Board of Commissioners of The Port of New Orleans v. Stern et al
Filing
56
ORDER AND REASONS DENYING 27 Motion to Dismiss for Lack of Jurisdiction; DENYING 28 Motion to Dismiss for Failure to State a Claim as set forth in document. Signed by Judge Ivan L.R. Lemelle on 11/21/2016. (mmv)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
THE BOARD OF COMMISSIONERS
OF THE PORT OF NEW ORLEANS
CIVIL ACTION
VERSUS
NO. 15-6527
MARK STERN, ET AL.
SECTION: “B” (3)
ORDER AND REASONS
I.
NATURE OF MOTION AND RELIEF SOUGHT
Before the court are Defendants Mark Stern and Grubb Young &
Co.’s (“GYC,” collectively “Defendants”) “Motion to Dismiss for
Lack of Personal Jurisdiction” (Rec. Doc. 27) and the Board of
Commissioners of the Port of New Orleans’ (“Port” or “Plaintiff”)
opposition thereto (Rec. Doc. 42). Also before the court are
Defendant Stern’s “Motion to Dismiss for Failure to State a Claim”
(Rec. Doc. 28) and Plaintiff’s opposition thereto (Rec. Doc. 43).
For the foregoing reasons, IT IS ORDERED that Defendants’
“Motion to Dismiss for Lack of Personal Jurisdiction” (Rec. Doc.
27) is DENIED. IT IS FURTHER ORDERED that Defendant Stern’s “Motion
to Dismiss for Failure to State a Claim” (Rec. Doc. 28) is DENIED.
II.
FACTS AND PROCEDURAL HISTORY
Mark Stern is the founder and CEO of Grubb Young & Co.
(“GYC”), a limited liability company with its principal place of
business in Las Vegas, Nevada. (Rec. Doc. 1.) Stern is domiciled
in Toronto, Ontario, Canada. (Rec. Doc. 27-1). In 2006, the Port
1
opened the Erato Street Cruise Terminal and Parking Garage Complex
to accommodate cruise lines and their passengers. (Rec. Doc. 1).
Since then, numerous third-party services have marketed their
private parking facilities, competing with the Port’s parking.
(Rec. Doc. 1). On February 7, 2013, GYC registered the website
domain “PortOfNewOrleansParking.com.” (Rec. Doc. 1).
The Port has used the tradename, trademark, and service mark
“Port of New Orleans” since at least 1991, but have been identified
with the name as early as 1896. (Rec. Doc. 1). The “Port of New
Orleans” name, stylized or with design, was registered with the
United States Patent and Trademark Office on June 7, 2009. (Rec.
Doc. 1-14). On December 7, 2015, Plaintiff filed its complaint
against GYC and Stern alleging unauthorized use of “Port of New
Orleans” in the website’s domain name and contents. (Rec. Doc. 1).
Defendants moved to dismiss for lack of personal jurisdiction and
failure to state a claim, now before the court. (Rec. Doc. 1).
The PortOfNewOrleansParking.com webpage is entitled “Southern
Style and Great Rates at Port of New Orleans Parking.” (Rec. Doc.
1-26). The website lists several parking services and garages near
the Port with links to their directions and websites. (Rec. Doc.
42-3). It features a disclaimer stating that it has no affiliation
with the Port. (Rec. Doc. 27-1). The website links to a Twitter
account,
@portorleansparking,
bearing
2
the
name
“Port
of
New
Orleans 1” with the account biography as “The Most Affordable Port
Parking Lot” and a picture of a map approximately marking the
location of the Port of New Orleans. (Rec. Doc. 1-28). After
Plaintiff
filed
the
complaint,
Defendants
registered
another
domain linking to the same webpage, NewOrleansPortParking.com.
(Rec. Doc. 42-1). The webpage offers a chat feature allowing
visitors
to
inquire
about
parking
with
a
customer
service
representative in real time. (Rec. Doc. 42, Rec. Doc. 42-3). Due
to an error in the website’s code, the chat feature is in the
background of the website, but is nonetheless functional. (Rec.
Doc. 42). In total, the chat feature was accessed by four visitors,
at least one of which was Plaintiff’s counsel. (Rec. Doc. 49-2).
Other interactive features on the website include an email function
and comments section, none of which received any traffic. (Rec.
Doc. 49).
The webpage states, “We’re more than happy to accept all major
credit cards,” and “With our super low $6 a day rate, you won’t
have to worry about this issue at New Orleans Port Parking Parking
[sic].”
(Rec.
Doc.
42-6).
The
website
does
not
perform
the
bookings, that is, collect credit card information and reserve
parking spots, but it does contain a “non-functioning, booking
‘widget.’” (Rec. Doc. 27-1).
1
The Twitter account was later renamed to “Port Orleans
Parking.” (Rec. Doc. 42-1)
3
III. DISCUSSION
A.
