Wells Enterprises, Inc v. Olympic Ice Cream
MEMORANDUM AND OPINION ORDER: Denying 7 Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue or, in the alternative, to Transfer Case. Signed by Senior Judge Donald E O'Brien on 06/29/12. (kfs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WELLS ENTERPRISES, INC.,
Memorandum and Opinion Order
OLYMPIC ICE CREAM, d/b/a
MARINO ITALIAN ICES,
(hereinafter “Wells”) filed a complaint against Olympic Ice
Cream. Olympic Ice Cream does business as Marino Italian Ices
(hereinafter “Marino”). Wells alleges Marino has violated the
Lanham Act (the U.S. Trademark Act), as well as engaged in
common law trademark infringement and unfair competition.
Docket No. 2.
Currently before this Court is Marino’s motion
to dismiss for lack of personal jurisdiction and improper
venue. Docket No. 7. In the alternative, Marino requests the
case be transferred pursuant to 28 U.S.C. § 1404.
The parties are in general agreement as to the relevant
Wells is a corporation organized under Iowa law with
its principal place of business in Iowa.
Docket No. 2, 2.
Marino is a New York corporation with its principal place of
business in New York.
Docket No. 2.
While Wells sells its
products in New York, Marino does not and has never sold its
products in Iowa.
corporations, Fruit-Ices Corp. (hereinafter “Fruit-Ice”)and
Chill Ices, Ltd. (hereinafter “Chill Ice”), from Michael
Barone, Frank Barone, and David Edelstein.
Docket No. 2, 3;
see also Docket No. 9-2, 4.
The Purchase Agreement provided
Docket No. 2, 3.
“The Sellers also sold to Wells
logos, proprietary information and know-how related to” the
Docket No. 3, 2.
distributorship agreement with Marina Ice Cream Corporation
Docket No. 2, 5.
The agreement was
signed by Michael Barone as the Vice President and on behalf
Docket No. 9-1, 2.
In addition, Frank Barone acts
FROZFRUIT is registered under United States Trademark
Registration No. 1,331,109.
as Marina’s President and Human Resources Manager. Docket No.
The agreement provided that Marina would distribute
Wells’ products, including FROZFRUIT.
Docket No. 2, 6.
agreement also provided that Marina acknowledged that Wells
owned “‘all right, title and interest in and to the Wells’
Trademarks, know-how and all other proprietary information .
. .’” and, upon termination of the agreement, Marina would
discontinue use of “‘Wells’ Trademarks and Wells’ Property .
. . .’”
Docket No. 2, 6 (quoting Docket No. 2-4).
1, 2008, Wells and Marina entered into another distributorship
agreement which again stated that Wells maintained ownership
of its Trademarks.
Docket No. 2, 6-7; see also Docket No. 2-
The second agreement also provided that any goodwill
created by Marina’s distribution “‘shall be deemed to have
been made by and inure to the benefit of Wells,’” and, upon
the “termination or expiration” of the agreement, Marina
Trademarks and the Wells’ Property . . . .’”
Docket No. 2, 7.
selling a FROZENFRUIT bar, which Wells alleges has “nearly
identical trade dress to that of Wells’ FROZFRUIT bar.”
Docket No. 2, 7.
The FROZ portion of Wells’ FROZFRUIT
packaging is written in blue lettering, and the FRUIT portion
of FROZFRUIT is written in rainbow lettering.
portion of Marino’s FROZENFRUIT packaging is also written in
blue lettering, and the FRUIT portion of FROZENFRUIT is also
FROZENFRUIT packages also contain depictions of the fruit
within the bar across the bottom of the package, as well as
the Marino and Wells logos in the upper left hand corners
Marino, though a separate corporate entity, uses the
address formerly utilized by Chill Ice and Fruit Ice, which,
as previously noted, formerly made FROZFRUIT and was sold to
Wells by Michael Barone, Frank Barone, and David Edelstein.
Docket No. 9-3, 2.
Frank Barone is the Director and Michael
Barone the President, CEO, Chief Technology Officer, and
Marinos’s largest distributor of its products is Marina,
which, as previously noted, also acted as the distributor of
Wells’ FROZFRUIT bar and other products from 2005 through
jurisdiction pursuant to Federal Rule of Civil Procedure
The party asserting jurisdiction has the burden to
make a prima facia showing that jurisdiction is proper.
