Mid America Gutters, Inc. v. Thompson Creek Window Company et al
ORDER granting 5 Motion to Dismiss, or in the alternative, to Transfer Venue; this matter is transferred to the United States District Court for the District of Maryland. Signed by Judge Michael R. Barrett on 8/6/12. (ba1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
d/b/a The Guttershutter Co.,
Case No. 1:11cv843
Thompson Creek Window Co., et al.,
Judge Michael R. Barrett
This matter is before the Court upon Defendants Thompson Creek Window
Company and Rick Wuest’s Motion to Dismiss for Failure of Service, Lack of Jurisdiction
and Improper Venue or Motion to Transfer Venue. (Doc. 5.) Plaintiff Mid-America Gutters
filed a Memorandum in Opposition (Doc. 9) and Defendants filed a Reply (Doc. 18).
Plaintiff brings claims for (1) patent infringement; (2) copyright infringement; (3)
breach of contract; (4) violation of Ohio Deceptive Trade Practices Act; (5) theft/conversion;
and (6) misappropriation of trade secrets.
Plaintiff is an Ohio corporation with its principal place of business in Cincinnati, Ohio.
(Doc. 2, ¶ 1.) Defendant Thompson Creek Window Company is a Maryland corporation
and Defendant Wuest is a resident of Maryland. (Id. ¶¶ 2, 3.)
Plaintiff alleges it is the owner of several patents related to a gutter-protection
system. (Id., ¶ 9.) Plaintiff also alleges it owns a copyright in the advertising and
promotional materials related to the gutter-protection system, as well as the trademarks
“Guttershutter,” “Gutterstud,” and “America’s Finest Leaf and Debris System.” (Id., ¶¶ 1011.)
Plaintiff alleges that in September of 2003, Wuest contacted Plaintiff and requested
additional information about the gutter-protection system. (Id., ¶ 12.) Plaintiff alleges that
Wuest also visited Plaintiff’s manufacturing and warehouse facility in Cincinnati, Ohio. (Id.)
Plaintiff alleges that it entered into a contract with Defendants which gave
Defendants exclusive rights to use a custom gutter trough machine and install Plaintiff’s
gutter-protection system in a specified territory in Maryland. (Id., ¶ 13.) Plaintiff alleges
that soon thereafter, Wuest and another Thompson employee attended sales training in
Cincinnati. (Id.) Plaintiff alleges that in April 2004, Defendants took delivery of the gutter
trough machine in Cincinnati. (Id., ¶ 14.) Plaintiff alleges that at that time, a Thompson
employee was trained on that machine. (Id) Plaintiff alleges that in February of 2006,
Wuest and other Thompson employees attended a dealer event in Cincinnati. (Id., ¶ 15.)1
Plaintiff alleges that during that event, Defendants purchased another trough machine.
(Id.) The trough machine included a counter which enabled Plaintiff to monitor the number
of linear feet of its system being sold to Thompson. (Id.)
Plaintiff claims that Defendants’ orders for materials decreased in February of 2008.
After unsuccessful attempts to gauge the amount of product being produced using the
counter on the trough machine, Plaintiff questioned whether Defendants were receiving
materials from another source. Then, in August of 2011, Defendants gave 60-day notice
that they would be terminating the contract with Plaintiff. Plaintiff claims that Defendants
Defendants maintain that this event actually took place at the Belterra Casino in
continue to use Plaintiff’s machines and products.
Defendants dispute that there is a contract between themselves and Plaintiff.
Defendants maintain that they entered into a “Dealership Agreement” with a different entity
named “The Gutter Shutter Manufacturing Company,” which was controlled by Lee Brown.
Defendants explain that Brown is the named inventor of the patents at issue. Defendants
claim that the Dealership Agreement gave them the right to operate a “Guttershutter
dealership” and use the service marks at issue. Defendants claim that the Dealership
Agreement did not place limitations on Defendants’ use of the machines. In addition,
Defendants claim that unbeknownst to Defendants, The Gutter Shutter Manufacturing
Company sold its assets to Plaintiff. Defendants point out that the Dealership Agreement
provides that the Agreement shall not be assigned without prior written consent.
Initially, Defendants argued that this case should be dismissed for lack of proper
However, Defendants subsequently executed waivers.
(Docs. 12, 13.)
Defendants no longer maintain lack of service as a basis for dismissal. (Doc. 18, at 5 n.2.)