PERSONAL JURISDICTION
A court may exercise general personal jurisdiction over a
defendant when its “affiliations with the State are so ‘continuous
and systematic’ as to render [it] essentially at home in the forum
State.” Daimler, 134 S. Ct. at 761. General jurisdiction permits
the cause of action to be unrelated to the defendant’s extensive
contacts within the forum. Id. at 754. The Supreme Court has
articulated a “limited set of affiliations with a forum [that]
will
render
a
defendant
amenable
to
all-purpose
jurisdiction
there.” Id. at 760. For an individual, it is his or her domicile;
for a corporation, the paradigmatic exemplars are where it is
incorporated or has its principal place of business. Goodyear, 131
S. Ct. at 2853-2854. Neither Stern nor GYC can be regarded as “at
home” in Louisiana because Louisiana is not Stern’s domicile, GYC’S
place of incorporation, nor its principal place of business. Thus,
GYC and Stern are not subject to the court’s general personal
jurisdiction.
Alternatively, courts may exercise specific jurisdiction over
a defendant when the cause of action arises out of or is related
to
the
defendant’s
contacts
within
the
forum.
Helicopteros
Nacionales de Colombia, S.A. v. Hall, 468 U.S. 408, 414 (1984).
The Fifth Circuit has formulated a three-step inquiry to evaluate
whether a defendant has sufficient minimum contacts so that a court
4
may exercise personal jurisdiction: (1) whether the defendant
purposely directed its activities to the forum state or purposely
availed itself of the privileges of conducting business there; (2)
whether the plaintiff’s cause of action arises out of or results
from the defendant’s forum related contacts; and (3) whether the
exercise of personal jurisdiction is fair and reasonable. Nuovo
Pignone
v.
STORMAN
ASIA
M/V¸
310
F.3d
374,
378
(5th
Cir.
2002)(citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474
(1985)).
The Fifth Circuit has established a sliding scale (“Zippo
scale”) to assess whether a defendant has purposefully availed
itself to the forum based on activity over the internet. Mink v.
AAAA Development, LLC, 190 F.3d 333, 336 (5th Cir. 1999) (citing
Zippo Manufacturing Co. v. Zippo Dot Com, Inc. 952 F.Supp. 1119
(W.D.Pa.1997).
The
scale
classifies
websites
into
three
categories. Id. Personal jurisdiction is proper when the website
is able to enter into contracts with residents of the forum state
and involves the knowing and repeated transmission of computer
files over the internet. Id. (citing CompuServe, Inc. v. Patterson,
89 F.3d 1257 (6th Cir. 1996)). Personal jurisdiction is improper
when the website is “passive,” that is, does nothing more than
advertise on the internet. Id. In between, personal jurisdiction
is adjudged based on the level of interactivity and commercial
nature of the exchange of information. Id.
5
In Mink v. AAAA Development LLC, the website at issue listed
a
toll-free
number,
a
printable
mail-in
order
form,
mailing
address, and an e-mail address. Id. The Fifth Circuit held the
website fell into the “passive” category of the Zippo scale because
the website could not interact with users. Id. The Fifth Circuit
distinguished Mink from an interactive website in Revell v. Lidov.
317 F.3d 467, 472 (5th Cir. 2002). In Revell, the website operated
as an on-line bulletin board for any user to send and receive
information. Id. The exchange of information served as the basis
for evaluating personal jurisdiction in the intermediary of the
Zippo scale. Id.
Here, defendants’ website advertises information for thirdparty parking services. (Rec. Doc. 42-3). It also features a realtime chat feature resulting in information being exchanged. (Rec.
Doc. 42-3). Unlike in Mink, the email and commenting function here
are built into the website. 190 F.3d 333 at 336. Though the
interactive features are limited to “expressing an interest in a
commercial product,” they nonetheless occur on the website in a
real-time exchange of information. Revell, 317 F.3d 467 at 472.
See also Ford v. Mentor Worldwide, LLC, 2 F.Supp. 3d 898, 905
(E.D.La. 2014). The website here has sufficient interactivity
placing it in the middle ground of the Zippo scale. Since the
website is interactive, it must now be shown the injury arises
from the website. Id.
6
Plaintiff
argues
that
jurisdiction
is
proper
because
defendants knew their conduct would result in harm felt within the
forum. (Rec. Doc. 42-1). This has been called the “effects” test
or Calder test with respect to the Supreme Court’s decision in
Calder v. Jones. 465 U.S. 783, 788 (1984). The “effects” test is
one aspect of the defendant’s contacts with the forum, but not a
substitute for minimum contacts. Panda Brandywine Corp. v. Potomac
Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001). The “effects”
test
requires
that
the
defendant
must
have
(1)
committed
an
intentional act; (2) expressly aimed at the forum state; that (3)
caused harm, the brunt of which is suffered and which the defendant
knows is likely to be suffered in the forum state. Calder, 465
U.S. at 788.
The Fifth Circuit has not settled whether trademark disputes
fall under recognized intentional torts for the Calder test.
Healfix Infusion Therapy, Inc. v. Helix Health, LLC, Civil Action
No. H-08-0337, 2008 WL 1883546, at *6 (S.D. Tex. Apr. 25, 2008).
However, other courts have consistently applied the Calder test to
trademark disputes. Licciardello v. Lovelady, 544 F.3d 1280, 1286
(11th Circ. 2008); Panavision Intern., L.P. v. Toeppen¸ 141 F.3d
1316,
1321
(9th
Cir.
