Move Merch, LLC v. Amaru/AWA Merchandising, Inc. et al

Filing 52

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that defendants Amaru-Awa Merchandising, Inc. and Amaru Entertainment, Inc.'s motion to dismiss for lack of personal jurisdiction or for improper venue or, in the alternative, motion to transfer for im proper venue or for convenience is GRANTED in part and DENIED as moot in part. The motion is granted to the extent it seeks dismissal for lack of personal jurisdiction, and denied as moot in all other respects. [Doc. 16 ] An Order of Partial Dismissal will accompany this Memorandum and Order. Signed by District Judge Charles A. Shaw on 3/4/15. (KXS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MOVE MERCH, LLC,
Plaintiff,
v.
AMARU/AWA MERCHANDISING,
INC., AMARU ENTERTAINMENT, INC.,
and DECOSTA MARKETING, INC.,
Defendants.

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No. 4:14-CV-878 CAS

MEMORANDUM AND ORDER
This matter is before the Court on defendants Amaru-AWA Merchandising, Inc. and Amaru
Entertainment, Inc.’s (the “Amaru defendants”) motion to dismiss for lack of personal jurisdiction
or for improper venue or, in the alternative, motion to transfer for improper venue or for
convenience. Plaintiff Move Merch, LLC (“plaintiff”) opposes the motion. For the following
reasons, the Amaru defendants’ motion to dismiss for lack of personal jurisdiction will be granted
and its alternative motion to transfer for improper venue or for convenience will be denied as moot.
I.

Background
This case arises out of the licensing and on-line sale of t-shirts and other merchandise

bearing the intellectual property of the late entertainer Tupac Shakur. According to the complaint,
after Mr. Shakur’s death, his mother Afeni Shakur founded defendant Amaru Entertainment, Inc.,
which exclusively owns the intellectual property rights of the late entertainer. Defendant AmaruAWA Merchandising, Inc. is a joint venture between defendant Amaru Entertainment, Inc. and an
individual named Rick Barlowe. Amaru-AWA Merchandising, Inc. obtained an exclusive license

of the late Tupac Shakur’s intellectual property rights from Amaru Entertainment, Inc. for the
purpose of furthering the entertainer’s legacy. (Compl. at ¶¶ 12-14).
Defendant DeCosta Marketing, Inc. (“DeCosta”) is a marketing company. According to the
complaint, the Amaru defendants contracted with defendant DeCosta to develop and maintain a full
social media network to further the legacy of Tupac Shakur, including developing a personalized
website, www.2pac.com (“Tupac website”) and a Facebook page.
Plaintiff Move Merch, LLC is an entertainment merchandising company operating out of
Overland, Missouri that “creates, produces, and distributes high quality merchandise on behalf of
its clients.” (Compl. ¶ 18). On June 1, 2012, plaintiff signed an “Online Sales License Agreement”
(“Online Sales Agreement” or “Agreement”) granting it the exclusive right and license to use
intellectual property of Tupac Shakur to design, manufacture and sell t-shirts, fleece tops, and
headwear online through the Tupac website and the official Tupac Shakur Facebook page. Plaintiff
was recognized as the official online licensee of Tupac Shakur merchandise.
The parties disagree as to which entities were party to the Online Sales Agreement. The
Agreement states:
THIS AGREEMENT is entered . . . by and between Amaru/AWA Merchandising,
c/o DECOSTA Marketing, Inc., a corporation incorporated in the province of
Ontario, Canada, with its principal office located at 2126 Burnhamthrope Rd. W,
Box 98039 Mississauga, ON, L5L 3A0 (“Licensor”) and Move Merch LLC, a
Missouri limited liability company, having its principal office at 1525 Fairview
Industrial, Overland, MO 63132 (“Licensee”).
Compl., Ex. 1.
The Agreement is signed as follows (handwritten portions of signature block are shown here in
italics):

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LICENSOR:

LICENSEE:

Amaru/AWA Merchandising
BY DECOSTA MARKETING INC.

MOVE MERCH LLC

By:

By:

/s/ Jesse DeCosta

/s/ Nick Loftis

Name: JESSE DECOSTA

Name: Nick Loftis

Title: PRESIDENT

Title: President

—PENDING RECEIPT OF
WIRE TRANSFER ON
JUNE 1ST, 2012.
In accordance with the Agreement, plaintiff alleges it paid Amaru-AWA Merchandising, Inc.
a non-refundable advance of $75,000 against its obligation to pay future royalties. The term of the
Agreement was three years, June 1, 2012 through May 31, 2015. As to termination rights, the
Agreement states:
10.

