Source Network Sales & Marketing, LLC v. Ningbo Desa Electrical Manufacturing Co, Ltd.

Filing 35

MEMORANDUM OPINION AND ORDER: Before the court are the defendant's motions to dismiss the plaintiff's amended complaint for lack of personal jurisdiction and failure to state a claim for relief (docket entry 24 ) and the plaintiff's motion to strike aspects of the defendant's supporting affidavit (docket entry 28 ). Desa's motions to dismiss are DENIED and Source's motion to strike is GRANTED. (Ordered by Senior Judge A. Joe Fish on 5/15/2015) (bdb)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

SOURCE NETWORK SALES &
MARKETING, LLC,
Plaintiff,
VS.
NINGBO DESA ELECTRICAL
MANUFACTURING CO., LTD.,
Defendant.

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CIVIL ACTION NO.
3:14-CV-1108-G

MEMORANDUM OPINION AND ORDER
Before the court are the defendant’s motions to dismiss the plaintiff’s amended
complaint for lack of personal jurisdiction and failure to state a claim for relief
(docket entry 24) and the plaintiff’s motion to strike aspects of the defendant’s
supporting affidavit (docket entry 28). For the reasons discussed below, the
defendant’s motions are denied and the plaintiff’s motion is granted.
I. BACKGROUND
A. Factual Background
The present dispute arises out of a manufacturing agreement (the “agreement”)
the parties negotiated in April and May of 2010. Plaintiff’s First Amended

Complaint (“Complaint”) ¶ 13 (docket entry 22). Under the agreement, the
defendant, Ningbo Desa Electrical Manufacturing Company, Ltd. (“Desa”), agreed to
manufacture heaters for the plaintiff, Source Network Sales & Marketing, LLC
(“Source”). Id. Desa “requested orders and payments for the Heaters to be sent
through China Ningbo Cixi Import and Export (‘Cixi’)” -- Desa’s holding company -“and informed Source that Cixi would also handle shipping the Heaters.” Appendix
to Plaintiff’s Response to Defendant’s Motion to Dismiss (“Plaintiff’s Appendix”)
(docket entry 27), Tab 1, Declaration of Mike Dolder (“Dolder Declaration”) at App.
3, ¶ 10. Although Source was not the manufacturer of the heaters, it was still
“responsible for all quality control and warranty issues.” Complaint ¶ 13.
During the course of the parties’ business relationship, Desa’s representatives
had various contacts with Texas. “In the spring of 2013, at Desa’s request,
representatives of Desa . . . visited Source’s offices in Plano, Texas.” Dolder
Declaration at App. 5, ¶ 16. Of the more than 1,500,000 heaters Desa manufactured
for Source, “Approximately 115,000 heaters were shipped directly to Source in Texas,
and shipments were made on a weekly basis ten months out of every year, with at
least 168 total shipments sent directly to Texas.” Id. ¶ 15. Desa sent replacement
parts to ABC Vacuum, an Austin, Texas-based company which repaired defective
heaters Source had sold. Plaintiff’s Appendix, Tab 3, Declaration of Ralph Baccus at
App. 54-55, ¶ 4; see also Dolder Declaration at App. 7, ¶ 22. Moreover, throughout

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the relationship, Desa communicated with Source’s representatives in Texas to handle
business issues. Dolder Declaration at App. 5-6, ¶¶ 17, 20.
Frustrated by the increasing number of defective heaters Desa manufactured,
Source terminated its relationship with Desa in January of 2014. Id. at App. 6-7,
¶¶ 21-24; Complaint ¶ 16. Subsequently, Source discovered that in 2011 Desa
applied for and successfully registered LIFE SMART (the “mark”) as a trademark in
China. Complaint ¶ 18; Dolder Declaration at App. 7-8, ¶ 25; Plaintiff’s Appendix,
Tab 1, Exhibit A (“Cease-and-Desist Letter”) at App. 12 (“Ningbo Desa has obtained
registration of the LIFE SMART trademark for electric heaters . . ..”). Prior to Desa’s
registration of the mark in China, Source had already registered the mark in the
United States for hot tubs, spas, and saunas. Complaint ¶ 8, Exhibit 1.
In 2014, Source filed an application to register the mark for additional
products, including infrared heaters, in the United States. Id. ¶ 8, Exhibit 2. When
the United States Patent & Trademark Office published the mark on February 25,
2014 for opposition, “Desa filed an application for a stylized mark ‘Life Smart’ that is
identical” to a logo Source developed for the mark in 2011.1 Id. ¶ 19, Exhibit 6; see
also Dolder Declaration at App. 8, ¶ 27. After filing its application, Desa sent Source
a letter on March 25, 2014 requesting that Source “immediately halt all global (1)