Viasystems, Inc. v. EBM-Papst St. Georgen GMBH & Co., KG, 646
jurisdiction is proper must view the evidence then available
in a light most favorable to the party asserting jurisdiction
and resolve all factual conflicts in favor of that party.
Gross Graphic Systems, Inc. v. Man Roland Druckmaschinen
Aktiengesellschaft, 139 F. Supp. 2d 1040 (N.D. Iowa 2001)
(citing Dakota Industries v. Dakota Sportswear, Inc., 946 F.
2d 1384, 1387 (8th Cir. 1991).
In order for a federal court to exercise jurisdiction,
the forum state’s long-arm statute must provide sufficient
See Romak USA, Inc. v. Rich, 384 F.3d 979, 984 (8th
Cir. 2004). If jurisdiction is proper under the forum state’s
long-arm statute, the exercise of jurisdiction must still
comport with a defendant’s constitutional Due Process Rights.
Iowa Rule of Civil Procedure 1.306 provides for personal
jurisdiction over a defendant to the full extent of the
Med-Tec, Inc. v. Kostich, 980 F. Supp. 1315
(N.D. of Iowa 1997).
Thus, the question here presented is
whether forcing Marino to defend itself in a federal court
located in the State of Iowa would violate its constitutional
Due Process Rights.
Due Process requires that a defendant “have certain
minimum contacts with” a forum “such that the maintenance of
the suit does not offend ‘traditional notions of fair play and
International Shoe Co. v. State of
Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)).
Minimum contacts are
contacts, ties or relations with a forum state such that a
defendant “should reasonably anticipate being haled into court
there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
Traditional notions of fair play and substantial
justice refer to the reasonableness of requiring a defendant
“to defend a particular suit” in the forum in which it is
determination of whether the exercise of jurisdiction is
defendant’s burden of defending in the forum state, as well
the forum State’s interest in adjudicating
the dispute . . . the plaintiff’s interest
in obtaining convenient and effective
relief . . . the interstate judicial
system’s interest in obtaining the most
efficient resolution of controversies; and
the shared interest of the several States
social policies . . . .
(internal citations omitted).
In interpreting and synthesizing Supreme Court case law,
jurisdiction comports with constitutional Due Process:
(1) the nature and quality of the
[defendant’s] contacts with the forum
[defendant’s] contacts with the forum
state; (3) the relation of the cause of
action to the [defendant’s] contacts; (4)
the interest of the forum state in
providing a forum for its residents; and
(5) the convenience of the parties.
Dakota Industries, Inc. v. Dakota Sportwear, Inc., 946 F.2d
1384, 1390 (8th Cir. 1991) (citing Land-O-Nod Co. v. Bassett
Furniture Industries, Inc., 708 F.2d 1338 (8th Cir. 1983)).
The first three factors are the predominant “factors, and
the remaining two factors are secondary . . . .”
Arden, 614 F.3d 785, 794 (8th Cir. 2010) (citation omitted).
A court must look at all of the factors together and “examine
the totality of the circumstances in making a personaljurisdiction determination.”
The Supreme Court has recognized the existence of two
types of jurisdiction:
specific and general.
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15
Specific jurisdiction refers to the exercise of
“personal jurisdiction over a defendant in a suit arising out
of or related to the defendant’s contacts with the forum.”
Id. at 414, fn. 8.
General jurisdiction occurs when, though
the suit may not arise out of a defendant’s contacts with the
forum, the defendant’s independent contacts with the forum are
Thus, the distinction between specific and general
jurisdiction is a recognition that fairness requires more or
less contacts with a forum depending on whether the conduct of
the defendant at issue is part of the purported basis for
In Burger King Corp. v. Rudzewicz, the Supreme Court
recognized that the exercise of specific jurisdiction is
an out-of-state defendant has ‘purposefully
directed’ his activities at residents of
the forum, and the litigation results from
alleged injuries that ‘arise out of or
relate to’ those activities.
471 U.S. 462, 473-74 (1985) (quoting Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 774 (1984) and Helicopteros
Nacionales de Colombia, 466 U.S. at 414).
Similarly, in Calder v. Jones, the Supreme Court ruled
that jurisdiction was proper so long as the defendant engaged
in “intentional conduct . . . calculated to cause injury” in
the forum State.2
465 U.S. 783, 791 (1984).
In trademark infringement or unfair competition cases in
which the defendant resides and sells its product in a state
other than the state in which an action is brought, it may be
difficult for a plaintiff to demonstrate that the conduct of
the defendant was “purposefully directed” at a resident of the
intentionally calculated to cause injury in the state in
question, as required under Calder.