TERMINATION

A.
This Agreement may be terminated by either party upon thirty (30) days
written notice to the other party in the event of a breach of a material provision of
this Agreement by the other party, provided that, during the thirty (30) day period,
the breaching party fails to cure such breach.
Compl., Ex. 1 at 4.
Beginning on June 16, 2012, plaintiff sold Tupac Shakur merchandise through the Tupac
website and the site’s corresponding Facebook page. Plaintiff continued to sell merchandise through
these channels until February 19, 2014. According to the complaint, on February 19, 2014,
defendants terminated the agreement without cause and in violation of the agreement.
On May 7, 2014, plaintiffs filed this complaint in four counts: (1) Breach of Contract by all
defendants; (2) Unjust Enrichment by all defendants; (3) in the alternative to Count I, Tortious

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Interference by defendant Amaru Entertainment, Inc.; and (4) in the alternative to Count II, Tortious
interference by defendant Amaru Entertainment, Inc. In response, the Amaru defendants have filed
the instant motion to dismiss for lack of personal jurisdiction or for improper venue or, in the
alternative, motion to transfer for improper venue or for convenience.
II.

Legal Standard
“If jurisdiction is controverted, the plaintiff has the burden of proving facts supporting

personal jurisdiction. Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). The
plaintiff’s prima facie showing must be tested, not by the pleading alone, but by the affidavits and
exhibits presented with the motions and opposition thereto. Id. (quotation and citation omitted).”
Coen v. Coen, 509 F.3d 900, 904-05 (8th Cir. 2007); see also Miller v. Nippon Carbon Co., Ltd.,
528 F.3d 1087 (8th Cir. 2008). Although the court must view evidence in a light most favorable to
the plaintiff and resolve factual conflicts in plaintiff’s favor, the party seeking to establish the court’s
personal jurisdiciton carries the burden of proof and that burden does not shift to the party
challenging jurisdiction. Fastpath, Inc. v. Arbela Tech. Corp., 760 F.3d 816, 820 (8th Cir. 2014).
III.

Discussion
A.

Missouri’s Long-Arm Statue

“Missouri’s long-arm statute authorizes personal jurisdiction over defendants who, inter alia,
transact business, make a contract, or commit a tort within the state.” Viasystems, Inc. v.
EBM–Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 593 (8th Cir. 2011) (citing Mo. Rev. Stat.
§ 506.500.1). “In adopting the long-arm statute, the Missouri legislature ‘intended to provide for
jurisdiction, within the specific categories enumerated in the statutes [e.g., transacting business or
making a contract within the state,] to the full extent permitted by the due process clause.’” K-V

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Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011) (quoting State ex rel. Metal
Serv. Ctr. of Ga., Inc. v. Gaertner, 677 S.W.2d 325, 327 (Mo. 1984) (en banc)).
In their motion to dismiss, the Amaru defendants argue the Missouri long-arm statute does
not allow for personal jurisdiction because they have not transacted business in the state and have
not entered into a contract in the state. Contrary to the allegations in the complaint, the Amaru
defendants state they did not authorize DeCosta to enter into the Online Sales Agreement on their
behalf; they never granted authority to defendant DeCosta to act as their agent in Missouri or
otherwise; they did not approve of the Agreement; and they never granted plaintiff any rights at all.
The Amaru defendants specifically deny delegating any authority to DeCosta to act as their agent
and to enter into the Online Sales Agreement with plaintiff. These facts are wholly supported by
the declarations submitted by Afeni Shakur, the mother of Tupac Shakur and the President and sole
shareholder of defendant Amaru Entertainment, Inc., and Rick Barlowe, the President of defendant
Amaru-AWA Merchandising, Inc. (See Docs. 19 and 21).
To further remove any doubt that DeCosta had authority to act as the Amaru defendants’
agent to enter into the Online Sales Agreement, the Amaru defendants have submitted as evidence
the marketing agreement between Amaru-AWA Merchandising, Inc. and DeCosta Marketing, Inc.
(the “Marketing Agreement”) (Supp. Barlowe Decl., Doc. 33, Ex. 1). The Marketing Agreement
gives DeCosta the right to develop a “full social network and online media strategy” and a royalty
free license to use the intellectual property owned by Amaru on the websites. (Id. at ¶¶ 1-2). It also
includes a provision for DeCosta to retain as compensation a portion of “all merchandise sales.” (Id.
at ¶ 4). But the agreement does not provide for DeCosta to act as the Amaru defendants’ agent in
licensing their intellectual property rights to a third-party vendor of Tupac Shakur merchandise. The

