BEST CHAIRS INCORPORATED v. FACTORY DIRECT WHOLESALE, LLC

Filing 64

ORDER granting 42 Motion for Leave to File Amended Complaint. Best Chairs is ORDERED to file its Amended Complaint forthwith. Signed by Judge Richard L. Young on 1/6/2015. (TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

BEST CHAIRS INCORPORATED,

)
)
Plaintiff,
)
)
vs.
)
)
FACTORY DIRECT WHOLESALE, LLC, )
)
Defendant.
)

3:14-cv-00067-RLY-WGH

ENTRY ON MOTION FOR LEAVE TO FILE AMENDED COMPLAINT
Plaintiff, Best Chairs Incorporated, moves for leave to file an Amended Complaint
to add additional parties and claims for civil conspiracy and contributory infringement.
For the reasons set forth below, the motion is GRANTED.
I.

Background
Best Chairs owns and uses a family of trademarks that incorporate the name

“BEST.” These include BEST CHAIRS, INC. & Design, BEST HOME
FURNISHINGS, THE POWER OF BEST, AND BEST-MAX (“BEST Trademarks”).
On May 7, 2014, Best Chairs filed a Verified Complaint against the Defendant, Factory
Direct Wholesale, LLC, alleging claims for trademark infringement, counterfeiting, false
advertising, false designation of origin, and unfair competition under federal, state, and
common law. Expedited discovery targeted to Best Chair’s Motion for Preliminary
Injunction and Factory Direct’s Motion to Dismiss for lack of personal jurisdiction is not

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complete; in fact, the Magistrate Judge recently granted in part and denied in part the
Plaintiff’s Motion to Compel. (See Filing No. 54).
A.

New Parties

The limited discovery Best Chairs has received so far reflects that Hanping Liu is
the owner and Chief Executive Officer of Factory Direct and related entities, Eastern
Enterprises, LLC and Pay Less Here, LLC. Each company is located at the same address
and each company appears to have the same employees. According to Best Chairs,
Factory Direct allows its related entities and third parties, like Rowland Direct
Wholesale, to sell, promote, and advertise chairs and other furniture products using the
BESTCHAIR, BEST CHAIR and BESTOFFICE name on various online retail websites,
such as Amazon.com and eBay.com. (See, e.g., Filing No. 42-7, Amazon.com screen
shot of an allegedly infringing product; Filing No. 52-1, Better Business Bureau
Complaint; Filing No. 52-2, Deposition of Hanping Liu (“Liu Dep.”) at 28, 41, 113;
Filing No. 52-10, September 29, 2014 Declaration of Hanping Liu ¶¶ 1-2, 13; Filing No.
52-7, Deposition of Martin Weaver at 27). Factory Direct then fills and ships the items to
consumers. (Liu Dep. at 28, 69). Best Chairs therefore seeks to add Liu, Eastern
Enterprises, Pay Less Here, and Rowland Direct to the Complaint as defendants.
Best Chairs also learned that, since the filing of the Complaint, numerous
usernames and online store names have been found on Amazon.com’s marketplace that
use, sell, promote, and advertise chairs and other furniture products using the
“BESTCHAIR” name, including “CoreStone Wholesale” and “Shopperchoice2013.”
Best Chairs has been unable to determine who is behind these stores’ names and
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usernames. Consequently, Best Chairs seeks to add these entities, and to add John Doe,
Jane Doe, and Unknown others, as defendants.
B.

New Claims

Finally, Best Chairs alleges that the Defendants conspired to commit trademark
infringement and that that the Defendants contributed to the infringement of the BEST
trademarks by using, selling promoting, and/or advertising the BEST CHAIR,
BEST CHAIR, and BESTOFFICE lines of office chairs and other office furniture
through various online retailers. (See Filing No. 43, Proposed Amended Complaint,
Counts VI and VII).
C.

Jurisdiction

The allegations relating to jurisdiction will be discussed infra.
II.

Discussion
Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a

pleading “shall be freely given when justice so requires.” Although leave to amend
should be granted liberally, a district court may deny leave for several reasons, including
undue delay, bad faith or dilatory motive, undue prejudice to the opposing party, or if the
amendment would be futile. Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 792
(7th Cir. 2004) (citations omitted). “An amendment is futile if it reasserts a claim
previously determined, merely restates the facts from the original complaint using
different language, fails to state a valid theory of liability, or could not withstand a
motion to dismiss.” Kasak v. Village of Bedford Park, 552 F.Supp.2d 787, 790 (N.D. Ill.
2008) (citing Bower v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992)).
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Factory Direct’s primary argument is that the court lacks personal jurisdiction over
the Defendants. Based on that proposition, Factory Direct argues that granting Best
Chair leave to file an Amended Complaint will not only be futile, but also prejudicial
because, with the addition of new parties and new claims, additional jurisdictional
discovery will likely be necessary, serving to prolong Factory Direct’s involvement in
this litigation. In support of this argument, Factory Direct cites the court to the
declaration of Hanping Liu, owner and Chief Executive Officer of Factory Direct and
related entities Eastern Enterprises, LLC and Pay Less Here, LLC. In his declaration
dated October 5, 2014, Liu states that, inter alia, “Eastern Enterprises and Pay Less Here
do a de minimis amount of business with customers in Indiana.” (Filing No. 46-1,
October 5, 2014 Declaration of Hanping Liu, ¶ 8).
As noted above, Best Chairs filed a motion to compel in an effort to obtain
discovery regarding Factory Direct’s (and its related entities’) contacts with the State of
Indiana. In connection with that motion, Factory Direct filed a letter dated October 6,
2014 – the day after Liu’s declaration was filed – which informed Best Chairs’ counsel
that Factory Direct’s counsel would be providing all online BESTCHAIR sales from all
entities that Liu owns for 2013 and for part of 2014, and additional data regarding sales to
Indiana. (See Filing No. 50-1, sealed letter to counsel; Filing No. 50-2, sealed email
search 1 of online sales to Indiana in September (year not shown)). Even though this