1

As originally depicted, the logo featured the word “life” on top of the
word “smart.” However, “In or around 2011, the Logo was also depicted with the
word SMART to the right of the word LIFE rather than below.” Complaint ¶ 9.
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manufacture, packaging, distribution, and sale of electric infrared heaters, and (2) use
of the above-referenced LIFE SMART and similar trademarks.” Cease-and-Desist
Letter at App. 13; Complaint ¶ 21. The letter indicated that the Administration of
Industry and Commerce in China had “taken steps to protect Ningbo Desa’s Chinese
intellectual property rights by raiding Source Network’s new supplier and seizing
infringing products.” Cease-and-Desist Letter at App. 12.
Moreover, Desa sent emails to many of Source’s customers, including BiMart,
Home Depot, Walmart, KMS, Inc., and Lowes, Inc., claiming that Source was
“infringing on Desa’s trademarks” and offering to serve as an alternative supplier of
Life Smart heaters. Dolder Declaration at App. 8-10, ¶¶ 29-33; Plaintiff’s Appendix,
Tab 1, Exhibits B, F-H. After the contractual relationship between Desa and Source
ended, at least one United States company purchased heaters from Desa bearing the
mark. Plaintiff’s Appendix, Tab 2, Declaration of Keith Carpenter at App. 42-44,
¶¶ 2-4. Despite Desa’s actions, “On July 14, 2014, Source Network also obtained a
federal registration for the Mark . . . for infrared heaters and other products . . ..”
Complaint ¶ 8; Exhibit 2.
B. Procedural Background
Source filed its complaint with this court on March 28, 2014 asserting claims
for trademark infringement, unfair competition, tortious interference, and declaratory
judgment (docket entry 1). After Desa served a motion to dismiss (docket entry 14),

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Source filed an amended complaint which added claims for breach of contract and
breach of implied warranty of merchantability (docket entry 22). Desa responded
again with a motion to dismiss, contending both that Source’s amended complaint
fails to state claims for tortious interference and breach of contract and that the court
lacks personal jurisdiction over Desa with respect to all of Source’s claims (docket
entry 24). Source filed a timely response (docket entry 26) and a motion to strike
certain statements contained in an affidavit supporting Desa’s motion (docket entry
28). Desa failed to serve a reply. The motions are now ripe for consideration.
II. ANALYSIS
A. Legal Principles
1. Personal Jurisdiction under Texas and Federal Law
a. General Discussion
A federal court may exercise personal jurisdiction over a nonresident defendant
if “(1) the long-arm statute of the forum state creates personal jurisdiction over the
defendant; and (2) the exercise of personal jurisdiction is consistent with the due
process guarantees of the United States Constitution.”2 Revell v. Lidov, 317 F.3d 467,
2

With regard to claims arising under federal law, a district court generally
has jurisdiction only over a defendant “who is subject to the jurisdiction of a court of
general jurisdiction in the state where the district court is located.” FED. R. CIV. P.
4(k)(1). However, if “the defendant is not subject to jurisdiction in any state’s courts
of general jurisdiction,” then the district court can “exercis[e] jurisdiction [when it] is
consistent with the United States Constitution and laws.” FED. R. CIV. P. 4(k)(2); see
also Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 650-51 (5th Cir.), cert.
(continued...)
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469 (5th Cir. 2002). Thus, the court must first apply state law to analyze whether
Texas, the forum state, could assert long-arm jurisdiction. Pedelahore v. Astropark, Inc.,
745 F.2d 346, 347 (5th Cir. 1984). The Texas long-arm statute confers jurisdiction
to the furthest extent permissible under the federal constitution. See Access Telecom,
Inc. v. MCI Telecommunications Corporation, 197 F.3d 694, 716 (5th Cir. 1999), cert.
denied, 531 U.S. 917 (2000); see also TEX. CIV. PRAC. & REM. CODE ANN. § 17.041 et
seq. (Texas long-arm statute). Consequently, the court need only concern itself with
the federal due process inquiry. See Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.
1999); Wilson v. Belin, 20 F.3d 644, 647 n.1 (5th Cir.), cert. denied, 513 U.S. 930
(1994).
Due process requires the satisfaction of two elements to exercise personal
jurisdiction over a nonresident defendant: (1) the nonresident must have sufficient
contacts with the forum, resulting from affirmative action on his part, such that the
nonresident defendant could anticipate being haled into the courts of the forum state;
and (2) it must be fair and reasonable to require the nonresident to defend himself in
the forum state. See Burger King Corporation v. Rudzewicz, 471 U.S. 462, 474-78
(1985); Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d 1071, 1073
(5th Cir.), cert. denied, 498 U.S. 900 (1990). The Due Process Clause ensures that
persons have a “fair warning that a particular activity may subject [them] to the
2

(...continued)
denied, 543 U.S. 979 (2004).
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jurisdiction of a foreign sovereign.” Burger King, 471 U.S. at 472 (quoting Shaffer v.
Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)) (internal quotation
marks omitted).
To establish minimum contacts with the forum, a nonresident defendant must
do some act by which he “purposefully avails [him]self of the privilege of conducting
activities within the forum State, thus invoking the benefits and protections of its
laws.” Burger King, 471 U.S. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235,
253 (1958)) (internal quotation marks omitted). The unilateral activity of one
asserting a relationship with the nonresident defendant does not satisfy this
requirement. Id.; Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417
(1984). “Once a plaintiff has established minimum contacts, the burden shifts to the
defendant to show the assertion of jurisdiction would be unfair.” Wien Air Alaska, Inc.
v. Brandt, 195 F.3d 208, 215 (5th Cir. 1999) (citation omitted). In determining
whether the exercise of jurisdiction is fair and reasonable under the Due Process
Clause, “courts in appropriate cases may evaluate the burden on the defendant, the
forum State’s interest in adjudicating the dispute, the plaintiff’s interest in obtaining
convenient and effective relief, the interstate judicial system’s interest in obtaining
the most efficient resolution of controversies and the shared interest of the several
States in furthering fundamental substantive social policies.” Burger King, 471 U.S. at
477 (internal quotations, alterations and citation omitted).

