Ameripay, LLC v. Ameripay Payroll, Ltd., 03-CV-3534 (FSH).

• Decision Date: 20 July 2004
• Docket Number: No. 03-CV-3534 (FSH).,03-CV-3534 (FSH).
• Citation: 334 F.Supp.2d 629
• Parties: AMERIPAY, LLC, Plaintiff, v. AMERIPAY PAYROLL, LTD., Defendant.
• Court: U.S. District Court — District of New Jersey

334 F.Supp.2d 629

AMERIPAY, LLC, Plaintiff, v. AMERIPAY PAYROLL, LTD., Defendant.

No. 03-CV-3534 (FSH).

United States District Court, D. New Jersey.

July 20, 2004.

COPYRIGHT MATERIAL OMITTED

Richard L. Ravin, Hartman & Winnicki, P.C., Paramus, NJ, for Plaintiff.

OPINION & ORDER

HOCHBERG, District Judge.

This matter is before this Court upon a federal trademark infringement action between Plaintiff Ameripay, LLC and Defendant Ameripay Payroll, Ltd. Defendant has filed a Motion to Dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and, alternatively, a Motion to Transfer Venue to the Northern District of Illinois under 28 U.S.C. § 1404(a). This Court has reviewed the submissions of the parties pursuant to Fed.R.Civ.P. 78.

BACKGROUND

Plaintiff and Defendant are payroll service providers headquartered in New Jersey and Illinois, respectively. On or about October 21, 1999, Plaintiff, owner of the "AMERIPAY" trademark, discovered that Defendant had acquired the Internet domain name "ameripay.com".¹ On July 24, 2003, Plaintiff filed suit alleging that Defendant violated the Lanham Act by registering and operating "ameripay.com" for the purpose of doing business as a payroll service provider. Plaintiff brought federal trademark infringement, unfair competition, and cybersquatting claims, as well as several state claims.

Defendant's website at "ameripay.com" is accessible from all computers connected to the Internet, including those in New Jersey. The site is both informational and interactive. It describes the company's services and provides contact information. Its interactive features allow users to download programs from the site; however, installation of the programs requires a license key available only to Defendant's clients. Remote software installation is possible by accessing the software WebEx, but there is currently no evidence of WebEx access by any computer in New Jersey. The site also includes Employee Self Service ("ESS"), a feature that allows employees, including those living in New Jersey, to view their pay history, edit their personnel data, and view check stubs on-line.

Defendant has no clients in New Jersey.² It focuses its marketing in Illinois, where 96% of its clients are located. A few of Defendant's clients have employees who reside in New Jersey. As part of its payroll services, Defendant makes 342 annual tax filings with the State of New Jersey on behalf of its clients' 131 New Jersey employees. Each year, Defendant issues directly to its clients about 5,100 checks for these 131 employees. Defendant has no other contacts with New Jersey.³

STANDARD

I. Personal Jurisdiction

A court may determine that personal jurisdiction exists when a defendant has "minimum contacts" with the forum state and if asserting jurisdiction based on those contacts comports with "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).⁴ On a motion under Fed.R.Civ.P. 12(b)(2), the plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish jurisdiction. Carteret Sav. Bank FA v. Shushan, 954 F.2d 141, 146 (3d Cir.1992). A court must accept as true the allegations in the complaint and resolve disputed issues of fact in favor of the plaintiff. Id. at 142 n. 1. However, the plaintiff cannot rely on the pleadings alone but must provide actual proofs. Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66 n. 9 (3d Cir.1984). Once the plaintiff has shown minimum contacts, the burden shifts to the defendant, who must show that the assertion of jurisdiction would be unreasonable. Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1226 (3d Cir.1992).

A. Minimum Contacts

A court can assert either specific or general jurisdiction over a defendant. Specific jurisdiction requires the defendant to have "minimum" contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). In addition, the lawsuit must "arise out of" or "relate to" these minimum contacts. Id. Furthermore, the defendant must have purposefully availed itself of the forum such that it "should reasonably anticipate being haled into court" there, having invoked the benefits and protections of the forum's laws. Id. at 474-75, 105 S.Ct. 2174.