However, Defendants still argue that Plaintiff’s claims should be dismissed for lack of
personal jurisdiction and improper venue, or in the alternative, should be transferred to
Motion to Dismiss Standard
The plaintiff bears the burden of proving personal jurisdiction exists. CompuServe
Inc. v. Patterson, 89 F.3d 1257, 1262-63 (6th Cir. 1996). In the face of a supported motion
to dismiss, the plaintiff may not rest on his pleadings, but must, by affidavit or otherwise,
set forth specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d
1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir.
1974)). When the Court considers a motion to dismiss pursuant to Rule 12(b)(2) without
an evidentiary hearing, the plaintiff “‘need only make a prima facie showing of jurisdiction.’”
Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (quoting Neogen Corp. v. Neo Gen
Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)) (internal citation omitted). The plaintiff
can make this prima facie showing by “‘establishing with reasonable particularity sufficient
contacts between [the Defendant] and the forum state to support jurisdiction.’” Neogen
Corp., 282 F.3d at 887 (quoting Provident Nat'l Bank v. California Savings Loan Ass’n, 819
F.2d 434, 437 (3d Cir. 1987))
The Sixth Circuit has established a two-step inquiry to determine whether a federal
district court sitting in a diversity-of-citizenship case can exercise personal jurisdiction over
a defendant: (1) whether the law of the state in which the district court sits authorizes
jurisdiction, and (2) whether the exercise of jurisdiction comports with the Due Process
Clause. CompuServe, 89 F.3d at 1262.
The Sixth Circuit has explained that there are two kinds of personal jurisdiction:
general and specific jurisdiction. Nationwide Mut. Ins. Co. v. Tryg Int'l Ins. Co., 91 F.3d
790, 793 (6th Cir. 1996) (“Jurisdiction may be found to exist either generally, in cases in
which a defendant’s “continuous and systematic” conduct within the forum state renders
that defendant amenable to suit in any lawsuit brought against it in the forum state . . . or
specifically, in cases in which the subject matter of the lawsuit arises out of or is related to
the defendant's contacts with the forum.”). Plaintiff argues that both general and specific
jurisdiction exist in this case. However, there has been some debate as to whether Ohio
courts recognize general jurisdiction. See Indus Trade & Technology, LLC v. Stone Mart
Corp., 2011 WL 6256937, *2, n.1 (S.D.Ohio Dec.14, 2011) (describing split on whether
general personal jurisdiction is available under Ohio law). The Sixth Circuit has recently
stated that “under Ohio law, a court may exercise personal jurisdiction over a non-resident
defendant only if specific jurisdiction can be found under one of the enumerated bases in
Ohio’s long-arm statute.” Conn, 667 F.3d at 718. Accordingly, this Court will only analyze
whether specific jurisdiction exists under Ohio law.
Ohio’s long-arm statute
Plaintiff relies on the following provision of Ohio’s long-arm statute to establish
A court may exercise personal jurisdiction over a person who acts directly or
by an agent, as to a cause of action arising from the person’s:
(1) Transacting any business in this state;
Ohio Rev. Code § 2307.382(A). The Ohio Supreme Court has explained that this provision
“is very broadly worded and permit[s] jurisdiction over nonresident defendants who are
transacting any business in Ohio.” Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc.,
559 N.E.2d 477, 481 (1990); see also Brunner v. Hampson, 441 F.3d 457, 464 (6th Cir.
2006) (“[t]he term ‘transacting any business’ as used in . . . the statute . . . will be given
broad interpretation.”) (quoting Ricker v. Fraza/Forklifts of Detroit, 828 N.E.2d 205, 209
(Ohio Ct. App. 2005)).
Plaintiff points to the contract between Plaintiff and Defendants.
Defendants claim they entered into a contract with The Gutter Shutter Manufacturing
Company, not Plaintiff. The Court finds it unnecessary at this stage of the proceedings to
make a determination on this issue because this Court must accept as true Plaintiff’s
assertions that a contract existed between the parties. PTG Logistics, LLC v. Bickel's
Snack Foods, Inc., 196 F. Supp. 2d 593, 598 (S.D. Ohio 2002) (citing Advanced Polymer
Sciences, Inc. v. Phillips Industrial Services, 34 F.Supp.2d 597 (N.D.Ohio 1999)).
