Purple Innovations v. Honest Reviews et al
MEMORANDUM DECISION AND ORDER-the court DENIES Defendants' Motions to Dismiss for lack of personal jurisdiction and improper venue, DENIES Defendants' Motions to Transfer Venue, DENIES GhostBed's Motion to Dismiss pursu ant to Rule 12(b)(6), except with respect to Plaintiff's Second Cause of Action for Contributory False Association and False Advertising, for which GhostBed's Motion is GRANTED. See Order for details. Signed by Judge Dee Benson on 7/25/17. (jmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
PURPLE INNOVATIONS, LLC, a
Delaware limited liability company,
MEMORANDUM DECISION AND
HONEST REVIEWS, LLC, a Florida
Corporation, RYAN MONAHAN, an
individual, and GHOSTBED, INC., a
Case No. 2:17-cv-138-DB
District Judge Dee Benson
Before the court are two Motions to Dismiss, one filed by Defendants Honest Reviews,
LLC (“HMR”) and Ryan Monahan (“Monahan”) (collectively “HMR Defendants”) (Dkt. No.
64), and the other filed by Defendant GhostBed, Inc. (“GhostBed”). (Dkt. No. 67.) The court
held a hearing on the Motions on July 7, 2017. Plaintiff was represented by James E. Magleby,
Christine T. Greenwood, and Adam Alba. The HMR Defendants were represented by Marc J.
Randazza, D. Gill Sperlein, and W. Andrew McCullough. GhostBed was represented by Eleanor
M. Yost and Kathryn Smith. At the hearing, the court heard argument with respect to the above
motions.1 At the conclusion of the hearing, the court took the motions under advisement. Now
being fully informed, the court issues the following Memorandum Decision and Order.
At the hearing, the court denied the HMR Defendants’ Motion to Strike and for Sanctions (Dkt. No. 139) and
granted Plaintiff’s Motion for Leave to File Supplemental Memoranda (Dkt. No. 140). The evidence submitted in
Plaintiff’s supplemental memoranda (Dkt. Nos. 137 and 138), as well as Ghostbed’s supplemental authority (Dkt.
No. 129) are included in the court’s analysis.
Plaintiff is a manufacturer and online distributor of mattresses and related products.
(Compl.2 at ¶¶ 14-27.) Plaintiff is a Delaware limited liability company with its principal place of
business in Utah County, Utah. (Id. at ¶ 6.) Plaintiff manufactures its products in Utah but does
not maintain any brick and mortar stores for the sale of its products. (Id. at ¶ 24.) Instead,
Plaintiff sells its bedding products solely through an e-commerce platform. (Id.)
Plaintiff alleges that, beginning in January 2017, the HMR Defendants began a smear
campaign against Plaintiff on their purportedly independent mattress review website,
honestmattressreviews.com. (Id. at ¶ 39.) Plaintiff alleges that the HMR Defendants made
numerous false and misleading statements regarding Plaintiff’s products, including posts
attacking the safety of Plaintiff’s products without factual support. (Id. at ¶¶ 39-117.) In its
Complaint, Plaintiff identifies several specific posts that link Plaintiff’s products to cancercausing agents, provide unsubstantiated false information about the make-up of Plaintiff’s
products, and post inflammatory images with respect to Plaintiff’s products. (Id. at ¶¶ 67, 68, 77,
Plaintiff identifies other posts in which the HMR Defendants state that they made
“repeated inquiries to [Plaintiff] for information” including a post that states that the HMR
Defendants attempted to contact Plaintiff for “159 days”, and posts specifically identifying two
separate phone calls to Plaintiff in Utah. (Id. at ¶¶ 54, 60, 82, 94, 97.) The website also includes
several images of Plaintiff’s products, some of which have an unidentified source, some which
All citations to the Complaint refer to the First Amended Complaint, Dkt. No. 63.
appear to be taken from Plaintiff’s website, and others which are labeled as being drawn from a
Utah news source, KUTV 2 News. (Id. at ¶¶ 76, 77, 90, 102, 105, 109.)
Plaintiff further alleges that the HMR Defendants, while claiming to provide independent
consumer reviews, are actually closely associated with Plaintiff’s competitor, GhostBed. (Id. at ¶
118.) In support of its allegations, Plaintiff provides facts showing that Monahan was an author
on the GhostBed’s website on several occasions (id. at ¶¶123-129), that Monahan’s Twitter and
LinkedIn profiles identified him as the Chief Brand Officer of GhostBed until approximately
October 2016 (id.), that Monahan identified himself as Chief Brand Officer of GhostBed when
he spoke at a Content and Commerce Summit in September 2016 (id.at ¶130), that Monahan
used the email address “ryan@GhostBed.com” and was responsible for handling GhostBed
inquiries to that email (id. at ¶¶132-133), that the HMR Defendants, as well as Social Media
Sharks—another company owned by Monahan—are jointly represented in other litigation by the
same law firm representing GhostBed in this litigation (id. at ¶134), and that GhostBed has
admitted to continuing to maintain a connection with Monahan through Social Media Sharks and
another entity, Achieve Agency. (Id. at ¶¶ 135-136.) The honestmattressreviews.com website
makes several affirmative representations of independence from all mattress manufacturers,
including that the website does not receive “affiliate commissions” or seek “affiliate
relationships” with mattress companies, that the website is not interested in “influencing a
purchase decision to promote a company”, and that the website is “free from corporate or
conglomerates.” (Id. at ¶¶ 148-155.)
