Furminator, Inc. v. Brown et al
Filing
63
MEMORANDUM AND ORDER re: 20 IT IS HEREBY ORDERED that the motions of Shaun Koch and Ragaie Wahba to dismiss Plaintiff Furminator, Inc.s amended complaint as to them on the ground that the Court lacks personal jurisdiction over them are DENIED. [Docs. #20, 22] MOTION to Dismiss Case filed by Defendant Shaun Koch, 22 First MOTION to Dismiss for Lack of Jurisdiction filed by Defendant Ragaie Wahba. Signed by Honorable Audrey G. Fleissig on 8/29/11. (JWJ)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
FURMINATOR, INC.,
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Plaintiff,
vs.
RAGAIE WAHBA, et al.,
Defendants.
Case No. 4:10CV01941 AGF
MEMORANDUM AND ORDER
This matter is before the Court on the motions of Shaun Koch and Ragaie Wahba
(Docs. #20, 22) to dismiss Plaintiff Furminator, Inc.’s amended complaint as to them on
the ground that the Court lacks personal jurisdiction over them. For the reasons set forth
below, these motions shall be denied.
BACKGROUND
This case arises from Defendants’ alleged unlawful sale of counterfeit products
using FURminator trademarks and logos, over the Internet. FURminator asserts claims
for federal trademark counterfeiting and infringement, unfair competition, and false
designation of origin, under the Lanham Act (Counts I and II), common law trademark
infringement and unfair competition (Count III), and unfair competition under Missouri
statutory law (Count IV). FURminator seeks injunctive relief to prevent the further sale
and/or distribution of the counterfeit and infringing goods, an accounting of profits, treble
damages and/or statutory damages, and costs and attorneys’ fees.
FURminator is an Indiana corporation with its principal place of business in St.
Louis, Missouri, that designs, manufactures, markets, and sells pet grooming products.
Defendants Ragaie Wahba and Shaun Koch, are residents of New Jersey and North
Carolina, respectively. FURminator asserts in its complaint that this Court has personal
jurisdiction over Wahba and Koch because they sell and offer for sale the
counterfeit/infringing products in question in Missouri by selling them on eBay.com
(Wahba) and Amazon.com (Koch). FURminator further alleges that it has continuously
used the FURminator trademark since at least 2002, that it purchased a counterfeit
FURminator product from each of these Defendants on the above Internet websites, and
that Defendants’ unauthorized use of the FURminator trademark in connection therewith
was knowing and wilful.
Wahba and Koch now argue separately that their activities over the Internet are
insufficient to subject them to the jurisdiction of this Court. Each attests by affidavit,
essentially that he owns no property in Missouri, was never a resident of Missouri, is not
registered to do business in Missouri, never advertised in Missouri newspapers, and has
no agents, employees, bank accounts, or phone listings in Missouri. Wahba attests
additionally that he began selling an allegedly counterfeit FURminator product on
eBay.com in May or June 2010; that he received an email from FURminator on July 2,
2010, that the product may be counterfeit, but his immediate request for additional
information was not answered; and that in September 2010, eBay.com removed an
auction he posted for the product, and he thereafter stopped selling it.
2
In its response to Koch’s motions to dismiss, FURminator identifies another
interactive website, NoMoreFleasPlease.com, which FURminator asserts is owned and
operated by Koch, and through which, FURminator asserts, Koch sold counterfeit
FURminator products. Koch acknowledges in his reply that for purposes of his motion to
dismiss, FURminator “proved that he used online websites like Ebay and Amazon to
generally sell products including FURminator products to Missouri residents.” He
asserts, however, that FURminator has not proven that he sold any counterfeit/infringing
products through NoMoreFleasPlease.com.
DISCUSSION
To defeat a motion to dismiss for lack of personal jurisdiction, “the nonmoving
party needs only make a prima facie showing of jurisdiction.” Miller v. Nippon Carbon
Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008) (citing Dakota Indus., Inc. v. Dakota
Sportswear Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). If personal jurisdiction is
challenged, the plaintiff has the burden of proving facts supporting such jurisdiction.
Viasystems v. EBM-Papst St. Georgen GmbH & Co. KG, 646 F.3d 589, ___ (8th Cir.
2011). “The plaintiff’s prima facie showing must be tested, not by the pleadings alone,
but by the affidavits and exhibits presented with the motions and opposition thereto.”
