Skedco Inc. v. ARC Products, LLC

Filing 19

OPINION AND ORDER: Defendant's Motion To Dismiss 7 is GRANTED IN PART and DENIED IN PART. Defendant's motion as to a personal jurisdiction and venue is denied. Defendant's motion as to the laches doctrine is denied with leave to renew. Defendant's motion as to plaintiff's second claim is granted.(see 10 page opinion and order for further details) Signed on 7/30/13 by Judge Ancer L. Haggerty. (cib)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

SKEDKO, INC.,
Plaintiff,

Case No. 3:13-cv-00696-HA
OPINION AND ORDER

v.
ARC PRODUCTS, LLC, a Missouri limited
liability company, d/b/a MEDSLED,
Defendant.

HAGGERTY, District Judge:
SKEDCO, Inc. ("plaintiff' or "SKEDCO") filed this action against ARC Products, LLC
("defendant" or "Medsled") for false advertising in violation of Section 43(a) of the Lanham Act,
15 U.S.C. § 1125(a), and unfair competition in violation of common law. Defendant currently
moves to dismiss the action, asserting lack of personal jurisdiction, improper venue, laches, and
failure to state a claim. Plaintiff requested oral argument, but the court finds oral argument
urmecessary to rule on the current motion. For the following reasons defendant's Motion to
Dismiss [7] is granted in part and denied in part.

1 - OPINION AND ORDER

BACKGROUND
Plaintiff is an Oregon corporation with its principal place of business in Tualatin, Oregon.
Plaintiff manufactures and sells emergency medical rescue equipment, and its leading product is
the Sked® Rescue System ("Sked"), an evacuation sled system designed to quickly evacuate
wounded people from confined spaces, from high angles, in technical rescues, and in traditional
land-based rescues.
Defendant is organized under Missouri law and is headquartered in Missouri. Defendant
also manufactures and sells emergency transportation and evacuation devices. Of particular
relevance to this case, defendant manufactures and sells the Vertical Lift Rescue Sled ("VLR
Sled"), which is an evacuation device that provides quick transport of a nonambulatory
individual in a difficult rescue situation or a confmed space.
On April24, 2013, plaintiff filed this lawsuit, alleging that defendant has used false and
misleading advertising in brochures, in films, in presentations, and on the Internet that compare
the VLR Sled and the Sked. Based on these misrepresentations, plaintiff asserts that defendant
engaged in false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)
and unfair competition in violation of Oregon common law. Defendant currently moves this
court to dismiss plaintiffs claims for lack of personal jurisdiction, improper venue, laches, and
failure to state a claim.
ANALYSIS
1.

Personal Jurisdiction

Plaintiff bears the burden of establishing that this court has personal jurisdiction over
defendant. Fireman's Fund Ins. Co. v. Nat'/ Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996).
2 - OPINION AND ORDER

However, plaintiff need only make a prima facie showing of facts that support the exercise of
jurisdiction over defendant. Tuazon v. R.J Reynolds Tobacco Co., 433 F.3d 1163, 1168 (9th Cir.
2006).
Personal jurisdiction over a non-resident defendant is tested under a two-prong analysis.
The exercise of jurisdiction must: (1) satisfy the requirements of the long-arm statute of the state
in which the district court sits; and (2) comport with the principles offederal due process.
Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995). Oregon Rule of Civil
Procedure (ORCP) 4(B)-(K) provides specific bases for personal jurisdiction and subsection (L)
extends jurisdiction to the limits of due process under the United States Constitution. Nike, Inc.
v. Spencer, 707 P.2d 589, 591 (Or. Ct. App. 1985); see ORCP 4. Therefore, plaintiff need only
satisfy the second prong of the personal jurisdiction test.
The Due Process Clause of the U.S. Constitution protects persons from being subject to
the binding judgments of a forum with which they have "established no meaningful 'contacts,
ties, or relations."' Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (citing Int'l
Shoe Co. v. Washington, 326 U.S. 310,319 (1945)). Due process requires that a defendant have
"minimum contacts with the forum state such that the exercise of personal jurisdiction does not
offend traditional notions of fair play and substantial justice." Decker Coal Co. v.
Commonwealth Edison Co., 805 F.2d 834, 839 (9th Cir. 1986) (citing Int'l Shoe Co., 326 U.S. at
316). "A court may exercise either general or specific jurisdiction over a nonresident defendant."
Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990) (citation omitted).
For a defendant to be subject to general personal jurisdiction, the defendant must have
such "continuous and systematic contacts with the forum that the exercise of jurisdiction does not