Moreover, as the Ohio Supreme Court has explained:
It is clear that R.C. 2307.382(A)(1) and Civ.R. 4.3(A)(1) are very broadly
worded and permit jurisdiction over nonresident defendants who are
transacting any business in Ohio. “Transact,” as defined by Black's Law
Dictionary (5 Ed.1979) 1341, “ * * * means to prosecute negotiations; to carry
on business; to have dealings * * *. The word embraces in its meaning the
carrying on or prosecution of business negotiations but it is a broader term
than the word ‘contract’ and may involve business negotiations which have
been either wholly or partly brought to a conclusion * * *.” (Emphasis added.)
Kentucky Oaks Mall Co., 559 N.E.2d at 480.
“Solicitation of business by an out-of-state corporation is a factor to be assessed in
determining whether the foreign company was transacting business in Ohio for purposes
of submitting to personal jurisdiction.” Ricker v. Fraza Forklifts of Detroit, 828 N.E.2d 205,
209 (Ohio Ct. App. 2005) (citing U.S. Sprint Communications Co., Ltd. Partnership v. Mr.
K's Foods, Inc., 624 N.E.2d 1048, 1052 (Ohio 1994)). In addition, a court must consider
“in which jurisdiction the parties undertook their discussions and communications, and on
what terms.” Ricker, 828 N.E.2d at 209. Finally, a court must consider whether the foreign
company becomes obligated to make payments to an Ohio-based plaintiff. Hammill Mfg.
Co. v. Quality Rubber Prod's, Inc., 612 N.E.2d 472, 374 (Ohio 1992) (concluding that
nonresident corporation is “transacting business” in Ohio where it “initiates, negotiates a
contract, and through the course of dealing becomes obligated to make payments to an
Ohio corporation”); Kentucky Oaks Mall Co., 559 N.E.2d at 480 (holding that “a commercial
nonresident lessee, for purposes of personal jurisdiction, is ‘transacting any business’
within the plain and common meaning of the phrase, where the lessee negotiates, and
through the course of dealing becomes obligated, to make payments to its lessor in Ohio.”).
It appears that the parties agree that Plaintiff sent a mailer to Defendants, and
Wueste responded to the mailer, but the parties disagree as to who initiated the actual
business relationship. The Court finds Plaintiff’s mailer, sent directly to Defendants, was
what initiated the business relationship between the parties. However, the question of who
initiated the business dealings is not itself determinative as to whether a defendant
transacted business in Ohio and submitted to personal jurisdiction. Ricker, 828 N.E.2d at
209 (citing U.S. Sprint Communications, 624 N.E.2d at 1052) (explaining that mere
solicitation of business does not constitute “transacting business”). Therefore, the Court
will determine whether the discussions and communications between the parties occurred
Plaintiff has identified two undisputed occasions where Thompson employees
traveled to Plaintiff’s headquarters in Cincinnati. The first was in 2003, when Wuest visited
Plaintiff’s facility and met with Plaintiff’s owner. The second was in 2004, when Wuest and
another employee came to Cincinnati to participate in a training program. Plaintiff identifies
a third visit in February of 2006, but Defendants explain that the dealer event which Plaintiff
has identified actually took place at the Belterra Casino in Indiana. The fourth visit was a
“Closers Camp” held in Ohio, but Defendants have no recollection or records of attending
this event. (Doc. 18-1, Rick Wuest Decl., ¶ 8.)
Defendants point out that the Dealership Agreement between The Guttershutter
Manufacturing Company and Thompson Creek was reached in Maryland. (Wuest Decl.,
¶ 5.) Defendants explain that two representatives of The Guttershutter Manufacturing
Company visited Thompson Creek to finalize the agreement. (Id.)
Plaintiff explains that in April 2004, Defendants ordered a trough machine which was
delivered to Plaintiff’s manufacturing facility. Plaintiff claims that Defendants sent an
employee to pick up the machine and participate in a week of training on the machine.
Defendants do not dispute these facts, but point out that a second trough machine was
shipped to them in Maryland. (Id., ¶ 7.) Plaintiff also explains that Defendants ordered all
their supplies and materials from Plaintiff’s office in Cincinnati, which required Defendants
to make regular email and telephone communications to Ohio. Plaintiff states that it sent
invoices to Defendants, who then sent payment to Plaintiff in Cincinnati.
