Land-O-Nod Co. v. Bassett Furniture Industries, Inc., LAND-O-NOD

Citation708 F.2d 1338
Decision Date08 June 1983
Docket NumberNo. 82-2437,LAND-O-NOD,82-2437
PartiesTheCOMPANY, Appellee, v. BASSETT FURNITURE INDUSTRIES, INCORPORATED, and the E.B. Malone Corporation, Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Hogan & Hartson, David B. Lytle, George H. Mernick, III, Timothy J. Dowling, Washington, D.C., Merchant, Gould, Smith, Edell, Welter & Schmidt, Douglas J. Williams, Minneapolis, Minn., for appellants.

Allen I. Saeks, Stephen J. Davidson, Minneapolis, Minn., for appellee The Land-O-Nod Co.; Leonard, Street & Deinard, Minneapolis, Minn., of counsel.

Before BRIGHT and JOHN R. GIBSON, Circuit Judges, and HANSON, * Senior District Judge.

HANSON, Senior District Judge.

Bassett Furniture Industries, Inc. (Bassett) and the E.B. Malone Corporation (Malone) appeal from an order of the district court 1 granting the Land-O-Nod Company (Land-O-Nod) a preliminary injunction. The injunction prohibits Bassett and Malone from using Land-O-Nod's registered trademark "Chiropractic" in marketing their mattresses and box springs. We hold that it was not proper for the district court to grant the preliminary injunction because the court had no personal jurisdiction over the defendants.

I.

Bassett is a Virginia corporation engaged in the business of manufacturing and selling furniture, including mattresses and box springs. Malone, a Florida corporation, is a wholly-owned subsidiary of Bassett and a manufacturer of mattresses and box springs which are sold both under the Malone name and under the Bassett name. Neither Bassett nor Malone is licensed to do business in Minnesota, neither maintains any place of business in Minnesota, neither has any employees headquartered in Minnesota, and neither has any bank accounts in Minnesota. Malone's products are sold under the Bassett name through Levitz Furniture stores, two of which are in Minnesota. Such products have been sold in Minnesota since at least 1972. Malone sales representatives call on Minnesota retailers regarding sales of mattresses and other bedding products. Malone reported $151,871.00 in annual sales in Minnesota for 1981 and $42,637.00 in sales for the first six months of 1982.

Land-O-Nod is a Minnesota corporation which manufactures, sells, and distributes mattresses and box springs. In 1965, the United States Patent and Trademark Office (PTO) issued to Land-O-Nod a registration for the trademark "Chiropractic" which it uses to describe certain of its mattresses and box springs. Land-O-Nod's right to use the word "Chiropractic" as its trademark became incontestable in October 1975 after it filed an Affidavit of Continuous Use with the PTO pursuant to 15 U.S.C. Sec. 1065(3). Land-O-Nod derives a substantial portion of its income through fees from licenses granted to smaller manufacturers throughout the country giving them the right to use the "Chiropractic" trademark.

Land-O-Nod alleges that on or about November 1981, Bassett and Malone began infringing on Land-O-Nod's trademark by using the word "Chiropractic" to describe a particular line of mattresses and box springs which were manufactured by Malone and sold under the Bassett name. Bassett distributes its "Chiropractic" line in states other than Minnesota. Although the district court made no finding as to where the allegedly infringing mattresses were sold outside of Minnesota, there is evidence that the mattresses are being distributed in thirteen states, some of which include Alabama, Florida, Georgia, and Tennessee. Designated Record (D.R.) at 38.

Land-O-Nod brought this action against Bassett and Malone in the United States District Court for the District of Minnesota, alleging trademark infringement under federal law and unfair competition under both state and federal law. Service of process on Bassett and Malone was effected pursuant to the Minnesota "long-arm" statutes. Minn.Stat. Secs. 303.13, subd. 1(3) and 543.19, subd. 1. Bassett, by way of its answer, and Malone, by way of a motion to dismiss, contended that the district court lacked personal jurisdiction over them because they were foreign corporations, they were not transacting business in Minnesota, and they had neither committed any tort in Minnesota, nor caused any injury in the state. D.R. at 89, 92.

