Amba Marketing Systems, Inc. v. Jobar Intern., Inc., 75-1989

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Citation551 F.2d 784
Docket NumberNo. 75-1989,75-1989
PartiesAMBA MARKETING SYSTEMS, INC., Plaintiff-Appellant, v. JOBAR INTERNATIONAL, INC., Defendant-Appellee.
Decision Date04 April 1977

William H. Drummond, argued, Drummond, Nelson & Ptak, Phoenix, Ariz., for plaintiff-appellant.

Warren L. Kern, argued, Harris, Kern, Wallen & Tinsley, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the District of Arizona.

Before CHAMBERS and ANDERSON, Circuit Judges, and EAST, District Judge.

CHAMBERS, Circuit Judge:

This is an appeal from the district court's dismissal of plaintiff Amba Marketing System, Inc.'s (Amba's) action on the ground of lack of personal jurisdiction over the defendant Jobar International, Inc. (Jobar). Subject matter jurisdiction in district court was pursuant to 28 U.S.C. Secs. 1332(a) (diversity of citizenship) and 1338 (patent infringement, trademark infringement and unfair competition). While recognizing that close questions of in personam jurisdiction are presented, we affirm the district court's dismissal.

Amba's complaint was in 4 counts unfair competition, trademark infringement, false designation of origin, and patent infringement. The facts giving rise to the complaint were as follows. Plaintiff Amba is a Delaware corporation with its principal place of business in Arizona. Amba is engaged in mail order sales of leather goods, primarily women's wallets and handbags. Defendant Jobar is a California corporation with its principal place of business in Santa Monica, California. Jobar's business essentially consists of importing different items of merchandise and selling them to various mail order sales companies, including some of Amba's competitors. Jobar has no facilities in Arizona, no personnel in Arizona representing it, and no direct mail order business with anyone in Arizona.

This action arose out of Jobar's allegedly having cheaper imitations of, among other things, Amba's "clutch bag" item produced in Taiwan, with Jobar then selling the imitations to California mail order houses which compete with Amba by distributing the merchandise in interstate commerce. Embossed in the interior of "credit card organizers" found within the clutch bags was a legend which purportedly identified the products' origin as being Amba's place of business in Arizona, and which matched almost identically the writing inscribed on Amba's own product. These imported imitations allegedly are distinctly inferior in appearance, workmanship and quality of material to the genuine product sold by Amba.

The first 3 counts of Amba's complaint (unfair competition, trademark infringement and false designation of origin) alleged that Jobar imports the cheaper foreign imitations "for sale to and subsequent distribution by (Amba's) substantial competitors in interstate commerce." The fourth count (patent infringement) varied somewhat by alleging that Jobar's customers, some of which compete with Amba, have in turn "sold and are selling (the infringing merchandise) to the public within the state of Arizona and elsewhere." Damage in the form of injury to Amba's good will and reputation, impairment of its profit expectancies and competitive position, and dilution in trademark value is claimed to have been suffered by Amba in Arizona and elsewhere in interstate commerce. This damage allegedly was reasonably foreseeable to Jobar. Amba prayed in part for a temporary restraining order, preliminary and permanent injunction, and damages.

The district court (Judge Copple) issued a TRO without notice to Jobar, issued an order to show cause and set a hearing thereon for March 27, 1975. A registered California process server was specially appointed to serve process and other papers on Jobar in California. Shortly thereafter, Jobar moved to dissolve the TRO and order to show cause, or in the alternative to dismiss the complaint for improper venue (as to the patent infringement count) and for lack of in personam jurisdiction. A hearing on these motions was held on March 26, 1975, the day before the scheduled hearing on Judge Copple's order to show cause. The district court (Judge Craig) dismissed the entire case without prejudice for lack of personal jurisdiction over Jobar, thus allowing Amba to file the action in a suitable jurisdiction. The TRO accordingly was dissolved and the order to show cause vacated. Subsequently, Amba filed a similar action in the Central District of California, which case has been stayed pending the outcome of this appeal.