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Two types of in personam jurisdiction may be exercised over a nonresident
defendant -- specific jurisdiction and general jurisdiction. Specific jurisdiction exists if
the cause of action “arises from or relates to the defendant's contact with the forum
state,” and those contacts meet the due process standard. J.R. Stripling v. Jordan
Production Company, LLC, 234 F.3d 863, 871 (5th Cir. 2000) (quoting Latshaw, 167
F.3d at 211) (internal quotation marks omitted). “In determining whether specific
jurisdiction exists, the court must conduct the minimum contacts analysis separately
for each cause of action.” Eagle Metal Products, LLC v. Keymark Enterprises, LLC, 651
F. Supp. 2d 577, 585 (N.D. Tex. 2009) (Lynn, J.) (citation omitted). With regard to
a corporation, general jurisdiction may be found when the nonresident is
(1) incorporated in the forum state; (2) operates its principal place of business in the
forum state; or (3) possesses contacts with the forum that are “so continuous and
systematic as to render them essentially at home in the forum State.” Daimler AG v.
Bauman,

U.S.

, 134 S. Ct. 746, 754, 760 (2014) (internal quotations and

citations omitted).
Under either a specific or general jurisdiction analysis, however, “the
constitutional touchstone remains whether the defendant purposefully established
‘minimum contacts’ in the forum [s]tate.” Burger King, 471 U.S. at 474 (quoting
International Shoe Company v. Washington, 326 U.S. 310, 316 (1945)). The
“purposeful availment” requirement of the minimum contacts inquiry “ensures that a

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defendant will not be haled into a jurisdiction solely as a result of ‘random,’
‘fortuitous,’ or ‘attenuated’ contacts . . . or of the ‘unilateral activity of another party
or a third person.’” Id. at 475(internal citations omitted).
b. Calder Effects Jurisdiction
In Calder v. Jones, 465 U.S. 783, 784-86 (1984), the Supreme Court concluded
that personal jurisdiction existed in the California Superior Court over a reporter and
editor of a Florida-based national magazine with respect to libel claims brought by an
actress. An issue of the magazine, which sold approximately 600,000 copies in
California, contained material that allegedly libeled the actress. Id. at 785. While
researching the relevant article, the reporter called sources in California and even
called the actress’s residence on one occasion. Id. at 785-86. The editor, who also
served as the president of the magazine, “ha[d] been to California only twice -- once,
on a pleasure trip, prior to the publication of the article and once after to testify in an
unrelated trial.” Id. at 786. However, he did “review[ ] and approve[ ] the initial
evaluation of the subject of the article and edited it in its final form. He also declined
to print a retraction requested by [the actress].” Id. These facts demonstrated that
the defendants helped produce “an article that they knew would have a potentially
devastating impact upon [the actress]. And they knew that the brunt of that injury
would be felt by [the actress] in the State in which she lives and works and in which
the [magazine] has its largest circulation.” Id. at 789-90. Consequently, the

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defendants “must reasonably anticipate being haled into court there to answer for the
truth of the statements made in their article.” Id. at 790 (internal quotations and
citations omitted). Summarizing its reasoning, the Supreme Court noted that when a
party is a “primary participant[ ] in an alleged wrongdoing intentionally directed at a
[state’s] resident, [then] jurisdiction over them [may be] proper on that basis.” Id.
Calder indicated that when the effects of an intentional tort are clearly directed
at a state, those effects support the exercise of personal jurisdiction over the tortfeasor
in the target state. Although Calder concerned the tort of defamation, it is clear
Calder’s “effects test” extends “outside the context of defamation.” Wien Air Alaska,
195 F.3d at 212 (citation omitted). In Guidry v. U.S. Tobacco Company, Inc., 188 F.3d
619, 629 (5th Cir. 1999) (citation omitted), the Fifth Circuit noted that “the effects
of torts committed outside the forum state that cause death or serious physical harm
may also serve as minimum contacts with the forum for purposes of personal
jurisdiction.” The test also logically applies to “intentional business torts,” including
tortious interference and intentional trademark infringement or dilution. Isbell v. DM
Records, Inc., No. 3:02-CV-1408-G, 2004 WL 1243153, at *10 (N.D. Tex. June 4,
2004) (Fish, Ch.J.) (compiling cases); see also Mullins v. TestAmerica, Inc., 564 F.3d
386, 402 (5th Cir. 2009) (finding the application of the effects test to a tortious
interference claim “particularly persuasive”); Healix Infusion Therapy, Inc. v. Human Arc
Corporation of Ohio, Civil Action No. H-08-cv-3262, 2009 WL 7326369, at *7 n.2

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(S.D. Tex. July 13, 2009) (“While the Fifth Circuit has not applied the effects test to
resolve jurisdiction over trademark disputes, it has recognized that Calder’s reasoning
is applicable to intentional torts other than defamation, the claim at issue in [the]
Supreme Court’s opinion.”); Healix Infusion Therapy, Inc. v. Helix Health, LLC, Civil
Action No. H-08-0337, 2008 WL 1883546, at *6 (S.D. Tex. Apr. 25, 2008) (“[A]
defendant that ‘expressly aims’ its trademark-diluting conduct at residents of a forum
state can be said to have purposely directed its activities toward that forum, and
should therefore reasonably anticipate being haled into court in that forum.”)
(citation omitted); Licciardello v. Lovelady, 544 F.3d 1280, 1287-88 (11th Cir. 2008)
(applying the effects test to a trademark infringement claim); Panavision International,
L.P. v. Toeppen, 141 F.3d 1316, 1321-22 (9th Cir. 1998) (same); Dakota Industries,
Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1391 (8th Cir. 1991) (same). These
extensions represent other instances where defendants should “reasonably anticipate
being haled into court” in a forum state “because of their intentional conduct in
[another state or country] calculated to cause injury to” a party residing in the forum
state. Calder, 465 U.S. at 789, 791 (emphasis added).
As this court has previously noted, the “effects test” establishes the minimum
contacts necessary for personal jurisdiction when (1) a defendant committed an
intentional tort or business tort; “(2) the plaintiff felt the brunt of the harm in the
forum, such that the forum can be said to be the focal point of the resulting harm to

