Connecticut Elec. Inc. v. Pacific Coast Breaker, Inc.

• Decision Date: 24 February 2012
• Docket Number: 1:10-cv-01440-LJM-TAB
• Parties: CONNECTICUT ELECTRIC, INC., Plaintiff, v. PACIFIC COAST BREAKER, INC. and PC SYSTEMS, INC., Defendants.
• Court: U.S. District Court — Southern District of Indiana

CONNECTICUT ELECTRIC, INC., Plaintiff, v. PACIFIC COAST BREAKER, INC. and PC SYSTEMS, INC., Defendants.

1:10-cv-01440-LJM-TAB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

Dated: February 24, 2012

ORDER ON MOTION TO DISMISS, OR IN THE ALTERNATIVE, TRANSFER

This matter comes before the Court on Defendants', Pacific Coast Breaker, Inc. ("PCB") and PC Systems, Inc. ("PCS") (collectively, "Defendants"), Motion to Dismiss for Lack of Personal Jurisdiction or in the Alternative, Transfer to the Eastern District of California [Dkt. No. 40]. For the following reasons the Court GRANTS Defendants' Motion to Dismiss WITHOUT PREJUDICE and DENIES Defendants' Motion to Transfer.

I. BACKGROUND

PCB, a wholesale supplier of new and reconditioned circuit breakers, is a closely-held California corporation founded in 1987 and headquartered in McClellan, California. It is owned by its shareholders, Craig Volpe, Randy McAyeal, and Gary Volp, and it has a total of sixteen employees. Volpe Decl. at ¶¶ 3-4. PCB's only office is located in McClellan, California, and all of its employees are located in McClellan. Id. Employees of PCB fill customer-initiated orders for reconditioned and new circuit breakers via the telephone or the internet. Id. at ¶ 4. PCB maintains a website at http://www.pacificcoastbreaker.com. Id. at ¶ 10.

PCS is a California corporation founded in 2005 and headquartered in McClellan, California. Id. at ¶ 5. PCS is owned by its shareholders, Craig Volpe, Randy McAyeal, and Gary Volp, and it has four additional employees. Id. at ¶ 3. PCS manufactures and distributes new motor control products to various wholesalers. Id. at ¶ 5. PCS has no employees or offices in Indiana. Id. at ¶ 15. It operates a web site at http://www.pcsep.com. Id. at ¶ 13. PCS conducts all of its business activities except manufacturing in McClellan, California. Id. at ¶ 5. PCS manufactures new products in China. Id. at ¶ 23. PCS does manufacture the Zinsco-type breakers at issue in this case, but it sells them directly to PCB. Id. at ¶¶ 8, 10. PCS has only sold these breakers to PCB. Id.

At issue in this lawsuit are Zinsco-type replacement circuit breakers (the "Breakers") manufactured by PCS and sold by PCB. The Zinsco-type breaker compete with Zinsco replacement breakers Connecticut Electric manufactures and sells. Volpe Decl. at ¶ 8. Connecticut Electric is a Delaware corporation with its only place of business in Anderson, Indiana. Dunham Decl. at ¶ 2. Connecticut Electric manufactures electrical products including residential circuit breakers. Id. In 2004, Connecticut Electric purchased the Zinsco brand from Thomas & Betts. Id. at ¶ 3. The Court includes additional facts as necessary.

II. STANDARD

Where no evidentiary hearing has taken place, the plaintiff bears only the burden of making a prima facie case for personal jurisdiction. uBid, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 423 (7th Cir. 2010). Accordingly, the Court takes Connecticut Electric's assertedfacts as true and resolves any factual disputes in its favor. See Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010).

Connecticut Electric asserts claims under the Lanham Act, 15 U.S.C. §§ 1114, 1116, 1117, and 1125(a) and (c) as well as claims under both Indiana statutory law and Indiana common law. The Lanham Act does not authorize nationwide service of process. See Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir. 2004). Accordingly, the Court may exercise personal jurisdiction over PCS and PCB if it would be permitted to do so under the Indiana long-arm statute. See Fed. R. Civ. P. 4(k)(1)(A). In Indiana, the determination of whether a court has personal jurisdiction over a defendant is determined by Indiana's long arm statute, Indiana Trial Rule 4.4. Trial Rule 4.4 lists several specific factors that, if present, would subject a defendant to the jurisdiction of Indiana Courts. See Ind. Trial R. 4.4. In addition, the rule states: "a court of [Indiana] may exercise jurisdiction on any basis not inconsistent with the Constitutions of [Indiana] or the United States." Ind. Trial R. 4.4(a). Therefore, the Court has jurisdiction over Defendants to the limits allowed by the Due Process Clause of the Fourteenth Amendment. LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 966-67 (Ind. 2006).