The pivotal issue in this case is whether the district court correctly dismissed Amba's action for lack of personal jurisdiction. To resolve this issue, two inquiries must be addressed: whether an applicable rule or statute potentially confers personal jurisdiction over the defendant; and whether assertion of such jurisdiction accords with constitutional principles of due process. As to the first inquiry, under F.R.Civ.P. 4(d)(7), reference is made to the jurisdiction law of the state in which the district court sits. Cook v. Fox, 537 F.2d 370 (9th Cir. 1976). In Arizona, the long-arm rule, Ariz.R.Civ.P. 4(e)(2) (16 Ariz.Rev.Stat.Ann.) confers personal jurisdiction inter alia over a corporation "which has caused an event to occur in the state out of which the claim which is the subject of the complaint arose." 1 Thus, the question becomes whether Jobar "has caused an event to occur" within Arizona within the meaning of Rule 4(e)(2). Arizona law is controlling on this question.

Amba essentially alleges that it was harmed by Jobar's obtaining samples of Amba's merchandise, sending them abroad for production of cheaper imitations containing a false designation of origin, and then selling the duplicates to other mail order houses in this country. The thrust of Amba's complaint is that Jobar injected the cheaper imitations into the general stream of commerce by selling to California mail order houses which in turn sell to interstate consumers. Only in the patent infringement count of its complaint does Amba specifically allege that the imitations actually made their way into Arizona. Under modern notions of notice pleading, this lone allegation normally might be sufficient to vest personal jurisdiction in Arizona. However, Jobar's motion to dismiss clearly challenged personal jurisdiction over it, and the party asserting jurisdiction has the burden of establishing its existence when challenged. Taylor v. Portland Paramount Corp., 383 F.2d 634, 639 (9th Cir. 1967); Maloof v. Raper Sales Inc., 113 Ariz. 485, 557 P.2d 522, 524 (1976). Amba could not simply rest on the bare allegations of its complaint, but rather was obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction. Taylor v. Portland Paramount Corp., supra. In this case, Amba failed to meet Jobar's jurisdictional challenge with sufficient facts to sustain its burden of showing that an "event" in Arizona had been caused by Jobar. At the hearing before Judge Craig on the motion to dismiss, Amba apparently was unable or unwilling to establish that any of the allegedly infringing items were on sale or had been sold or obtained in Arizona. With no showing that the imitations actually made their way into Arizona through either Jobar or the California mail order houses to which it sold 2, personal jurisdiction over Jobar under Rule 4(e)(2) was lacking. 3

Moreover, we think it was essential for Amba to show that the imitations were sold in Arizona or to Arizona consumers by either Jobar or the California mail order houses to which it sold in order to establish an "event" within the meaning of Rule 4(e)(2). Amba's bare allegation of harm or injury suffered in the forum state does not constitute an "event" occurring within the state and thus does not by itself confer personal jurisdiction under Arizona's long-arm rule. 4 See Houghton v. Piper Aircraft Corp., 112 Ariz. 365, 542 P.2d 24 (1975). Rather, the actual damage-causing event must have occurred in Arizona, not merely the effect of the event. Id.; see Jones Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136 (9th Cir. 1971). Thus, the mere fact that Amba may have suffered injury to its good will or reputation, dilution of the value of its trademark, and damages from expected profits lost as a result of Jobar or the California mail order houses' sale of the cheaper imitations in states other than Arizona seemingly would not suffice to invoke personal jurisdiction in Arizona. We therefore conclude that the requirements of Rule 4(e)(2) have not been satisfied. 5

Having determined that no "event" has been caused by Jobar in Arizona such that personal jurisdiction would be warranted under Rule 4(e)(2), we normally would leave the matter at that. The Arizona supreme court, however, consistently has interpreted its long-arm rule as imposing no greater barrier to assertion of personal jurisdiction than does the due process clause of the Constitution. 6 Thus, it would seem somewhat anomalous to find noncompliance with the literal requirements of Rule 4(e)(2) without also concluding that assertion of personal jurisdiction in the case would violate due process. 7 For the same reasons underlying our conclusion that Jobar was not shown to "have caused an event to occur" within Arizona under Rule 4(e)(2), we similarly believe that assertion of personal jurisdiction here would infringe applicable principles of due process as well.

Federal law is controlling on the issue of due process. It is essentially a question of whether Jobar has sufficient "minimum contacts" with Arizona such that invoking jurisdiction there would be consistent with notions of "fair play and substantial justice." International Shoe Co. v. Washington,326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Although under this flexible standard a case-by-case determination necessarily must be made, this...

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