Miller, 528 F.3d at 1090. Where, as here, “the district court does not hold a hearing and
instead relies on pleadings and affidavits, . . . the court must look at the facts in the light
most favorable to the nonmoving party, and resolve all factual conflicts in favor of that
party.” Pangaea, Inc. v. Flying Burrito, LLC, ___F.3d ___, 2011 WL 3241859, at *1
(8th Cir. Aug. 1, 2011) (quoting another source).
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In a diversity action, a federal court may assume jurisdiction over a nonresident
defendant only to the extent permitted by the long-arm statute of the forum state and by
the Due Process Clause. In Viasystems, the Eighth Circuit suggests that these two
questions should be analyzed separately. Viasystems, 646 F.3d at ___ n.2. Missouri’s
long-arm statute authorizes personal jurisdiction over defendants who, inter alia, commit
a tort within the state. Mo. Rev. Stat. § 506.500.1. “These individual categories are
construed broadly, such that if a defendant commits one of the acts specified in the
long-arm statute, the statute will be interpreted ‘to provide for jurisdiction, within the
specific categories enumerated in the statute, to the full extent permitted by the Due
Process Clause.’” Id. (quoting State ex rel. Metal Serv. Ctr. of Ga., Inc. v. Gaertner, 677
S.W.2d 325, 327 (Mo. banc 1984)). Missouri’s long-arm statute covers extraterritorial
tortious acts that yield consequences in Missouri. Bryant v. Smith Interior Design Group,
Inc., 310 S.W.3d 227, 232 (Mo. 2010). Thus, the Court concludes that Defendants’
alleged acts fall within conduct specified in Missouri’s long-arm statute, see Maritz v.
Cybergold, Inc., 947 F. Supp. 1328, 1331 (E.D. Mo. 1996), and turns to consider whether
asserting personal jurisdiction over Defendants comports with due process.
For the assertion of personal jurisdiction over a nonresident defendant, due process
requires sufficient contacts between the nonresident defendant and the forum state “‘such
that maintenance of the suit does not offend traditional notions of fair play and substantial
justice.’” J. McIntyre Mach. Ltd. v. Nicastro, 131 S. Ct. 2780, 2787 (2011) (quoting Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). “As a general rule, the sovereign’s
exercise of power requires some act by which the defendant ‘purposefully avails itself of
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the privilege of conducting activities within the forum State, thus invoking the benefits
and protections of its laws.’” Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
There are two types of personal jurisdiction – general and specific. General
jurisdiction arises when a defendant’s contacts with the forum state are so “continuous
and systematic” that the defendant may be subject to suit there even for causes of action
distinct from the in-state activities. Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414-15 & n.9 (1984). By contrast, a court may exercise specific
jurisdiction over a nonresident defendant when the defendant has purposely directed its
activities at the forum state, and the litigation results from injuries arising out of, or
relating to, those activities. Id. & n.8; Johnson v. Arden, 614 F.3d 785, 795 (8th Cir.
2010); Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008).
The Eighth Circuit has established a five-factor test to determine whether a
defendant’s contacts with the forum are sufficient to satisfy due process, affording the
first three factors primary importance: (1) the nature and quality of contacts with the
forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the
contacts; (4) the interest of the forum state in providing a forum for its residents; and (5)
convenience of the parties, with the third factor applying only in the specific jurisdiction
context. Steinbuch, 518 F.3d at 586.
When the cause of action involves a tortious act, as in the present case, a plaintiff
also “can obtain specific jurisdiction over a nonresident defendant by employing the
Calder effects test”; this test provides that a defendant’s tortious acts can serve as a
source of personal jurisdiction “where the plaintiff makes a prima facie showing that the
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defendant’s acts (1) were intentional, (2) were uniquely or expressly aimed at the forum
state, and (3) caused harm, the brunt of which was suffered -- and which the defendant
knew was likely to be suffered -- in the forum state.” Johnson, 614 F.3d at 796 (citing
Calder v. Jones, 465 U.S. 783 (1984)); see also J. McIntyre Machinery, Ltd., 131 S. Ct.
at 2787 (“[I]n some cases, as with an intentional tort, the defendant might well fall within
the State’s authority by reason of his attempt to obstruct its laws.”).
In applying the effects test, the economic injury in trademark infringement cases
occurs in the state where the trademark owner has its principal place of business. Dakota
Indus., Inc., 46 F.2d at 1389-89. The Calder effects test does not replace the traditional
five-factor test; rather, it “requires the consideration of additional factors when an
intentional tort is alleged.” Id. at 1391. The Eighth Circuit “construe[s] the Calder
effects test narrowly, and hold[s] that, absent additional contacts, mere effects in the
forum state are insufficient to confer personal jurisdiction.” Johnson, 614 F.3d at 794. A
court “must look at all of the factors in the aggregate and examine the totality of the
circumstances in making a personal-jurisdiction determination.” Id.
