Claimsolution, Inc. v. Claim Solutions, LLC

Filing 16

MEMORANDUM AND ORDER granting 11 Defendant's Motion to Dismiss for Lack of Personal Jurisdiction and this action is hereby dismissed. Signed by District Judge John W. Lungstrum on 06/30/2017. (ses)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

CLAIMSOLUTION, INC.,

)
)
Plaintiff,
)
)
v.
)
)
CLAIM SOLUTIONS, LLC,
)
)
Defendant.
)
)
_______________________________________)

Case No. 17-2005-JWL

MEMORANDUM AND ORDER
This matter comes before the Court on defendant’s motion to dismiss for lack of
personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) (Doc. # 11). For the reasons
set forth below, the Court grants the motion, and this action is hereby dismissed.
According to its complaint, plaintiff ClaimSolution, Inc. is a corporation located
in Kansas that offers insurance claim processing and administration services to insurers;
while defendant Claim Solutions, LLC is a company located in Colorado that offers
insurance claim services to insureds. Plaintiff asserts claims against defendant for
trademark infringement and cybersquatting under federal law and for common-law
trademark infringement and unfair competition, based on defendant’s use of its name and
website. Defendant moves to dismiss the action for lack of personal jurisdiction.
The federal statutes at issue here do not provide for nationwide service of process;
thus, the parties agree that the Court must apply the law of the forum state. The Kansas

long-arm statute is construed liberally to allow jurisdiction to the full extent permitted
by due process. See Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Co-op., 17 F.3d
1302, 1305 (10th Cir. 1994) (citing Volt Delta Resources, Inc. v. Devine, 241 Kan. 775
(1987)). For jurisdiction satisfying due process, the defendant “must have ‘minimum
contacts’ with the forum state, such that having to defend a lawsuit there would not
offend traditional notions of fair play and substantial justice.” See Dudnikov v. Chalk
& Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (internal quotation
omitted) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Plaintiff does not assert that defendant’s contacts with Kansas give rise to general
jurisdiction over defendant; rather, plaintiff argues that defendant is subject to specific
jurisdiction in this case. A plaintiff asserting specific jurisdiction must satisfy two
requirements to show minimum contacts: “first, that the out-of-state defendant must
have ‘purposefully directed’ its activities at residents of the forum state, and second, that
the plaintiff’s injuries must ‘arise out of’ defendant’s forum-related activities.” See id.
at 1071 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
“Purposeful direction” is indicated by an intentional action expressly aimed at the forum
state with knowledge that the brunt of the injury would be felt there. See id. at 1072.
The Court begins by determining the relevant facts to be considered in its
analysis. A plaintiff bears the burden of establishing personal jurisdiction. See id. at
1069. When the issue is raised at the pleading stage based on allegations and affidavits,
the plaintiff may meet its burden by a prima facie showing of jurisdiction. See id. at
2

1070. The Court accepts as true all well-pleaded (plausible, non-conclusory, nonspeculative) facts alleged by the plaintiff, unless those facts are controverted by affidavit.
See Shrader v. Biddinger, 633 F.3d 1235, 1248 (10th Cir. 2011). Factual disputes in the
parties’ affidavits are resolved in the plaintiff’s favor at this stage. See Dudnikov, 514
F.3d at 1070.
In its complaint, plaintiff alleges that it is located in Kansas; that defendant is
located in Colorado; that defendant maintains a website, www.claimsolutionspa.com, to
promote the business; and that defendant did not cease its allegedly infringing activities
(use of its name and domain name) after plaintiff sent defendant a cease-and-desist letter.
With respect to jurisdiction, plaintiff alleges conclusorily that defendant engaged in acts
in Kansas causing injury, engaged in acts outside Kansas resulting in injury in Kansas,
or otherwise had sufficient contacts with Kansas.

