Miller Yacht Sales, Inc. v. Smith, 02-3304.

Citation384 F.3d 93
Decision Date20 September 2004
Docket NumberNo. 02-3304.,02-3304.
PartiesMILLER YACHT SALES, INC., Appellant v. Steven SMITH, individually; Mariner Yacht Sales, Inc.; Ivan Bogachoff, individually; Island Yacht Brokers; ABC Corporations 1-10, names being fictitious; John Does, (1-10), names being fictitious.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Appeal from the United States District Court for the District of New Jersey, Anne E. Thompson, J Chryssa Yaccarino, (Argued), Villani & DeLuca, Point Pleasant Beach, NJ, for Appellant.

Ivan Bogachoff, (Argued), Bogachoff & Associates, Washington, DC, for Appellees.

Before SCIRICA, Chief Judge, NYGAARD, and AMBRO, Circuit Judges.

NYGAARD, Circuit Judge.

The District Court dismissed Miller Yacht Sales' suit for trade-dress infringement, statutory and common law unfair competition, and tortious interference with prospective economic advantage, because it concluded that it lacked personal jurisdiction over Appellees. Because we conclude that Appellees have sufficient contacts with New Jersey, we will reverse.

I.

To defeat Appellee's motion to dismiss for lack of personal jurisdiction, Miller Yacht was required to present a prima facie case that jurisdiction existed. Mellon Bank (East) PSFS Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir.1992). Miller Yacht is a New Jersey corporation with its principal offices in South Toms River, New Jersey. Miller Yacht designs, manufactures, markets and sells boats. Specific to this action, Miller Yacht has designed, manufactured, marketed and sold 34' and 38' Marine Trader Double Cabin and Sedan Yachts.

Appellees also sell and market boats, but are not New Jersey residents or corporations. Beginning in 1998, Miller Yacht and Appellees began negotiating a deal that was intended to allow the Appellees to become exclusive marketing representatives and dealers for some of Miller Yacht's boats, including the Marine Trader Yachts.1 During these negotiations, Appellees made phone calls from their offices outside New Jersey to Miller Yacht's offices in New Jersey. Additionally, Appellees transmitted facsimiles into New Jersey, including proposed licensing agreements for the trade names relevant to the negotiations. Appellees also traveled to Miller Yacht's offices in New Jersey. During one of these trips, Donald Miller, the president of Miller Yacht, provided Steven Smith with a copy of Miller Yacht's sales brochure. That brochure included photographs and floor plans of the Marine Trader Yachts. Miller Yacht also alleges that it arranged and paid for Smith to travel to China to observe the manufacturing process for the Marine Trader Yachts and meet Miller Yacht's business contacts relevant to those yachts. Miller Yacht claims that Appellees sent facsimile transmissions to Donald Miller as part of the planning activities for Smith's trip to China.

Eventually, the negotiations between the parties reached a standstill and they failed to reach an agreement. Miller Yacht alleges that Appellees misappropriated the photographs and floor plans contained in Miller Yacht's sales brochure, as well as other intellectual property owned by Miller Yacht, and used it to produce and market boats that are identical to the Marine Trader Yachts. It further alleges that Appellees engaged Miller Yacht's business contacts in China to manufacture the boats, and thereby interfered with Miller Yacht's business relationship with those contacts.

Based on these allegations, Miller Yacht sued Appellees for trade-dress infringement, statutory and common law unfair competition, and tortious interference with prospective economic advantage. Appellees moved to dismiss Miller Yacht's complaint based on lack of personal jurisdiction and improper venue. The District Court, without holding an evidentiary hearing, granted Appellees' motions to dismiss for lack of personal jurisdiction. This appeal followed.

II.

The District Court had subject matter jurisdiction over this action under 28 U.S.C. §§ 1331, 1332 and 1367. We have appellate jurisdiction over the District Court's final order under 28 U.S.C. § 1291 and review the District Court's decision de novo. Pinker, 292 F.3d at 368.