3 - OPINION AND ORDER

offend traditional notions of fair play and substantial justice." Reebok Int'l Ltd. v. McLaughlin,
49 F.3d 1387, 1391 (9th Cir. 1995) (citation omitted). The standard for general jurisdiction is
high, requiring that the contacts in the forum "approximate physical presence." Tuazon, 433 F.3d
at 1169 (citation omitted). Unless the defendant can be deemed "present" within the forum for
all purposes, general jurisdiction is not appropriate. See Menken v. Emm, 503 F.3d 1050, 1057

(9th Cir. 2007). Because defendant's contacts in Oregon do not approximate physical presence in
the state and plaintiff does not contend that defendant is subject to general personal jurisdiction
in Oregon, it is clear that general jurisdiction is inappropriate.
In contrast to general personal jurisdiction, specific jurisdiction exists where: (I) the
defendant has purposefully directed his activities or consummated some transaction with the
forum of the resident thereof; or performed some act by which he purposefully availed himself of
the privilege of conducting activities in the forum, thereby invoking the benefits and protections
of its laws; (2) the claim arises out of, or relates to, the defendant's forum-related activities; and
(3) the exercise of jurisdiction is reasonable. Washington Shoe Co. v, A-Z Sporting Goods, Inc.,
704 F.3d 668, 672 (9th Cir. 2012) (citation omitted). If the plaintiff meets the first and second
elements, the burden shifts to the defendant to present a compelling case that the exercise of
jurisdiction would be unreasonable. !d. (citation omitted). However, if the plaintiff fails at the
first or second step, then the jurisdictional inquiry ends and the defendant must be dismissed
from the case. Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008).
To establish the first prong for specific jurisdiction, plaintiff must demonstrate that
defendant either purposefully availed itself of the privilege of conducting activities in the forum,
or purposefully directed its activities at the forum. Washington Shoe Co., 704 F.3d at 672. The

4 - OPINION AND ORDER

purposeful availment analysis is used in contract suits, while the effects test is used in tort cases.

Id. at 672-73. The effects test was established in Calder v. Jones, 465 U.S. 783 (1984). This is
the proper analyticallense through which to view personal jurisdiction in a tort claim such as the
one alleged in the present case. Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1228
(9th Cir. 2011). To satisfY the effects test, "the defendant allegedly must have (1) committed an
intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows
is likely to be suffered in the forum state." Yahoo! Inc. v. La Ligue Contre Le Racisme Et

L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (quoting Schwarzenegger v. Fred Martin
Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)).
The first part of the effects test is clearly satisfied. Defendant intended to publish
advertisements and make statements that target SKEDCO and make comparisons between the
VLR Sled and the Sked.
The second question, whether by publishing the advertisements, defendant's conduct was
expressly aimed at Oregon, must also be answered in the affirmative. The Ninth Circuit has
found jurisdiction in a plaintiffs home forum when it has determined that the tort is an
intentional one. Brainerd v. Governors of the Univ. ofAlta., 873 F.2d 1257, 1260 (9th Cir. 1989)
(citations omitted); Licciardello v. Lovelady, 544 F.3d 1280, 1286 (9th Cir. 2008) ("[S]tates have
a special interest in exercising jurisdiction over those who commit intentional torts causing injury
to their residents."). Accordingly, the express aiming requirement is satisfied, and specific
jurisdiction exists, when the defendant is alleged to have engaged in wrongful conduct targeted at
a plaintiff whom the defendant knows to be a resident of the forum state. Washington Shoe Co.,
704 F.3d at 675 (citations omitted). For example, in Brayton Purcell LLP v. Recordon &