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Marketing Agreement does not provide actual authority for DeCosta to enter into the Online Sales
Agreement.
Plaintiff focuses its personal jurisdiction argument on an agency theory, stating that the Court
may exercise personal jurisdiction over the Amaru defendants through the act of their agent,
DeCosta. For support, plaintiff relies on the allegations in its complaint, stating: DeCosta engaged
plaintiff to enter into the Online Sales Agreement; DeCosta represented itself as a partner and agent
of the Amaru defendants; the Online Sales Agreement states that it is between “Amaru-AWA
Merchandising as a Licensor and Move Merch as a Licensee”; and the Online Sales Agreement
states that Amaru-AWA Merchandising, Inc. owns or controls all intellectual property rights relating
to Tupac Shakur. Also, plaintiff submits the affidavit of its President, Nick Loftis, who states that
DeCosta represented itself as having authority to contract on behalf of the Amaru defendants and
having authority to authorize the production of Tupac Shakur licensed merchandise. (Loftis Decl.
at ¶¶ 8-9). Plaintiff states that it was given access to the exclusive intellectual property of the Amaru
defendants to design and market the Tupac merchandise, and that it sold the Tupac merchandise in
compliance with the Agreement on websites owned and controlled by the Amaru defendants for
nearly two years. Plaintiff mailed samples of its merchandise to the Amaru defendants via Rick
Barlowe. (Pl.’s Opp’n 6-8).1 “[N]ot only was DeCosta an agent and partner of Amaru-AWA acting
with actual and apparent authority to contract with Move Merch, the Amaru defendants made their
own intellectual property and websites available to Move Merch for the purpose of marketing and
selling Licensed Products.” Id. at 8.

1

Mr. Barlowe responds in his supplemental declaration: “Neither I nor anyone from AA
Merchandising ever communicated with Nick Loftis, or any representative of Move Merch, for
approvals of merchandise or otherwise.” See Supp. Barlowe Decl. at ¶ 10.
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Plaintiff’s argument relies on the apparent authority of DeCosta to enter into the Online Sales
Agreement on behalf of its alleged principal, Amaru-AWA Merchandising, Inc. The Court has no
doubt that DeCosta represented itself as having the authority to grant plaintiff the exclusive right and
license to sell Tupac Shakur merchandise through its websites. The Court need look no further than
the Agreement. The first paragraph specifically states the agreement is entered into by “AmaruAWA Merchandising, c/o DECOSTA Marketing, Inc., a corporation incorporated in the province
of Ontario Canada.” (Compl., Ex. 1 at 1). It is signed by the President of DeCosta Marketing, Jesse
DeCosta, under the signature block heading that reads: “LICENSOR: Amaru-AWA Merchandising
BY DECOSTA MARKETING INC.” (Id. at 7).
While there is significant evidence that defendant DeCosta represented itself as an agent of
the Amaru defendants, this fact is not necessarily relevant to the analysis of the Court’s personal
jurisdiction over the Amaru defendants. Under Missouri law apparent agency can only be found
based on the actions of the principal. “Although a court may exercise personal jurisdiction over a
defendant through the acts of his agent, ‘[a] party who relies upon the authority of an agent has the
burden of proof regarding both the fact of the agency relationship and the scope of the agent’s
authority.’ Karr-Bick Kitchens & Bath, Inc. v. Gemini Coatings, Inc., 932 S.W.2d 877, 879 (Mo.
Ct. App. 1996). We also note that express authority and apparent authority arise from the acts of
the principal, not the alleged agent. United Missouri Bank v. Beard, 877 S.W.2d 237, 240-41 (Mo.
Ct. App. 1994).” Romak USA, Inc., v. Rich, 384 F.3d 979, 985 (8th Cir. 2004). “Put another way,
it is authority which the principal, by his acts or representations, has led third persons to believe has
been conferred upon the agent.” United Missouri Bank, 877 S.W.2d at 240.

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The Court finds that plaintiff has not met its burden of proving the Amaru defendants have
transacted business, committed a tortious act, or entered into a contract that would submit them to
the jurisdiction of this Court under the Missouri long-arm statute. It bears repeating that the
undisputed evidence submitted by the Amaru defendants both by declarations and by the Marketing
Agreement with DeCosta shows that the Amaru defendants never authorized DeCosta to enter into
any third-party contracts and were not aware that DeCosta had entered into any agreements on
behalf of the Amaru defendants. (Supp. Barlowe Decl. at ¶ 8). Nor has plaintiff presented evidence
of any acts of the Amaru defendants that caused plaintiff to reasonably believe DeCosta had
authority to enter into the Online Sales Agreement.2 Because plaintiff has not met its burden of
proof regarding the fact and scope of the agency relationship between defendant DeCosta and the
Amaru defendants, the Court cannot find any acts by which it could exercise personal jurisdiction
over the Amaru defendants pursuant to Missouri’s long-arm statute.
B.