A federal court sitting in New Jersey has jurisdiction over parties to the extent provided under New Jersey state law. See Fed.R.Civ.P. 4(e); see also Carteret, 954 F.2d at 144. New Jersey's long-arm statute provides for jurisdiction coextensive with the due process requirements of the United States Constitution. N.J. Court Rule 4:4-4(c); see Charles Gendler & Co. v. Telecom Equip. Corp., 102 N.J. 460, 508 A.2d 1127, 1131 (1986). Thus, parties who have constitutionally sufficient "minimum contacts" with New Jersey are subject to suit there. See Carteret, 954 F.2d at 149.

Miller Yacht claims that the District Court had specific jurisdiction over Appellees based on their contacts with New Jersey.2 Miller Yacht concedes that Appellees do not have the "consistent and systematic" contacts with New Jersey that would subject them to general jurisdiction in that forum. See Pinker, 292 F.3d at 368 n. 1.

In analyzing Miller Yacht's specific jurisdiction argument, we must "examine the relationship among the [Appellees], the forum, and the litigation." Id. at 368. Specific jurisdiction over a defendant exists when that 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." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal quotations and citation omitted). A single contact that creates a substantial connection with the forum can be sufficient to support the exercise of personal jurisdiction over a defendant. Id. at 475 n. 18, 105 S.Ct. 2174.

If these "purposeful availment" and "relationship" requirements are met, a court may exercise personal jurisdiction over a defendant so long as the exercise of that jurisdiction "comport[s] with fair play and substantial justice." Id. at 476, 105 S.Ct. 2174 (internal quotations and citations omitted). To defeat jurisdiction based on this fairness inquiry, a defendant must "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Id. at 477, 105 S.Ct. 2174. The Supreme Court has indicated that lower courts addressing the fairness question may consider "the burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies." Id. (internal quotations omitted).

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the burden of establishing the court's jurisdiction over the moving defendants. Pinker, 292 F.3d at 368. However, when the court does not hold an evidentiary hearing on the motion to dismiss, the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor. Id.; see also Carteret, 954 F.2d at 142 n. 1.

The District Court did not hold an evidentiary hearing but did determine, based on the parties' submissions and arguments, that Miller Yacht failed to satisfy its burden because the contacts it presented did not show that Appellees purposefully availed themselves of New Jersey's laws. We disagree based on three important contacts and the context of those contacts.

III.
A. Trade-dress Infringement and Unfair Competition Claims

First, Miller Yacht alleges that Appellees made trips to New Jersey as part of their negotiations. Miller Yacht claims that during one of these trips Smith came to New Jersey and received Miller Yacht's sales brochure. The receipt of this sales brochure was Appellees' first step toward the misappropriation of Miller Yacht's trade-dress, photos and floor plans. This misappropriation is not only related, but is essential, to Miller Yacht's unfair competition and trade-dress infringement claims. Thus, Appellees came to New Jersey allegedly to receive the property that they eventually misappropriated and used to injure Miller Yacht.

Second, Miller Yacht alleges Appellees placed the misappropriated photos and floor plans in advertisements in boating magazines circulated in New Jersey and in at least one brochure that was sent directly to a potential customer in New Jersey. Intentionally and directly transmitting the misappropriated property that Appellees initially obtained in New Jersey back into New Jersey is a very strong contact between them and the State. It is also a second essential element of Miller Yacht's infringement and unfair competition claims.3

Miller Yacht also alleges that, at least before Appellees misappropriated its intellectual property, Appellees were directly engaged in the marketing of boats in New Jersey. They attended trade shows in New Jersey and adjoining states and advertised in regional boating magazines that were distributed in New Jersey. These pre-misappropriation contacts and the continued advertisements in New Jersey provide a nexus between Appellees and New Jersey, and logically explain why at least one New Jersey resident would request Appellees' sales brochure. While we do not base our holding on these pre-misappropriation contacts (they are not among the three contacts on which we rely), they are relevant to show that the request for sales material that Appellees received from a New Jersey resident was not a random or fortuitous occurrence upon which jurisdiction may not properly lie. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295-99, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (holding that one fortuitous act connecting a defendant with a state with which it has no other ties is not sufficient to...

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