American Homecare Federation v. Paragon Scientific

• Decision Date: 26 October 1998
• Docket Number: No. 3:98-CV-893(WWE).,3:98-CV-893(WWE).
• Citation: 27 F.Supp.2d 109
• Parties: AMERICAN HOMECARE FEDERATION, INC. d.b.a AHF, Plaintiff, v. PARAGON SCIENTIFIC CORPORATION d.b.a. Paragon Specialty Health Care and Mark A. Kyle, Defendants.
• Court: U.S. District Court — District of Connecticut

27 F.Supp.2d 109

AMERICAN HOMECARE FEDERATION, INC. d.b.a AHF, Plaintiff, v. PARAGON SCIENTIFIC CORPORATION d.b.a. Paragon Specialty Health Care and Mark A. Kyle, Defendants.

No. 3:98-CV-893(WWE).

United States District Court, D. Connecticut.

October 26, 1998.

COPYRIGHT MATERIAL OMITTED

Barry L. Kelmachter, Bachman & Lapointe, New Haven, CT, Donald S. Holland, Holland & Bonzagni, Longmeadow, MA, for Plaintiff.

Charles L. Howard, Stephanie Marmelstein Gitlin, Shipman & Goodwin, Hartford, CT, Geoffrey D. Weisbart, Cindy Olson Bourland, Hance, Scarborough, Woodward & Weisbart, Austin, TX, for Defendants.

RULING ON MOTION TO DISMISS OR TRANSFER VENUE

EGINTON, Senior District Judge.

INTRODUCTION

Defendants Paragon Scientific Corporation, ("PSC"), and Mark A. Kyle, ("Kyle" or, collectively, "defendants") have moved to dismiss this action for lack of jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2), lack of proper venue, Federal Rule of Civil Procedure 12(b)(3), or, in the alternative, to transfer this action to the United States District Court for the Western District of Texas, Austin Division, pursuant to 28 U.S.C. § 1404(a).

STATEMENT OF RELEVANT FACTS

The Court summarizes only those facts believed necessary to an understanding of the issues in, and decision rendered on, this Motion.

PSC is a Texas Corporation with its principal place of business in Austin, Texas. American is a Massachusetts corporation, doing business in Connecticut. Both are pharmaceutical providers that provide, inter alios, anti hemophiliac factor, a generic type of blood product certain people with hemophilia must receive. In the relevant market this generic blood product is known as "AHF". Plaintiff asserts that it is the owner of the word-type service mark "AHF", which is the same acronym of the blood product.

PSC maintains a program to underwrite sending children with hemophilia to a specially designed summer camp. Contributions made to this program allow children with hemophilia to attend a camp setting that is prepared to handle these children's special needs. The program is named "A Happy Face" (also "AHF") and is depicted with a smiley face. This acronym is at the heart of this litigation, plaintiff asserting that the use of "AHF" in conjunction with the "A Happy Face" summer program constitutes federal trademark infringement, as well as violation of Connecticut law.

Plaintiff asserts that defendants' improper actions have occurred, in part, in Connecticut. It is alleged that defendants have solicited business in Connecticut, using the "AHF" acronym without permission, in that they have broadcast the AHF mark on their Website (on the Internet), with a displayed "800" number that Connecticut customers could call. According to plaintiff, this is sufficient to confer personal jurisdiction as to PSC and Kyle and, subsequently, to a finding that venue in this district is appropriate.

Defendants maintain that the jurisdictional requirements of the Connecticut Long-Arm Statute have not been satisfied, and even if they have been, the constitutional requirements for personal jurisdiction have not been met as to either defendant.

LEGAL ANALYSIS

I. The Standards of Review

A. Federal Rule of Civil Procedure 12(b)(2)

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a plaintiff bears the burden of showing that the court has jurisdiction over a defendant. Metropolitan Life Insurance Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996), cert. denied, ___ U.S. ___, 117 S.Ct. 508, 136 L.Ed.2d 398 (1997). Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d 116 (1990). Plaintiff's proof is satisfied by a prima facie showing. Ball, 902 F.2d at 197. See also Ensign-Bickford Co. v. ICI Explosives USA, Inc., 817 F.Supp. 1018, 1026 (D.Conn.1993). The prima facie case may be made through the use of its own affidavits and supporting materials. Miller v. Meadowlands Car Imports, Inc., 822 F.Supp. 61, 64 (D.Conn.1993). The use of affidavits and supporting materials from a defendant is likewise proper under this Rule.