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the plaintiff; and (3) the defendant expressly aimed his conduct at the forum, so that
the forum can be said to be the focal point of the tortious activity.” Triple Diamond
Energy Corporation v. Venture Research Institute, Inc., Civil Action No. 3:08-CV-0050-M,
2008 WL 2620352, at *4 (N.D. Tex. July 3, 2008) (Lynn, J.) (citation omitted). By
requiring that a defendant “expressly aim[ ] his conduct at the forum,” id., the third
element ensures that a “[f]oreseeable injury alone is not sufficient to confer specific
jurisdiction, absent the direction of specific acts towards the forum.” Wien Air Alaska,
195 F.3d at 212 (citation omitted). In other words, “the plaintiff cannot be the only
link between the defendant and the forum. Rather, it is the defendant’s conduct that
must form the necessary connection with the forum State that is the basis for its
jurisdiction over him.” Walden v. Fiore,

U.S.

, 134 S. Ct. 1115, 1122 (2014)

(citation omitted). In certain cases, “[p]urposeful forum-directed activity -- even if
only a single substantial act -- may permit the exercise of specific jurisdiction in an
action arising from or related to such acts.” Ham v. La Cienega Music Company, 4 F.3d
413, 415-16 (5th Cir. 1993) (citations omitted).
For example, in SGS-Thomson Micro-Electronics, Inc. v. Ferris, No. 93-9115, 1995
WL 313932, at *1 (5th Cir. May 1, 1995) (per curiam) (unpublished), cert. denied,
516 U.S. 922 (1995), the Fifth Circuit approved the district court’s exercise of
personal jurisdiction over a defendant who “sent a letter to [an electronics company]
in 1989 alleging that [the company] was infringing [his] copyright by selling certain

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‘IC chips.’” The Fifth Circuit endorsed the district court’s reference to an opinion
from the Central District of California which “held that an alien defendant’s
transmittal of a letter to the Plaintiff in the forum state threatening litigation for
patent infringement, and thereby threatening plaintiff’s activities in the forum state,
was sufficient forum-related activity to satisfy due process requirements needed to
support specific jurisdiction.” Id. at *2 (citing Dolco Packaging Corporation v. Creative
Industries, Inc., No. 86-3078 WMB (Bx), 1986 WL 84366 (C.D. Ca. Oct. 10, 1986)).
By sending the cease-and-desist letter, the defendant “initiated” and “purposefully
directed” conduct towards Texas that established the minimum contacts necessary for
personal jurisdiction.3 See id. at *3.
3

Desa cites Stroman Realty, Inc. v. Wercinski, 513 F.3d 476 (5th Cir.), cert.
denied, 555 U.S. 816 (2008), for the proposition that sending a cease-and-desist letter
to a state does not establish personal jurisdiction over the sender in that state.
Defendant’s Renewed Motions to Dismiss, and Brief in Support, for Lack of Personal
Jurisdiction and Failure to State a Claim (“Defendant’s Brief”) at 7 (docket entry 24).
The defendant in Stroman, the Commissioner of the Arizona Department of Real
Estate (the “commissioner”), sent two cease-and-desist letters to a Texas-based real
estate company “stating that [the company’s] agents were not licensed as real estate
brokers or salespeople in Arizona.” Id. at 480-81. The company brought an action
against the commissioner under 42 U.S.C. § 1983 “alleging that Arizona’s attempted
exercise of regulatory jurisdiction to license timeshare resales violates the Commerce
Clause . . . .” Id. at 481. The Fifth Circuit concluded that the district court lacked
personal jurisdiction over the commissioner. Id. at 489.
However, the court’s discussion in Stroman indicates the case’s limits as
precedent. “Courts generally exercise specific jurisdiction over nonresident
defendants that are engaged in commercial, profit-oriented enterprise.” Id. at 485
(emphasis added). The commissioner, in contrast, was not trying “to obtain a
commercial benefit by acting in a governmental capacity to enforce Arizona law.” Id.
(continued...)
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In reaching this conclusion, the Fifth Circuit cited Brown v. Flowers Industries,
Inc., 688 F.2d 328 (5th Cir. 1982), cert. denied, 460 U.S.1023 (1983), an opinion
preceding Calder but consistent with its principles. The Brown court concluded that
the due process clause authorized the exercise of personal jurisdiction over an Indiana
businessman whose only relevant contact with Mississippi was an allegedly
defamatory telephone call he made to a corporation located in Mississippi. Id. at
333-34. In the court’s words, the businessman “initiated the telephone call and
allegedly committed an intentional tort. The injurious effect of the tort, if one was
committed, fell in Mississippi, which the defendant could easily have foreseen.” Id. at
334.
Similarly, in Athletic Training Innovations, LLC v. L.A. Gear, Inc., Civil Action
No. 10-1524, 2010 WL 4103309, at *5 (E.D. La. Oct. 18, 2010), the court
concluded it possessed personal jurisdiction over a shoe company with respect to a
tortious interference claim because the shoe company “specifically sent a cease-anddesist letter to the Plaintiff in Louisiana . . . .” With this Louisiana contact in place,