General jurisdiction, by contrast, requires the defendant to have "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). These contacts need not relate to the subject matter of the litigation. Id. at 415 n. 9, 104 S.Ct. 1868. However, general jurisdiction requires "a very high threshold of business activity." Compagnie des Bauxites de Guinea v. Ins. Co. of N. America, 651 F.2d 877, 891 n. 2 (3d Cir.1981) (finding that a "daily presence" in the forum and activities such as weekly advertising, regular solicitation of business, substantial product sales, and the maintenance of a telephone number in the forum meet the threshold).

A website operated by the defendant may provide contacts sufficient to support jurisdiction. Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 452 (3d Cir.2003). If a website is neither "passive," i.e., solely informational, nor "commercially interactive," i.e., capable of executing contracts over the Internet, then jurisdiction depends on: (1) the level of interactivity; and (2) the commercial nature of the exchange that occurs on the site. Id.

However, in trademark infringement actions there must be "something more" than the infringement itself to show that the defendant directed its activity towards the forum. Machulsky v. Hall, 210 F.Supp.2d 531, 539 (D.N.J.2002). The defendant must have purposely availed itself of the forum by targeting its website there, knowingly conducting business with forum residents through the website, or by non-internet contacts, such as communications, business trips, or contracts in the forum. Toys "R" Us, 318 F.3d at 452-55 (finding a site that was designed primarily for sales to European customers not to be directed at New Jersey, despite two online sales to New Jersey residents and related email correspondence). When a defendant sells its services to subscribers in the forum, American Network, Inc. v. Access America/Connect Atlanta, Inc., 975 F.Supp. 494, 499 (S.D.N.Y.1997), or assigns forum residents passwords knowing that the contacts will result in business relationships, Zippo Manuf. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1126 (W.D.Pa.1997), courts have asserted jurisdiction based on an infringing website. By contrast, a defendant who operated an infringing website but conducted business solely abroad and did not use its website to attract business in the forum was not subject to personal jurisdiction there. Desktop Techs., Inc. v. Colorworks Reproduction & Design, Inc., 1999 WL 98572, ^*6 (E.D.Pa.1999).

B. Fair Play and Substantial Justice

Jurisdiction must also be reasonable. Burger King, 471 U.S. at 476, 105 S.Ct. 2174 (finding that the assertion of jurisdiction must comport with "fair play and substantial justice"). A court must determine reasonableness by balancing the burden on the defendant, the forum's interest in adjudicating the dispute, the judicial system's interest in the efficient resolution of disputes, the interests of the several states in furthering fundamental social policies, and the plaintiff's interest in convenient and effective relief. Id. at 476-77, 105 S.Ct. 2174. However, whether the plaintiff's claim is time-barred in another forum cannot be considered in the jurisdictional analysis. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 778, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984); Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 574 (2d Cir.1996).

C. Jurisdictional Discovery

If the plaintiff can allege with "reasonable particularity" the possible existence of the requisite jurisdictional contacts, then jurisdictional discovery should be granted. See, e.g., Toys "R" Us, 318 F.3d at 456-57 (granting discovery because the request was not "frivolous," since the court had improperly denied discovery of non-Internet contacts).

II. Transfer of Venue

The court has discretion to transfer an action to any district where it might have originally been brought for the "convenience" of the parties and witnesses and in the interest of "justice" under 28 U.S.C. § 1404(a). Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995). The movant has the burden of showing the need to transfer. Id.

DISCUSSION

I. Personal Jurisdiction

A. Minimum Contacts

Plaintiff has failed to show that Defendant's contacts with New Jersey are sufficient to support specific or general jurisdiction. Plaintiff alleges five types of contacts between Defendant and New Jersey: (1) its infringing website, (2) its correspondence with Palladino, (3) its issuance of checks, (4) its relationship with Swift, and (5) its filing of employee taxes in the forum.

1. Specific Jurisdiction

Among Plaintiff's alleged contacts between Defendant and New Jersey, the only ones relevant to an inquiry of specific jurisdiction are Defendant's website and its correspondence with Palladino.⁵

Defendant's website is partly interactive but incapable of executing contracts online; therefore, it must be evaluated based on its level of interactivity and commercial nature. Toys "R" Us, 318 F.3d at 452. Although "ameripay.com" is interactive in that it allows software download, remote software installation, and payroll account monitoring, its interactive functions are highly restricted. Defendant distributes its software license key only to its non-New Jersey clients and does not use WebEx to control any computer in New Jersey. Although the 131 New Jersey employees of Defendant's clients can interact with the website through the ESS feature, the nature of the...