Allstar Marketing Group v. Your Store Online, LLC

• Decision Date: 10 August 2009
• Docket Number: Case No. CV 09-02094 MMM (AGRx).
• Citation: 666 F.Supp.2d 1109
• Parties: ALLSTAR MARKETING GROUP, LLC, a New York limited liability company, and Felknor Ventures, LLC, a Tennessee limited liability company, Plaintiffs, v. YOUR STORE ONLINE, LLC, a Wisconsin limited liability company, Chris Reoch, an individual, and Paul Reoch, an individual, TV Market, LLC, a Wisconsin limited liability company, and TV Marketplace, LLC, a Wisconsin limited liability company, Defendants.
• Court: U.S. District Court — Central District of California

666 F.Supp.2d 1109

ALLSTAR MARKETING GROUP, LLC, a New York limited liability company, and Felknor Ventures, LLC, a Tennessee limited liability company, Plaintiffs, v. YOUR STORE ONLINE, LLC, a Wisconsin limited liability company, Chris Reoch, an individual, and Paul Reoch, an individual, TV Market, LLC, a Wisconsin limited liability company, and TV Marketplace, LLC, a Wisconsin limited liability company, Defendants.

Case No. CV 09-02094 MMM (AGRx).

United States District Court, C.D. California.

August 10, 2009.

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Adam M. Cohen, Sarah Hawa Bawany Yousuf, Kane Kessler PC, New York, NY, Lynda J. Zadra-Symes, Nicholas David Atchison, Knobbe Martens Olson & Bear LLP, Irvine, CA, for Plaintiffs.

James C. Potepan, Thomas M. O'Leary, Ropers Majeski Kohn and Bentley, Los Angeles, CA, for Defendants.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR TRANSFER

MARGARET M. MORROW, District Judge.

On May 15, 2009, plaintiffs Allstar Marketing Group, LLC ("Allstar") and Felknor Ventures, LLC ("Felknor") commenced this action against defendants Your Store Online, LLC ("YSO"), Chris Reoch, Paul Reoch, TV Market, LLC, and TV Marketplace, LLC, alleging, inter alia, violation of plaintiffs' trademarks with regard to three products: "Snuggie" brand fleece sleeved blankets, "Topsy Turvy" brand tomato planters, and "Aqua Globes" brand plant watering bulbs. On June 15, 2009, defendants filed a motion to dismiss for lack of personal jurisdiction and improper venue, or, in the alternative, for transfer to the Eastern District of Wisconsin.

I. FACTUAL & PROCEDURAL BACKGROUND

Allstar is a New York limited liability company with its principal place of business in New York;¹ Felknor is a Tennessee limited liability company with its principal place of business in Tennessee.² Allstar is a producer and distributor of "unique household products," including the three products at issue in this case. It markets the products through direct response television advertising.³ Allstar created the Snuggie and Aqua Globes products.⁴ Felknor created the Topsy Turvy product and granted Allstar an exclusive license to market it in June 2008.⁵

The Snuggie is a fleece blanket with attached sleeves, which Allstar began marketing in August 2008.⁶ The product has been featured in the New York Times, and on "Real Time with Bill Maher," "The Tonight Show with Jay Leno," and "The Oprah Winfrey Show."⁷ Allstar alleges that it owns common law trademark rights in the mark "Snuggie" for use in connection with sleeved blankets.⁸ Its federal trademark applications for the mark are pending.⁹

The Aqua Globes are stained blown glass watering bulbs designed to water potted plants.¹⁰ Allstar is the owner of a federal trademark registration for the mark "Aqua Globes" for use in connection with "plant watering globes of blown glass."¹¹ It also claims common law trademark rights in the "Aqua Globes" marks.¹²

Felknor is the owner of United States Patent No. 6,874,278, which covers a hanging planter designed to grow transplanted plants upside down, and a federal trademark registration for the mark "Topsy Turvy" for use in connection with planters.¹³ It is also the owner of a copyright in a photograph of the Topsy Turvy product.¹⁴