Plaintiff further alleges that GhostBed representatives have independently posted false or
misleading statements about Plaintiff’s products. Plaintiff alleges that the daughter of
GhostBed’s CEO, an employee of GhostBed, posted a review under a false name, stating that
Plaintiff’s mattress had a “whitish powder” all over it and expressing concern that the powder
would cause cancer. (Id. at ¶ 137.)
Plaintiff provided the court with additional facts supporting its allegations of a close
association between GhostBed and the HMR Defendants and GhostBed’s independent
defamatory comments in its Opposition to the Motions to Dismiss, including various emails
between Monahan and GhostBed representatives and various posts or comments made by
GhostBed employees. (Dkt. No. 94.) The court does not rely on the additional facts presented in
Plaintiff’s Opposition in determining the issue of jurisdiction here, but rather relies on Plaintiff’s
Complaint with its attachments and the Declarations submitted by the parties. (Dkt. Nos. 30, 31,
In support of their motions, Defendants reference two Declarations previously submitted
to the court3, the Declaration of Ryan Monahan (Dkt. No. 30) and the Declaration of Marc
Werner (Dkt. No. 31). In his Declaration, Monahan states that he is the sole member and
president of HMR, which operates honestmattressreviews.com, and the founder, co-owner, and
CEO of Social Media Sharks, a Florida marketing company. Monahan maintains a current
business relationship with GhostBed through Achieve Agency and Social Media Sharks, but
those services do not involve HMR. (Id. at ¶ 6.) Monahan has identified himself as Chief Brand
Officer of GhostBed on LinkedIn, Twitter, and a conference in September 2016, but was later
asked by GhostBed to stop using the title. (Id. at ¶¶ 7-8.) Monahan has never had an office or
phone extension with GhostBed. (Id. at ¶ 9.) Monahan further states that HMR has a single
Monahan and Mr. Werner’s Declarations were submitted to the court in connection with the HMR Defendants’
motion to stay temporary restraining order.
source of income—Google Adsense—and that HMR has never received any consideration from
GhostBed, nor has any company, person, or product had any influence over reviews on HMR.
(Id. at ¶¶ 11-13.)
In the Declaration of Marc Werner, CEO of GhostBed, Mr. Werner disavows any
relationship with the HMR Defendants, stating that “GhostBed does not have any affiliation
whatsoever with co-defendants Honest Reviews LLC or Mr. Monahan.” (Dkt. No. 31 at ¶ 6.)
GhostBed does not own, operate, direct, control or contribute to honestmattressreviews.com. (Id.
at ¶¶ 4-5.) GhostBed “did not, and does not, remunerate Mr. Monahan or Honest Reviews LLC
in any way for anything they do in connection with the honestmattressreviews.com website.” (Id.
at ¶ 7.) “Mr. Monahan is not, and has never been, an employee, director, or officer of GhostBed.”
(Id. at ¶ 11.) When Monahan identified himself on Twitter and LinkedIn as “Chief Brand
Officer” of GhostBed, he did so “mistakenly.” (Id. at ¶ 14.) Monahan is “not a member of
GhostBed’s marketing department or any other GhostBed department” and does not have an
office, phone extension, or email address with GhostBed. (Id. at ¶¶ 15-19.) Monahan has “no
monetary interest in the success of GhostBed” and “receives no compensation either directly or
indirectly from GhostBed for the content he publishes on honestmattressreviews.com.” (Id. at ¶
20.) However, Werner acknowledges a connection with Monahan through Achieve Agency and
Social Media Sharks. (Id. at ¶ 12.)
In a supplemental memorandum, Plaintiff submitted a Declaration of GhostBed’s former
Director of Marketing, Calisha Anderson, which disputes Werner’s Declaration and provides
additional information indicating a close relationship between Monahan and Ghostbed. (Dkt. No.
137.) Anderson was employed as Director of Marketing of GhostBed from October 2016 until
June 7, 2017. (Dkt. No. 137-1 at ¶ 4.) She had “very little actual authority for GhostBed’s
marketing” and Monahan “was the real ‘Director of Marketing.’” (Id. at ¶¶ 5, 8.) Monahan
“controlled every aspect of the GhostBed website from before the time [Anderson] was hired
until the day that [she] left GhostBed.” (Id. at ¶ 11.) Monahan “was on the agenda” for every
weekly staff meeting Anderson attended. (Id. at ¶¶ 14, 15.) Monahan attended GhostBed staff
meetings telephonically and “led the discussion” regarding marketing. (Id. at ¶ 16.) Monahan
“frequently used the email address firstname.lastname@example.org to communicate with others, including
in the system used to send out email blasts.” (Id. at ¶ 43.) Monahan “was the Chief Brand Officer
of GhostBed, and he held himself out as such in his communications with others….” (Id. at ¶
41.) During Anderson’s employment, Monahan spoke on the telephone regularly with Werner,
visited GhostBed’s offices from time to time, and went to Werner’s house for dinner. (Id. at ¶¶
Shortly after being hired, Anderson was informed by CEO Werner’s daughter, Ashley
Werner, “that Ryan was the real ‘Director of Marketing’” and that “Monahan’s marketing
decisions trumped [Anderson’s] marketing decisions.” (Id. at ¶ 8.) Monahan “could and did and
several occasions veto [Anderson’s] decisions.” (Id.) Based on Anderson’s observations and
experience, she “suspect[s] that [Monahan] is being paid under the table by GhostBed.” (Id. at ¶
Anderson’s Declaration also provided support for the proposition that GhostBed
independently made statements substantially similar to those alleged in the Complaint. She stated
that CEO Werner “would tell [Anderson] and other GhostBed employees about a powder on
[Plaintiff’s] mattress”, “saying that a competitor was using talcum powder and talking about
lawsuits against Johnson & Johnson because talcum powder caused cancer.” (Id. at ¶ 24.)