Here, the Court first concludes that Wahba’s and Koch’s Internet activities do not
support this Court’s assertion of general personal jurisdiction over them, because their
contacts with Missouri over the Internet cannot be said to have been “systematic and
continuous.” See Johnson, 614 F.3d at 795. However, application of the five relevant
factors set forth above, in combination with the “effects test,” leads the Court to conclude
that due process does not preclude this Court from exercising specific personal
jurisdiction over Wahba and Koch in this case. FURminator has made a prima facie
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showing that Wahba and Koch knew that the products in question that they sold on
eBay.com or Amazon.com were available to Missouri residents, were in fact sold to at
least one Missouri resident (Plaintiff), and more-importantly, were counterfeit, infringing
on a Missouri company’s trademark. See 3M Co. v. Mohan, No. 09-1413 (ADM/FLN),
2010 WL 786519, at *1-3 (D. Minn. March 5, 2010) (holding that the court had specific
personal jurisdiction over a nonresident defendant that used eBay.com and Amazon.com
to sell products which allegedly infringed trademarks and patent held by the resident
plaintiff); Bose Corp. v. Neher, No. 09-11479-PBS, 2010 WL 3814886, at *5-6 (D. Mass.
July 30, 2010) (finding that the court had specific personal jurisdiction in an infringement
case over defendants who allegedly violated a forum company’s trademark by posting
infringing products on eBay.com, even absent proof of specific sales to forum residents);
Zen Design Group, Ltd. v. Clint, No. 08-cv-14309, 2009 WL 4050247, *3 (E.D. Mich.
Nov. 23, 2009) (ruling that accused patent infringer’s offering product for sale on an
eBay internet auction to residents of the forum created personal jurisdiction for
infringement claim); see also Dakota, 946 F.2d at 1391 (finding that specific personal
jurisdiction existed where the plaintiff presented some evidence that the defendants knew
their allegedly trademark-infringing products were being directly shipped to forum state
where the plaintiff had its principal place of business, and there was also evidence that
the defendants had previously communicated with the plaintiff about allegedly infringing
conduct); Anheuser-Busch, Inc. v. City Merch., 176 F. Supp. 2d 951, 959 (E.D. Mo.
2001) (holding that Missouri trademark holder made prima facie showing that alleged
infringer had sufficient contacts with Missouri so that Missouri federal court could exert
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personal jurisdiction over alleged infringer; although alleged infringer asserted that it
conducted no business in Missouri, had not traveled to Missouri, had no purchases made
from Missouri, kept no office in Missouri, held no bank account in Missouri, and had no
target market in Missouri, alleged infringer sold four of the allegedly infringing products
to the plaintiff’s investigators in Missouri).
The situation here is different from that in a case heavily relied on by Defendants,
Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008),1 and similar cases. In Boschetto,
the court held that a California purchaser of a car over eBay.com could not obtain
specific personal jurisdiction over the Wisconsin seller in an action for violation of
California consumer protection laws, breach of contract, and fraud, all in connection with
the sale. The Ninth Circuit based its decision on the fact that the case involved “a
one-time contract for the sale of a good that involved the forum state only because that is
where the purchaser happened to reside,” and that there was no evidence that the
defendant was using eBay.com “as a broader vehicle for commercial activity.”
Boschetto, 539 F.3d at 1019. In trademark infringement cases, the injured party is not the
purchaser of an item who happens to reside in the forum state. Rather, the injured party
is the trademark holder. But more significantly, here there is evidence that Wahba and
Koch were using eBay.com and/or Amazon.com as a broad vehicle for commercial
activity.
1
This case is discussed in Koch’s brief; Whaba, in his brief, adopts Koch’s
arguments.