3

(...continued)
“Because no such benefit accrue[d] to the Commissioner from her activities relating
to Texas,” the court concluded that “any jurisdiction based upon her having caused
an ‘effect’ in Texas [was] likewise misplaced.” Id. Moreover, the “[i]mportant
questions of federalism . . . present” in Stroman are entirely absent from the present
case. Id. at 488 (noting that allowing “a federal district court in the Southern District
of Texas [to exercise] personal jurisdiction over a nonresident state official would
create an avenue for challenging the validity of one state’s laws in courts located in
another state”).
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the court relied on the effects produced by additional cease-and-desist letters the shoe
company sent to the plaintiff’s out-of-state customers to establish jurisdiction under
Calder. Id. at *3-6. These latter cease-and-desist letters “were designed to prevent
Plaintiff from retaining customers,” and given the shoe company’s knowledge of the
plaintiff’s home state, “they were ‘purposefully directed’ towards a Louisiana
resident.” Id. at *5.
c. Rule 12(b)(2)
When a nonresident defendant moves to dismiss for lack of personal
jurisdiction under Federal Rule of Civil Procedure 12(b)(2), “the plaintiff bears the
burden of establishing the district court’s jurisdiction over the nonresident.”
Wilson, 20 F.3d at 648 (quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.
1985)) (internal quotation marks omitted); see also Gardemal v. Westin Hotel
Company, 186 F.3d 588, 592 (5th Cir. 1999). Once the plaintiff establishes
minimum contacts between the defendant and the forum, “the burden shifts to the
defendant to show the assertion of jurisdiction would be unfair.” Wien Air Alaska,
195 F.3d at 215 (citation omitted); see also Eagle Metal Products, 651 F. Supp. 2d at
587 (“Since [the defendant] does not even claim the absence of fair play and
substantial justice, . . . if minimum contacts exist, jurisdiction may be exercised.”)
“The court may determine the jurisdictional issue by receiving affidavits,

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interrogatories, depositions, oral testimony, or any combination of the recognized
methods of discovery.” Stuart, 772 F.2d at 1192.
In its consideration of the motion, the court will take the allegations of the
complaint as true, except where they are controverted by opposing affidavits, and all
conflicts in the facts are resolved in favor of the plaintiff. Wilson, 20 F.3d at 648;
Gardemal, 186 F.3d at 592. If the court decides not to have an evidentiary hearing on
the jurisdictional issue, then to defeat the motion the plaintiff is required to present a
prima facie case for personal jurisdiction, rather than proving the issue by a
preponderance of the evidence. King v. Hawgwild Air, LLC, Civil Action No. 3:08-CV0153-L, 2008 WL 2620099, at *1 (N.D. Tex. June 27, 2008) (Lindsay, J.).
2. Rule 12(b)(6) Standard
“In considering a motion to dismiss for failure to state a claim, a district court
must limit itself to the contents of the pleadings, including attachments thereto.”
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citing FED.
R. CIV. P. 12(b)(6)). “To survive a Rule 12(b)(6) motion to dismiss, the plaintiff
must plead ‘enough facts to state a claim to relief that is plausible on its face.’” In re
Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell
Atlantic Corporation v. Twombly, 550 U.S. 544, 570 (2007)). “While a complaint
attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief

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requires more than labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotation
marks, brackets, and citation omitted). “Factual allegations must be enough to raise a
right to relief above the speculative level, on the assumption that all the allegations in
the complaint are true (even if doubtful in fact).” In re Katrina Canal, 495 F.3d at
205 (quoting Twombly, 550 U.S. at 555) (internal quotation marks omitted). “The
court accepts all well-pleaded facts as true, viewing them in the light most favorable
to the plaintiff.” Id. (quoting Martin K. Eby Construction Company, Inc. v. Dallas Area
Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)) (internal quotation marks
omitted).
The Supreme Court has prescribed a “two-pronged approach” to determine
whether a complaint fails to state a claim under Rule 12(b)(6). See Ashcroft v. Iqbal,
556 U.S. 662, 678-79 (2009). The court must “begin by identifying the pleadings
that, because they are no more than conclusions, are not entitled to the assumption
of truth.” Id. at 679. The court should then assume the veracity of any well-pleaded
allegations and “determine whether they plausibly give rise to an entitlement of
relief.” Id. The plausibility principle does not convert the Rule 8(a)(2) notice
pleading standard to a “probability requirement,” but “a sheer possibility that a
defendant has acted unlawfully” will not defeat a motion to dismiss. Id. at 678. The
plaintiff must “plead[ ] factual content that allows the court to draw the reasonable

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inference that the defendant is liable for the misconduct alleged.” Id. “[W]here the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged -- but it has not ‘show[n]’ -- ‘that the pleader is
entitled to relief.’” Id. at 679 (alteration in original) (quoting FED. R. CIV. P. 8(a)(2)).
The court, drawing on its judicial experience and common sense, must undertake the
“context-specific task” of determining whether the plaintiffs’ allegations “nudge” their
claims against the defendant “across the line from conceivable to plausible.” See id.
at 679, 683.
3. The Noerr-Pennington Doctrine
The Noerr-Pennington “doctrine allows individuals or businesses to petition the
government, free of the threat of antitrust liability, for action that may have
anticompetitive consequences. Noerr-Pennington protection is grounded on the theory
that the right to petition guaranteed by the First Amendment extends to petitions for
selfish, even anticompetitive ends.” Greenwood Utilities Commission v. Mississippi Power
Company, 751 F.2d 1484, 1497 (5th Cir. 1985). In California Motor Transport
Company v. Trucking Unlimited, 404 U.S. 508, 510 (1972), the Supreme Court stressed
that the Noerr-Pennington doctrine’s protection of the right to petition “extends to all
departments of the Government.”
“Although the Noerr-Pennington doctrine initially arose in the antitrust field, [it
now also] protect[s] first amendment petitioning of the government from claims