Anderson further stated that she believed that Werner “wanted consumers to know about this.”
GhostBed is a Delaware corporation with its principal place of business in Plantation,
Florida. (Compl. at ¶ 9.) Similarly, HMR is a Florida limited liability company with its principal
place of business in Plantation, Florida. (Id. at ¶ 7.) Monahan is an individual domiciled in
Florida. (Id. at ¶ 8.) Monahan is the sole member and president of HMR, which operates
honestmattressreviews.com. (Dkt. No. 30 at ¶ 2.) None of the defendants appears to have a
residence or place of business in the state of Utah. (Id.at ¶¶ 4-5; Compl. at ¶ 9.)
When, as in this case, a court considers a motion to dismiss “on the basis of the complaint
and affidavits,” a plaintiff must “only make a prima facie showing of personal jurisdiction.”
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The
plaintiff may make this prima facie showing by demonstrating by affidavit or other written
materials, facts that if true would support jurisdiction over the defendant. OMI Holdings, Inc. v.
Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir. 1998). “[A]ny factual disputes in the parties’
affidavits must be resolved in plaintiffs’ favor.” Dudnikov, 514 F.3d at 1070. In order to defeat
the plaintiff’s prima facie showing of personal jurisdiction, the moving defendant must present a
compelling case demonstrating “that the presence of some other considerations would render
jurisdiction unreasonable.” OMI Holdings, 149 F.3d at 1091 (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 477 (1985)).
To obtain personal jurisdiction over a nonresident defendant in a diversity action, a
plaintiff must show (1) that jurisdiction is legitimate under the laws of the forum state, and
(2) that the exercise of jurisdiction does not offend the due process clause of the Fourteenth
Amendment. Soma Medical Int’l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir.
I. Jurisdiction Under State Law
Utah law expressly states that the Utah state long arm statute must be interpreted broadly
“so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due
process clause of the Fourteenth Amendment to the United States Constitution.” Utah Code §
78B-3-201; see also Starways, Inc. v. Curry, 980 F.2d 204, 206 (Utah 1999) (“We have held that
the Utah long-arm statute ‘must be extended to the fullest extent allowed by due process of
law.”) (quoting Synergetics v. Marathon Ranching Co., 701 F.2d 1106, 1110 (Utah 1985)).
Because the Utah long-arm statute confers the maximum jurisdiction permissible consistent with
the Due Process Clause, the court proceeds to determine whether the exercise of personal
jurisdiction over Defendants meets federal due process standards.
II. Due Process Analysis
“The Due Process Clause protects an individual’s liberty interest in not being subject to
the binding judgments of a forum with which he has established no meaningful ‘contacts, ties, or
relations.’” Burger King, 471 U.S. at 471-72 (quoting International Shoe Co. v. Washington, 326
U.S. 310, 319 (1945)). Accordingly, a “court may exercise personal jurisdiction over a
nonresident defendant only so long as there exist ‘minimum contacts’ between the defendant and
the forum state.” World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quoting
International Shoe, 326 U.S. at 316). The minimum contacts standard can be met in two ways.
First, a court may assert specific personal jurisdiction over a nonresident defendant where “the
defendant has ‘purposefully directed’ his activities at residents of the forum, and the litigation
results from alleged injuries that arise out of or are related to those activities.” Burger King, 471
U.S. at 472. Where no nexus exists between the forum-related activity and the injury sustained,
the court may nevertheless exercise general jurisdiction over the defendant when the defendant’s
contacts are “so pervasive that personal jurisdiction is conferred by the ‘continuous and
systematic’ nature of the defendant’s in-state activities.” OMI Holdings, 149 F.3d at 1090-91.
The court does not find that any of the Defendants have continuous and systematic contacts with
the State of Utah such that they would be subjected to general personal jurisdiction in Utah. As
such, the court proceeds with the specific personal jurisdiction analysis as to each defendant.
A. Specific Jurisdiction
The court’s specific jurisdiction inquiry is two-fold. First, the court must determine
whether the defendant has such “minimum contacts” with the forum state “that he should
reasonably anticipate being haled into court there. World-Wide Volkswagen, 444 U.S. at 297.
These “minimum contacts” are established “‘if the defendant has “purposefully directed” his
activities at residents of the forum and the litigation results from alleged injuries that “arise out
of or relate to” those activities.’” OMI Holdings, 149 F.3d at 1091 (quoting Burger King, 471
U.S. at 472.) Second, if the defendant’s activities create sufficient minimum contacts, then the
court must consider “whether the exercise of personal jurisdiction over the defendant offends
‘traditional notions of fair play and substantial justice.’” Id. (quoting Asahi Metal Indus. Co. v.
Superior Court of California, 480 U.S. 102, 113 (1987)). The latter inquiry requires a
determination of whether a district court’s exercise of personal jurisdiction over a defendant with
minimum contacts is “reasonable” in light of the circumstances surrounding the case. OMI
Holdings, 149 F.3d at 1091.