8
The present case is also different from Johnson v. Arden, in which the Eighth
Circuit affirmed the district court’s conclusion that it did not have personal jurisdiction
over a nonresident defendant. In Johnson, Missouri plaintiffs who owned a Missouri cat
breeding business that owned the trademark “Cozy Kitten Cattery” sued a non-Missouri
defendant under the Lanham Act for advertising her cat breeding business using the
words “Cozy Kittens and Cuddly Cats” on her website. The Eighth Circuit noted as
follows:
Although [Defendant’s website] may be characterized as interactive, there
is no evidence in the record that [Defendant] engaged in any transactions or
exchange of information with a Missouri resident [the website], or that a
Missouri resident ever accessed the website. We decline to confer personal
jurisdiction based on only the possibility that a Missouri resident had
contact with [Defendant] through [Defendant’s website]. Similarly,
[Plaintiffs] have failed to prove that [Defendant’s website] is uniquely or
expressly aimed at Missouri; thus Calder provides no support for their
Lanham Act claim.
Johnson, 614 F.3d at 797-98.
Here, as noted above, there is evidence that Wahba and Koch were using
eBay.com and/or Amazon.com as a broad vehicle for commercial activity. These two
websites are highly interactive, and there is evidence of at least one sale per Defendant to
a purchaser in Missouri, namely, Plaintiff. In fact, as noted above, Koch has admitted he
used these websites “to generally sell products including FURminator products to
Missouri residents.”
Nor is this case like a products liability “stream-of-commerce” case where the
nonresident defendant’s product fortuitously ends up in the forum state where it injures
the plaintiff. Cf. J. McIntyre Mach. Ltd., 131 S. Ct. at 2790-91, 2793 (plurality and
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concurrence rejecting rule that a producer is subject to jurisdiction for a products-liability
action so long as it “knows or reasonably should know that its products are distributed
through a nationwide distribution system that might lead to those products being sold in
any of the fifty states”). Here, the injury could have been sustained in only one state,
namely, Missouri.
In a recent decision in another trademark infringement case in this Court, the
nonresident defendant’s motion to dismiss for lack of personal jurisdiction was granted
because there was no evidence that the Missouri plaintiff was the owner or had any
cognizable interest in the trademark, and thus no evidence that the alleged infringement
would be felt in Missouri; rather the owner of the trademark was the nonresident plaintiff
(the wholly-owned subsidiary of the Missouri plaintiff). Express Scripts, Inc. v. Care
Continuum Alliance, Inc., No. 410CV2235 CDP, 2011 WL 2199967, at *3 (E.D. Mo.
June 11, 2011). Here, to the contrary, it is undisputed that the Missouri plaintiff is the
owner of the trademark.
The case for asserting specific personal jurisdiction over Wahba is made stronger
by virtue of FURminator’s evidence that he sold counterfeit products, available to
Missouri residents, on a website he operated/owned. When considering the sufficiency of
Internet contacts under a specific jurisdiction analysis, the Eighth Circuit has found the
test set out in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa.
1997) “instructive.” Johnson, 614 F.3d at 796. Zippo articulated a “sliding scale” to
measure a website’s contacts with a forum state, explaining that
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“the likelihood that personal jurisdiction can be constitutionally exercised is
directly proportionate to the nature and quality of commercial activity that
an entity conducts over the Internet. . . . At one end of the spectrum are
situations where a defendant clearly does business over the Internet. . . . At
the opposite end are situations where a defendant has simply posted
information on an Internet Web site which is accessible to users in foreign
jurisdictions. . . . The middle ground is occupied by interactive Web sites
where a user can exchange information with the host computer. In these
cases, the exercise of jurisdiction is determined by examining the level of
interactivity and commercial nature of the exchange of information that
occurs on the Web site.
952 F. Supp. at 1124.
Here, FURminator’s evidence with regard to NoMoreFleasPlease.com is a factor
adding to Furminator’s prima facie case of specific personal jurisdiction over Koch. See,
e.g., Stomp, Inc. v. NeatO, LLC, 61 F. Supp. 2d 1074, 1078-81 (C.D. Cal. 1999) (holding
that a Connecticut defendant’s internet website constituted sufficient minimum contacts
with California to warrant exercise of personal jurisdiction there, in suit challenging
validity of patent; substantial portion of website was dedicated to allowing customers to
purchase defendant’s products on-line, including products which incorporated technology
of the patent at issue).
In sum, based on the record before it, the Court concludes that Plaintiff has met its
burden of making a prima facie showing that both Koch and Wahba are subject to the
specific personal jurisdiction of the Court.2
2
The Court rejects Koch’s argument that FURminator, Inc., is not the real party
in interest.
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CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the motions of Shaun Koch and Ragaie Wahba
to dismiss Plaintiff Furminator, Inc.’s amended complaint as to them on the ground that
the Court lacks personal jurisdiction over them are DENIED. [Docs. #20, 22]
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 29th day of August, 2011.
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