1998);
Indianapolis
Colts,
Inc.
v.
Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d
410, 412 (7th Cir, 1994). Further, the Fifth Circuit has held,
“When the actual content of communications with a forum gives rise
7
to intentional tort causes of action, this alone constitutes
purposeful availment.” Wien Air Alaska, Inc. v. Brandt, 195 F.3d
208, 213 (5th Cir. 1999). For specific jurisdiction, courts should
analyze only the contact out of which the cause of action arises,
here, that is the maintenance of a trademark infringing website.
Revell¸317 F.3d at 472.
Here, the injury did not arise from website’s inability to
collect payments or perform bookings, but arose from the actual
content of the website bearing allegedly infringing marks. See
Ford, 2 F.Supp. 3d at 905-907. The website’s “express aiming” at
the forum is marked by its domain name, defendants’ use of an SEO,
the website’s real-time chat, ability to post comments, and direct
e-mail,
each
premised
on
facilitating
services
physically
performed in Louisiana. (Rec. Doc. 42-1). The website’s contacts
contemplate parking in only Louisiana for which physical presence
is necessary. (Rec. Doc. 42-1). Thus, defendants specifically and
solely targeted the forum through multiple avenues on the website
which has given rise to the injury satisfying the first two prongs
of the specific jurisdiction inquiry. Nuovo Pignone, 310 F.3d at
378.
Once these constitutionally minimum contacts are established,
the defendants have a burden to make a “compelling case” that
jurisdiction is not reasonable and fair. Wien Air Alaska, 195 F.3d
at 215. Here, Defendants have made no showing why exercising
8
personal specific jurisdiction would be unfair or unreasonable.
(Rec. Doc. 42-1). Thus, the Port has made a prima facie showing
that exercising jurisdiction comports with due process.
B. FAILURE TO STATE A CLAIM
The
Port
has
stated
causes
of
action
for
infringement,
dilution, and unfair competition under both state and federal law.
(Rec. Doc. 43-1). Stern contends he cannot be personally liable
for GYC’s corporate actions and therefore should be dismissed from
the case. (Rec. Doc. 28). Under federal law, a trademark may be
infringed
by
a
corporate
officer
when
it
is
found
that
the
individual partook in the infringing. Mead Johnson & Co. v. Baby’s
Formula Service, Inc., 403 F.2d 19, 23 (5th Cir. 1968); Audubon
Real Estate Associates, L.L.C. v. Audubon Realty, L.L.C., Civil
Action No. 15-115, 2016 WL 740467, at *3-5 (M.D.La. Feb. 24, 2016)
(finding that the Mead rationale applicable to an LLC.) Further,
there is no requirement that a plaintiff must first “pierce the
corporate
veil”
to
impose
parallel
personal
and
corporate
liability. Engineering Dynamics, Inc. v. Structural Software, Inc.
26 F.3d 1335, 1349 (5th Cir. 1994). Nor is there any requirement
for the officer to be acting outside of corporate capacity. Mead,
403 F.2d 19, 23 (5th Cir. 1968). Since the Port has contended that
Stern was involved in the trademark infringement, Stern is not
shielded
from
potential
liability
by
GYC’s
limited
status for the federal claims. (Rec. Doc. 43-1).
9
liability
Louisiana
state
law
recognizes
exceptions
to
personal
liability relating to LLCs including fraud, breach of professional
duty, “or other wrongful act.” La. R.S. 1320(D). “Other wrongful
acts” are not limited to torts and the Louisiana Supreme Court has
set forth four factors to analyze the scope of conduct the statute
envisions:
(1)
whether
a
member’s
conduct
could
be
fairly
characterized as a traditionally recognized tort; (2) whether a
member’s conduct could be fairly characterized as a crime for which
a natural person could be held culpable; (3) whether the conduct
at issue was required by or in furtherance of a contract between
claimant and the LLC; (4) and whether the conduct at issue was
done outside the member’s capacity as a member. Ogea v. Merritt,
130 So.3d 888, 900 (2013). In Audubon Real Estate Associates,
L.L.C. v. Audubon Realty, L.L.C., the court held Louisiana state
law violations of trademark infringement, unfair trade practices,
and
unfair
competition
fit
traditionally
recognized
torts
triggering an exception to limited liability under 12:1320(D).
2016 WL 740467, at *3-5. Here, the Port has pled identical state
law claims in its complaint. (Rec. Doc. 1.) Thus, state law
recognizes an exception to GYC’s limited liability and Stern may
be personally liable. The website’s registration shows the actual
registrant as “Stern” on “behalf of grubyoung.com.” (Rec. Doc. 126). Further, the Port points to Stern’s role as the sole founder
and owner of GYC. (Rec. Doc. 1). These factual allegations and the
10
existing state and federal law sufficiently show that Stern’s
involvement
in
the
trademark
infringement
as
“plausible,”
rendering dismissal of Stern inappropriate.
New Orleans, Louisiana, this 21st day of November, 2016.
___________________________________
SENIOR UNITED STATES DISTRICT JUDGE
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