Bissell Homecare, Inc. v. PRC Industries, Inc.
Filing
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OPINION AND ORDER APPROVING AND ADOPTING REPORT AND RECOMMENDATION 68 ; Defendant's Motion to Dismiss 24 is GRANTED; Plaintiff's Motion for Leave to File Amended Complaint 54 is DENIED; Judgment to issue; signed by Judge Janet T. Neff (Judge Janet T. Neff, clb)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BISSELL HOMECARE, INC.,
Plaintiff,
Case No. 1:13-cv-1182
v
HON. JANET T. NEFF
PRC INDUSTRIES, INC.,
Defendant.
_______________________________/
OPINION AND ORDER
Plaintiff Bissell Homecare, Inc., filed this case against Defendant PRC, Industries, Inc.,
alleging trademark infringement and unfair competition claims related to Defendant’s alleged
unauthorized remanufacturing of Bissell products. Defendant filed a Motion to Dismiss pursuant
to FED. R. CIV. P. 12(b)(2) for Lack of Personal Jurisdiction (Dkt 24). The matter was referred to
the Magistrate Judge, who issued a Report and Recommendation (R & R), recommending that this
Court grant Defendant’s motion. The matter is presently before the Court on Plaintiff’s Objections
to the Report and Recommendation (Dkt 70). Defendant has filed a Response to the Objections (Dkt
71).
I. OBJECTIONS
Plaintiff objects to five aspects of the Report and Recommendation:
(1) The Magistrate Judge’s failure to consider the effect of PRC’s refusal to cooperate in
discovery and repeated attempts to conceal information from BISSELL and the Court;
(2) The Magistrate Judge’s decision to decide PRC’s Motion to Dismiss without first
allowing BISSELL to amend its Complaint;
(3) The Magistrate Judge’s statement (in dicta) that she would have denied BISSELL’s
Motion to Amend, in any event;
(4) The Magistrate Judge’s conclusion that the Court lacked general jurisdiction over PRC;
and
(5) The Magistrate Judge’s conclusion that the Court lacked specific jurisdiction over PRC.
(Obj., Dkt 70 at p. ID# 941).
Plaintiff requests that the Court: (1) deny Defendant’s Motion to Dismiss, and (2) grant
Plaintiff leave to file its Amended Complaint. In the alternative, Plaintiff requests that the Court
defer ruling on Defendant’s Motion to Dismiss, permit Plaintiff to file its Amended Complaint and,
should Defendant still claim this Court lacks personal jurisdiction, allow the parties to address the
issue of personal jurisdiction in light of the new allegations in the Amended Complaint (id.).
In accordance with 28 U.S.C. § 636(b)(1) and FED. R. CIV. P. 72(b)(3), the Court has
performed de novo consideration of those portions of the Report and Recommendation to which
objections have been made.
The Court finds no basis for altering the Magistrate Judge’s
recommended disposition. The Court denies Plaintiff’s objections and requested alternative relief.
A. Discovery
Plaintiff first objects that the Magistrate Judge failed to adequately consider Defendant’s
misrepresentations and refusal to provide complete information about its contacts with Michigan (Pl.
Obj. at p. ID# 947). Plaintiff alleges that Defendant repeatedly told the Court it had no relationships
or dealings with any Michigan companies other than its contract and contact with Plaintiff in 2001,
misleading the Court by omitting any reference to the parties’ Canadian contract negotiations as well
as a contact(s) with Whirlpool, another Michigan company (id.). Moreover, Defendant did little to
investigate the extent of its “contracts” with Michigan, and the investigation it did conduct did not:
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(i) identify products shipped to companies that were incorporated in Michigan; (ii) determine
whether Defendant’s employees had come to Michigan to meet with Michigan companies; (iii)
search for e-mails, telephone calls or other correspondence with Michigan entities, or otherwise
relating to Michigan, or investigate those potential communications; and (iv) provide any
information to Plaintiff about communications with companies which Defendant had not
successfully retained as a client (id. at 947). Plaintiff contends that without this investigation,
Defendant’s representation that it lacks sufficient contacts with Michigan cannot be given any
weight (id. at 948).
Defendant responds that Plaintiff’s discovery complaints are without basis since the
discovery requests did not seek the documents Plaintiff alleges, and specifically excluded documents
in Plaintiff’s possession, such as contracts between the parties (Def. Resp., Dkt 71 at p. ID# 976).
With regard to Defendant’s alleged lack of investigation of documents, Defendant notes that it has
only fourteen clients, and no in-depth investigation was necessary to determine the extent of its
Michigan contacts (id. at 977). And with regard to other investigation, such as employee email
searches related to the Whirlpool contact, such sporadic communications would not give rise to a
finding of jurisdiction (id.).