Chris and Paul Reoch are the co-owners, managing members, and sole employees of YSO, a Wisconsin limited liability company with its principal place of business in Wisconsin.¹⁵ YSO conducts business through its online store located at .¹⁶ Plaintiffs assert that YSO "regularly advertises its products to and solicits business from California residents, and regularly ships products into [the Central District of California]."¹⁷ They allege that defendants have infringed their trademark rights in the products at issue by marketing and selling sleeved fleece blankets under the names "Snuggie" or "Snuggle"; hanging planters identical in appearance to the Topsy Turvy under the name "Topsy Turny"; and watering bulbs under the name "Aqua Globes."¹⁸ In addition plaintiffs allege that defendants have purchased the terms "Snuggie" and "Aqua Globes" as keywords for Internet advertising programs, including Google's "Ad-Words.¹⁹ As a result, an advertisement with a link to defendants' website appears when customers run searches using those words.²⁰ Plaintiffs further allege that defendants have used the word "Snuggie" in the headers and text of their website to ensure that their site appears as a search result when search engine users search for "Snuggie."²¹ They allege that defendants have used the copyrighted photograph of the Topsy Turvy in packaging and advertising for the Topsy Turny.²² Finally, plaintiffs alleges that defendants have marketed their products with the "As Seen on TV" label, despite the fact that defendants have never paid for television advertising.²³

With regard to all three products, plaintiffs assert a variety of Lanham Act claims; unfair competition and false advertising claims under California Business and Professions Code §§ 1200 and 17500; and common law unfair competition and trademark infringement claims. In addition, they assert a copyright infringement claim based on defendants' use of the Topsy Turvy photograph.

On June 15, 2009, Chris and Paul Reoch filed the present motion. The Reoches argue that they are not subject to personal jurisdiction in this district in their individual capacities and that venue is improper. They do not, however, argue that the court lacks jurisdiction over the corporate defendants. Alternatively, the Reoches argue that; even if the court can exercise personal jurisdiction over them and venue is proper, the court should transfer the case to the Eastern District of Wisconsin under 28 U. S.C. § 1404(a) for the convenience of the parties and witnesses and in the interests of justice.²⁴

II. THE MOTION TO DISMISS

A. Standard Governing Motions To Dismiss for Lack of Personal Jurisdiction

When a defendant moves to dismiss under Rule 12(b)(2), the plaintiff bears the burden of demonstrating that the court may properly exercise personal jurisdiction over the defendant. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir.2006); Bohara v. Backus Hosp. Medical Benefit Plan, 390 F.Supp.2d 957, 961 (C.D.Cal.2005) (citing Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir.1995)). Absent formal discovery or an evidentiary hearing, plaintiff need make only a prima facie showing that jurisdiction exists to survive a Rule 12(b)(2) motion to dismiss.²⁵ Pebble Beach, 453 F.3d at 1154; Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002); Ziegler, 64 F.3d at 473.

"The general rule is that personal jurisdiction over a defendant is proper if it is permitted by a long-arm statute and if the exercise of that jurisdiction does not violate federal due process." Pebble Beach, 453 F.3d at 1154-55 (citing Fireman's Fund Ins. Co. v. Nat. Bank of Coops., 103 F.3d 888, 893 (9th Cir.1996)); see also Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 243 F.Supp.2d 1073, 1082 (C.D.Cal.2003) (citing Aanestad v. Beech Aircraft Corp., 521 F.2d 1298, 1300 (9th Cir.1974)). Because California authorizes jurisdiction to the full extent permitted by the Constitution, see CAL.CODE CIV. PROC. § 410. 10, the only question the court must ask in this case is whether the exercise of jurisdiction over defendants would be consistent with due process. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir.2003); Peterson v. Highland Music, Inc., 140 F.3d 1313, 1317 n. 2 (9th Cir.1998).

The Fourteenth Amendment's Due Process Clause permits courts to exercise personal jurisdiction over any defendant who has sufficient "minimum contacts" with the forum that the "maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). There are two recognized bases for exercising personal jurisdiction over a non-resident defendant: (1) "general jurisdiction," which arises where defendant's activities in the forum state are sufficiently "substantial" or "continuous and systematic" to justify the exercise of jurisdiction over him in all matters;²⁶ and (2) "specific jurisdiction," which arises when a defendant's specific contacts with the forum give rise to the claim in question. See Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Doe v. Am. Nat'l Red Cross, 112 F.3d 1048, 1050-51 (9th Cir.1997). Plaintiffs assert conclusorily that defendants are subject to general jurisdiction.²⁷ The analysis in their opposition to defendants' motion addresses specific jurisdiction only, however. Therefore, the court considers only whether specific jurisdiction exists.

The Ninth Circuit applies a three-prong test to determine whether a court may exercise specific jurisdiction over a defendant:

"`(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.'"

Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir.2004) (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.1987)). The plaintiffs bear the burden of satisfying the first two prongs of this test. Id. If they do, "the burden then shifts to the defendant[s] to `present a compelling case' that the exercise of jurisdiction would not be reasonable." Id. (quoti...