This may be true even
though the plaintiff, whose proprietary interests in its
products’ designs were allegedly wrongfully usurped, resides
The Eighth Circuit, rather than viewing Calder as
announcing independent grounds for a finding of personal
jurisdiction, has stated that it merely “requires the
consideration of additional factors . . . .”
Industries, Inc., 946 F.2d at 1391.
in the state where the action was brought.
For instance, the
defendant may not have, due to a lack of sophistication,
intentionally engaged in trademark infringement or unfair
Further, a defendant may have simply been
unaware of a plaintiff’s legal residence and, therefore,
unaware of where any injury would result.
Given that many
trademarks appear on web-sites on the world-web and originate
from unknown or difficult to discern locations, this is
undoubtedly a legitimate concern.
As previously noted, the
touchstone of whether or not the exercise of jurisdiction is
proper is whether or not the defendant could reasonably expect
to be haled into a distant court.
However, after thoroughly reviewing Supreme Court case
law and the Eighth Circuit’s five-part test, this Court is
presented in this case, this Court has the authority to
exercise specific jurisdiction over Defendant.
together act as Defendant Marino’s Director, President, CEO,
Chief Technology Officer, and Information Technology Manager,
FROZFRUIT; after all, they are, along with David Edelstein,
who initially sold the rights related to FROZFRUIT to Wells.
Even further, they, as President, Vice President and Human
Resource Manager of Marina, were directly involved in the
distribution of FROZFRUIT on Wells’ behalf and were aware that
Wells contractually defended their proprietary interest in
Defendant argues that because Fruit Ice, Chill Ice, and
Marina are not named Defendants, their contacts with this
forum are irrelevant.
While Defendant is correct in noting
officers, while acting on behalf of separate entities (i.e.
Marina, Fruit-Ice, and Chill-Ice), are not its contacts, they
independently significant facts. The knowledge of Michael and
inseparable from Marino’s knowledge.3
The imputation of
knowledge from agent to principal is justified because a
“principal’s agents link the principal to the external world
The Restatement (Third) of Agency § 5.03 provides that
“notice of a fact that an agent knows or has reason to know is
imputed to the principal if knowledge of the fact is material
to the agent’s duties to the principal . . . .”
for purposes of taking action . . . .”
Restatement (Third) of
persuasive when the principal is a corporation - a legal
fiction, literally incapable of having any knowledge outside
authority an agent has within the structure of a principal,
the more reasonable it is to hold the principal accountable
for the agent’s knowledge.
As previously noted, the evidence
before this Court indicates Michael and Frank Barone are the
primary owners and operators of Marino.
Thus, prior to
Trademark. Furthermore, Marino, in adopting a trade dress for
FROZENFRUIT which it knew to be similar to FROZFRUIT, was
aware that its actions could result in injury within the State
To hold otherwise would elevate a necessary legal
fiction - corporate personhood - into a legal absurdity.
This Court is persuaded that the facts of this case are
on point with the facts in Dakota Industries, Inc. v. Dakota
Sportswear, Inc., 946 F.2d 1384 (8th Cir. 1991).
Industries, the Eighth Circuit held that “the use of [a]
trademark with knowledge of infringement” resulted in an
“intentional tortious wrongdoing,” which falls within the
purview of the Supreme Court’s decision in Calder.4
This Court is also persuaded that the test in
Rudzewicz is satisfied.
Defendant, prior to adopting its
trademark, had, through its agents, detailed knowledge of
Plaintiff’s proprietary interest in FROZFRUIT. Defendant also
had, through its agents, direct knowledge of Plaintiff’s legal
Thus, Defendant’s adoption of a trademark similar
directed at this forum.
At the hearing of February 15, 2012, Defendant contended
that the Dakota Industries’ Court largely relied on the fact
that some of defendant’s products were sold in the forum
state. After thorough review of Dakota Industries, this Court
is not persuaded this was a predominant factor. The record in
Dakota Industries is clear: the defendant there did not ship
the products in question directly to the forum State; instead,
the products were only later distributed to the forum State by
a third party.