Plaintiff’s objection is without merit. The Magistrate Judge properly considered Plaintiff’s
discovery complaints in deciding the issue of personal jurisdiction (R & R, Dkt 68 at p. ID# 903-04).
The Magistrate Judge was not persuaded by Plaintiff’s argument that the shortcoming in proofs
regarding Defendant’s Michigan contacts resulted directly from Defendant’s failure to provide any
meaningful jurisdictional discovery (id.). Nothing raised by Plaintiff calls into question the
Magistrate Judge’s conclusion.
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Moreover, the Magistrate Judge personally presided over the discovery proceedings in this
case and was well-aware of the concerns and complaints raised by the parties. She found Plaintiff’s
assertion that discovery would produce additional supporting evidence of significant Michigan
contacts by Defendant “speculative” (id. at 904) (emphasis in original). This Court agrees.
Plaintiff’s objection is denied.
B. Amendment of the Complaint
Plaintiff argues that the Magistrate Judge erred in deciding Defendant’s motion to dismiss
before allowing Plaintiff to amend its complaint (Obj. at p. ID# 949). Plaintiff states that “[t]he
Magistrate Judge informed the parties during the April 15, 2014 hearing that she had, after much
debate, decided to consider the Motion to Dismiss before addressing the Motion to Amend” (id.,
citing 4/15/14 Hrg. Tr., Dkt 69 at p. ID# 911). Plaintiff contends that because the new claims in the
proposed amended complaint directly bear on the issue of personal jurisdiction, the Magistrate Judge
erred by declining to permit the amendment before deciding Plaintiff’s jurisdictional motion (Obj.
at p. ID# 949-500).
Plaintiff’s assertions of error lack merit. Although at the outset of April 15, 2014 hearing,
the Magistrate Judge noted that she would be deciding Defendant’s motion to dismiss and motion
to amend consecutively and independently, Plaintiff was well aware of this intended procedure in
advance of the hearing and never raised any objection, either before or at the hearing. The
Magistrate Judge entered an order on April 11, 2014 (Dkt 62), which stated: “Defendant’s Motion
to Dismiss for Lack of Personal Jurisdiction (Dkt. 24) and Plaintiff’s Motion to Amend Complaint
(Dkt. 54) will be considered separately and consecutively. If the court concludes that it does not
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have personal jurisdiction over the defendant, it appears inappropriate to decide other motions in the
case prior to that determination.”
Nor did Plaintiff raise any concern at the time of filing the motion to amend that it was
properly decided before the motion to dismiss, even though the motion to dismiss was filed more
than two months before Plaintiff’s motion to amend. Plaintiff’s belated procedural objection—after
the Magistrate Judge rendered her substantive ruling against Plaintiff—is unavailing. Plaintiff
effectively waived any procedural objection.
In any event, even if Plaintiff’s procedural objection is not waived, any error was harmless
since the Magistrate Judge considered the merits of Plaintiff’s motion to amend in the alternative,
and, contrary to Plaintiff’s further argument (Obj. at p. ID# 952-54), determined that leave to amend
was properly denied.
The Magistrate Judge stated that she had reviewed the motion to amend and Defendant’s
response (Dkt 63), and having considered all circumstances, she would deny leave to file the
proposed amended complaint (R & R at p. ID# 906-07). As noted by the Magistrate Judge,
“[p]ursuant to FED. R. CIV. P. 15(a)(2), ‘[t]he court should freely give leave [to amend a pleading]
when justice so requires.’ A district court should consider undue delay in filing, lack of notice to
the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous
amendments, undue prejudice to the opposing party, and the futility of amendment” (id. at 907). See
Rice v. Karsch, 154 F. App’x 454, 464 (6th Cir. 2005) (citing Hageman v. Signal L.P. Gas, Inc., 486
F.2d 479, 484 (6th Cir. 1973)). The Magistrate Judge concluded:
Here, the factors of undue delay, undue prejudice and futility all weigh
against leave to amend given that (1) Plaintiff did not seek an amendment until the
motion to dismiss for lack of personal jurisdiction was extensively briefed, and
months after the basis of the amendment was or should have been known to Plaintiff
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based on Defendant’s Answer and filing of the Krantz declaration (Dkts 14, 21); and
(2) the alleged connection between the NDA and the claims in the original complaint
is tenuous.
(R & R at p. ID# 907).
