Sit N' Stay Pet Services, Inc. v. Hoffman
DECISION AND ORDER ADOPTING 12 REPORT AND RECOMMENDATION, this Court denies defendant's 6 motion to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1). FURTHER, plaintiff's 18 request for Rule 11 sanctions is denied. FURTHER, this case is referred back to Judge McCarthy for further proceedings consistent with the referral order of March 1, 2017. SO ORDERED. Signed by Hon. Lawrence J. Vilardo on 9/5/2017. (CMD)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
SIT N’ STAY PET SERVICES, INC.,
DECISION AND ORDER
CARRIE HOFFMAN D/B/A KELSEY’S
SIT AND STAY D/B/A KELSEY’S SIT,
PLAY, & STAY,
The plaintiff, Sit N’ Stay Pet Services, Inc. (“Sit N’ Stay”), has sued Carrie
Hoffman doing business as Kelsey’s Sit and Stay and Kelsey’s Sit, Play, & Stay. Based
on the similarity of the three business names, Sit N’ Stay has alleged that Kelsey’s Sit
and Stay and Kelsey’s Sit, Play, & Stay engaged in unfair competition and false
designation of origin in violation of the Lanham Act (the “Act”), 15 U.S.C. Section
1125(a); trademark infringement and unfair competition in violation of New York
common law; and deceptive trade practices in violation of New York General Business
Law Section 349. Before this Court is Magistrate Judge Jeremiah J. McCarthy’s Report
and Recommendation on the defendant’s motion to dismiss for lack of subject-matter
jurisdiction and the plaintiff’s request for Rule 11 sanctions. For the following reasons,
this Court adopts Judge McCarthy’s recommendation and denies both the motion to
dismiss and the request for Rule 11 sanctions.
Kim Sauer, the owner and operator of Sit N’ Stay, has sold pet-sitting and dogtraining services since at least June 4, 2002, under the name “Sit N’ Stay Pet Services.”
Docket Item 1 ¶¶ 12, 28. Sauer has maintained a website advertising her services
since at least May 30, 2003, at the domain name www.sitnstaypetservices.com, with
other domain names directed to this website. Id. ¶ 34, 34.1-.4. She incorporated Sit N’
Stay Pet Services, Inc., on July 3, 2008. Id. ¶¶ 11, 28, 39.
According to the complaint, defendant Hoffman has been advertising and selling
pet-sitting services under the name “Kelsey’s Sit and Stay” since January 1, 2015. Id. ¶
52. In December 2016, Hoffman began doing business also as “Kelsey’s Sit, Play, &
Stay,” and at the time the complaint was filed she did business under both names.
Id. ¶ 55. She has advertised and sold services at the domain name
www.facebook.com/KelseysSitandStay since April 17, 2015; at
www.KelseysSitandStay.com since January 1, 2016; and at
www.facebook.com/KelseysSitPlayandStay since sometime after December 5, 2016.
Id. ¶ 53-55.
In lieu of answering the complaint, Hoffman moved to dismiss for lack of subjectmatter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Docket Item 6. The
case was referred to Judge McCarthy on March 1, 2017. Docket Item 7. The plaintiff
The facts are taken from the complaint as they must be on this motion to
dismiss. Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011).
then filed a memorandum opposing the motion to dismiss, which included a request for
sanctions under Federal Rule of Civil Procedure 11. Docket Item 9. On April 17, 2017,
Judge McCarthy issued his Report and Recommendation, in which he recommended
that both the defendant’s motion to dismiss and the plaintiff’s request for Rule 11
sanctions should be denied. Docket Item 12. The defendant objected, and, after the
objection was fully briefed, this Court heard oral argument on June 16, 2017. Docket
Items 13, 15-17.
REVIEW OF REPORT AND RECOMMENDATION
This Court “must determine de novo any part of the magistrate judge’s
disposition that has been properly objected to” and “may accept, reject, or modify the
recommended disposition.” Fed. R. Civ. P. 72(b)(3); see 28 U.S.C. § 636(b)(1).
PROCEDURAL PRINCIPLES FOR FEDERAL-QUESTION JURISDICTION
Hoffman has moved to dismiss the complaint for lack of federal-question
jurisdiction. She argues that Sit N’ Stay has not met its burden of establishing
jurisdiction because it has failed to plead claims that arise out of federal law or raise a
substantial federal question. Docket Item 6-1 at 12.
