Registered Agents Ltd. v. Registered Agent Inc.
Filing
11
MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 7/31/2012. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
REGISTERED AGENTS, LTO.,
)
)
Plaintiff,
)
)
v.
)
Civ. No. 11-775-SLR
)
REGISTERED AGENT, INC.,
)
)
Defendant.
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Chad S.C. Stover, Esquire, Christina M. Hillson, Esquire, and Jennifer Fraser, Esquire
of Connolly, Bove, Lodge & Hutz, Wilmington, Delaware. Counsel for Plaintiff.
Sean T. O'Kelly, Esquire of O'Kelly, Ernst, Bielli & Wallen, Wilmington, Delaware.
Counsel for Defendant.
MEMORANDUM OPINION
Dated: July 31, 2012
Wilmington, Delaware
~~
ROBINSON,
I. INTRODUCTION
Plaintiff Registered Agents, Ltd. (''RAL" or "plaintiff') filed this action against
defendant Registered Agent, Inc. (''RAI" or "defendant") on September 2, 2011. (D.I. 1)
Plaintiff alleges six causes of action: (1) trademark ("Mark") infringement under Section
32(1) of the Lanham Act of 1946, as amended, 15 U.S.C. § 1051 et seq.; (2) use of
false designations of origin in commerce and false advertisement, under Section 43(a)
of the Lanham of Act of 1946, as amended, 15 U.S.C. § 1125(a); (3) unfair competition
under Section 43(a) of the Lanham Act, as amended, 15 U.S.C. § 1125(a); (4) statutory
unfair competition under the Delaware Uniform Deceptive Trade Practices Act, 6 Del. C.
§ 2531 et seq.; (5) common law unfair competition under the common law of the State
of Delaware; and (6) unjust enrichment under the common law of the State of
Delaware. (D. I. 1 at 1J1) Currently before the court is defendant's motion to dismiss for
lack of personal jurisdiction and plaintiff's request for a period of jurisdictional discovery.
(D.I. 6; D.l. 8 at 6) For the following reasons, defendant's motion is granted and
plaintiff's request is denied.
II. BACKGROUND
A. The Parties
Plaintiff is a "small business incorporation solution expert," offering, among other
things, corporate headquarters services and other new entity services. (D. I. 1 at 1J5)
Plaintiff has been operating as a Delaware corporation with a principal place of
business in Wilmington, Delaware since 1979. 1 (/d.; D.l. 8 at 1)
Defendant offers services similar to plaintiff's, namely, assisting third parties with
corporate headquarters services and other new entity services. (D. I. 1 at~ 6; D. I. 7 at
Ex. 1) Defendant registered as a Nevada corporation on August 31, 2009, and has
since maintained a principal place of business in Carson City, Nevada. (D.I. 7 at Ex. 1)
Whereas plaintiff provides services in all fifty states (D.I. 1 at~ 11 ), defendant's
business is aimed only at servicing its clients' Nevada corporate filing needs. (D. I. 7 at
6, Ex. A)
B. Underlying Facts
In its complaint, plaintiff asserts that the court may exercise personal jurisdiction
over the non-resident defendant because:
Defendant transacts business in Delaware, directs advertising into Delaware,
enters into contracts to supply services and/or products in Delaware, with
Delaware entities and citizens, and has purposefully availed itself of the
privilege of conducting activities in Delaware.
(D.I. 1 at~ 3) Plaintiff supports these jurisdictional allegations in its answering brief with
three factual assertions: (1) 51 of defendant's 7,719 clients are Delaware corporations
(D. I. 8 at 4; D. I. 7 at 3); (2) defendant mailed two solicitous letters bearing the allegedly
infringing Mark to a Delaware address, offering services to a Delaware corporation (D. I.
1 at~ 8; D.l. 10 at 3 n. 1); and (3) defendant maintains a commercially interactive
website that is accessible throughout the United States, including within Delaware. (D.I.
1 at~ 7; D.l. 7 at Ex. A)
1
On January 1, 2011, American Incorporators Ltd. ("AIL") became plaintiff's new
parent company. (D. I. 4)
2
1. Defendant's Delaware clients
Defendant, offering to provide its services solely in Nevada, has 7,719 clients.