The record fully supports the Magistrate Judge’s conclusions. Defendant filed its Answer
on December 17, 2013 (Dkt 14) and filed the motion to dismiss for lack of jurisdiction, along with
the declaration of Darren Krantz, on January 17, 2014 (Dkts 24-26). Plaintiff did not file the motion
for leave to file an amended complaint (Dkts 54-55) until March 26, 2014—nearly two weeks after
Plaintiff filed its Response to the motion to dismiss on March 14, 2014 (Dkt 51). Plaintiff claimed
that it only learned of the basis for the motion to amend upon taking the deposition of Darren Krantz
(see, e.g., Dkt 55 at p. ID# 655). However, Plaintiff’s assertion is questionable given the related
factual basis of the claims in the original complaint, the parties’ past business dealings, the record
available to Plaintiff, and the parties’ extensive and tenacious litigation of this case during its short
existence. Moreover, the Krantz deposition was taken on February 28, 2014 (Dkt 55-2), nearly a
month before the motion to amend was filed, yet Plaintiff did not seek amendment until a month
after the hearing on the motion to dismiss was noticed and after the motion was nearly fully briefed.
Plaintiff complains that Defendant cited no concrete examples of prejudice, but prejudice should be
evident from the wasted costs, time and resources of briefing the motion to dismiss, which would
be rendered futile by an amended complaint.
This Court finds no error in the Magistrate Judge’s conclusion that Plaintiff’s motion to
amend was properly denied on the basis of undue delay and prejudice, and because any connection
between the NDA and the claims in the original complaint was tenuous.
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C. General Jurisdiction
Plaintiff argues that the Magistrate Judge erred in declining to find general jurisdiction over
Defendant. Plaintiff asserts that Defendant failed to reveal that it has had a continuous presence in
Michigan, both through dealings with Plaintiff and with other companies doing business in Michigan
(Obj. at p. ID# 954). Plaintiff further argues that the Magistrate Judge “erroneously noted that ‘there
is no evidence that [the 2011-2012] negotiations between the parties involved meetings in Michigan
or visits to Michigan by Defendant’” (Obj. at p. ID# 955, citing Dkt 68 at p. ID# 898). Plaintiff
asserts that “during his deposition, Mr. Krantz specifically testified that such meetings occurred in
Michigan” (id., citing Krantz Dep., Dkt 51-4 at 505-07, 510-11).
Plaintiff’s objection is without merit. Plaintiff selects partial excerpts of the Magistrate
Judge’s analysis to support its contention of error. A review of the Report and Recommendation and
the record establishes no error in the Magistrate Judge’s analysis or conclusion that general
jurisdiction is lacking. Contrary to Plaintiff’s assertion, there is no evidence that Defendant has had
a continuous presence in Michigan. Plaintiff’s reference to the Magistrate Judge’s findings is taken
out of context. The Magistrate Judge acknowledged Defendant’s contract with Plaintiff that ended
in 2001, and Defendant’s more recent negotiations with Plaintiff concerning products in Canada,
neither of which supported a finding of general jurisdiction, stating in relevant part:
It is undisputed that the parties had some “business relationship” that ended
in 2001 (see Def. Brf. at p. ID# 213-214). Thereafter, in 2011–2012, the parties
entertained negotiations for a potential agreement concerning remanufacturing of
Plaintiff’s products in Canada. As discussed subsequently in more detail, there is no
evidence that those negotiations involved meetings in Michigan or visits to Michigan
by Defendant. Other than some email and telephone communications, the
2011–2012 contacts between the parties occurred in Canada or at locations outside
Michigan. Defendant’s past, limited negotiations with Plaintiff, and otherwise
tenuous or isolated contact with Michigan, do not establish a basis for general
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jurisdiction. See Houle v. Bert R. Huncilman & Son, Inc., No. 12–10188, 2012 WL
6193959, at *2 (E.D. Mich. Dec. 12, 2012).
(R & R at p. ID# 898, emphasis added).
The Magistrate Judge more fully addressed Plaintiff’s allegations of Defendant’s extensive
contacts in Michigan (id. at 900-03), and properly found the record to the contrary (id. at 901).
Plaintiff points out that the deposition testimony of Krantz that two employees visited Michigan was
later disclaimed because he recollected that the visits did not occur while those individuals were
employed by Defendant but instead while they were employees of a separate company he owned.
However, Plaintiff raises no worthy challenge to this correction of the record.
The Magistrate Judge considered the record in light of the parties’ contentions and properly
concluded that “Defendant’s past, limited negotiations with Plaintiff, and otherwise tenuous or
isolated contact with Michigan, did not establish a basis for general jurisdiction” (R & R at p. ID#
898).
D. Specific Jurisdiction
Plaintiff contends that the Magistrate Judge erred in declining to find specific jurisdiction
over Defendant. Plaintiff argues that the Magistrate Judge recognized and applied the three dueprocess requirements for specific jurisdiction, but incorrectly concluded that they were not satisfied
(Obj. at p. ID# 956). Plaintiff’s argument is without merit.