5 - OPINION AND ORDER

Recordon, the nonresident defendant, a law firm specializing in elder abuse law, engaged in
willful copyright infringement targeted at the plaintiff, another law firm specializing in elder
abuse law. 606 F .3d 1124 (9th Cir. 201 0). By targeting the plaintiff, the defendant placed itself
in direct competition for business with the plaintiff. !d. at 1129. Based on this, the Ninth Circuit
held that the defendant's conduct was expressly aimed at the forum state. Similarly, in the
present case, Medsled targeted SKEDCO by comparing the Sked and the VLR Sled. In so doing,
Medsled placed itself in direct competition with SKEDKO. Knowing that SKEDCO is a resident
of Oregon, this targeting satisfies the express aiming prong.
Defendant argues that the second part of the effects test is not satisfied because defendant
operates an essentially passive website and does not contain "something more" as required to
assert personal jurisdiction pursuant to Mavrix Photo, Inc., 64 7 F .3d at 1229. However,
defendant's argument fails for two reasons. First, plaintiffs claims do not arise solely from
defendant's website, as this argument would require. Instead, plaintiff asserts that defendant
engaged in false advertising in brochures and through Y ouTube.com. Moreover, the Ninth
Circuit explained in Mavrix Photo that the use of "a passive website in conjunction with
'something more'- conduct directly targeting the forum- is sufficient" to satisfY the express
aiming prong. 647 F.3d at 1229 (quoting Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007,
1020 (9th Cir. 2002). A defendant has done "something more" when it has "individually targeted
a plaintiff known to be a forum resident." !d. (citations and quotation omitted). As discussed
above, defendant targeted plaintiff and knew it to be an Oregon resident.
The last part of the Calder effects test has also been satisfied as any harm suffered by
SKEDCO would necessarily be felt in Oregon regardless of where plaintiff lost business.

6 - OPINION AND ORDER

Because the purposeful availment or direction prong has been satisfied, the court turns to
the question of whether plaintiffs claims arise out of, or result from, defendant's forum-related
activities. They clearly do. Plaintiff alleges false advertisements that target an Oregon
corporation. Because defendant's contacts in Oregon include this intentional targeting, the claims
at issue arise from defendant's contacts in the forum state.
As plaintiff has met its burden in satisfying the first two prongs of the specific
jurisdiction test, defendant must present a compelling case that the exercise of jurisdiction would
be unreasonable. Defendant argues that the exercise of jurisdiction is unreasonable because it
has minimal contacts in Oregon. However, this is outweighed by defendant's purposeful
interjection into the forum state and the forum state's interest in adjudicating the dispute.
Accordingly, this court finds no compelling reason for declining to exercise personal jurisdiction
over defendant.

2.

VENUE

Defendant argues that venue is improper in the District of Oregon, because a substantial
part of the events giving rise to the claim occurred outside of Oregon. However, pursuant to 28
U.S.C. § 139l(c), a corporate defendant shall be deemed to reside in any judicial district in which
such defendant is subject to the court's personal jurisdiction with respect to the civil action in
question. Venue is proper in any district in which the defendant resides. 28 U.S.C. § 1391(b).
As discussed above, defendant is subject to this court's personal jurisdiction; therefore, venue in
this district is proper.

3.

FAILURE TO STATE A CLAIM

In addition to defendant's jurisdictional arguments, it asserts that plaintiffs claims should

7 - OPINION AND ORDER

be dismissed for failure to state a claim. In reviewing a motion to dismiss pursuant to Fed. R.
Civ. P. 12(b)(6), the court must "accept factual allegations in the complaint as true and construe
the pleadings in the light most favorable to the non-moving party." Fayer v. Vaughn, 649 F.3d
1061, 1064 (9th Cir. 2011) (citation omitted).

A.