The Court finds that there is little in these facts to distinguish this case from the case
before the Ohio Supreme Court in Kentucky Oaks Mall Co. v. Mitchell’s Formal Wear
where the court found that:
In the case at bar, Mitchell's negotiated the lease by telephone contact to
Ohio with an Ohio-based limited partnership. Mitchell's intentionally and
voluntarily entered into a ten-year contract by signing the document in
Georgia and mailing it to Ohio. The document creates ongoing duties and
obligations for the life of the contract. Undoubtedly, both parties sought the
benefit of each other's bargain in hopes of realizing a pecuniary gain. The
fact that Mitchell's maintained no physical presence in Ohio does not
preclude a finding that it transacted business in this state.
Thus, we are convinced that Mitchell's conduct falls unequivocally within the
plain and broad language of R.C. 2307.382(A)(1) and Civ.R. 4.3(A)(1).
559 N.E.2d at 480. Similarly, in Hammill Manufacturing Co. v. Quality Rubber Products,
Inc., the Ohio Supreme Court found that:
In the case at bar, QRP negotiated the contract by telephone contact to Ohio
with an Ohio-based corporation. QRP intentionally and voluntarily entered
into a contract by issuing the purchase order in California and mailing it to
Ohio. The document creates ongoing duties and obligations for the life of
the contract. Undoubtedly, both parties sought the benefit of each other's
bargains. The fact that QRP maintained no physical presence in Ohio for the
initial contract does not preclude a finding that it transacted business in this
612 N.E.2d at 374.
Here, Defendants intentionally and voluntarily entered into a contract with Plaintiff.
Under this Dealership Agreement, Defendants had continuing obligations that connected
them to Ohio. Therefore, the Court concludes that Defendants were “transacting business”
However, the Court finds that Plaintiff has not met the necessary due process
requirements. To comport with due process, an exercise of personal jurisdiction requires
that a defendant “have certain minimum contacts such that the maintenance of the suit
does not offend ‘traditional notions of fair play and substantial justice.’” International Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945). The Sixth Circuit has set forth a three-part
analysis to determine whether jurisdiction accords with due process:
First, the defendant must purposefully avail himself of the privilege of acting
in the forum state or causing a consequence in the forum state. Second, the
cause of action must arise from the defendant's activities there. Finally, the
acts of the defendant or consequences caused by the defendant must have
a substantial enough connection with the forum state to make the exercise
of jurisdiction over the defendant reasonable.
Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000) (quoting Southern Mach.
Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)).
“The ‘purposeful availment’ requirement is satisfied when the defendant's contacts
with the forum state ‘proximately result from actions by the defendant himself that create
a ‘substantial connection’ with the forum State,’ and when the defendant’s conduct and
connection with the forum are such that he ‘should reasonably anticipate being haled into
court there.’ CompuServe, 89 F.3d at 1263 (quoting Burger King Corp. v. Rudzewicz, 471
U.S. 462, 474-75 (1985)).
This Court finds that Defendants’ contacts with Ohio and Defendants’ conduct and
connection with Ohio are indistinguishable from those in Calphalon Corp. v. Rowlette,
wherein the Sixth Circuit found that the defendants did not purposefully avail themselves
of the benefits of the laws of Ohio. 228 F.3d at 722. Calphalon was an Ohio corporation.
Id. at 720. Defendant Rowlette was a Minnesota corporation and did not own any property
in Ohio. Id. The parties entered into a series of agreements by which Rowlette served as
Calphalon’s exclusive manufacturer’s representative in Minnesota, Iowa, North Dakota,
South Dakota and Nebraska. Id. Rowlette communicated with Calphalon through letters,
faxes and telephone calls to Ohio. Rowlette made two visits to Ohio: the first for a
mandatory sales meeting, and the second for a tour of Calphalon’s facilities. The final
agreement between the parties provided that “this Agreement shall be interpreted under
the laws of the State of Ohio.” Id. Through a letter from counsel, Rowlette claimed breach
of contract, and Calphalon filed suit for declaratory judgment. Id. at 721.
The Sixth Circuit noted that “the mere existence of a contract between Rowlette and
an Ohio citizen for seventeen months is insufficient to confer personal jurisdiction over
Rowlette.” Id. at 722. The court explained that the focus should be on the quality of the
parties' relationship, rather than the duration of the relationship. Id. In this vein, the court
noted that Rowlette's obligations under the agreement were to be performed outside of
Ohio and Rowlette was not seeking to exploit a market for Calphalon's products in Ohio.
Id. The court explained that these facts did not support jurisdiction:
In Kerry Steel Inc. v. Paragon Industries, Inc., 106 F.3d 147, 151 (6th Cir.