1. Minimum Contacts – HMR Defendants
“[T]he Supreme Court has instructed that the “minimum contacts” standard requires,
first, that the out-of-state defendant must have “purposefully directed” its activities at residents
of the forum state, and second, that the plaintiff’s injuries must “arise out of” defendant’s forumrelated activities.” Dudnikov, 514 F.3d at 1071 (quoting Burger King, 471 U.S. at 472.) The
United States Court of Appeals for the Tenth Circuit has explained, however, that the
“purposeful direction” requirement can appear in “different guises.” Id. In contract cases, “we
sometimes ask whether the defendant “purposefully availed” itself of conducting business in the
forum state; in the tort context, meanwhile, “we often ask whether the non resident defendant
‘purposefully directed’ its activities at the forum state.” Id. (citing Bell Helicopter Textron, Inc.
V. Hekiqwest Int’l, Ltd., 385 F.3d 1291, 1296 (10th Cir. 2004). Under either approach, the
“shared aim of purposeful direction” is to “ensure that an out-of-state defendant is not bound to
appear to account for merely ‘random, fortuitous, or attenuated contacts’ with the forum state.”
Id. (quoting Burger King, 471 U.S. at 475.)
In this case, Plaintiff attempts to satisfy the “purposeful direction” requirement by
application of the “effects test” set forth by the United States Supreme Court in Calder v. Jones,
465 U.S. 783, 789-90 (1984), and more recently applied by the Tenth Circuit in Dudnikov v.
Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063 (2008). Specifically, Plaintiff contends that the
HMR Defendants’ false and misleading statements about a Utah resident and its activities in
Utah, combined with the HMR Defendants’ purchase of Plaintiff’s products and use of materials
on Plaintiff’s website, demonstrate that the HMR Defendants expressly aimed their activities at
Utah residents, and that Utah has been the focal point of the tortious conduct and of the resulting
In Dudnikov, the Tenth Circuit explained that purposeful direction may be found where
plaintiff has alleged “(a) an intentional action . . . that was (b) expressly aimed at the forum state
. . . with (c) knowledge that the brunt of the injury would be felt in the forum state.” Id. In the
internet context, the Tenth Circuit has recognized that “a person who simply places information
on the Internet does not subject himself to jurisdiction in each State into which the electronic
signal is transmitted and received.” Shrader v. Biddinger, 633 F.3d 1235, 1240–41 (10th Cir.
2011) (quoting ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th
Cir.2002)). Rather, to subject himself to personal jurisdiction in a state, a defendant must direct
actionable electronic activity into the state “with the manifested intent of engaging in business or
other interactions within the State.” Id.
Applying the Calder effects test, as set forth in Dudnikov and clarified in Shrader, this
court finds that Plaintiff has sufficiently alleged “purposeful direction” with respect to the HMR
Defendants, such that they have the requisite minimum contacts with Utah. First, Plaintiff has
sufficiently alleged that the HMR Defendants intentionally posted materially false and
misleading statements about Plaintiff’s products on the honestmattressreviews.com website.
(Compl. at ¶¶ 39-117.) The HMR Defendants also do not dispute that the alleged conduct was
intentional. (Dkt. No. 64 at 7 n. 3.)
Second, the court finds that the HMR Defendants’ conduct was expressly aimed at the
state of Utah. The Dudnikov court explained that the “express aiming” test focuses on a
defendant’s intentions–what was the “focal point of [the defendant’s] purposive efforts.”
Dudnikov, 514 F.3d at 1075. In this case, the focal point of the HMR Defendants’ alleged efforts
was to damage a Utah-based competitor. Stated another way, the “express aim” of the HMR
Defendants’ conduct was to effectively reach into Utah and damage Plaintiff’s business and
reputation. See Dudnikov, 514 F.3d at 1075.
The HMR Defendants targeted Plaintiff, knowing that Plaintiff is a Utah-based company,
operating primarily in Utah. (Compl. at ¶¶ 94, 102.) The HMR Defendants acknowledge on the
honestmattressreviews.com website that they made “repeated inquiries to [Plaintiff] for
information, for 159 days”, including two specifically identified phone calls to Plaintiff in Utah.
(Id. at ¶¶ 54, 60, 82, 94, 97.) Such extensive contact with Plaintiff, acknowledged by the HMR
Defendants, indicates that they intentionally and regularly reached into Utah to harm a Utahbased competitor. Furthermore, many of the materials used on the honestmattressreviews.com
website to damage Plaintiff were taken from Utah sources, such as Plaintiff’s own marketing
photos and videos posted to its website and social media, and KUTV 2 News in Utah. (Id. at ¶¶
102, 105.) Such direct acquisition of Utah-based materials creates “an actual, not merely a
possible, contact with the forum”, which “constitute[s] a purposeful availment of the Utah
forum.” Kindig It Design, Inc. v. Creative Controls, Inc., 157 F. Supp. 3d 1167, 1179 (D. Utah
2016); see also SelectHealth, Inc. v. Risinger, 18 F. Supp. 3d 1268, 1275 (D. Utah 2014)
(holding that “copying Plaintiff's website content and using it” for an allegedly unlawful purpose
was sufficient to demonstrate that the defendant purposely directed his activities to the state of
Utah). The court is satisfied that the HMR Defendants expressly aimed the allegedly tortious
conduct at the forum state of Utah and, as such, have sufficient minimum contacts to satisfy the
exercise of personal jurisdiction.