In ruling on Malone's motion to dismiss, the district court concluded that exercise of personal jurisdiction over Malone was proper because Malone's contacts with Minnesota were sufficient to satisfy constitutional due process concerns. Land-O-Nod Co. v. Bassett Furniture Industries, Inc., et al., 551 F.Supp. 63, 73 (D.Minn.1982). Subsequently the district court preliminarily enjoined both Bassett and Malone from using Land-O-Nod's "Chiropractic" trademark. This interlocutory appeal followed in which defendants allege that the district court abused its discretion in granting the preliminary injunction and erred in concluding that the assertion of personal jurisdiction over defendants comports with due process.

II.
A.

The jurisdictional basis for this appeal is 28 U.S.C. Sec. 1292(a)(1) as the appeal is from an interlocutory order granting an injunction. Accordingly Land-O-Nod contends that the only issue properly before this court is whether the district court abused its discretion in granting the preliminary injunction and that the lower court's order denying the motion to dismiss for lack of personal jurisdiction is not reviewable at this time. "[B]ut the question of jurisdiction is always vital. A court must have jurisdiction as a prerequisite to the exercise of discretion. The question whether a court has abused its discretion necessarily involves the question whether a court has any discretion to abuse." Eighth Regional War Labor Board v. Humble Oil & Refining Co., 145 F.2d 462, 464 (5th Cir.1944), cert. denied, 325 U.S. 883, 65 S.Ct. 1577, 89 L.Ed. 199 (1945). See 7 Moore's Federal Practice p 65.03, at 65-31 and 65-33 (2d ed. 1982). It is therefore appropriate for this court to review the question of personal jurisdiction at this juncture. Visual Sciences, Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir.1981).

B.

It is clear that Minnesota's long arm statutes, Minn.Stat. Secs. 303.13 and 543.19, authorize the assertion of jurisdiction over foreign corporations to the fullest extent allowed by constitutional due process. Toro Co. v. Ballas Liquidating Co., 572 F.2d 1267, 1269 (8th Cir.1978). We test the limits of due process by applying the familiar minimum contacts standard; nonresident defendants must have certain minimum contacts with the forum such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In this circuit, the standard has devolved into a consideration of five factors:

(1) the nature and quality of the contacts with the forum state; (2) the quantity of the contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties.

Aaron Ferer & Sons Co. v. Diversified Metals Corp. 564 F.2d 1211, 1215 (8th Cir.1977); see Aftanese v. Economy Baler Co., 343 F.2d 187, 195-97 (8th Cir.1965). These factors, however, do not provide "a slide rule by which fundamental fairness can be ascertained with mathematical precision." Toro, supra, 572 F.2d at 1270. For instance, the last two factors are said to be of secondary importance and not determinative. Aaron Ferer & Sons Co. v. American Compressed Steel Co., 564 F.2d 1206, 1210 n. 5 (8th Cir.1977). Ultimately, we must not lose sight of "the central concern of the inquiry" which is "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977); Scullin Steel Co. v. National Railway Utilization Corp., 676 F.2d 309, 313 (8th Cir.1982).

Particularly apposite to our current inquiry is Toro Co. v. Ballas Liquidating Co., supra. In Toro, the Toro Co., a Minnesota corporation, and its wholly-owned wholesale distributor brought an action in Minnesota against International Marketing Associates (IMA), a Texas corporation. IMA was the exclusive sales agent for Weed Eater products and had chosen to distribute those products in various areas of the country through local sales divisions of Toro. Toro brought an antitrust action against IMA and various other defendants in response to IMA's termination of Toro's New York distributorship. Evidence in support of personal jurisdiction over IMA in Minnesota indicated that IMA conducted activities in Minnesota under its agreement with Weed Eater; IMA's regional sales director called on Minnesota distributors of Weed Eater products to assist them in their sales efforts; and in the year preceding the lawsuit, $400,000 worth of Weed Eater products were sold in the Minnesota market. Based on these facts, the court of appeals upheld the district court's conclusion that personal jurisdiction was lacking because there was no connection between IMA's activities in Minnesota and the litigation concerning termination of Toro's New York distributorship.

C.

As in Toro, in the instant case it is the absence of any connection between Land-O-Nod's cause of action and the sales activity of Bassett and Malone in Minnesota which forces us to conclude that personal jurisdiction is lacking. Although Malone mattresses are sold in Minnesota under the Bassett name, none of the allegedly infringing "Chiropractic" mattresses have been sold in Minnesota.

The district court, while conceding that defendants' business in Minnesota "may not consist of selling the precise allegedly infringing product," Land-O-Nod, supra, 551 F.Supp. at 70, concluded that defendants could have anticipated that their activity in Minnesota...

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