Zoya Company et al v. NIOS, Inc.
Filing
21
Memorandum Opinion granting defendant's Motion to dismiss for lack of jurisdiction. (Related Doc # 11 ). Moreover, because this Court finds that it lacks personal jurisdiction over Defendant, there is no reason to decide on Defendant's Motion to Dismiss for improper venue. This action is dismissed w/out prejudice. Judge Donald C. Nugent(C,KA)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Zoya Company et al.,
Plaintiff(s),
v.
NIOS, Inc.,
Defendant.
)
)
)
)
)
)
)
)
)
Case No. 1:13-cv-00780-DCN
Judge Donald C. Nugent
MEMORANDUM OPINION
This matter comes before the Court on Defendant Nios Inc.’s (“Nios”) Motion to Dismiss
on the basis of lack of personal jurisdiction and improper venue pursuant to Rules 12(b)(2) and
12(b)(3). ECF #11. For reasons discussed below, Defendant’s Motion to Dismiss is GRANTED.
I.STATEMENT OF FACTS
Plaintiff Zoya is an Ohio based corporation with its principal place of business in
Bedford Heights, Ohio. Compl. ¶ 2. Zoya sells products such as nail polish and lip gloss under
the ZOYA mark throughout the United States and internationally. Compl. ¶¶ 9-12. Zoya has had
a federal registration, U.S. Registration No. 1,863,005, for the ZOYA mark since November 15,
1994 and its ownership of the trademark cannot be challenged under 15 U.S.C. § 1065. Id. ¶¶ 1314.
On April 9, 2013, Zoya filed suit against NIOS, Inc. alleging that Nios started selling
cosmetic products using the “Noya” term, and that such use by Nios is likely to confuse others
into thinking that NIOS is affiliated with, connected to, or associated with Zoya. Id. ¶¶ 15-25. As
a result, Zoya is seeking relief for 1) trademark infringement under the Lanham Act 15 U.S.C. §
1114 and 1125; 2) Cyberpiracy under the Lanham Act 15 U.S.C. § 1125(d); 3) Violations of the
Ohio Deceptive Trade Practices Act Ohio Revised Code § 4165.01, et seq; 4) Unfair
competition; and 5) Unjust enrichment. Id. ¶¶ 26-50. Zoya seeks both monetary damages,
including compensatory and punitive damages, and injunctive relief. Id. at 8.
Nios, Inc. is a New York corporation with a business address in New York City. Answer
at 1. Nios admits that it has been using the Noya designation when selling cosmetic products, but
denies the intent to mislead and confuse customers and trying to capitalize on the ZOYA brand
recognition. Id. ¶ 1. Nios also raised six affirmative defenses in its answer, including that this
Court lacks personal jurisdiction and is an improper venue. Answer at 4-6.
Prior to using the NOYA trademark, Nios sought a trademark legal opinion to determine
infringement risk of adopting NOYA for cosmetics sales; the trademark opinion letter by
attorney Michael Sheena did not identify the ZOYA trademark as an infringement risk. Affidavit
of Joshua Gordon ¶¶ 20-21. Afterwards, on June 4, 2012, Nios filed an Intent-to-Use trademark
application with the USPTO for “NOYA” (USPTO Serial Number 85642689). On October 10,
2012, the USPTO approved the NOYA trademark application for publication. Id. at ¶ 2.
Pursuant to 15 U.S.C. § 1052(2) (d), the USPTO’s approval included a determination that
NOYA and ZOYA can co-exist for the sale of cosmetics. Id. at ¶ 4.
In November 2012, Nios began selling its NOYA lip balm products—to date, no other
products have been sold under the NOYA brand in stores. Ex. A ¶ 5. NOYA products are
currently sold in approximately 150 stores in New York State, 19 stores in New Jersey, 2 stores
in Chicago, and 0 stores in Ohio. Id. at ¶ 6. Nios estimates that 87% of its revenue comes from
sales in New York, and about .0004% of total revenue from Ohio. Id. at ¶ 7. Furthermore,
approximately 99% of NOYA products are sold in brick-and-mortar stores, and less than 1% are
2
sold online. Id. To date, Nios has only made three online sales, two of which were to individuals
affiliated with Nios’s employees, and one of which was to Plaintiffs’ investigator in the amount
of $15.96. Id. at ¶¶ 10-19.
Nios has a Terms and Conditions page on its website, which includes a clause that
specifies New York as having exclusive jurisdiction for disputes arising with regard to Nios and
its NOYA products. Id. at ¶¶ 12-13. Nios has never maintained an office in Ohio, and, with the
exception of the singular online sale, has no other direct or persistent contact with Ohio. Id. at ¶¶
10a-10m.
II.STANDARD OF REVIEW
Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move
to dismiss a case for lack of personal jurisdiction. Once the defendant makes such a motion, the
plaintiff bears the burden of proof that the Court does indeed have personal jurisdiction over the
defendant. Air Prods. and Controls, Inc. v. Safetech Intern., Inc., 503 F.3d 544, 549 (6th Cir.