(D.I. 7 at Ex. 1) Of these 7,719 clients, 51 are Delaware corporations which conduct
some form of business within Nevada. (/d.) Of these 51 Delaware clients, none
maintain a Delaware mailing address. (/d.) Out of defendant's total client base, one
client, a Nevada corporation, maintains a Delaware mailing address. (/d.)
2. Defendant's letters to a Delaware corporation
On October 14, 2010 and again on May 19, 2011, defendant mailed solicitations
to a Delaware corporation, Technorads, Inc. ("Techno") at a Delaware address. (D. I. 1
at~
8; D.l. 8 at Ex. 2) Both of these letters were sent from Carson City, Nevada. (D.I. 8
at Ex. 2) Both defendant's letters and briefs indicate that it believed Techno had some
kind of Nevada registration or licensing that had expired. (/d.) Each of defendant's
letters to Techno offered to bring Techno's expired Nevada paperwork up to date. (/d.)
The record does not reveal any return communications from Techno to defendant or
that Techno and defendant have ever conducted any business.
3. Defendant's website
Defendant maintains a website- www.registeredagentinc.com- that is available
throughout the 50 states, including Delaware. (D. I. 1 at~ 7; D. I. 7 at Ex. A)
Defendant's website serves two purposes: (1) to inform businesses about the "low tax
climate" in Nevada; and (2) to explain how defendant's services can help businesses
register or incorporate in Nevada so that they can take advantage of this "low tax
climate." (D.I. 7 at Ex. A) Specifically, defendant's website explains that they "are able
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to provide [the client] with all [the client's] filing needs in Nevada." (/d.) (emphasis
added) The website does allow companies to interact with defendant by ordering
information about "Corporate Headquarters" (D.I.8 at 4), but the majority of the website
merely repeats the same information about Nevada's "low tax climate" on several
different pages. (D. I. 7 at Ex. A)
4. Plaintiff's other jurisdictional claims
Plaintiff's complaint also alleges that "at least one former RAL client has
registered with RAI ... in response to a RAI solicitation." (D. I. 1 at 1[8) Defendant's
motion to dismiss denies this assertion and plaintiff's answering brief does not bring
forth any factual evidence or make any further allegations on this score. (D.I. 7 at 1[6)
Ill. STANDARD OF REVIEW
Rule 12(b)(2) directs the court to dismiss a case when the court lacks personal
jurisdiction over the defendant. Fed. R. Civ. P. 12(b)(2). When reviewing a motion to
dismiss pursuant to Rule 12(b)(2), a court must accept as true all allegations of
jurisdictional fact made by the plaintiff and resolve all factual disputes in the plaintiff's
favor. Traynor v. Liu, 495 F. Supp. 2d 444, 448 (D. Del. 2007). Once a jurisdictional
defense has been raised, the plaintiff bears the burden of establishing, with reasonable
particularity, that sufficient minimum contacts have occurred between the defendant
and the forum to support jurisdiction. See Provident Nat'/ Bank v. Cal. Fed. Sav. &
Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). To meet this burden, the plaintiff must
produce "sworn affidavits or other competent evidence," since a Rule 12(b)(2) motion
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"requires resolution of factual issues outside the pleadings." Time Share Vacation Club
v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984).
To establish personal jurisdiction, a plaintiff must produce facts sufficient to
satisfy two requirements by a preponderance of the evidence, one statutory and one
constitutional. See id. at 66; Reach & Assocs. v. Oencer, 269 F. Supp. 2d 497, 502 (D.
Del. 2003). With respect to the statutory requirement, the court must determine
whether there is a statutory basis for jurisdiction under the forum state's long-arm
statute. See Reach & Assocs., 269 F. Supp. 2d at 502. The constitutional basis
requires the court to determine whether the exercise of jurisdiction comports with the
defendant's right to due process. See id.; see also lnt'l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945).