Minimum Contacts Required for Due Process

Plaintiff also has not shown the Amaru defendants had sufficient minimum contacts with this
forum that the exercise of personal jurisdiction would comport with federal due process. To
evaluate the sufficiency of a defendant’s contacts, the Court considers five factors: (1) the nature
and quality of the contacts with the forum state; (2) the quantity of the contacts with the forum state;
(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) the convenience of the parties. Bell Paper Box, Inc. v. Trans

2

Plaintiff attaches to the Nick Loftis declaration a bank statement of defendant DeCosta
showing a transfer of $10,029.14 to “AMARU AWA MERCH” on June 8, 2012. Although plaintiff
claims this money is a portion of the $75,000 advance plaintiff paid pursuant to the Online Sales
Agreement, there is no evidence from which the Court can make this determination.
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Western Polymers, 53 F.3d 920, 922 (8th Cir. 1995). Of these factors, the first three are of “primary
importance” while the last two are “secondary factors.”

Digi-Tel Holdings Inc. v. Proteq

Telecomm., 89 F.3d 519, 523 (8th Cir. 1996).
In its surresponse, plaintiff argues the Amaru defendants are subject to general personal
jurisdiction based on their advertising and promotional activities in Missouri and the business
conducted through their interactive website. “Amaru Defendants maintain interactive websites and
social media pages through which they . . . market the memory of Tupac Shakur and also allow for
the purchase of Tupac Shakur licensed products.” (Pl. Surresp. at 3). Plaintiff argues this point in
a conclusory fashion without providing any evidence that any Missouri resident has purchased any
Tupac Shakur licensed products or even visited the website. See e.g., Pangaea, Inc. v. Flying Burrito
LLC, 647 F.3d 741, 747 (8th Cir. 2011) (declining to exercise personal jurisdiction where no
evidence that forum resident ever accessed the website in question). Moreover, the allegations
pertain to activities of DeCosta, the marketing company the Amaru defendants contracted with to
“develop and maintain a full social network and online media strategy . . . includ[ing] creating new
content for Tupac Shakur sites including Facebook, Twitter and 2PAC.com.”

(Marketing

Agreement, Defs. Surreply, Ex. 1 at 1).
Through the affidavits of Afeni Shakur and Rick Barlowe, the Amaru defendants state that
they are not citizens of Missouri; neither they nor any employee have entered into Missouri to
conduct business or otherwise; they have no business in Missouri; no agent for service of process
in Missouri; and no property, employees, offices, telephone numbers, or bank accounts in Missouri.
(Shakur Aff. at ¶¶ 4-12; Barlowe Aff. at ¶¶ 8-15). Plaintiff has not shown the Amaru defendants
have purposefully availed themselves of the privilege of conducting activities in Missouri.

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Based on the foregoing, the Court finds that exercising personal jurisdiction over the Amaru
defendants in Missouri would offend traditional notions of fair play and substantial justice. See Bell
Paper, 53 F.3d at 921. The Court will grant the Amaru defendants’ motion to dismiss based on lack
of personal jurisdiction.
In the alternative, the Amaru defendants assert that venue is improper and move the Court,
if it does not grant the motion to dismiss, to transfer this action under 28 U.S.C. § 1406(a) to the
United States District Court for the Central District of California. Because the Court grants the
Amaru defendants’ motion to dismiss on personal jurisdiction grounds, its motion for transfer is
moot.
Accordingly,
IT IS HEREBY ORDERED that defendants Amaru-Awa Merchandising, Inc. and Amaru
Entertainment, Inc.’s motion to dismiss for lack of personal jurisdiction or for improper venue or,
in the alternative, motion to transfer for improper venue or for convenience is GRANTED in part
and DENIED as moot in part. The motion is granted to the extent it seeks dismissal for lack of
personal jurisdiction, and denied as moot in all other respects. [Doc. 16]
An Order of Partial Dismissal will accompany this Memorandum and Order.

__________________________________
CHARLES A. SHAW
UNITED STATES DISTRICT JUDGE

Dated this 4th day of March, 2015.

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