The court also finds that the third element—knowledge that the brunt of the injury would
be felt in the forum state of Utah—is met, for many of the same reasons. The HMR Defendants
were aware, based on conversations with Plaintiff and the materials used from KUTV and
Plaintiff’s website for the honestmattressreviews.com site, that Plaintiff is a Utah-based company
with many Utah customers. The HMR Defendants’ posts specifically and negatively targeted
Plaintiff to the exclusion of other mattress retailers it reviewed. (Compl. at ¶¶ 39-117.) Plaintiff
has sufficiently alleged that the HMR Defendants had knowledge that the brunt of the injury
from their actions would be felt in the forum state of Utah.
Having determined that the HMR Defendants “purposefully directed” their activities at
the forum state, the court has no difficulty concluding that Plaintiff’s injuries “arise out of “ the
HMR Defendants’ contacts with the forum jurisdiction. See Burger King, 471 U.S. at 472.
Plaintiff’s claims arose from the HMR Defendants’ posts on the honestmattressreviews.com
website, which include materials taken from Plaintiff’s website and references to the HMR
Defendants’ telephonic and electronic contact with Plaintiff. Those same actions also constitute
the HMR Defendants’ contacts with Utah. Therefore, the court concludes that Plaintiff has
alleged facts sufficient to support a finding that the HMR Defendants’ conduct was
“purposefully directed” at Utah and that Plaintiff’s claims arose out of those contacts such that
the HMR Defendants have minimum contacts with Utah.
2. Minimum Contacts – GhostBed
Having determined that Plaintiff has sufficiently alleged minimum contacts with respect
to the HMR Defendants, the court turns now to Plaintiff’s allegations with respect to GhostBed.
As discussed above, to defeat dismissal for lack of personal jurisdiction, Plaintiff must make a
prima facie showing that GhostBed engaged in “(a) an intentional action . . . that was (b)
expressly aimed at the forum state . . . with (c) knowledge that the brunt of the injury would be
felt in the forum state.” Dudnikov, 514 F.3d at 1075. Plaintiff again attempts to make this
showing by application of the Calder “effects test.” More specifically, Plaintiff alleges that
GhostBed conspired with the HMR Defendants to target Plaintiff with false and misleading
statements for purposes of obtaining a competitive advantage. (See Compl. at ¶¶ 39-117.)
Accordingly, Plaintiff asserts that GhostBed’s creation of contacts in Utah, both independently
and through the HMR Defendants, are sufficient here to establish minimum contacts for purposes
of Due Process. (Id.)
The court agrees. With respect to the first Calder factor, Plaintiff has sufficiently alleged
that GhostBed acted intentionally, both through the HMR Defendants and independently. The
allegations of an association between Monahan and GhostBed in the Complaint (Compl. at
¶¶123-136,) along with Anderson’s statements that Monahan “was the real ‘Director of
Marketing’”, “was on the agenda” for every weekly staff meeting Anderson attended, “led the
discussion” regarding marketing, and had a close relationship with GhostBed’s CEO and his
daughter, are sufficient to establish at this stage that GhostBed intentionally associated with
Monahan. (Dkt. No. 137-1 at ¶¶ 8, 14-17, 21.) That intentional association, combined with the
intentional actions of the HMR Defendants to damage a competitor of GhostBed are sufficient to
establish an intentional action for purposes of minimum contacts with respect to GhostBed. The
inference of intent is further strengthened by the express disavowal of any relationship with any
mattress company on the honestmattressreviews.com website. (See Compl. at ¶¶ 39, 118.)
Plaintiff has also alleged additional, independent actions taken by GhostBed that satisfy
the standard. In its Complaint, Plaintiff alleges that the daughter of GhostBed’s CEO, an
employee of GhostBed, posted a review under a false name, stating that Plaintiff’s mattress had a
“whitish powder” all over it and expressing concern that the powder would cause cancer.
(Compl. at ¶ 137.) In Anderson’s Declaration, Plaintiff submits that GhostBed’s CEO discussed
the powder on Plaintiff’s mattress with GhostBed employees and compared it to cancer causing
agents, and wanted consumers to be aware of it. (Dkt. No. 137-1 at ¶ 24.) Plaintiff has alleged
sufficient intentional actions taken by GhostBed to satisfy the first prong of the Calder test.
Second, Plaintiff must make a prima facie showing that these intentional actions were
expressly aimed at the forum state of Utah. Plaintiff asserts that GhostBed has worked with the
HMR Defendants to target Plaintiff and its manufacturing process in Utah, to such a degree that
the forum state of Utah has become the focal point of their efforts. The facts alleged by Plaintiff
relating to GhostBed’s connection to the HMR Defendants, combined with allegations that highlevel GhostBed employees made substantially similar comments during the same time period,
corroborate Plaintiff’s assertion that GhostBed acted in concert with the HMR Defendants to
reach into Utah to damage Plaintiff, a direct competitor of GhostBed. As discussed above,
Plaintiff has made a prima facie showing that GhostBed closely associated with Monahan during
the time period when he was posting the allegedly defamatory statements on the
honestmattressreviews.com website. (Dkt. No. 137-1 at ¶¶ 8, 14-17, 21; Compl. at ¶¶ 39, 118,
137.) Plaintiff has also established a prima facie case that the HMR Defendants reached into
Utah and established minimum contacts, by contacting Plaintiff in Utah regularly, using Utah
sources on its website, and targeting Plaintiff to the exclusion of other mattress providers. (Id. at
¶¶ 54, 60, 82, 94, 97, 102-105.) By virtue of the alleged close connection and collusion between
the HMR Defendants and GhostBed, the court similarly finds that GhostBed has “‘purposefully
directed’ its activities at the forum state” of Utah. Dudnikov, 514 F.3d at 1071.