Under the Due Process Clause, a defendant is subject to the jurisdiction of a
federal court only when the defendant's conduct is such that it should "reasonably
anticipate being haled into court there." See World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980). Personal jurisdiction over a nonresident
defendant is proper when either specific or general jurisdiction exists. See Dollar Sav.
Bank v. First Sec. Bank of Utah, N.A., 746 F.2d 208, 211 (3d Cir. 1984). "Specific
personal jurisdiction exists when the defendant has 'purposefully directed his activities
at residents of the forum and the litigation results from alleged injuries that arise out of
or related to those activities."' BP Chems. Ltd. v. Fibre Corp., 229 F.3d 254, 259 (3d
Cir. 2000) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
General jurisdiction exists when the defendant's contacts with the forum are
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"continuous and systematic," whether or not the contacts relate to the litigation. See id.
(quoting Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 416 (1984)).
IV. PERSONAL JURISDICTION
A. Standard of Review
To establish personal jurisdiction, a plaintiff must show, by a preponderance of
the evidence, that (a) "there is a statutory basis for jurisdiction under the forum state's
long-arm statute" and (b) "the exercise of jurisdiction comports with the defendant's
right to due process." Boston Scientific Corp. v. Wall Cardiovascular Tech., 647 F.
Supp. 2d 358, 364 (D. Del. 2009) (citations omitted). Pursuant to the relevant portions
of Delaware's long-arm statute, 10 Del. C. § 3104 (c)(1)- (3), a court may exercise
personal jurisdiction over a defendant when the defendant or its agent:
(1)
(2)
(3)
Transacts any business or performs any character of work or
service in the State;
Contracts to supply services or things in this State;
Causes tortious injury in the State by an act or omission in
this State;
10 Del. C. § 31 04(c)(1)- (3) (emphasis added). These three disputed sections of the
long-arm statute require a showing of specific jurisdiction. See Shoemaker v.
McConnell, 556 F. Supp. 2d 351, 354,55 (D. Del. 2008). If defendant is found to be
within the reach of the long-arm statute, the court then must analyze whether the
exercise of personal jurisdiction comports with due process, to wit, whether plaintiff has
demonstrated that defendant "purposefully avail[ed] itself of the privilege of conducting
activities within the forum State," so that it should "reasonably anticipate being haled
into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
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(1980) (citations omitted) (emphasis added). For the court to exercise specific personal
jurisdiction consistent with due process, plaintiff's cause of action must have arisen
from the defendant's activities in the forum State. See Burger King Corp. v. Rudzewicz,
471 U.S. 462, 472 (1985). For the court to exercise general personal jurisdiction
consistent with due process, plaintiff's cause of action can be unrelated to defendant's
activities in the forum State, so long as defendant has "continuous and systematic
contacts with the forum state." Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F.
Supp. 1458, 1470 (D. Del. 1991 ).
B. Analysis
Plaintiff alleges that defendant's Delaware contacts are sufficient for this court to
exert personal jurisdiction over defendant. Plaintiff is first tasked with demonstrating "a
statutory basis for jurisdiction under [Delaware's] long-arm statute." Boston Scientific
Corp., 647 F. Supp. 2d at 364 (alteration in original). Plaintiff has failed to demonstrate
such a statutory basis of jurisdiction.
Plaintiff asserts three bases for personal jurisdiction under Delaware's long-arm
statute: (1) defendant's 51 Delaware clients; (2) defendant's solicitation of business
from a Delaware company; and (3) the tortious injury caused in Delaware by
defendant's mailing letters with the allegedly infringing Mark into Delaware. 2
Plaintiff alleges that defendant transacts business in Delaware and has entered
into contracts to supply services in Delaware. Defendant does count 51 Delaware
corporations as clients, but plaintiff does not allege that defendant has provided any
2
Plaintiff does not assert that defendant's website may serve as a basis for
personal jurisdiction under the long-arm analysis.
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services to these Delaware clients within Delaware's borders or has entered into any
contracts to do so in the future. Furthermore, defendant's website and sworn
declaration indicate that defendant's services are only offered within Nevada.