1997), we held that an out-of-state defendant-buyer did not purposefully avail
itself of the benefits and protections of the forum state's laws because, in
part, no facts connected the subject matter or performance of the contract
at issue to the forum state. Furthermore, we held that any negative
economic effect on the in-state plaintiff-seller did not create a determinative
impact on the state economy, as “ ‘the locus of such a monetary injury is
immaterial, as long as the obligation did not arise from a privilege the
defendant exercised in the forum state.’ ” Id. (quoting LAK, 885 F.2d at
Id. The court also noted that Rowlette’s communications and visits to Ohio resulted not
because Rowlette chose to create continuous and substantial consequences in Ohio, but
because Calphalon chose to be headquartered there. Id. at 723. The court also stated
that “[a]rguably, Rowlette would have served as Calphalon's representative in the
designated states, regardless of Calphalon's base of operation.” The court concluded that
“Rowlette’s contacts were precisely the type of “random,” “fortuitous,” and “attenuated”
contacts that the purposeful availment requirement is meant to prevent from causing
The Calphalon court then noted that the “arising from” requirement under the
second prong “is satisfied when the operative facts of the controversy arise from the
defendant's contacts with the state.” Id. (citing Southern Machine, 401 F.2d at 384). In
addition, because the defendant’s connection with Ohio was not substantial as required
by the third prong, “it is necessary for the plaintiff to demonstrate that the facts at issue
actually occurred in the forum state.” Id. at 724 (citing Southern Machine Co., 401 F.2d
at 381). Here, Defendants’ performance of the terms of the agreement between the
parties occurred in Maryland. Similarly, any use of Plaintiff’s patents, copyrights, and
trademarks also occurred in Maryland, and any facts related to deceptive trade practices,
theft, conversion, or misappropriation of trade secrets would have occurred in Maryland.
Based on the foregoing, the Court concludes that it does not have personal
jurisdiction over Defendants.
Motion to Transfer Venue
Defendants also move to transfer venue to Maryland pursuant to 28 U.S.C. § 1404,
which provides that “[f]or the convenience of the parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any other district court where it might
have been brought.” However, this Court may not transfer under section 1404(a) where
personal jurisdiction over the defendants does not exist. Pittock v. Otis Elevator Co., 8
F.3d 325, 329 (6th Cir. 1993) (citing Martin v. Stokes, 623 F.2d 469, 474 (6th Cir. 1980)).
Instead, 28 U.S.C. § 1406(a) “provides the basis for any transfer made for the purpose of
avoiding an obstacle to adjudication on the merits in the district court where the action was
originally brought.” Martin, 623 F.2d at 474; see also Taylor v. Love, 415 F.2d 1118 (6th
Cir. 1969) (district court has power to transfer complaint to another district even if it did not
have personal jurisdiction), cert. denied, 397 U.S. 1023 (1970). While Defendants brought
their motions to transfer in the alternative in the event the motions to dismiss were denied,
this Court may sua sponte order that a case be transferred, rather than dismissed pursuant
to Section 1406. Thornton v. Walter, 1985 WL 13711, *2 (6th Cir. Sept. 17, 1985) (per
Section 1406(a) provides that a district court with a case “laying venue in the wrong
division or district shall dismiss, or if it be in the interest of justice, transfer such case to any
district or division in which it could have been brought.” The Sixth Circuit has adopted a
broad construction of this provision and explained that “[t]he law in this Circuit, therefore,
is that § 1406(a) provides the basis for any transfer made for the purpose of avoiding an
obstacle to adjudication on the merits in the district court where the action was originally
brought.” Martin v. Stokes, 623 F.2d 469, 474 (6th Cir. 1980).
There is no dispute that this case could have been brought in the United States
District Court for the District of Maryland. Furthermore, this Court finds that it is in the
interest of justice to transfer this case. Therefore, the Court concludes that transfer, as
opposed to dismissal, is the proper course of action.
Based on the foregoing, Defendants Thompson Creek Window Company and Rick
Wuest’s Motion to Dismiss, or in the Alternative, to Transfer Venue (Doc. 5.) is GRANTED
on grounds that this Court lacks personal jurisdiction over Defendants. However, pursuant
to 28 U.S.C. § 1406(a), this matter is hereby TRANSFERRED to United States District
Court for the District of Maryland.
IT IS SO ORDERED.
/s/ Michael R. Barrett
Michael R. Barrett
United States District Judge
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