District courts have jurisdiction to hear all cases “arising under the Constitution,
laws or treaties of the United States.” 28 U.S.C. § 1331. A suit arises under the federal
law that creates the cause of action only if the complaint, on its face, pleads such a
cause of action. Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152 (1908);
American Well Works Co. v. Layne Bowler Co., 241 U.S. 257, 260 (1916). Therefore,
“[a] plaintiff properly invokes § 1331 jurisdiction when she pleads a colorable claim
‘arising under’ the Federal Constitution or laws.” Arbaugh v. Y & H Corp., 546 U.S. 500,
501 (2006) (citation omitted).
A party may bring a motion challenging the federal court’s subject-matter
jurisdiction at any time. Fed. R. Civ. P. 12(h)(3). Following such a motion, “[a] case is
properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the
district court lacks the statutory or constitutional power to adjudicate it.” Makarova v.
United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed. R. Civ. P. 12(b)(1)).
“The party asserting federal jurisdiction bears the burden of proving that the case
is properly in federal court.” Gilman v. BHS Sec., Inc., 104 F.3d 1418, 1421 (2d Cir.
1997) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).
Once a plaintiff asserts a federal question, however, the plaintiff need only show that
she has alleged a non-frivolous claim under federal law to establish subject-matter
jurisdiction. Shapiro v. McManus, __ U.S. __, 136 S. Ct. 450, 455 (2015) (citing Bell v.
Hood, 327 U.S. 678, 682-83 (1946)). “Absent such frivolity, ‘the failure to state a proper
cause of action calls for a judgment on the merits and not for a dismissal for want of
jurisdiction.’” Id. at 456 (quoting Bell, 327 U.S. at 682). 2 Thus, there is a “very low
As highlighted by the Supreme Court in Arbaugh, courts should be cautious not
to obscure this distinction:
Judicial opinions . . .“often obscure the issue by stating that the court is
dismissing ‘for lack of jurisdiction’ when some threshold fact has not been
established, without explicitly considering whether the dismissal should be
for lack of subject matter jurisdiction or for failure to state a claim.”
546 U.S. at 511 (quoting Da Silva v. Kinsho Int’l Corp., 229 F.3d 358, 361 (2d Cir.
2000). The Supreme Court describes such decisions as “‘drive-by jurisdictional rulings’
that should be accorded ‘no precedential effect’ on the question whether the federal
threshold required to support federal-question jurisdiction.” Gallego v. Northland Group
Inc., 814 F.3d 123, 128 (2d Cir. 2016).
“When the Rule 12(b)(1) motion is facial, i.e., based solely on the allegations of
the complaint . . . the plaintiff has no evidentiary burden.” Carter v. HealthPort Techs.,
LLC, 822 F.3d 47, 57 (2d Cir. 2016). Under those circumstances, a court draws all facts
from the complaint, “which [it] assume[s] to be true unless contradicted by more specific
allegations or documentary evidence.” Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671
F.3d 140, 145 (2d Cir. 2011). A defendant is permitted, however, “to make a fact-based
Rule 12(b)(1) motion, proffering evidence beyond the [p]leading.” Carter, 822 F.3d at
FEDERAL-QUESTION JURISDICTION UNDER THE LANHAM ACT
First, this Court finds that, on its face, the complaint states a claim for relief under
federal law and that Sit N’ Stay’s claim therefore “arises under” federal law.
In the complaint, Sit N’ Stay alleges that Hoffman engaged in unfair competition
and false designations of origins—violations of the Lanham Act—that entitle the plaintiff
to relief. Docket Item 1 ¶ 61-120. Thus, the complaint includes a statement for relief
arising from the federal law that creates the cause of action. See Mottley, 211 U.S. at
152; American Well Works Co., 241 U.S. at 260.
Sit N’ Stay argues that these allegations give this Court subject-matter
jurisdiction under three provisions: (1) 15 U.S.C. Section 1121 (granting district courts
original jurisdiction over Lanham Act claims); (2) 28 U.S.C. Section 1331 (granting
court had authority to adjudicate the claim.” Id. (quoting Steel Co. v. Citizens for Better
Environment, 523 U.S. 83, 91 (1998)).
district courts original jurisdiction over federal questions); and 28 U.S.C. Section 1338
(granting district courts original jurisdiction over any civil action asserting a claim of
unfair competition when accompanying a substantial and related claim under trademark
laws). Docket Item 1 ¶5.