B. Federal Rule Of Civil Procedure 12(b)(3)

28 U.S.C. § 1391 provides for venue in the federal courts. Section (b) of that statute, as applicable to this case, provides:

(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.

Where venue is challenged by a defendant, the plaintiff bears the burden of proving that venue is in the forum state. Saferstein v. Paul, Mardinly, Durham, James, Flandreau & Rodger, P.C., 927 F.Supp. 731 (S.D.N.Y.1996), aff'd 127 F.3d 1096 (1997) (case transferred to New Jersey). Further, in a case with multiple claims and multiple defendants, the plaintiff has the burden of establishing that venue is proper as to each claim and each defendant. Jarrett v. State of North Carolina, 868 F.Supp. 155 (D.S.C.1994).

C. The Connecticut Long-Arm Statute

In diversity or federal question cases the Court must look first to the long-arm statute of the forum state, in this instance Connecticut. Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir.1997). Only if the exercise of jurisdiction comports with the dictates of the long-arm statute, does the Court need to turn to the constitutional ramifications of jurisdiction. Bensusan, 126 F.3d at 27; Metropolitan, 84 F.3d at 567.

Connecticut utilizes a familiar two-step analysis to determine if a court has personal jurisdiction. First, the court must determine if the state's long-arm statute reaches the foreign corporation. Second, if the statute does reach the corporation, then the court must decide whether that exercise of jurisdiction offends due process.

Bensmiller v. E.I. Dupont de Nemours & Co., 47 F.3d 79, 81 (2d Cir.1995) citing Greene v. Sha-Na-Na, 637 F.Supp. 591, 595 (D.Conn.1986).¹ See also Frazer v. McGowan, 198 Conn. 243, 246, 502 A.2d 905 (1986) (trial court need not make constitutional inquiry if it finds that long-arm statute does not reach defendant corporation).

The section of the long-arm statute upon which Plaintiff relies provides:

Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: ... (2) out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the state....

Conn.Gen.Stat. § 33-411(c)(2).

The term "transacting business" is not broadly interpreted in Connecticut. Chemical Trading v. Manufacture de Produits, 870 F.Supp. 21, 23 (D.Conn.1994); Hagar v. Zaidman, 797 F.Supp. 132, 135-36 (D.Conn. 1992).

As to Defendant Kyle, Plaintiff relies on Conn.Gen.Stat. § 52-59b(a)(3), which provides for jurisdiction over nonresidents. The pertinent section states:

(a) as to a cause of action ... a court may exercise personal jurisdiction over any nonresident individual ... who ... (3) commits a tortious act outside the state causing injury to person or property within the state ... if he (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce....

II. The Standards As Applied

A. Jurisdiction and PSC

The Internet has opened worlds to millions of people and the fields for multi-faceted information and education thereon are enormous. This being a relatively new technology, its effect on the law is also in its infant stages. The Internet has been described as the world's largest network of computers linked together to share electronic files. Bensusan, 937 F.Supp. at 295, 297 n. 1, citing MTV Networks v. Curry, 867 F.Supp. 202 (S.D.N.Y.1994). A "site" is an Internet address which permits users to exchange digital information with a particular host. Bensusan, 937 F.Supp. at 297 n. 1.

Websites have been defined as either "passive" or "interactive", or a combination of the two. Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1123-24 (W.D.Pa.1997). Distinctions between these two categories have been held to often be determinative of the existence or non-existence of personal jurisdiction. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files, such system is interactive and personal jurisdiction is proper. See, e.g., CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996). At the opposite end are situations where a defendant has simply posted information on an Internet Website accessible to users in foreign jurisdictions. This category, a passive Website, which does little more than make information available to those who are interested in it, is not grounds for personal jurisdiction. See e.g., Bensusan, 937 F.Supp. at 297 (no personal jurisdiction under New York long-arm statute as to passive Website). The middle ground is occupied by interactive...