The Magistrate Judge appropriately and extensively considered the specific jurisdiction
requirements in light of the record. She correctly concluded that Plaintiff failed to meet any of the
three prongs of the due-process test: “purposeful availment,” “arising from” or “reasonableness.”
Plaintiff points to no error in the Magistrate Judge’s analysis, and merely disagrees with the
Magistrate Judge’s conclusions.
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First, with regard to “purposeful availment,” Plaintiff continues to rely on the parties’
negotiations concerning the Canadian remanufacturing agreement, contending that the negotiations
involved numerous e-mails, business documents, and telephone conversations with Bissell
employees in Michigan. Plaintiff’s contentions are generalized and lack record support (see Obj.
at p. ID# 957). But moreover, Plaintiff’s factual contentions and arguments were all raised before
and considered by the Magistrate Judge. The Magistrate Judge properly rejected these arguments
and found that the alleged Michigan contacts with Bissell were the types of “random,” “fortuitous,”
or “attenuated” contacts that preclude a finding of “purposeful availment” (R & R at p. ID# 902,
citing Rice, 154 F. App’x at 462-63; Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 889
(6th Cir. 2002)). The Magistrate Judge also fully considered the alleged additional contacts and
indirect connections with Michigan cited by Plaintiff, including Defendant’s contacts with Amazon,
and correctly found that they offered little support to the showing of purposeful availment (R & R
at p. ID# 902-03).
Plaintiff complains that the Magistrate Judge should not have considered that the Mutual
Nondisclosure Agreement (NDA) was a “fairly standard” agreement because that is irrelevant to
assessing personal jurisdiction (Obj. at p. ID# 958). The Magistrate Judge did not find the NDA
significant in the analysis of purposeful availment given the context in which it was executed, noting
that it “was a fairly standard agreement and merely a vehicle for the exchange of information
necessary to negotiate the Remanufacturing Agreement, which was between Defendant and Bissell
Canada Corporation (R & R at p. ID# 902). This passing notation is of little import in the overall
analysis of purposeful availment.
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Similarly, Plaintiff continues to contend that Defendant’s alleged infringing conduct “arises
from” the parties’ Canadian negotiations, since those negotiations allowed Defendant to obtain the
information necessary to land its account with Amazon (Obj at p. ID# 960). This argument was
raised before the Magistrate Judge, whose reasons for rejecting it were sound (R & R at p. ID# 905).
The Magistrate Judge did not err in finding that the “arising from” prong of the due-process test was
not met.
Finally, Plaintiff disagrees with the Magistrate Judge’s conclusion that it would not be
reasonable to exercise jurisdiction over Defendant (Obj. at p. ID# 961; R & R at p. ID# 906). The
Magistrate Judge considered the relevant factors in deciding “reasonableness,” including “‘the
burden on the defendant, the interest of the forum state, the plaintiff’s interest in obtaining relief,
and the interest in other states in securing the most efficient resolution of controversies.’” See
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1268 (6th Cir. 1996) (citation omitted). Plaintiff again
merely disagrees with the Magistrate Judge’s conclusion, citing Plaintiff’s separately rejected
arguments that Defendant “purposefully availed” itself of doing business in Michigan based on the
Canadian contract negotiations. The Magistrate Judge acknowledged Plaintiff’s and Michigan’s
interests in preventing deceptive products in the market and in enforcing trademarks, but nonetheless
found that “Defendant is a New York corporation with its principal place of business in St. James,
New York, and does not have a ‘substantial enough’ connection with Michigan to make the exercise
of jurisdiction over the Defendant reasonable” (R & R at p. ID# 906). See Southern Machine Co.
v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968).
Plaintiff raises no legitimate objection to the Magistrate Judge’s analysis and conclusion that
specific jurisdiction is lacking over Defendant.
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II. CONCLUSION
Having found Plaintiff’s objections without merit, this Court adopts the Magistrate Judge’s
Report and Recommendation as the Opinion of this Court. Defendant’s motion to dismiss for lack
of personal jurisdiction is properly granted, and Plaintiff’s motion for leave to amend the complaint
is properly denied. A Judgment will be entered consistent with this Opinion and Order. See FED.
R. CIV. P. 58.
Therefore:
IT IS HEREBY ORDERED that the Objections (Dkt 70) are DENIED and the Report and
Recommendation (Dkt 68) is APPROVED and ADOPTED as the Opinion of the Court.
IT IS FURTHER ORDERED that Defendant’s Motion to Dismiss (Dkt 24) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File Amended Complaint
(Dkt 54) is DENIED.
/s/ Janet T. Neff
JANET T. NEFF
United States District Judge
Dated: July ___, 2014
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