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brought under federal and state laws . . ..” Video International Production, Inc. v.
Warner-Amex Cable Communications, Inc., 858 F.2d 1075, 1084 (5th Cir. 1988), cert.
denied, 490 U.S. 1047 (1989). For example, the doctrine “can apply to trademark
owners’ attempts to protect their intellectual property rights.” GoForIt Entertainment,
LLC v. DigiMedia.com L.P., 750 F. Supp. 2d 712, 742 (N.D. Tex. 2010) (Fitzwater,
Ch.J.); see also Video International Production, 858 F.2d at 1084 (noting that the NoerrPennington doctrine extends to tortious interference claims).
With regard to petitioning the judicial branch (i.e., filing a lawsuit), the NoerrPennington doctrine extends to threats to litigate, such as cease-and-desist letters, even
though such actions do not entail petitioning the government. Coastal States
Marketing, Inc. v. Hunt, 694 F.2d 1358, 1367 (5th Cir. 1983); Select Comfort
Corporation v. Sleep Better Store, LLC, 838 F. Supp. 2d 889, 896-900 (D. Minn. 2012)
(concluding that “the Noerr-Pennington doctrine immunizes pre-suit demand letters
. . .”). The Fifth Circuit justified extending the doctrine to pre-suit activities as
follows:
Given that petitioning immunity protects joint litigation, it
would be absurd to hold that it does not protect those acts
reasonably and normally attendant upon effective
litigation. The litigator should not be protected only when
he strikes without warning. If litigation is in good faith, a
token of that sincerity is a warning that it will be
commenced and a possible effort to compromise the
dispute.

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Coastal States Marketing, 694 F.2d at 1367; see also Select Comfort Corporation, 838
F. Supp. 2d at 896 (“Because the right to petition means more than simply the right
to communicate directly with the government, protection under the doctrine
necessarily includes those activities reasonably and normally attendant to effective
petitioning.”) (internal quotations, alteration and citation omitted).
A defendant should raise the Noerr-Pennington doctrine as an affirmative
defense. Bayou Fleet, Inc. v. Alexander, 234 F.3d 852, 860 (5th Cir. 2000), cert. denied,
532 U.S. 905 (2001); Acoustic Systems, Inc. v. Wenger Corporation, 207 F.3d 287, 295
(5th Cir. 2000) (“Although the Noerr-Pennington doctrine is frequently referred to as
an ‘antitrust immunity,’ it provides only a defense to liability, not an immunity from
suit.”) (citations omitted). As with other affirmative defenses, when the NoerrPennington defense “appears on the face of the pleadings, dismissal under Rule
12(b)(6) may be appropriate.” Miller v. BAC Home Loans Servicing, L.P., 726 F.3d
717, 726 (5th Cir. 2013) (internal quotations and citation omitted); Love Terminal
Partners, L.P. v. City of Dallas, Texas, 527 F. Supp. 2d 538, 550 (N.D. Tex. 2007)
(Fitzwater, J.) (noting that a court can dismiss an action under Rule 12(b)(6) if “it is
apparent from the face of plaintiffs’ complaint that defendants are entitled to NoerrPennington immunity . . .”).
From the outset, however, the Supreme Court indicated that “[t]here may be
situations in which [petitioning activity] ostensibly directed toward influencing

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government action, is a mere sham to cover what” would be, in the absence of NoerrPennington immunity, an illegal activity. Eastern Railroad Presidents Conference v. Noerr
Motor Freight, Inc., 365 U.S. 127, 144 (1961). Individuals engaging in such activity
are abusing, rather than effectively using, their First Amendment right to petition.
Consequently, the “sham” exception removes Noerr-Pennington immunity “when one
party has begun litigation not to win that litigation, but rather to force its competitor
to waste time and money in defending itself.” Video International Production, 858 F.2d
at 1082.
4. Elements of a Breach of Contract Claim
The parties agree that to succeed on a breach of contract claim under Texas law
a plaintiff must prove “(1) the existence of a valid contract; (2) performance or
tendered performance by the plaintiff; (3) breach of the contract by the defendant;
and (4) damages sustained by the plaintiff as a result of the breach.”4 Beauty
Manufacturing Solutions Corporation v. Ashland, Inc., 848 F. Supp. 2d 663, 667 (N.D.
Tex. 2012) (Fish, J.) (quoting Mullins, 564 F.3d at 418); see also Defendant’s Brief at
15 n.4; Plaintiff’s Response to Defendant’s Motion to Dismiss (“Response”) at 23
(docket entry 26).