But Hoffman says that Sit N’ Stay is missing an element necessary for subjectmatter jurisdiction. Specifically, she argues that Sit N’ Stay has failed to allege that she
had “substantial effects on interstate commerce” and therefore failed to satisfy the “in
commerce” element of the Lanham Act. 3 Docket Item 6-1 at 6-9. Hoffman also argues
that because Sit N’ Stay’s website advertises that it serves “most of Erie County, and
some of Niagara County,” it cannot also claim to be “in commerce.” 4 Docket Item 10
In response, Sit N’ Stay argues that it is not required to establish any activity “in
commerce” for the sake of establishing jurisdiction because “in commerce” is an
element of the cause of action under 15 U.S.C. Section 1125(a), not a jurisdictional
requirement under 15 U.S.C. Section 1121(a). Docket Item 9 at 10-11. Sit N’ Stay also
argues that even if “in commerce” were a jurisdictional requirement, it has asserted both
its own activity in interstate and international commerce and the defendant’s
“In commerce” refers to interstate and foreign commerce. See N.L.R.B. v.
Jones & Laughlin Steel Corp., 301 U.S. 1, 31, 57 S. Ct. 615, 621 (1937) (finding that the
phrase “affecting commerce,” defined by Congress as “in commerce,” unquestionably
refers to interstate and foreign commerce.)
The defendant’s argument that a company serving “most of Erie County, and
some of Niagara County” necessarily cannot be in interstate or international commerce
is a non sequitur based on a logical fallacy. The fact that a company serves Erie and
Niagara Counties does not mean it does not also serve customers from outside those
locales, as might have been the case if the plaintiff advertised that it served “only Erie
and Niagara Counties.”
interference with that activity, as well as the defendant’s own activity in interstate and
international commerce. Id. at 5; see Docket Item 1 ¶¶ 3, 53-57.
This Court agrees that “in commerce” is not a jurisdictional element of the
Lanham Act. Sit N’ Stay, therefore, has no burden to allege that it or Hoffman are “in
commerce” to establish subject-matter jurisdiction.
“In Commerce” Is Not a Jurisdictional Element of the Lanham Act.
When deciding federal-question jurisdiction, courts should distinguish facts—or,
in this instance, allegations—that determine subject-matter jurisdiction from those that
are elements of a claim for relief. Arbaugh, 546 U.S. at 503. Relevant to this Court’s
analysis are two provisions of the Lanham Act: 15 U.S.C. Section 1121(a), 5 which
grants jurisdiction to federal district courts; and 15 U.S.C. Section 1125(a), 6 which
outlines the elements needed to state a claim under the Act. Recent case law suggests
that “in commerce” is an element of the cause of action under 15 U.S.C. Section
1125(a), not an element required to establish federal subject-matter jurisdiction under
In Arbaugh v. Y & H Corp., the Supreme Court distinguished between
jurisdictional elements and cause-of-action elements. Arbaugh concerned a Title VII
15 U.S.C. Section 1121 in relevant part provides:
The district and territorial courts of the United States shall have original
jurisdiction . . . of all actions arising under this chapter, without regard to the
amount in controversy or to diversity or lack of diversity . . . .
15. U.S.C. Section 1125 provides:
Any person who, on or in connection with any goods or services . . . uses in
commerce any word, term, [or] name, . . . which is likely to cause confusion
. . . or to deceive as to the affiliation . . . of such person with another person
. . . shall be liable in a civil action by any person who believes that he or
she is or is likely to be damaged by such act.
claim that was dismissed for lack of federal-question jurisdiction. 546 U.S. at 515-16.
The district court had dismissed the claim because the defendant employer had fewer
than 15 employees—a requirement under Title VII. Id. at 504. Arbaugh therefore
presented a discrete question: Is Title VII’s requirement that the defendant have at least
15 employees a jurisdictional prerequisite? Id. at 513.