This finding is further supported by Plaintiff’s evidence that, during the same time
period, the CEO of GhostBed and his daughter, an employee of GhostBed, made comments
online and to GhostBed employees that were substantially similar to those posted on the
honestmattressreviews.com website. (Dkt. No. 137-1 at ¶¶ 8, 14-17, 21; Compl. at ¶¶ 39, 118,
137.) Plaintiff has sufficiently alleged a prima facie showing that GhostBed acted in concert with
the HMR Defendants to intentionally reach into Utah to damage its Utah-based competitor.
Third, as with the HMR Defendants, the court finds that GhostBed had knowledge that
the brunt of the injury resulting from its intentional conduct would be felt in the forum state of
Utah. Plaintiff has alleged that Monahan was on the agenda for every weekly staff meeting that
Anderson attended, that he led the discussion regarding marketing, and that he had regular
telephonic and in-person contact with GhostBed’s CEO and his daughter, an employee of
GhostBed. (Dkt. No. 137-1 at ¶¶ 8, 14-17, 21.) Given the closeness and regularity of the
connection between Monahan and GhostBed, Monahan’s knowledge that the brunt of the injury
inflicted by the honestmattressreviews.com website may reasonably be imputed to GhostBed,
particularly in light of the related comments made by GhostBed’s CEO and his daughter to
others. Id. As such, Plaintiff has sufficiently alleged that GhostBed was aware that the brunt of
the injury inflicted by its actions would be felt in the forum state of Utah.
Finally, as with the HMR Defendants, having found that GhostBed “purposefully
directed” its activities at the forum state of Utah, the court also concludes that Plaintiff’s injuries
“arise out of” GhostBed’s contacts with the forum jurisdiction. See Burger King, 471 U.S. at
472. Plaintiff’s claims arose from the posts on the honestmattressreviews.com website, for which
Plaintiff has sufficiently alleged collusion between the HMR Defendants and GhostBed. Those
same actions also constitute GhostBed’s contacts with Utah. Therefore, the court concludes that
Plaintiff has alleged facts sufficient to support a finding that GhostBed’s conduct was
“purposefully directed” at Utah and that Plaintiff’s claims arose out of GhostBed’s contacts with
Utah such that GhostBed has minimum contacts with Utah.
Having determined that Plaintiff has met its burden of establishing “minimum contacts”
with all Defendants, the court must still inquire whether the existence of personal jurisdiction
would “offend traditional notions of fair play and substantial justice.” Dudnikov, 514 F.3d at
1080 (quoting International Shoe, 326 U.S. at 316). This inquiry requires a determination of
whether a district court’s exercise of personal jurisdiction is “reasonable” in light of the
circumstances surrounding the case. OMI Holdings, 149 F.3d at 1091. In this regard, the court
should consider: (1) the burden on the defendant, (2) the forum state’s interest in resolving the
dispute, (3) the plaintiff’s interest in receiving convenient and effective relief, (4) the interstate
judicial system’s interest in obtaining the most efficient resolution of controversies, and (5) the
shared interest of the several states in furthering fundamental substantive social policies. Id. at
1095; World-Wide Volkswagen, 444 U.S. at 292.
The analyses of minimum contacts and reasonableness are complimentary, such that the
reasonableness prong of the due process inquiry evokes a sliding scale:
the weaker the plaintiff’s showing on [minimum contacts], the less a defendant
need show in terms of unreasonableness to defeat jurisdiction. The reverse is
equally true: an especially strong showing of reasonableness may serve to fortify
a borderline showing of [minimum contacts].
Pro Axess, Inc. v. Orlux Distribution, Inc. , 428 F.3d 1270, 1280 (10th Cir. 2005) (quoting OMI
at 1092 (alterations in original) (quotations omitted)). However, in a case such as this, where the
court has found that the defendants “purposefully ... directed [their] activities” at Utah, in order
to defeat jurisdiction, the defendants “must present a compelling case that the presence of some
other considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477. The
Defendants are unable to meet this high standard.
a. Burden on Defendants of Litigating in the Forum
Regarding the first factor, Defendants reside in Florida. To defend a suit in Utah will
create a burden to them. However, “[m]odern transportation and communication, and in
particular the implementation of electronic case filing, noticing, and teleconferences, have to
some extent lessened the burden to out-of-state defendants.” Toytrackerz LLC v. Koehler, 2009
WL 1505705, at *18 (D. Kan. May 28, 2009). Accordingly, although the court recognizes that
Defendants may face some burden if required to litigate in Utah, “[i]n the modern world of air
transportation and digital communication, the court has no difficulty in finding that litigating in
Utah will not create so substantial a burden on [Defendants] as to violate Due Process.” Kindig It
Design, 157 F. Supp. at 1180.