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On September 11, 2014, Liu testified that sales of BESTCHAIR products are done through
email, and that specifically finding the records of sales to Indiana residents would take “hundreds
of hours.” (Filing No. 52-2, Liu Dep. at 69).

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document was filed in another motion, it is relevant to the extent that it shows Factory
Direct and its related entities obtain at least some sales from customers in Indiana. On
this record, Factory Direct fails to establish that Best Chairs’ amendment of the
Complaint could not survive a motion to dismiss. Accordingly, the court finds the
proposed amendment would be not be futile or prejudicial to its interests.
Factory Direct also argues that the proposed Amended Complaint contains only
boilerplate allegations of jurisdiction – “there is no allegation that any proposed
Defendant ‘targets’ or ‘purposefully directs’ its activity toward Indiana.” (Filing No. 46,
Factory Direct’s Opposition at 3). The proposed Amended Complaint alleges the court
has personal jurisdiction over Factory Direct and Eastern Enterprises due to their contacts
with the State of Indiana – i.e., they solicit, sell, and continue to sell products in Indiana
that allegedly violate Best Chairs’ BEST Trademarks. (Filing No. 43, Proposed
Amended Complaint ¶ 17). In addition, the proposed Amended Complaint alleges the
court has personal jurisdiction over Liu because he directs and controls Eastern
Enterprises and Pay Less Here. (Id. ¶ 18). Lastly, the proposed Amended Complaint
alleges the court has personal jurisdiction over all of the Defendants because they
engaged in a conspiracy to sell BESTCHAIR, BEST CHAIR, and BESTOFFICE lines of
chairs and other furniture products in the State of Indiana through various online retailers.
(Id. ¶ 19); Kohler Co. v. Kohler Int’l, Ltd., 196 F.Supp.2d 690, 696 (N.D. Ill. 2002)
(applying Illinois law, a district court may exercise jurisdiction “over all of the coconspirators, both resident and non-resident, based on their involvement in a conspiracy
which occurred within the forum”); Sumpter v. Am. Tobacco Co., 2000 WL 1449851
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(S.D. Ind. May 4, 2000) (stating that “an Indiana court would likely determine whether
under its formulation of civil conspiracy law, exercising jurisdiction over a non-resident
co-conspirator based on the acts of another co-conspirator in the forum comports with
due process”). The fact that the proposed Amended Complaint fails to use the words
“target” or “purposefully directs” is not fatal; that the Defendants and proposed
Defendants target and/or purposefully direct their activities to the State of Indiana is
inferred. The court therefore finds, at this stage of the litigation, the proposed Amended
Complaint sufficiently alleges personal jurisdiction over Factory Direct and the proposed
Defendants.
Lastly, Factory Direct urges the court to rule on its Motion to Dismiss before
ruling on the present motion. Based on the limited discovery produced by Factory Direct,
the court finds the better option is to grant Best Chairs’ motion for leave. Factory Direct
admits it makes online sales of BESTCHAIR products through its related entities, and
allows third parties to do the same. Thus, Best Chair should have the opportunity to
include all defendants it believes are part of the BESTCHAIR transactions. Moreover,
Factory Direct’s Motion to Dismiss will not be fully briefed until at least mid-February.
(See Filing No. 58, granting motion for extension of time to file response to January 30,
2014). Were the court to grant Factory Direct’s request, a ruling on the Best Chair’s
motion for leave would likely be deferred until early Spring 2015. The court finds the
interests of justice warrant a ruling on Best Chair’s motion now.

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III.

Conclusion
Best Chair’s Motion for Leave to File Amended Complaint adding additional

Defendants and claims is in the interest of justice. Accordingly, Best Chairs’ Motion for
Leave to File Amended Complaint (Filing No. 42) is GRANTED. Best Chairs is
ORDERED to file its Amended Complaint forthwith.

SO ORDERED this 6th day of January 2015.

_________________________________
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
Southern District of Indiana

Distributed Electronically to Registered Counsel of Record.

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