In answering this question, the Supreme Court looked to the statute’s language
to determine Congressional intent. Id. at 515. Because Title VII’s 15-employee
requirement appeared in a provision separate from the jurisdictional provision, and
because the employee-numerosity provision did not use jurisdictional language or refer
to the jurisdiction of district courts, the Court did not read the 15-employee requirement
into the jurisdictional provision. Id. at 515. Thus, the Supreme Court established a
bright line: “when Congress does not rank a statutory limitation on coverage as
jurisdictional, courts should treat the restriction as nonjurisdictional in character.” Id. at
The Ninth Circuit recently applied this bright-line rule when it held that “in
commerce” was not a jurisdictional requirement of the Lanham Act. La Quinta
Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 872 (9th Cir. 2014). In La
Quinta, a Mexican hotel chain challenged federal-question jurisdiction by claiming that it
was not “in commerce” because it had sent only two letters of intent to open hotel
branches in the United States. Id. But the Ninth Circuit disagreed: “[N]othing suggests
that Congress intended that ‘use in commerce’ be interpreted as a jurisdictional
requirement.” Id. at 873 (citing Arbaugh, 546 U.S. at 515-16). More recently, the Ninth
Circuit cited both Arbaugh and La Quinta when it held that the Lanham Act’s “use in
commerce” requirement was an element of the cause of action, and not a jurisdictional
element, in a trademark infringement action against a ukulele manufacturer. Gibson
Brands, Inc. v. Viacom Intern., Inc., 640 F. App’x 677, 678-79 (9th Cir. 2016).
Section 1121, the jurisdictional section of the Lanham Act, does not include the
“in commerce” language. See 15 U.S.C. § 1121. Rather, “in commerce” is found only
in Section 1125, which provides the elements for a viable claim. See 15 U.S.C. § 1125.
Therefore, the Ninth Circuit’s textual analysis, as instructed by Arbaugh, makes
resolving the issue here quite simple: Because “in commerce” is not included in the
jurisdictional provision of the Lanham Act, it is an element of the cause of action, not an
element required to establish jurisdiction. See Arbaugh, 546 U.S. at 515-16.
Therefore Hoffman’s allegations that neither Sit N’ Stay nor her own business are
“in commerce” do not impact subject-matter jurisdiction. 7
But even if Sit N’ Stay were required to allege that both it and Hoffman are “in
commerce” to establish federal-question jurisdiction, it has made these allegations.
First, Sit N’ Stay has alleged specific facts supporting its own participation in
interstate and foreign commerce. For example, people travel across state lines to buy
and receive its services, Docket Item 1 ¶ 3; people can purchase, and have purchased,
gift cards for Sit N’ Stay’s services on the internet, id.; Sit N’ Stay employees travel in
interstate commerce to provide services, id. ¶ 63; people purchase Sit N’ Stay’s
instructional courses in states and nations different from where the course is taught, id.
¶ 65; and Sit N’ Stay advertises its services in interstate commerce, id. ¶ 66.
With respect to the defendant’s participation “in commerce,” Sit N’ Stay alleges
that Hoffman maintains a website and a Facebook page with the words “sit” and “stay.”
Id. ¶¶ 53-54. In response, Hoffman argues that “[m]ere use of a particular world or term
on an internet site is not ‘use in commerce’ for purposes of the Lanham Act.” Docket
Item 10 at 3. But case law instructs that internet activity can place an individual “in
commerce.” And that is especially so when the internet activity is alleged to interfere
with the interstate and foreign commerce of another entity.
In fact, the case law suggests that maintaining a website, without more, can
suffice to establish a defendant’s activity “in commerce.” See, e.g., United States v.
Sutcliffe, 505 F.3d 944, 952 (9th Cir. 2007). And one district court has noted that
Sit N’ Stay’s Allegations That Establish Subject-Matter Jurisdiction
Are Not Frivolous.
Because Sit N’ Stay’s allegations raise a federal question, those allegations must
simply not be frivolous to survive a 12(b)(1) motion. See Gallego, 814 F.3d at 126
(quoting Shapiro, 136 S. Ct. at 455). And those allegations easily meet that generous
standard—that is, they are not “obviously without merit,” “essentially fictitious,” or
“wholly insubstantial.” See Shapiro, 136 S. Ct. at 456.
Indeed, Sit N’ Stay fleshes out its claim in considerable detail. It alleges that it
has accumulated trademark rights to the use of “sit” and “stay” and has asserted those
rights prior to this lawsuit. Docket Item 1 ¶¶ 48-49; see generally id. ¶¶ 27-51. It
alleges that two pet-service companies’ using “sit” and “stay” in their names is likely to
cause customer confusion. Id. ¶¶ 116, 116.1-.4. It alleges that its business involves
interstate commerce and that the defendant has interfered with that business by
advertising and selling pet services under the names “Kelsey’s Sit and Stay” and
“[b]ecause the internet is an ‘instrumentality of interstate commerce,’ courts have
repeatedly held that the unauthorized use of a trademark on the internet satisfies the ‘in
commerce’ requirement [of the Lanham Act].” AvePoint, Inc. v. Power Tools, Inc., 981
F. Supp. 2d 496, 512 (W.D. Va. 2013) (citing Utah Lighthouse Ministry v. Found. for
Apologetic Info. and Research, 527 F.3d 1045, 1054 (10th Cir.2008)).