The Due Process Clause requires that a non-resident defendant have "certain minimum contacts with [Indiana] such 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 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Personal jurisdiction may be either general or specific. See Alpha Tau Omega v. Pure Country, Inc., 185 F. Supp. 2d 951, 956 (S.D. Ind. 2002). General jurisdiction renders a non-resident defendant amenable to suit within a particular forum regardless of the subject matter of thesuit, based on a defendant's continuous and systematic contacts with the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). Specific jurisdiction renders a non-resident defendant amenable only to suits arising out of or related to its contacts with the particular forum. Id. at 414.

In order for a Court to exercise specific jurisdiction, due process requires that a non-resident defendant must have established his contacts with the forum state by purposefully availing himself of the privilege of conducting business there. See Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S. 102 (1987). "This 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts." See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)). In other words, the defendant's conduct and connection with the forum state should be such that he should reasonably anticipate being haled into court there. See id. at 474. It must be the activity of PCS and PCB in the forum state that creates jurisdiction, not the conduct of Connecticut Electric or a third party. See Purdue Research Found. v. Sanofi-Synthelabo, 338 F.3d 773, 780 (7th Cir. 2003).

III. DISCUSSION

Connecticut Electric does not assert, and the evidence does not support, a claim of general jurisdiction over Defendants in Indiana. Instead, Connecticut Electric argues that Indiana can exercise specific jurisdiction over both PCS and PCB. Specific jurisdiction is appropriate when the defendant purposefully directs its activities at the forum state and the alleged injury arises out of those activities. See Burger King, 471 U.S. at 475.

Before turning its attention to its ability to exercise jurisdiction over PCS, the Court considers the propriety of exercising specific jurisdiction over PCB. Connecticut Electric argues PCB does have minimum contacts with Indiana sufficient to support the Court's exercise of specific jurisdiction. Specifically, Connecticut Electric cites sales to Indiana residents, the existence of a one-year warranty with every sale, regular interaction with Indiana customers, and a "highly interactive" website as contacts supporting personal jurisdiction over PCB in Indiana. The Court addresses each of these contacts in turn.

Connecticut Electric notes that over the last five years, PCB has made approximately 648 sales of circuit breakers to Indiana residents. Pl.'s Ex. 3, Indiana Invoices. Connecticut Electric argues that because of the way that PCB describes the circuit breakers on their invoices, PCB cannot disprove that it sold 648 allegedly infringing breakers in Indiana and that, as a result, the Court should presume that all 648 sales involved the allegedly infringing breakers. However, the invoices do specify the type of breaker sold, and only seventy invoices identify Zinsco-type breakers as the subject of the sale. See Pl.'s Ex. 3, Indiana Invoices; Volpe Decl. at ¶ 21. PCB has admitted that it cannot distinguish based upon the invoices whether the sale of a Zinsco-type breaker was fulfilled with an actual Zinsco replacement breaker or one of the alleged infringing breakers. Volpe Decl. at ¶ 21. PCB asserts that only four of the sales of Zinsco-type breakers are confirmed to consist of the sale of an allegedly infringing unit. Volpe Decl. at ¶ 20. Because there is a dispute as to whether the other sixty-six Zinsco-type breakers orders in Indiana were fulfilled with allegedly infringing breakers, the Court assumes that they were for the purposes of this motion. See Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010) (stating that on a motion to dismiss for lack of personal jurisdiction where there hasbeen no evidentiary hearing, the plaintiff is entitled to have factual disputes resolved in its favor). Even if all seventy orders for Zinsco-type breakers were filled with allegedly infringing breakers, it constitutes only $3,780.00 in sales, or approximately .012% of PSB's total revenue since 2005. At minimum, PCB sold 1,700 allegedly infringing breakers. Volpe Decl. at ¶ 22. Accordingly, the maximum percentage of allegedly infringing breakers sold in Indiana is 4.1%. These sales alone are not enough to constitute "substantial" contacts of the type required by the Constitution. See Richter v. Instar Enters. Int'l, Inc., 594 F. Supp. 2d 1000, 1007 (N.D. Ill. 2009) (Kapala, J.) (collecting cases). Indeed, specific personal jurisdiction based upon the sales of allegedly infringing breakers to Indiana residents alone "would really prove too much: It would hale any asserted infringer of a claimed intellectual property right into a remote forum based upon truly de minimis contacts." See Guinness World Records, Ltd. v. Doe, 664 F. Supp. 2d 927, 929 (N.D. Ill. 2009) (Shadur, J.) (concluding that nominal sales of an allegedly infringing product in the forum state, without more, are not substantial contacts...