
trademark infringement [or unfair competition] action is deemed to take
place ‘where the passing off occurs.’” Whelen Eng’g Co. v. Tomar Elecs.,
Inc., 672 F. Supp. 659, 662 (D. Conn. 1987) (quoting Vanity Fair Mills, Inc. v.
T. Eaton Co., 234 F.2d 633, 639 (2d Cir. 1956)). The “passing-off” occurs
“where the deceived customer buys the defendant’s product in the belief
that he is buying the plaintiff’s.” Id. (citing Am. Wholesalers, 312 F. Supp.
2d at 253). “A showing of only one infringing sale is enough to establish
long-arm jurisdiction over the infringing party.” Id.
Plaintiffs have alleged facts sufficient to show that AMP is subject to
long-arm jurisdiction pursuant to Conn. Gen. Stat. § 52- 59(b). Neither
party disputes that AMP has sold $11,613 worth of products to Connecticut
customers, representing roughly 6% of AMP’s total revenue during the
period between AMP’s incorporation and the filing of this lawsuit. This
revenue was a product of numerous sales over the course of two years.
Plaintiff has also averred that a Connecticut customer placed two orders
for a total of 18 units of the allegedly infringing “Anti-Redness Foaming
Cleanser” from Connecticut, which were then shipped to this customer in
Connecticut.1 [Dkt. 89, Exh. D (“Midgley Dep.”) at 49; Dkt. 92, Exh. 4.]
AMP’s conduct triggers long-arm jurisdiction on the basis of subsections
(1) and (3) of Conn. Gen. Stat. § 52-59(b).
b. Due Process
“The constitutional analysis under the Due Process Clause consists
of two separate components: the ‘minimum contacts’ inquiry and the
‘reasonableness’ inquiry.” Licci ex rel. Licci v. Lebanese Canadian Bank,
SAL, 673 F.3d 50, 60 (2d Cir. 2012).
The “minimum contacts” inquiry requires the Court to consider
whether the Defendant has “purposefully avail[ed] itself of the privilege of
conducting activities within the forum state, thus invoking the benefits and
protections of its laws.” See Vertrue v. Meshkin, 429 F. Supp. 2d 479, 495
(D. Conn. 2006) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). A
defendant’s conduct and contacts with the forum state must such that the
defendant “should reasonably anticipate being haled into court there.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)); Grand River
Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 166 (2d Cir. 2005) (holding
Defendant claims that these products were labeled for resale and did not
bear the alleged “Anti-Redness Foaming Cleanser” mark. However, the
label that retail customers see may be irrelevant to whether the product
infringed Plaintiff’s claimed mark, where the relevant universe of potentially
confused consumer may well be a dermatological reseller rather than a
retail customer. Moreover, the universe of potentially confused consumers
is a question of fact ill-suited for disposition at the motion to dismiss stage.
that courts must consider a totality of the circumstances to determine
whether a defendant’s contacts with the forum state justify the exercise of
AMP has sufficient contacts to give rise to personal jurisdiction in
Connecticut. The record shows that Mr. Marchese traveled to Connecticut
periodically to conduct business on AMP’s behalf between AMP’s
formation and the date on which this lawsuit was filed. The record further
suggests that AMP made numerous sales to Connecticut customers
throughout this period, and that at least one Connecticut customer
purchased AMP products by calling Mr. Marchese’s Connecticut telephone
number. [Kasper Aff. ¶¶ 6-7.] While AMP sold allegedly infringing products
to a Connecticut customer on only two occasions, totaling approximately
$450, these sales were wholesale transactions, purchased with the intent of
reselling the allegedly infringing product (presumably to Connecticut
customers). Courts have held similar circumstances sufficient to give rise
to personal jurisdiction. See, e.g., Broad. Mktg., 345 F. Supp. 2d at 1062
(holding that sales of $518.27 to Connecticut customers gave rise to
personal jurisdiction); Mashantucket Pequot Tribe v. Redican, 309 F. Supp.
2d 309, 315 (D. Conn. 2004) (finding the exercise of jurisdiction appropriate
where the defendant made “at least two visits” to Connecticut and made
attempts by email or phone to arrange meetings with Connecticut
customers); cf. WorldCare Corp. v. World Ins. Co., 767 F. Supp. 2d 341, 360
(D. Conn. 2011) (finding insufficient contacts where the defendant was
licensed to do business in Connecticut, but had never sold insurance
products to Connecticut residents). This Court sees no reason to adopt a
The “reasonableness” inquiry requires the Court to decide “whether
the assertion of personal jurisdiction comports with traditional notions of
fair play and substantial justice—that is, whether it is reasonable to
exercise personal jurisdiction under the circumstances of the particular
case.” Licci, 673 F.3d at 60 (quotations omitted). The Supreme Court has
held that courts must evaluate the following factors as part of this analysis:
“(1) the burden that the exercise of jurisdiction will impose on the
defendant[s]; (2) the interests of the forum state in adjudicating the case;
(3) the plaintiff[s’] interest in obtaining convenient and effective relief; (4)
the interstate judicial system’s interest in obtaining the most efficient
resolution of the controversy; and (5) the shared interest of the states in
furthering substantive social policies.” Metro. Life Ins. Co. v. RobertsonCeco Corp., 84 F.3d 560, 568 (2d Cir. 1996) (citing Asahi Metal Indus. Co.,
Ltd. v. Superior Court, 480 U.S. 102, 113–14 (1987)).