b. Forum State’s Interest in Resolving the Dispute
States have “an important interest in providing a forum in which their residents can seek
redress for injuries caused by out-of-state actors.” OMI Holdings, 149 F.3d at 1096. In this case,
the court finds that Utah has a strong interest in adjudicating this controversy. Plaintiff not only
resides in Utah, but also claims to have suffered significant injury and monetary damages within
the state. See Burger King, 471 U.S. at 483-84.
c. Plaintiff’s Interest in Convenient and Effective Relief
Plaintiff similarly has a strong interest in obtaining relief in Utah, where it operates and
has suffered significant injury.
d. Interstate Judicial System’s Interest in Obtaining Efficient Resolution
With respect to the fourth factor, the court evaluates whether the forum state is the most
efficient place to litigate the dispute. Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1281
(10th Cir. 2005). In evaluating this factor, courts look to the location of witnesses, the location of
the underlying wrong, what forum’s substantive law governs the case, and whether jurisdiction is
necessary to prevent piecemeal litigation. Id. Here, the location of witnesses seems to be neutral,
as most of Plaintiff’s witnesses appear to be in Utah, while most of Defendants’ witnesses appear
to reside primarily in Florida. The underlying wrong is primarily electronic, but the brunt of the
injury is felt here in Utah, which weighs in favor of litigating the dispute in Utah. The parties
disagree about what substantive law will apply to the case. However, this court is fully capable
of applying the state law of Utah or Florida, as the case may be. Litigating this matter in Utah
allows all parties to resolve the dispute expeditiously and in one forum. Accordingly, this factor
does not indicate that the exercise of jurisdiction in Utah would be unreasonable.
e. States’ Interest in Furthering Fundamental Substantive Social Policies
Finally, the fifth factor of the reasonableness inquiry focuses on whether the exercise of
personal jurisdiction by the forum state affects the “substantive social policy interests of other
states or foreign nations.” OMI Holdings, 149 F.3d at 1097. The court finds no facts suggesting
that the exercise of personal jurisdiction in Utah would affect the substantive social policy
interests of any other state or foreign nation.
After evaluating the relevant factors, the court finds that Defendants have failed to
establish a “compelling case” that the exercise of jurisdiction would be unreasonable. Burger
King, 471 U.S. at 477. Accordingly, the court determines that the exercise of jurisdiction in Utah
is reasonable and would not run afoul of Due Process.
Venue is similarly proper in Utah, pursuant to 28 U.S.C. § 1391(b)(2), because
Defendants intentionally reached into Utah to target a Utah-based competitor. The statute
provides that venue is proper in “a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred [.]” 28 U.S.C. § 1391(b)(2). This court has previously
recognized that where a defendant’s allegedly unlawful acts occurred over the internet, “a
substantial part of the events occurred in Utah” for purposes of venue if the defendant
“intentionally reached” into the forum “in an effort to do harm to the Utah business, knowing its
location in Utah.” Diesel Power Source, L.L.C. v. Crazy Carl's Turbos Inc., 2015 WL 1034231,
at *10 (D. Utah Mar. 10, 2015). Here, Defendants reached out to Plaintiff on many occasions
regarding its product and used Utah-based materials to post allegedly defamatory statements
about the product, knowing that Plaintiff is a Utah-based company and that the brunt of the harm
would be felt in Utah. Such intentional actions directed at Utah are sufficient to satisfy the venue
requirements of 28 U.S.C. § 1391(b)(2).
III. Defendants’ Motions, in the Alternative, to Transfer Venue
Having determined that venue is proper in Utah, the court must determine whether it should
exercise its discretion to transfer the action “[f]or the convenience of parties and witnesses, [and]
in the interest of justice,…to any other district or division where it might have been brought.” 28
U.S.C. § 1404(a). Defendants acknowledge that they “bear the burden of establishing that the
existing forum is inconvenient” and that “[m]erely shifting the inconvenience from one side to
the other…is not a permissible justification for a change of venue.” Scheidt v. Klein, 956 F.2d
963, 965 (10th Cir. 1992).
In considering a motion to transfer venue under § 1404(a), courts in the Tenth Circuit weigh
the following discretionary factors:
the plaintiff’s choice of forum; the accessibility of witnesses and other sources of proof,
including the availability of compulsory process to insure attendance of witnesses; the cost
of making the necessary proof; questions as to the enforceability of a judgment if one is
obtained; relative advantages and obstacles to a fair trial; difficulties that may arise from
congested dockets; the possibility of the existence of questions arising in the area of
conflict of laws; the advantage of having a local court determine questions of local law;
and [ ] all other considerations of a practical nature that make a trial easy, expeditious and
Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991) (internal
quotation marks omitted). Defendants argue that the witnesses and proof in this case are in
Florida, that judgments would be more easily enforced in Florida, and that Florida law would
apply, weighing in favor of transfer to a Florida forum. The court does not find support for
Defendants’ arguments. The parties disagree about which state’s law will apply in this case.
However, as discussed above, this court is fully capable of applying Florida law—including
Florida Anti-SLAPP law—should it be found applicable. The witnesses and proof in this case
appear to be neutral with respect to venue, as Plaintiff’s witnesses and proof are found in Utah,
while Defendants’ witnesses and proof are in Florida. Merely transferring the burden of
inconvenience from Defendants to Plaintiff is an insufficient basis for a transfer of venue.
Considering the factors above, the court finds that Defendants have not carried their burden to
establish that Utah is an inconvenient forum in this case.