2007). Furthermore, if the Court relies solely on written submissions to resolve a Rule 12(b)(2)
motion, the plaintiff’s burden is “relatively slight”—the plaintiff need only make a prima facie
showing of personal jurisdiction in order to quash defendant’s motion. Theunissen v. Matthews
d/b/a Matthews Lumber Transfer, 935 F.2d 1454, 1458 (6th Cir. 1991).
The trial court must view the pleadings and affidavits in the “light most favorable” to the
non-moving party, but the “defendant’s undisputed factual assertions may be considered.” Air
Prods., 503 F.3d at 549. Finally, under Ohio law, “personal jurisdiction over non-resident
defendants is available only if (1) the long-arm statute confers jurisdiction and (2) jurisdiction is
proper under the Federal Due Process Clause.” Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir.
3
2012). Accordingly, Plaintiff Zoya must demonstrate that both due process and Ohio's long-arm
statute are satisfied regarding Defendant Nios.
III.LAW AND ARGUMENT
This Court can establish personal jurisdiction over Defendant Nios if: 1) Ohio’s long-arm
statute, O.R.C. § 2307.382, permits jurisdiction; and 2) exercising jurisdiction does not deprive
Nios of its due process rights under the Fourteenth Amendment. U.S. Sprint Communications
Co. Ltd. Partnership v. Mr. K’s Foods, Inc., 68 Ohio St.3d 181, 183-184 (Ohio Sup. Ct. 1994).
A.
Ohio’s Long Arm Statute Confers Personal Jurisdiction Over Defendant Nios.
Plaintiff argues that Ohio’s long-arm statute, O.R.C. § 2307.382(a), grants this Court
personal jurisdiction over Defendant Nios, Inc. because Defendant a) transacts business in Ohio
and b) caused tortious injury to Plaintiff in Ohio. ECF # 14 at 4-6. O.R.C. § 2307.382 specifies,
in part, that:
(a) 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;
(6) Causing tortious injury in this state to any person by an act
outside this state committed with the purpose of injuring persons,
when he might reasonably have expected that some person would be
injured thereby in this state. (Emphasis added).
This Court has personal jurisdiction over Nios Inc. under O.R.C. §
2307.382(a)(1). The explicit language of 2307.382(a)(1) indicates “any”
transaction as being sufficient to establishing personal jurisdiction over Defendant
Nios in the State of Ohio—this section is broadly worded, yet should be resolved
4
on “highly particularized fact situations, thus rendering any generalization
unwarranted.” Clark v. Connor, 82 Ohio St.3d 309, 312 (Ohio Sup. Ct. 1998).
While Defendant Nios argues that fixating on a singular sale orchestrated by
Plaintiff Zoya in establishing personal jurisdiction would be against public policy
and would further promote manufactured sales by Plaintiffs elsewhere with the
sole objective of gaining personal jurisdiction, such concerns are premature and
do not override the literal meaning of § 2307.382(a)(1). Accordingly, this Court
has personal jurisdiction over Defendant Nios. Because this Court finds personal
jurisdiction under § 2307.382(a)(1), no further analysis on the rest of the potential
applicable sections of § 2307.382 is necessary.
B.
Exercising Personal Jurisdiction Over Defendant Would Violate
Defendant’s Due Process Rights Under the Fourteenth Amendment.
In addition to determining whether Ohio’s long-arm statute confers
personal jurisdiction over Nios, this Court must also analyze whether exercising
such jurisdiction over Nios would deprive Nios of the right to due process
pursuant to the Fourteenth Amendment. U.S. Sprint, 68 Ohio St.3d 181 at 183184. The Supreme Court clarified that the Due Process standard of the United
States Constitution requires that a nonresident Defendant must have “certain
minimum contacts with the [forum state] such that the maintenance of the suit
does not offend ‘traditional notions of fair play and substantial justice.’”
International Shoe Co. v. State of Wash., Office of Unemployment Compensation
and Placement et al., 326 U.S. 310, 316 (U.S. 1945). The due process analysis is
5
not mechanical or quantitative; it is instead satisfied depending upon the “quality
and nature” of the activity. Id. at 319.
The minimum contact analysis used to establish specific jurisdiction
consists of three parts: “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.” Miller v. AXA Winterhur Ins. Co.,
694 F.3d 675 (6th Cir. 2012).
Purposeful availment is the first prong of the minimum contacts test, and
requires a showing that defendant’s contacts with the forum state result from
defendant’s own substantial connection with the forum state. Harris v. Lloyds
TSB Bank, PLC, 281 Fed.Appx. 489, 494 (6th Cir. 2008). Put more simply,
purposeful availment is required so that a defendant is not haled into court in a
forum in which his contacts are the result of random, fortuitous, or attenuated
events. Id.
