Cap Barbell, Inc. v. Hulkfit Prods.
| Decision Date | 27 February 2023 |
| Docket Number | Civil Action H-22-2371 |
| Parties | CAP BARBELL, INC., Plaintiff, v. HULKFIT PRODUCTS, INC., BALANCEFROM LLC, AVINASH NAGAVILLI, QIDUO E-COMMERCE (ZHEJIANG) CO., LTD., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
CAP Barbell is a Texas company that sells fitness products including weight plates and “trap” bars.[1] In its second amended complaint, CAP alleges that the defendants have misappropriated its intellectual property and infringed on its trade dress. HulkFit and Avinash Nagavalli have moved to dismiss the complaint for lack of personal jurisdiction and for failure to state a claim; BalanceFrom has moved to dismiss on the same grounds. (Docket Entry Nos. 45, 46, 54, 55). CAP alleges that Qiduo is BalanceFrom's parent company, (Docket Entry No. 44 ¶ 6), but Quido has not joined the pending motions. The court grants the motions to dismiss. CAP's claims for unfair competition, conversion, tortious interference, and unjust enrichment claims are preempted by state law and dismissed with prejudice. The remaining claims are dismissed without prejudice and with leave to amend.
The reasons are set out below.
CAP must make a prima facie showing of personal jurisdiction. Pervasive Software, Inc. v. Lexware GmbH & Co., 688 F.3d 214, 219 (5th Cir. 2012). A federal court may exercise personal jurisdiction over a nonresident defendant when the long-arm statute of the forum state confers personal jurisdiction over that defendant and the exercise of jurisdiction by the forum state is consistent with due process under the United States Constitution. Delgado v. Reef Resort Ltd., 364 F.3d 642, 644 (5th Cir. 2004). The Texas long-arm statute confers jurisdiction to the limits of due process. Sangha v. Navig8 ShipManagement Priv. Ltd., 882 F.3d 96, 101 (5th Cir. 2018); see also Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990) (“This court has decided that the broad language of the long-arm's statute's doing business requirement allows the statute to reach as far as the federal constitution permits.”).
When the cause of action does not arise from or relate to the nonresident defendant's purposeful conduct within the forum state, the court may have general personal jurisdiction. “[A] court may assert jurisdiction over a foreign corporation to hear any and all claims against [it] only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive as to render [it] essentially at home in the forum State.” Daimler AG v. Bauman, 571 U.S. 117, 122 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation marks omitted). Due process requires that the foreign defendant have engaged in continuous and systematic contacts with the forum state for a court to exercise general jurisdiction. Helicopteros Nacionales, 466 U.S. at 414-16; Bearry v. Beech Aircraft Corp., 818 F.2d 370, 374 (5th Cir. 1987). “Establishing general jurisdiction is ‘difficult' and requires ‘extensive contacts between a defendant and a forum.'” Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 101-102 (5th Cir. 2018) (quoting Johnston, 523 F.3d at 609). “[E]ven repeated contacts with forum residents by a foreign defendant may not constitute the requisite substantial, continuous[,] and systematic contacts required for a finding of general jurisdiction.” Revell v. Lidov, 317 F.3d 467, 471 (5th Cir. 2002).
Id. (internal citations omitted).
Under the “effects test,” in certain circumstances, “an act done outside the state that has consequences or effects within the state will suffice as a basis for jurisdiction in a suit arising from those consequences if the effects are seriously harmful and were intended or highly likely to follow from the nonresident defendant's conduct.” Guidry v. U.S. Tobacco Co., Inc., 188 F.3d 619, 628 (5th Cir. 1999) (citing Calder v Jones, 465 U.S. 783, 789-90 (1984)). The Fifth Circuit has clarified that the effects test “is not a substitute for a nonresident's minimum contacts that demonstrate purposeful availment of the benefits of the forum state.” Allred v. Moore & Peterson, 117 F.3d 278, 286 (5th Cir. 1997). “Foreseeable injury alone is not sufficient to confer specific jurisdiction, absent the direction of specific acts toward the forum.” Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 212 (5th Cir. 1999) (citations omitted).
Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). “[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Rule 8 “does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678 (quoting Twombly, 550 U.S. at 555). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
“A complaint ‘does not need detailed factual allegations,' but the facts alleged ‘must be enough to raise a right to relief above the speculative level.'” Cicalese v. Univ. Tex. Med. Branch, 924 F.3d 762, 765 (5th Cir. 2019) (quoting Twombly, 550 U.S. at 555). “Conversely, when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (alterations omitted) (quoting Twombly, 550 U.S. at 558).
The defendants argue that the court lacks both general and specific personal jurisdiction over them. CAP alleges that both HulkFit and BalanceFrom are organized under the laws of California and does not allege that either entity is incorporated or maintains its principal place of business in Texas. (Docket Entry No. 44 ¶¶ 3-4). CAP alleges that Nagavalli is a resident of the State of Washington and is the CEO and owner of HulkFit. (Id. ¶ 5). The defendants do not contest these allegations. There is no dispute that the alleged misappropriation occurred outside Texas. CAP alleges that 100 percent of the defendants' sales occur in Texas. (Id. ¶ 9).[2] HulkFit has submitted a declaration from Nagavalli, who states that HulkFit has no facilities, offices, or operations in Texas, and that HulkFit's employees and officers have never traveled to Texas on business. (Docket Entry No. 46-2 ¶¶ 6, 9). HulkFit argues that courts have rejected claims of general personal jurisdiction even when defendants do have employees and infrastructure in Texas. (Docket Entry No. 46 at 12-13). HulkFit argues that general personal jurisdiction is similarly inappropriate with respect to Nagavalli, who does not conduct business in, and has no ties to, Texas. (Id. at 13). BalanceFrom submits the declaration of Guangchao Liu, who states that BalanceFrom has no facilities, offices, or operations in Texas. (Docket Entry No. 45-2 ¶¶ 4-5). Liu states that BalanceFrom has never sent its employees or agents to Texas. (Id. ¶ 5).
There is little caselaw to guide the court's analysis of whether it may exercise general personal jurisdiction when the court does not sit in the corporation's state of incorporation or state in which the corporation maintains its principal place of business. There is authority that it is “incredibly difficult to establish general jurisdiction in a forum other than” those places. Monkton Ins Services, Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014). To exercise general personal jurisdiction in the forum state, “the affiliations with the forum state must approximate physical presence.” Frank v. P N K (Lake Charles) L.L.C., 947 F.3d 331, 339 (5th Cir. 2020). The sale of products-even 100 percent of a company's sales of that product or other products-into a state approximates physical presence, when, as here, the...
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