4

When this case is litigated on the merits, it might be advisable for the
parties to research whether the United Nations Convention on Contracts for the
International Sale of Goods governs their contract. United Nations Convention on
Contracts for the International Sale of Goods, adopted on Apr. 11, 1980, 52 Fed. Reg.
6262-6280, 1489 U.N.T.S. 3.
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B. Application
1. The Court Sustains Source’s Motion to Strike Evidence
Paragraphs five and six of Zhongda Chen’s declaration are inadmissible
evidence.5 See Declaration of Mr. Zhongda Chen in Support of Defendant’s Motion
to Dismiss for Lack of Personal Jurisdiction (“Chen Declaration”) ¶¶ 5-6 (docket
entry 15); Plaintiff’s Motion to Strike Inadmissible Statements in the Chen
Declaration (“Motion to Strike”) (docket entry 28). Chen is “familiar with Ningbo
Desa’s past and present corporate structure and operations” in his role as vice
president of the company. Chen Declaration ¶ 2. However, he fails to explain how
he possesses knowledge regarding the business interactions between Source and Cixi,
the latter being the company Chen claims directly sold the heaters to Source. See
Chen Declaration ¶¶ 5-6 (relying on nonspecific phrases such as “it is my
understanding” and “in researching the facts”). Without additional context, his
statements are mere self-serving allegations “based on conjecture or speculation.”
Kariuki v. Tarango, 709 F.3d 495, 507 (5th Cir. 2013) (internal quotations and
citation omitted). Because the statements are “not significant or probative evidence,”
id. (internal quotations and citation omitted), they are inadmissible. See Thompson v.
Chambers, 804 F. Supp. 188, 191 (D. Kan. 1992) (“[T]o be sufficient to put the
contested facts in issue, affidavits submitted in support of or in opposition to motions
5

Desa resubmitted the Chen affidavit which it filed to support its earlier
motion to dismiss for lack of personal jurisdiction. Defendant’s Brief at 1 n.1.
- 22 -

to dismiss for lack of jurisdiction must comply with the requirements of FED. R. CIV.
P. 56[(c)(4)]; i.e., they must be made on personal knowledge, set forth such facts as
would be admissible in evidence, and show affirmatively that the affiant is competent
to testify to the matters stated therein.”); FED. R. EVID. 602 (“A witness may testify
to a matter only if evidence is introduced sufficient to support a finding that the
witness has personal knowledge of the matter. Evidence to prove personal knowledge
may consist of the witness’s own testimony.”).
The purchase order attached to the Chen declaration suffers from similar
evidentiary flaws. See Chen Declaration, Exhibit A. According to Chen, the
document reflects a sale between Cixi and Source. Chen Declaration ¶ 6. However,
Chen “must produce evidence sufficient to support a finding that the item is what
[he] claims it is.” FED. R. EVID. 901(a). It is unclear how, as the vice president of
Desa, Chen would have access to a purchase order between Source and Cixi. The
failure “to include any basis whatsoever for authenticating the purchase order” makes
it inadmissible. Motion to Strike at 3. Moreover, at trial, the purchase order would
be inadmissible hearsay. Desa attempts to use the purchase order to prove that Cixi
sold the heaters directly to Source. In other words, Desa attempts to “prove the truth
of the matter[s] asserted” in the document. FED. R. EVID. 801(c)(2). Without
additional information bringing the purchase order within one of the hearsay
exceptions, see FED. R. EVID. 803-04, the document is inadmissible.

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2. Personal Jurisdiction Analysis
In the brief supporting its motion to dismiss, Desa fails to address why the
exercise of personal jurisdiction with respect to any claims would be unfair and
unreasonable. See Defendant’s Brief at 1-12. Therefore, if minimum contacts exist
with respect to a specific claim, the court can exercise jurisdiction over Desa. See
Wien Air Alaska, 195 F.3d at 215.
a. Source Established a Prima Facie Case for
Specific Personal Jurisdiction Over Desa
With Respect to the Contract Claims
Desa had many contacts with Texas during the life of the contract.6 Gavin Lao
-- a managing director for Desa – “sent numerous emails [to Source representatives]
agreeing to certain specification changes for the Heaters and also provided
information and edits for the user’s manual for the Heaters.” Dolder Declaration ¶¶
4, 9. “In the spring of 2013, at Desa’s request, representatives of Desa . . ., including
Mr. Lao and an individual who was held out to be the Desa plant manager, Zheng
Guohai, visited Source’s office in Plano, Texas.” Id. ¶ 16; see also Plaintiff’s Appendix,
6

Desa argues that “the Chen declaration establishes that there never was
a contract between Source Network and Ningbo Desa.” Defendant’s Brief at 9
(emphasis in original). As discussed above, the portions of the Chen declaration
supporting Desa’s argument, as well as the purchase order, are inadmissible. See
supra at 22-23. Even if the evidence were admissible, Source presents enough
conflicting evidence to establish a prima facie case for personal jurisdiction. See, e.g.,
Cease-and-Desist Letter at App. 11 (“We are informed that Source Network recently
terminated its business relationship with Ningbo Desa and commenced working with a
new Chinese supplier in the manufacture and packaging of the heaters.”) (emphasis
added).
- 24 -