Laches

Defendant argues that plaintiffs Lanham Act claims are barred under the laches doctrine.
To establish the defense of laches, defendant must prove both an unreasonable delay by the
plaintiff and prejudice to itself. Couveau v. American Airlines, Inc., 218 F.3d 1078, 1083 (9th
Cir. 2000). As plaintiff asserts correctly, "because the application of laches depends on a close
evaluation of all the particular facts in a case, it is seldom susceptible of resolution by surnrnary
judgment." Jd. (citations omitted). "At the motion-to-dismiss phase, the obstacle to asserting a
successful laches defense is even greater because the defendant must rely exclusively upon the
factual allegations set forth in the complaint." Kourtis v. Cameron, 419 F.3d 989, 1000 (9th Cir.
2005), abrogated on other grounds by Taylor v. Sturgell, 553 U.S. 880 (2008). Based on the
factual allegations set forth in the current complaint, this court cannot conclude that plaintiff has
unreasonably delayed the filing of its claims, nor can this court conclude that defendant was
prejudiced by any such delay.
Defendant demonstrates by affidavit that the date of the Y ouTube.com video, in which
defendant compares the Sked and the VLR Sled, is March 16, 2011. Accordingly, defendant
argues cursorily, plaintiff has slept on its rights for over two years. Further, defendant asserts
that plaintiff had the opportunity to submit declarations attesting to the date in question. While
the parties dispute whether materials outside the pleadings should be considered in a motion to

8 - OPINION AND ORDER

dismiss, defendant's argument falls short regardless. Even if this court were to consider the
declarations submitted, they are not conclusive on whether plaintiff unreasonably delayed in
filing suit or whether defendant was prejudiced by that delay. According to defendant, the
earliest date that laches could attach is March 16, 2013. Plaintiff filed this suit on April24,
2013. Plaintiff should be allowed the opportunity to present evidence as to why that five-week
delay was reasonable. Also, defendant has not presented evidence as to how that 5-week delay
resulted in prejudice. Therefore, defendant's motion as to the doctrine oflaches is denied. The
laches defense may be renewed after discovery is completed.

B.

COMMON LAW UNFAIR COMPETITION CLAIM

Lastly, defendant argues that plaintiff's second claim, an unfair competition claim under
Oregon common law, is a claim that is not recognized by Oregon courts. As defendant correctly
explains, when applying state law, and there is no relevant precedent from the state's highest
court, the federal court must follow relevant precedent from an appellate court unless there is
evidence that the supreme court likely would not follow it. Ryman v. Sears, Roebuck and Co.,
505 F.3d 993, 995 (9th Cir. 2007). In Volt Servs. Group, Div. of Volt Management Corp. v.
Adecco Employment Servs., Inc., the Oregon Court of Appeals explained that "unfair competition
is limited to misappropriation of a competitor's intellectual property." 35 P.3d 329, 338 (Or.
App. 2001). Therefore, an unfair competition claim under Oregon common law does not allow
claims for false and misleading advertisements.
Plaintiff cites two cases in support of its contention that Oregon recognizes false and
misleading advertising as unfair competition claims. In CollegeNET Inc. v. XAP Corp., this
court expressly stated that the parties agreed that the plaintiff's unfair competition claim arose

9 - OPINION AND ORDER

under Oregon law; therefore, the court did not reach that issue. No. CV-03-1229-HU, 2004 WL
2303506, *1 (D. Or., Oct. 12, 2004). Plaintiff also relies on Shakey's Inc. v. Covalt, 704 F.2d
426 (9th Cir. 1983), to support its position. However, in Shakey's, the plaintiff alleged unfair
competition that is most similar to infringement - defendant allegedly engaged in mimicry, which
"deceived the public, and enabled [defendant] to derive benefit from [plaintiffs] good will." !d.
at 431. Plaintiffs reliance on these cases does nothing to demonstrate that Oregon common law
recognizes unfair competition claims that allege anything other than misappropriation of a
competitor's intellectual property. Therefore, defendant's motion to dismiss plaintiffs second
claim is granted.
CONCLUSION
For the foregoing reasons, defendant's Motion to Dismiss [7] is GRANTED IN PART
and DENIED IN PART. Defendant's motion as to personal jurisdiction and venue is denied.
Defendant's motion as to the laches doctrine is denied with leave to renew. Defendant's motion
as to plaintiffs second claim is granted.
IT IS SO ORDERED.
Dated this

.?o day of July, 2013.

C:uu ~~~~~~
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ANCER L. BAGGER
United States District Judge

10- OPINION AND ORDER