None of these factors favor dismissal. First, because Plaintiffs have
offered evidence that Mr. Marchese is AMP’s “sole owner and agent,” and
that he travels to Connecticut regularly and owns property here, the burden
on AMP corporate representatives of litigating in Connecticut is low.
Second, while trademark enforcement is important to all states,
Connecticut courts have a strong interest in adjudicating trademark cases
which concern Connecticut companies, and which implicate Connecticut
common law causes of action. Connecticut has a substantial interest in
the viability of business entities resident in the state and in the
preservation of their exclusive proprietary rights. Third, the Plaintiffs’
home state of Connecticut is the most convenient forum for it to seek relief,
as evidenced by its decision to file suit in Connecticut and its choice of
Connecticut counsel. Fourth, the interstate judicial system’s interest in
obtaining the most efficient resolution of the controversy also favors
Connecticut because the case is here, this Court is familiar with the case,
both parties have counsel of their choice here, many of the events at issue
occurred here, and critical witnesses are here, in particular AMP’s nonparty customers, who will likely be called to testify. The last factor also
favors Connecticut. Although both Nevada and Connecticut share an
interest in affording their residents a neutral forum in which to resolve
trademark disputes, the revenue AMP derives from the alleged infringing
sales in Connecticut is paltry compared to that derived by the Plaintiff.
Defendant AMP’s Motion to Dismiss is therefore DENIED.
IV. Motion to Transfer Venue
Defendants move in the alternative for transfer pursuant to 28 U.S.C.
§§ 1404(a) or 1406(a). Section 1406(a) provides, “The district court of a
district in which is filed a case laying venue in the wrong division or district
shall . . . if it be in the interest of justice, transfer such case to any district
or division in which it could have been brought.” Section 1404(a) provides,
in relevant part, that “[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 or to any district or
division to which all parties have consented.” (emphasis added).
“Whether venue is ‘wrong’ or ‘improper’ depends exclusively on
whether the court in which the case was brought satisfies the requirements
of federal venue laws.” Atl. Marine, 134 S. Ct. at 577. Pursuant to 28 U.S.C.
§ 1391(b), “a civil action may be brought in . . . a judicial district in which a
substantial part of the events or omissions giving rise to the claim
occurred.” Plaintiffs have alleged that Defendants’ actions deprived them
of substantial revenue from Connecticut customers. Although Defendants
dispute this characterization and offer evidence to the contrary, it would be
inappropriate at this stage of the litigation for the Court to resolve this
factual dispute. Accepting Plaintiffs’ allegations and factual averments as
true, and drawing all reasonable inferences in Plaintiffs’ favor, a substantial
part of the events giving rise to this cause of action took place in the
District of Connecticut. Transfer under section 1406(a) is therefore
To decide whether transfer under section 1404(a) is proper, courts
are required to conduct an “individualized, case-by-case consideration of
convenience and fairness.” See Van Dusen v. Barrack, 376 U.S. 612, 622
(1964). “A district court is given broad discretion in making determinations
of convenience and fairness under [section 1404(a)],” Hawley v. Accor
North America, Inc., 522 F. Supp. 2d 256, 258 (D. Conn. 2008), and should
consider factors affecting the interest of justice and trial efficiency,
Hanninen v. Fedoravitch, 583 F. Supp. 2d 322, 331 (D. Conn. 2008); Miller v.
Meadowlands Inc., 822 F. Supp. 61, 66 (D. Conn. 1993). Among the factors
ordinarily considered are: (1) the plaintiffs’ choice of forum, (2) the locus of
operative facts, (3) the convenience of parties and witnesses, (4) the
availability of process to compel the attendance of unwilling witnesses, (5)
the location of relevant documents and relative ease of access to sources
of proof, and (6) the relative means of the parties. D.H. Blair & Co., Inc. v.
Gottdiener, 462 F.3d 95, 106-07 (2d Cir. 2006); N.Y. Marine and Gen. Ins. Co.
v. Lafarge N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010).
“[A] plaintiff’s choice of forum is presumptively entitled to
substantial deference . . . [and] unless the balance is strongly in favor of
the defendant, the plaintiff’s choice of forum should rarely be disturbed.”
Gross v. British Broad. Corp., 386 F.3d 224, 230 (2d Cir. 2004) (quoting Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)) (citations omitted).
Defendants have offered no evidence regarding why they believe Plaintiffs’
choice of forum should be disturbed other than that AMP and Mr. Marchese
are domiciled in Nevada. However, the fact that Nevada is more convenient
for the Defendants is not alone sufficient to overcome the presumption in
favor of Connecticut.
Moreover, the Court may only transfer venue to a forum where venue
would be proper or where the suit could have been brought. See 28 U.S.C.
§§ 1404(a), 1406(a). Defendants have offered no argument or evidence to
suggest—and it is not clear from the face of the Complaint—that the
District of Nevada would be an appropriate venue for the Plaintiffs.
Defendant AMP’s Motion to Transfer Venue is therefore DENIED.
For the foregoing reasons, Plaintiff Young’s motion for leave to file a
third amended complaint is GRANTED, and Defendant AMP’s motion to
dismiss, or in the alternative, to transfer venue to the District of Nevada is
IT IS SO ORDERED.
Hon. Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: February 6, 2017
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