Here, Plaintiff argues that Defendant has purposefully availed itself to
Ohio’s jurisdiction because Defendant sold its product to an Ohio resident—who
had placed the order in Ohio through Defendant’s website—and shipped the
product into Ohio. Defendant counters that such a sale should not grant Ohio
jurisdiction because it a) is a singular de minimis sale (accounting for only
6
0.0004% of Defendant’s total revenue); 2) was orchestrated by Plaintiff’s agent;
3) is the only Ohio sale—one of three internet sales, and the only one made over
the internet to a party with no connection to Defendant’s employees— and was so
far out of the realm of regular business that Defendant normally carries out
through brick-and-mortar sales in New York; and 4) was a sale made through the
website which specifies in its “Terms and Conditions” page that “the exclusive
jurisdiction for disputes arising with regard to Nios and its NOYA products shall
be in New York.” ECF # 11 at 6-16.
This Court agrees with Plaintiff’s argument that, because the Defendant
conscientiously made the (voluntary) decision to fulfill the purchase order placed
through its interactive website and mail it into Ohio, Defendant did in fact end up
targeting Ohio—and as such, purposefully availed itself to suit in Ohio. Fulfilling
the order denoted the type of purposeful, deliberate contact that purposeful
availment seeks to encompass. Additionally, because Plaintiff’s primary place of
business is Ohio, the effects of Defendant’s alleged misconduct are arguably felt
in Ohio. Under the Calder effects test, such an effect in Ohio would also establish
personal jurisdiction. Calder v. Jones, 465 U.S. 783 (1984).
Establishing purposeful availment is not enough to establish personal
jurisdiction; the cause of action in the instant case must arise from the
Defendant’s activities there. Smucker Co. v. Weston Firm, P.C., 2013 WL
3713457 (N.D. Ohio 2013). Furthermore, the exercise of jurisdiction should be
reasonable. Id. Plaintiff argues that the instant action arises out of Defendant’s use
7
of the “infringing NOYA mark to advertise and sell lip balm products” in Ohio.
ECF # 14 at 11. Defendant counters that the cause of action does not arise from
any direct contacts with Ohio and that the exercise of jurisdiction in Ohio is
unreasonable. ECF # 11 at 13-15.
This Court agrees with Defendant that it is unreasonable to exercise
jurisdiction over Defendant in Ohio based on the singular internet sale for a
trademark infringement claim under the circumstances of this case. Defendant
sought and received a trademark legal opinion prior to adopting the NOYA mark;
that opinion did not identify the ZOYA trademark as an infringement risk.
Affidavit of Joshua Gordon at ¶¶ 2, 20-21. Furthermore, the USPTO approved the
NOYA trademark application which would have included a determination by the
USPTO that NOYA and ZOYA could co-exist for the sale of cosmetics. Id.; ECF
# 11 at 2. This Court also considers Defendant’s insistence on New York
jurisdiction on the “Terms and Conditions” page on the website, combined with
the fact that the purchase itself was made through the website, where the forumselection clause would control so long as it is reasonable and is not a product of
fraud or overreaching. ECF # 11 at 10; Kennecorp. Mtge. Brokers, Inc. v. Country
Club Convalescent Hosp., Inc. 610 N.E.2d 987, Supreme Court of Ohio, May 5,
1993.
Since Defendant engaged in a good faith effort to ensure that use of the
NOYA trademark would be lawful, and because it received such assurance from
multiple sources, including the USPTO, it is unreasonable to hold that the
8
Defendant, in engaging in a sale with a Ohio resident, expected, or should
reasonably have expected, to be haled into court in Ohio for use of an alreadyapproved trademark. Accordingly, an Ohio court’s exercising jurisdiction over
Defendant would violate its Due Process rights.
The concept of general jurisdiction is that the forum state can exercise
personal jurisdiction over a nonresident Defendant even if the cause of action
does not arise from the Defendant’s contacts with the forum state. Conn v.
Zakharov, 667 F.3d 705 at 713 (6th Cir. 2012). However, in such a scenario, the
volume and quality of the contacts must be such that the nonresident Defendant is
“at home” in the forum state. Goodyear Dunlop Tires Operations, S.A. v. Brown,
131 S.Ct. 2846, 2851 (U.S. 2011). Here, Defendant’s only meaningful contact
with Ohio is the single $15.08 sale. ECF #11 at 3. Therefore, Defendant does not
have the volume or quality of contacts for Ohio to exercise general jurisdiction
over Defendant. Goodyear v. Brown, 131 S.Ct. 2846, 2851.
II.CONCLUSION
For each of the foregoing reasons, Defendant’s Motion to Dismiss for lack
of personal jurisdiction is GRANTED. Moreover, because this Court finds that it
lacks personal jurisdiction over Defendant, there is no reason to decide on
Defendant’s Motion to Dismiss for improper venue. This action is DISMISSED
WITHOUT PREJUDICE. IT IS SO ORDERED.
_/s/Donald C, Nugent __
DONALD C. NUGENT
United States District Judge
9
DATED: _August 26, 2013___
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?