Defendant has also on two occasions sent letters into Delaware, to a Delaware
corporation (Techno) soliciting business. Both of these letters bear defendant's
allegedly infringing Mark. The business solicited in these letters related to Techno's
timely filing of paperwork with the Nevada State Department. Plaintiff does not allege
that Techno ever responded to either of these two letters or that defendant and Techno
have ever engaged in any course of business.
The court declines to accept plaintiff's jurisdictional allegations because plaintiff
has failed to demonstrate any facts supporting personal jurisdiction under Delaware's
long-arm statute. See Boston Scientific Corp., 647 F. Supp. 2d at 363-364.
Specifically, plaintiff has not asserted reasonably particular factual allegations indicating
that specific jurisdiction under 10 Del. C. § 3104 (c)(1 )-(3) is proper. See Provident
Nat'/ Bank, 819 F.2d at 437. While plaintiff insists that defendant's 51 Delaware clients
bring defendant within reach of 10 Del. C. § 3104 (c)(1) or (2), plaintiff has failed to
show that any part of defendant's business dealings with these Delaware clients has
ever occurred in Delaware or even involves Delaware. See Eurofins Pharma US
Holdings v. BioAI/iance Pharma SA, 623 F.3d 147, 157 (3d Cir. 2010) (holding that
subsection (c)(2) of the Delaware long-arm statute requires that service contracts must
be for services performed in Delaware); Applied Biosystems, Inc., 772 F. Supp. at 1466
(holding that subsection (c)(1) of the Delaware long-arm statute "requires that some act
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must have actually occurred in Delaware."). To the contrary, defendant's website
clearly explains that its services are only offered in Nevada and defendant's president
has submitted a sworn declaration alleging that defendant only conducts business in
Nevada. Plaintiff has not submitted any "sworn affidavits or other competent evidence"
suggesting that defendant does business within Delaware. Time Share Vacation Club,
735 F.2d at 67 n.9.
Plaintiff's attempts to rely upon defendant's two letters to Techno as a means of
demonstrating personal jurisdiction under 10 Del. C. § 3104 (c)(1-3) are equally
unpersuasive. While defendant may have hoped to secure Techno's business in
Nevada, defendant's letters were isolated solicitations, mailed from outside of
Delaware, that did not result in any business either in Delaware or Nevada. In
interpreting Delaware's long-arm statute, this court has consistently held that
solicitations do not normally rise to the level of transacting business. See Thorn EM/
North America, Inc. v. Micron Technology, Inc., 821 F. Supp. 272, 274 (D. Del. 1993)
(holding that, under Delaware's long-arm statute, "[m]ere solicitation does not arise to
transacting business[.]"); Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F. Supp
1458, 1467 (D. Del. 1991) (holding that, under Delaware's long-arm statute, the
shipment of goods into Delaware by common carrier does not constitute "transaction of
business," especially when "the shipment was an isolated incident and no orders
resulted from th[e] solicitation.") (citing Moore v. Little Giant Industries, Inc., 513 F.
Supp 1043, 1046 (D. Del. 1981)). Furthermore, this court has held that the act of
mailing tortious material occurs where the material is mailed from, not where the
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tortious injury is felt. Sears, Roebuck & Co., 744 F. Supp. at 1294 (holding that, under
Delaware's long-arm statute, "[t]he 'act' of mailing, for purposes of subsection (c)(3), is
complete when the material is mailed," even if the mailed material causes tortious injury
within Delaware.).
In sum, defendant's solicitations do not bring it within reach of Delaware's longarm statute, and plaintiff has failed to present any facts showing that defendant
transacts, or has contracted to transact, any business within Delaware. Therefore,
even broadly construing 10 Del. C. § 3104 (c) as "[conferring] jurisdiction to the
maximum extent possible under the due process clause[,]" plaintiff has failed to bring
defendant within reach of Delaware's personal jurisdiction. LaNuova 0 & B, S.p.A. v.
Bowe Co., Inc., 513 A.2d 764, 768 (Del. 1986).