Plaintiff further alleges upon

“information and belief” that defendant offers its services “throughout the Denver
metropolitan area and into western Kansas.” Finally, plaintiff has attached to its
complaint two pages from defendant’s website, which pages note defendant’s license in
Colorado and contain no reference to Kansas.
With its motion to dismiss, defendant has provided a sworn declaration in which
its managing partner states that defendant operates and is licensed only in Colorado; that
defendant has no office or agent in Kansas; that defendant does not operate, do business,
offer services, advertise, or solicit business in Kansas; and that the accused website
refers to no state licensures other than for Colorado. Thus, by this declaration, defendant
3

has provided evidence to controvert any allegation that defendant does or solicits any
business in Kansas. Plaintiff’s own declaration in response does not controvert any of
the facts contained in defendant’s declaration. In plaintiff’s declaration, its employee
states that plaintiff’s client found defendant’s website while looking for plaintiff on-line,
believed the two companies to be the same, and expressed concerns about a conflict of
interest in representing both insurers and insureds. Although the declarant states that that
client conducts business in Kansas, she does not state that the client itself is located in
Kansas.
Thus, for purposes of its analysis, the Court assumes the following facts:
Defendant does no business in Kansas and does not solicit business in Kansas.
Defendant’s website refers only to being licensed in Colorado and does not refer to
Kansas. Defendant did not cease the allegedly infringing activities after receiving notice
from plaintiff. One client was confused about defendant’s use of its name and website,
but there is no evidence that any Kansas resident experienced such confusion.
Given these facts, plaintiff, in opposing the motion, relies solely on defendant’s
use of its website and defendant’s knowing (after receipt of the cease-and-desist letter)
use of its name and domain name in (alleged) violation of federal and state law.1
Plaintiff relies on two Kansas district court cases in which the courts considered
minimum contacts established through use of websites. The Tenth Circuit, however, has

1

In its argument, plaintiff does not rely on its allegation on “information and
belief” that defendant offers its services in western Kansas.
4

considered that issue more recently in Shrader v. Biddinger, 633 F.3d 1235 (10th Cir.
2011). The court in Shrader noted the particular problem in considering personal
jurisdiction in the internet context, as the internet effectively operates in every state. See
id. at 1240. The court concluded that “[t]he maintenance of a web site does not in and
of itself subject the owner or operator to personal jurisdiction, even for actions relating
to the site, simply because it can be accessed by residents of the forum state.” See id. at
1241. Rather, the defendant must have intentionally directed its internet activity or
operation at the forum state. See id. at 1240-41. Thus, “courts look to indications that
a defendant deliberately directed its message at an audience in the forum state and
intended harm to the plaintiff occurring primarily or particularly in the forum state.” See
id. at 1241.
In the present case, the evidence is that defendant’s activities, including operation
of its website, are not directed to residents in Kansas, where defendant is not licensed
and does no business. Therefore, defendant’s maintenance of its website does not
provide a basis for jurisdiction here.
Shrader also disposes of plaintiff’s argument for jurisdiction based on defendant’s
allegation that defendant knowingly caused injury to a Kansas resident. In that case, in
concluding that posting an allegedly defamatory statement about a forum resident did not
create a sufficient connection to the forum state, the Tenth Circuit stated that a
“plaintiff’s residence in the forum, and suffering of harm there, will not alone support
jurisdiction.” See id. at 1244. Although some courts have found it sufficient “when the
5