Tab 1, Exhibits C-D. Desa also shipped “[a]pproximately 115,000 heaters . . .
directly to Source in Texas” during the life of the contract. Dolder Declaration ¶ 15.
These contacts establish specific personal jurisdiction over Desa with respect to
the breach of contract and breach of implied warranty of merchantability claims. The
contacts furthered the contractual relationship between the parties and thus “relate[ ]
to” the contract-based claims. J.R. Stripling, 234 F.3d at 871. Moreover, given the
multitude of contacts, Desa “could anticipate being haled into court” in Texas. Burger
King, 471 U.S. at 474.
b. Source Established a Prima Facie Case for Specific Personal
Jurisdiction Over Desa With Respect to the Trademark
Infringement, Unfair Competition, Tortious Interference,
and Declaratory Judgment Claims7
Desa’s conduct satisfies the three elements of Calder’s “effects test” and thus
establishes minimum contacts with Texas. See supra at 9-15. Source alleges that
Desa committed the business torts of trademark infringement under both Texas
common law and the Lanham Act, unfair competition under the Lanham Act, and
tortious interference under Texas law. Complaint ¶¶ 24-30. As a Texas-based
company, Source experienced all of the harm resulting from the alleged wrongful acts

7

Although Source only applied Calder’s effects test to the tortious
interference claim, the reasoning in its brief applies equally to its trademark
infringement, unfair competition, and declaratory judgment claims. Additionally,
given the discussion below, the court does not need to determine whether Desa
possesses sufficient contacts with the United States as a whole to authorize the
exercise of jurisdiction under Federal Rule of Civil Procedure 4(k)(2).
- 25 -

in Texas. Finally, as in SGS-Thomson, 1995 WL 313932, at *1-3, and Athletic Training
Innovations, 2010 WL 4103309, at *3-7, Desa’s email to Source containing the ceaseand-desist letter “relates to” the trademark, unfair competition, and tortious
interference claims and constitutes “[p]urposeful forum-directed activity” that
establishes minimum contacts to “permit the exercise of specific jurisdiction . . ..”8
Ham, 4 F.3d at 415-16.
Source also requests a declaratory judgment that it is the “true owner of the
Mark and Logo, Desa is not the owner of the Mark or Logo and does not have the
right to sell goods or services under the Mark or Logo, and that Source Network has
not infringed any purported rights of Desa.” Complaint ¶ 33. This declaratory
judgment action is an alternative remedy to address the same underlying conduct
relevant to the unfair competition and trademark claims above. Thus, the contacts
that established personal jurisdiction for these other claims are also sufficient for the
declaratory judgment claim.

8

The letter states that Desa will “take legal action as necessary in the
relevant territories to protect its own intellectual property rights.” Cease-and-Desist
Letter at App. 12. This letter is one of the main reasons why Source filed the
trademark infringement and unfair competition claims. As for the tortious
interference claim, the cease-and-desist letter establishes a Texas contact and the
emails Desa sent to Source’s customers qualify as acts that “were ‘purposefully
directed’ towards a [Texas] resident.” Athletic Training Innovations, 2010 WL
4103309 at *5; Dolder Declaration at App. 8-10, ¶¶ 29-33; Plaintiff’s Appendix, Tab
1, Exhibits B, F-H.
- 26 -

3. Noerr-Pennington Immunity Does Not Support
Dismissing the Tortious Interference Claim
Noerr-Pennington authorizes dismissal through a Rule 12(b)(6) motion only
when its applicability “appears on the face of the pleadings . . ..” Miller, 726 F.3d at
726. The complaint alleges that:
Desa willfully and intentionally interfered with one or
more of [Source’s contractual] relationships by providing
false information to one or more of these customers of
Source Network, including but not limited to claiming that
it is the rightful owner of the Mark and Logo and offering to
provide heaters under the Mark and Logo in place of
Source Network.
Complaint ¶ 30. If Desa knew that Source possessed the rights to the trademark and
logo, then it contacted Desa’s customers not to exercise valid rights, “but rather to
force its competitor to waste time and money in defending itself.” Video International
Production, 858 F.2d at 1082. Thus, based solely on the “face of the pleadings,” the
“sham” exception renders Noerr-Pennington immunity inapplicable. Miller, 726 F.3d at
726.
4. Source States a Valid Claim for Breach of Contract
The complaint sufficiently pleads the four elements necessary for a breach of
contract claim. According to the complaint, after negotiations in 2010, the parties
“entered into an agreement . . . for [Desa] to become one of Source Network’s

- 27 -

manufacturers of heaters . . ..”9 Complaint ¶ 13. Initially, both parties performed
under the contract (i.e., Desa manufactured heaters for Source and Source paid Desa).
See id. ¶15. However, the complaint alleges that in 2013 Desa breached the contract
by manufacturing an increasing number of defective heaters. Id. ¶ 16. As a result of
the breach, “Source Network received many complaints and returns of defective
heaters from unsatisfied customers in Texas and elsewhere . . ..” Id. Source alleges
that damages stemming from this breach include “existing returns from end
consumers, future returns from end consumers, loss of business and loss of goodwill
in the marketplace.” Id. ¶ 17. The court concludes that these allegations are “enough
to raise a right to relief above the speculative level . . ..” In re Katrina Canal, 495 F.3d
at 205 (quoting Twombly, 550 U.S. at 555) (internal quotation marks omitted).
III. CONCLUSION
For the reasons discussed above, Desa’s motions to dismiss are DENIED and
Source’s motion to strike is GRANTED.

9

Even if paragraphs five and six of the Chen declaration were admissible
and the court consequently presumed that Source’s contractual counterparty were
Cixi, the court would still deny the motion to dismiss. Source’s evidence that “Cixi ...
is a holding company for Desa” would require discovery regarding the corporate
relationship between the two corporations before the court would dismiss the claim
against Desa. Dolder Declaration at App. 3, ¶ 10.
- 28 -

SO ORDERED.

May 15, 2015.

___________________________________
A. JOE FISH
Senior United States District Judge

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