Because plaintiff cannot satisfy the statutory basis for personal jurisdiction, the
court need not reach the constitutional due process prong of the personal jurisdiction
analysis. In any event, because the Delaware long-arm statute confers the identical
scope of jurisdiction as does the Due Process Clause, asserting personal jurisdiction
over defendant would offend due process for the same reasons articulated above.
Plaintiff fails to meet its burden with respect to defendant's motion to dismiss for lack of
personal jurisdiction.
V. JURISDICTIONAL DISCOVERY
A. Standard of Review
Just as plaintiff has failed to advance sufficient facts to establish personal
jurisdiction, plaintiff has also failed to advance sufficient factual allegations to justify
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jurisdictional discovery. While a plaintiff shoulders the burden of demonstrating
sufficient jurisdictional facts, "courts are to assist the plaintiff by allowing jurisdictional
discovery unless the plaintiff's claim is 'clearly frivolous."' Toys "R" Us, Inc. v. Step
Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003) (quoting Mass. Sch. of Law at Andover,
Inc. v. Am. Bar Ass'n, 107 F.3d 1026, 1042 (3d Cir. 1997)). "[It] is well established that
in deciding a motion to dismiss for lack of jurisdiction, a court is required to accept
plaintiff's allegations as true, and is to construe disputed facts in favor of the plaintiff."
/d. at 457 (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). "If a
plaintiff presents factual allegations that suggest 'with reasonable particularity' the
possible existence of the requisite 'contacts between [the parties] and the forum state,'
the plaintiff's right to conduct jurisdictional discovery should be sustained." /d. at 456
(quoting Mellon Bank (East) PSFS, Nat'/ Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir.
1992)). Jurisdictional discovery is "particularly appropriate where the defendant is a
corporation." Metcalfe v. Renaissance Marine, Inc., No. 08-1720, 2009 WL 1408523, at
*9 (3d Cir. May 21, 2009). A court must determine whether certain discovery avenues,
"if explored, might provide the 'something more' needed" to establish personal
jurisdiction. Toys "R" Us, 318 F.3d at 456.
B. Analysis
Plaintiff claims that it has pointed out "many indications that [defendant] is
subject to personal jurisdiction in Delaware under the Delaware long-arm statute" and
that these indications justify a period of jurisdictional discovery. (D. I. 8 at 7) However,
jurisdictional discovery is only appropriate "[i]f a plaintiff presents factual allegations that
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suggest "with reasonable particularity" the possible existence of the requisite "contacts
between [the party] and the forum state[.]" Toys "R" Us, Inc., 318 F.3d at 456. In this
case, taking account of all of plaintiff's allegations, plaintiff has not presented sufficient
factual allegations to justify a period of jurisdictional discovery.
As discussed above, to establish personal jurisdiction plaintiff points to a number
of factors. However, in its argument for jurisdictional discovery, plaintiff only points to
defendant's Delaware accessible website and the two letters that defendant sent to
Techno. (D. I. 7 at 7)
Even taking a broad view of all of plaintiff's allegations throughout its briefing
(despite the limited assertions put forth in its request for jurisdictional discovery),
plaintiff has failed to assert, with reasonable particularity, facts showing that defendant
might be subject to personal jurisdiction under Delaware's long-arm statute. Plaintiff
has presented no evidence indicating that defendant conducts business within
Delaware. Plaintiff has not alleged that defendant was in Delaware when the allegedly
tortious material was mailed. Plaintiff has presented no evidence that defendant's
services are available in any state other than Nevada. Even the two solicitous letters
defendant sent to Techno in Delaware were for services to be rendered in Nevada, not
Delaware.
To grant plaintiffs request for a period of jurisdictional discovery under such
circumstances would be to allow plaintiff to "undertake a fishing expedition based only
upon bare allegations, under the guise of jurisdictional discovery." Eurofins Pharma US
Holdings, 623 F.3d at 157. Therefore, the court will not allow jurisdictional discovery.
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VI. CONCLUSION
For the reasons discussed above, the court grants defendant's motion to dismiss
for lack of personal jurisdiction and denies plaintiff's request for a period of jurisdictional
discovery. An appropriate order shall issue.
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