Furthermore, as discussed in detail in this section,
Defendant’s agents, acting as agents of other entities,
contractually bound those other entities not to interfere with
the Plaintiff’s proprietary interest here at issue; this
indicates Defendant’s actions, as conducted through its
agents, were particularly purposeful, intentional, and
directed at Plaintiff, whom Defendant well knew to reside in
After considering the factors in Dakota
Industries and the factors present here, this Court is
persuaded the exercise of personal jurisdiction, though
justified in Dakota Industries, is far more justified in this
Furthermore, this Court has a real interest in providing
entities registered and headquartered within Iowa a forum in
which to file complaints against those who allegedly commit
intentional torts against them; especially when those torts
relate to property whose ownership primarily rests within,
though it may also extend outside, Iowa.
maintains that its witnesses live in New York, and it is
overly burdensome to require them to defend themselves in
Iowa, this is, in accordance with Eighth Circuit case law, a
Furthermore, though Wells has offices in New York, it is
undisputed that the hub of their operations is within this
forum, and there is no indication Wells’ offices in New York
are equipped to or have the requisite information to maintain
this cause of action.
Since Wells’ principal operations are
in Iowa, it would be nearly, if not equally, as burdensome to
require them to pursue their claims in New York.
No. 7-1, 1 and Docket No. 9, 13-14.
In summation, because Defendant had detailed knowledge of
Plaintiff’s proprietary interest in FROZFRUIT, as well as
Plaintiff’s status as an Iowa corporation headquartered in
intentionally calculated to cause injury to Plaintiff within
As such, Defendant had adequate notice that
its conduct would make it susceptible to being haled into
court in the State of Iowa.
Furthermore, because Plaintiff’s
interest in obtaining a convenient forum and this Court’s
interest in adjudicating causes of actions against residents
of this jurisdiction overrides the Defendant’s interest in
traditional notions of fair play and substantial justice.
Therefore Defendant’s motion to dismiss for lack of personal
jurisdiction is denied.
As previously noted, Defendant requests dismissal based
on improper venue.
28 U.S.C. § 1391(b)(1) provides that “[a]
civil action may be brought in a judicial district in which
any defendant resides.”
Though, in terms of subject matter
jurisdiction, Defendant is considered a resident of New York,
28 U.S.C. § 1391(c)(2), relating to venue, provides that
an entity with the capacity to sue and be
sued in its common name under applicable
law . . . shall be deemed to reside, if a
defendant, in any judicial district in
which such defendant is subject to the
court’s personal jurisdiction with respect
to the civil action in question . . . .”
personal jurisdiction, Defendant is, for purposes of venue, a
resident of this district, and venue is proper.
Defendant’s motion to dismiss based on improper venue is
TRANSFER OF VENUE
Defendant also requests transfer of venue pursuant to 28
U.S.C. § 1404(a), which provides:
[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 . . . .
The primary purpose of § 1404(a) is to provide a district
court discretion to transfer venue for reasons of convenience
and fairness, “despite the propriety of the plaintiff’s venue
Van Dusen v. Barrack, 376 U.S. 612, 634 (1964).
deference” is given “to a plaintiff’s choice of forum,” and,
therefore, the “party seeking a transfer under section 1404(a)
typically bears the burden of proving that a transfer is
In re Apple, Inc., 602 F.3d 909, 913 (8th Cir.
A court should consider “the convenience of the parties,
the convenience of witnesses, [and] the interests of justice,”
as well as any other relevant factors. Terra Intern., Inc. v.
Mississippi Chemical Corp., 119 F.3d 688, 696 (8th Cir. 1997).
Under the general category of “Convenience,” a court should
consider . . .
(1) the convenience of the parties, (2) the
convenience of the witnesses – including
the willingness of witnesses to appear, the
ability to subpoena witnesses, and the
adequacy of deposition testimony, (3) the
accessibility to records and documents, (4)
the location where the conduct complained
of occurred, and (5) the application of
each forum state’s substantive law.
Id. at 696.
Under the general category “Interest of Justice,” a court
(1) judicial economy, (2) the plaintiff’s
choice of forum, (3) the comparative costs
to the parties of litigating in each forum,
(4) each party’s ability to enforce a
judgment, (5) obstacles to a fair trial,
(6) conflict of law issues, and (7) the
determine questions of local law.
Defendant’s Brief focuses on the following factors:
the lack of a forum selection clause; (2) the Defendant’s
location, (3) the location of potential witnesses, and (4) the
location of operative events and records.