Likewise, the effect of the defendant’s websites on Sit N’ Stay’s interstate and
international commerce activities also places Hoffman “in commerce.” The Supreme
Court has made clear that the Lanham Act “confers broad jurisdictional powers upon the
courts of the United States.” Steele v. Bulova Watch Co., 344 U.S. 280, 283 (1952). In
that vein, a judge in the Southern District of New York has held that if a defendant’s
activities have an effect on the plaintiff’s interstate commerce activities, that is enough
to place the defendant within reach of the Lanham Act. Planned Parenthood Fed’n of
America v. Bucci, No. 97 CIV. 0629 (KMW), 1997 WL 133313 at *3 (S.D.N.Y., Mar. 24,
1997), aff’d 152 F.3d 920 (2d Cir. 1998), cert. denied, 525 U.S. 834 (1998). Because
Sit N’ Stay has alleged that Hoffman’s presence on the internet has adversely affected
its activities “in commerce,” Sit N’ Stay has successfully alleged that Hoffman is also “in
“Kelsey’s Sit, Play, & Stay” and using website domains that include such names.
Id. ¶ 52-55. In other words, Sit N’ Stay has detailed how the defendant advertised and
used the internet in ways that allegedly interfered with Sit N’ Stay’s interstate and
On their face, these allegations state a non-frivolous claim for relief. See Amidax
Trading Grp. 671 F.3d at 145-46. In her 12(b)(1) motion, Hoffman had the opportunity
to demonstrate that the plaintiff’s claims are “‘essentially fictitious,’ ‘wholly insubstantial,’
‘obviously frivolous,’ [or] ‘obviously without merit.’” See Shapiro, 136 S. Ct. at 456. But
Hoffman has not offered documentary evidence or other proof to show that Sit N’ Stay’s
allegations are “essentially fictitious” or “wholly insubstantial.” 8 See Amidax Trading
Grp. 671 F.3d at 145; Carter, 822 F.3d at 56. And for that reason, this Court has
In his Report and Recommendation, Judge McCarthy stated that he would allow
Hoffman to convert her 12(b)(1) motion into a 12(b)(6) motion but would first allow Sit N’
Stay to amend its complaint. Docket Item 12 at 3. This Court agrees with that plan.
Hoffman argues in her objections to the Report and Recommendation that
Judge McCarthy “improperly placed the burden on Defendant to show the lack of
subject matter jurisdiction.” Docket Item 13 at 7. Hoffman has confused Sit N’ Stay’s
burden of pleading with her opportunity to contradict or undermine Sit N’ Stay’s
allegations establishing subject-matter jurisdiction. Sit N’ Stay had the burden of
establishing jurisdiction, which it did by alleging on the face of the complaint a claim for
relief based on federal law. Hoffman then had the opportunity to show that the claim for
relief was “wholly insubstantial and frivolous” and assert lack of subject-matter
jurisdiction on the face of the complaint. See Shapiro, 136 S. Ct. at 456. So Judge
McCarthy did not shift the burden when he addressed whether the defendant had
shown the plaintiff’s claim to be fictitious, frivolous, or meritless. See Docket Item 12
RULE 11 SANCTIONS
This Court agrees with Judge McCarthy that because Sit N’ Stay (1) did not
make its request for sanctions “separately from any other motion,” as required by Rule
11(c)(2), and (2) did not allege that it complied with the “safe harbor” requirements of
Rule 11, its request for sanctions must be denied.
For the reasons stated above and in the Report and Recommendation, this Court
DENIES the defendant’s motion to dismiss for lack of subject-matter jurisdiction under
Rule 12(b)(1) and DENIES the plaintiff’s request for Rule 11 sanctions. The case is
referred back to Judge McCarthy for further proceedings consistent with the referral
order of March 1, 2017.
September 5, 2017
Buffalo, New York
s/Lawrence J. Vilardo
Lawrence J. Vilardo
United States District Judge
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