IV. GhostBed’s Motion to Dismiss Pursuant to Rule 12(b)(6)
In addition to its Motion to Dismiss pursuant to Rule 12(b)(2), GhostBed moves to
dismiss the Complaint pursuant to Rule 12(b)(6) for “failure to state a claim upon which relief
can be granted.” Fed. R. Civ. Proc. 12(b)(6). To survive a Rule 12(b)(6) motion, “a complaint
must have enough allegations of fact, taken as true, ‘to state a claim to relief that is plausible on
its face.’” Kansas Penn Gaming, LLC v.Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570). In considering a motion to dismiss, “[a] court
must not weigh potential evidence that the parties might present at trial,” but instead must
“assess whether the plaintiff’s . . . complaint alone is legally sufficient to state a claim for which
relief may be granted.” Checkley v. Allied Prop. & Cas. Ins. Co., 635 Fed. Appx. 553, 555-56
(10th Cir. 2016) (quotation marks and citation omitted). The Court “accept[s] all well-pleaded
facts as true, along with reasonable inferences from those facts.” Id.at 556.
GhostBed first moves to dismiss the Complaint pursuant to Rule 12(b)(6) on the grounds
that Ghostbed “does not own, control, operate, or contribute in any way to the
honestmattressreviews.com website”, and “does not have any affiliation whatsoever with codefendant Honest Reviews, LLC,” and, as such, cannot be held liable for the content posted on
the honestmattressreviews.com website. (Dkt. No. 67 at 15.) Accepting all of the facts in the
Complaint as true, the court cannot accept GhostBed’s argument.
In the Complaint, Plaintiff alleges that the HMR Defendants, are “closely associated”
with GhostBed. (Id. at ¶ 118.) In support of this assertion, Plaintiff states that Monahan was an
author on the GhostBed’s website on several occasions (id. at ¶¶123-129), that Monahan’s
Twitter and LinkedIn profiles identified him as the Chief Brand Officer of GhostBed until
approximately October 2016 (id.), that Monahan identified himself as Chief Brand Officer of
GhostBed when he spoke at a Content and Commerce Summit in September 2016 (id.at ¶130),
that Monahan used the email address “ryan@GhostBed.com” and was responsible for handling
GhostBed inquiries to that email (id. at ¶¶132-133), that the HMR Defendants, as well as Social
Media Sharks—another company owned by Monahan—are jointly represented in other litigation
by the same law firm representing GhostBed in this litigation (id. at ¶134), and that GhostBed
has admitted to continuing to maintain a connection with Monahan through Social Media Sharks
and another entity, Achieve Agency. (Id. at ¶¶ 135-136.) These factual allegations are sufficient
to support a close connection between the HMR Defendants and GhostBed, such that Plaintiff’s
allegations of collusion in the allegedly defamatory posts are plausible on their face. Plaintiff
also alleges independent conduct—a review posted by the daughter of GhostBed’s CEO under a
false name, stating that Plaintiff’s mattress had a “whitish powder” all over it and expressing
concern that the powder would cause cancer (id. at ¶ 137)—that support Plaintiff’s assertions of
collusion between Defendants and independent wrongful conduct on the part of GhostBed. The
court finds that the facts alleged allow the court to “draw the reasonable inference that
[GhostBed] is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Accordingly, GhostBed’s Motion to Dismiss on those grounds is denied.
GhostBed also moves to dismiss Plaintiff’s claim for contributory false association and
false advertising on the grounds that it is not a viable legal theory in this jurisdiction.4 The court
agrees. Plaintiff has cited to cases in other jurisdictions indicating that claims for contributory
false association or false advertising under the Lanham Act may be viable, and cases in this
jurisdiction in which courts recognized a cause of action for contributory trademark or patent
infringement. However, Plaintiff has provided no case law in this jurisdiction, nor has the court
found any, recognizing a cause of action for contributory false association or false advertising
under the Lanham Act. The court declines to extend the Act to allow such a claim here.5 As such,
GhostBed’s Motion to Dismiss Plaintiff’s claim for Contributory False Association and False
Advertising is granted.
GhostBed also mentions another ground for dismissal in the introduction section of its Motion to Dismiss—that
Plaintiff’s claim for violations of the Utah Truth in Advertising Act (“UTIAA”) must be dismissed because the
UTIAA applies only to advertisements that originate in Utah and target consumers in Utah, or to advertisements that
originate outside of Utah, but that target consumers in Utah. GhostBed did not address this argument in the
Argument section of its Motion, but did briefly discuss it again in its Reply briefing. To the extent that GhostBed
properly raised this issue to the court, the court finds sufficient allegations to support a finding that the alleged
defamatory statements target consumers in Utah, for the same reasons discussed in the court’s minimum contacts
analysis of GhostBed’s intentional actions reaching into Utah.
The court also recognizes that Plaintiff’s claim against GhostBed for Civil Conspiracy is largely duplicative of
Plaintiff’s claims for contributory false advertising in any event.
For the foregoing reasons, the court DENIES Defendants’ Motions to Dismiss for lack of
personal jurisdiction and improper venue, DENIES Defendants’ Motions to Transfer Venue,
DENIES GhostBed’s Motion to Dismiss pursuant to Rule 12(b)(6), except with respect to
Plaintiff’s Second Cause of Action for Contributory False Association and False Advertising, for
which GhostBed’s Motion is GRANTED.
DATED this 25th day of July, 2017.
BY THE COURT:
United States District Judge
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