defendant targets a known forum resident,” the Tenth Circuit has taken a more restrictive
approach, holding that “the forum state itself must be the focal point of the tort.” See id.
(emphasis and internal quotation omitted) (quoting Dudnikov, 514 F.3d at 1074 n.9). In
this case, although a Kansas resident was the victim of the alleged tort, there is no
evidence to suggest that Kansas was the focal point of the allegedly tortious activity, as,
again, defendant did not direct its activities, on-line or otherwise, at Kansas residents.
Plaintiff relies most heavily on Rainy Day Books, Inc. v. Rainy Day Books &
Café, L.L.C., 186 F. Supp. 2d 1158 (D. Kan. 2002), in which the court concluded that “it
was the Defendant’s own actions of maintaining a commercial website with the
knowledge that it allegedly infringed upon Plaintiff’s service mark and that Plaintiff’s
primary bookstore business operated in Kansas that created the minimum contacts with
the forum.” See id. at 1165. In that case, the court applied a sliding scale for internet
activities first articulated in the case of Zippo Manufacturing Co. v. Zippo Dot Com, Inc.,
952 F. Supp. 1119 (W.D. Pa. 1997). See Rainy Day Books, 186 F. Supp. 2d at 1163
(citing Zippo). In Shrader, although it noted the Zippo test, the Tenth Circuit declined
to adopt it. See Shrader, 633 F. 3d at 1242 n.5. The Court agrees with another judge of
this district who recently rejected application of the Zippo sliding scale and concluded
that the analysis is more appropriately governed by the standards set forth by the Tenth
Circuit in Shrader. See Inspired by Design, LLC v. Sammy’s Sew Shop, 200 F. Supp. 3d
1194, 1205 (D. Kan. 2016). In the other case on which plaintiff relies here, Toytrackerz
LLC v. Koehler, 2009 WL 1505705 (D. Kan. May 28, 2009), the court noted that
6

appellate courts since Zippo have incorporated various additional requirements for
internet contacts, see id. at *7. Thus, even if this Court applied the Zippo test, it would
still be required to find satisfaction of Shrader’s requirement of internet activity aimed
at the forum state.
Finally, application of the Zippo test would not help plaintiff in this case, as
plaintiff has provided no evidence that defendant clearly does business over the internet
and thus enters into contracts with residents of the forum state—or even that defendant
exchanges information over the website with residents of other states (where it is not
licensed). Instead, the only evidence is that defendant’s website is passive with respect
to Kansas residents, and such a website does not confer personal jurisdiction under the
Zippo test. See Shrader, 633 F.3d at 1242 n.5 (setting out the test). Thus, the present
case is easily distinguished from Rainy Day Books, in which the defendant conducted
business over its site with residents of other states, including Kansas. See Rainy Day
Books, 186 F. Supp. 2d at 1163-64.
Moreover, in Toytrackerz, cited by plaintiff, the court applied the Zippo test, but
it refused to find jurisdiction over one defendant whose only contact with Kansas was
the alleged infringement of the plaintiff’s trademark despite having received notice from
the plaintiff. See Toytrackerz, 2009 WL 1505705, at * 16-17. The court noted that more
was required under Tenth Circuit precedent, as the mere commission of a business tort
against a Kansas resident is not sufficient. See id. (citing Far West Capital, Inc. v.
Towne, 46 F.3d 1071, 1077-80 (10th Cir. 1995)). The Tenth Circuit confirmed in
7

Shrader that more is required than the allegation that the internet activity injured a
Kansas resident. There is nothing more in this case, however.
Thus, the Court concludes that plaintiff has failed to establish that defendant
purposefully directed its activities at Kansas as required for a finding of minimum
contacts sufficient to confer personal jurisdiction.2 Accordingly, the Court grants
defendant’s motion and dismisses the action.3

IT IS THEREFORE ORDERED BY THE COURT THAT defendant’s motion
to dismiss for lack of personal jurisdiction (Doc. # 11) is granted, and this action is
hereby dismissed.

IT IS SO ORDERED.

Dated this 30th day of June, 2017, in Kansas City, Kansas.

s/ John W. Lungstrum
John W. Lungstrum
United States District Judge

2

In light of that conclusion, the Court need not address the reasonableness of
exercising jurisdiction in this case.
3

The Court denies plaintiff’s alternative request for jurisdictional discovery. The
parties’ competing declarations did not present any factual disputes (which the Court
would have resolved in plaintiff’s favor at any rate), and plaintiff has not identified any
facts that it may discover that would permit jurisdiction here.
8