Because there is no contractual relationship between
Plaintiff and Defendant, there is, of course, no applicable
selection clause may be significant, its absence generally
does not militate toward a transfer.
In all tort actions
between parties not contractually bound to each other, there
will be no forum selection clause, and so it is difficult to
comprehend how the absence of a forum selection clause could
overcome the “strong presumption in favor of the plaintiff’s
choice of forum.”
Piper Aircraft Co. v. Reyno, 454 U.S. 235
As to the Defendant’s location, it is true that Defendant
is a New York corporation with its principal place of business
in New York.
However, Plaintiff is an Iowa corporation with
its principal place of business in Iowa. Though Plaintiff has
an office in New York, there is no indication its New York
office has the means or possesses the requisite information to
pursue this cause of action.
As previously noted, Defendant
bears the burden of showing this Court why a transfer is
appropriate. In re Apple Inc., 602 F.3d at 913. Furthermore,
absent evidence to the contrary, when a Plaintiff chooses
their home forum, “it is reasonable to assume” they did so
because it was “convenient.”
Piper Aircraft Co., 454 U.S. at
On balance, it appears forcing Plaintiff to pursue
its cause of action in the Eastern District of New York would
be nearly, if not equally, as burdensome as forcing Defendant
to defend in this district.
In any event, “the mere fact that
the costs of litigation would be more burdensome on Defendants
than on Plaintiff should the case remain in Iowa is not alone
sufficient cause to grant a transfer.”
Inc. v. Faidley, 416 F. Supp. 2d 678, 687 (S.D. Iowa 2006).
The Defendant’s Brief further contends that “most of the
non party witnesses are . . . located in the Eastern District
of New York,” and Plaintiff’s “have not and cannot allege that
any potential witnesses reside in this District.”
Defendant’s Brief also notes that “Rule 45 of the
Federal Rules of Civil Procedure limits the subpoena power to
compel the attendance of non-party witnesses to within 100
regularly transacts business . . . .”
(citing Fed. R. Civ. P. 45(c)(3).
Docket No. 7-1, 13
generally considered to be one of the most important factors
to be weighed” in a transfer of venue analysis, “‘the party
witnesses to be called and must make a general statement of
what their testimony will cover.’” Medicap Pharmacies, 416 F.
Supp. 2d at 687 (quoting Nelson v. Master Lease Corp., 759 F.
Supp. 1397, 1402 (D. Minn. 1991)).
initial Brief nor their Reply identify the non-party witnesses
which are located in the State of New York or would be beyond
this Court’s subpoena power.
In the closing minutes of the
counsel identified Wells’ current distributor in New York as
a potential witness but failed to indicate what they would
operative events[,] including the location of the relevant
evidence[,] also militates in favor of transfer.”
In a supplement to their resistence, Plaintiff indicates
that Defendant, though they have attempted to identify the
substance of Wells’ New York distributor’s testimony in an email to Plaintiff, have not shown that the testimony is
essential or even relevant to this litigation. Docket No. 13,
5. After reviewing the relevant e-mail, this Court agrees.
Docket No. 13-1.
the evidence in this case will predominantly consist of
scanners, fax machines, and overnight delivery, the location
of the evidence in a case such as this is a slight, if not
See Medicap Pharmacies, Inc., 416 F.
Supp. 2d at 688.
Furthermore, it is likely many of the
Plaintiff’s records related to its proprietary interests are
kept at its headquarters in Iowa, and, therefore, a transfer
transporting documents to Plaintiff.
important to note that trademark infringement is not the type
of tort that involves a discrete situs of tortious action,
such as a negligent car accident or assault.
intellectual, rather than physical, property, and, as such,
may be infringed upon from the other side of the planet.
unreasonable to force a Plaintiff to bring a cause of action
where the alleged infringer resides solely because that is
where the alleged infringer’s actions occurred.
even makes sense to say there is a location of operative
events in a trademark infringement case, that location -
again, as long due process standards are satisfied - should be
where the rightful owner of the trademark resides, for it is,
Overall, Defendant has failed to meet its burden of
showing that Plaintiff’s choice of venue is unwarranted.
Therefore, Defendant’s motion to transfer venue is denied.
IT IS SO ORDERED this 29th day of June, 2012.
Donald E. O’Brien, Senior Judge
United States District Court
Northern District of Iowa
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