Critzas Industries v. Waterway-Creve Coeur, 85-1166C(5).

• Decision Date: 11 April 1986
• Docket Number: No. 85-1166C(5).,85-1166C(5).
• Citation: 652 F. Supp. 56
• Parties: CRITZAS INDUSTRIES, INC., Plaintiff, v. WATERWAY-CREVE COEUR, INC., and Eclectic Products, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

652 F. Supp. 56

CRITZAS INDUSTRIES, INC., Plaintiff, v. WATERWAY-CREVE COEUR, INC., and Eclectic Products, Inc., Defendants.

No. 85-1166C(5).

United States District Court, E.D. Missouri, E.D.

April 11, 1986.

Polster, Polster and Lucchesi, Lionel L. Lucchesi, Gregory E. Upchurch, St. Louis, Mo., for plaintiff.

Popkin, Stern, Heifetz, Lurie, Sheehan, Reby & Chervitz, Richard J. Sheehan, David Sobelm, St. Louis, Mo., for defendant Waterway-Creve Coeur.

Knobbe, Martens, Olson & Bear, Lowell Anderson, Newport Beach, Cal., and Lewis & Rice, Jeffrey B. Hunt, St. Louis, Mo., for defendant Eclectic Products.

MEMORANDUM

LIMBAUGH, District Judge.

This cause is before the Court on defendant Eclectic Products' motion to dismiss for lack of venue or, in the alternative, to transfer. Both the plaintiff and Eclectic have fully briefed their positions.

Plaintiff Critzas Industries brings this six-count civil action against defendants Waterway-Creve Coeur, Eclectic Products and Tim Hobbs.¹ Plaintiff Critzas and defendant Waterway Creve-Coeur are Missouri corporations having their principal places of business in Missouri. Defendant Eclectic is a California corporation with its principal place of business in that state. Defendant Tim Hobbs is a Missouri resident. Critzas claims the defendants are violating its trademark rights in a product named "Goop," a multi-purpose cleaner. Apparently, Eclectic manufactures and distributes an adhesive product which has a variety of names, all of which contain the word "goop," e.g., "Shoe Goop." Critzas alleges that defendants Hobbs and Waterway have purchased and re-sold Eclectic's "goop" products.

Plaintiff bases its venue allegations on 28 U.S.C. § 1391(b) and (c). Since subject matter jurisdiction in this case does not rest solely on diversity of citizenship, venue is proper in any district where all the defendants reside and in the district in which the claim arose. 28 U.S.C. § 1391(b). The plaintiff claims venue is proper in the Eastern District of Missouri because its claims arose in this district and because all the defendants reside here. As to the second basis for venue, Critzas alleges that Eclectic is a resident of the Eastern District of Missouri because it is "doing business" here. See 28 U.S.C. § 1391(c).

"Claim Arose"

The plaintiff's complaint against Eclectic is, in a sense, a transitory action since defendant sells its "goop" products in a large number of states. A relatively small number of these sales occur in Missouri. In the past nine years, Eclectic has sold in Missouri products valued at approximately $9,600.00, out of total sales of $2,000,000.00. The Missouri sales, then, represent less than one-half of one percent of Eclectic's total sales. In contrast, Eclectic's California sales represent twenty percent of its total sales. Eclectic has no offices, officers or phone listings in Missouri, and is not licensed to do business in this state. Even if, as plaintiff alleges, Eclectic has recently increased its sales activities in Missouri, this state is not one of Eclectic's key markets.

In deciding whether the claim brought by Critzas arose in the Eastern District of Missouri, the Court must look primarily to the seminal case in this area, Leroy v. Great Western United Corp., 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979). There, the Supreme Court noted that Congress, when adding the "claim arose" language to § 1391(b), "did not intend to provide for venue at the residence of the plaintiff or to give that party an unfettered choice among a host of different districts." Id. at 185, 99 S.Ct. at 2717, citing Denver & R.G.W.R. Co. v. Railroad Trainmen, 387 U.S. 556, 560, 87 S.Ct. 1746, 1748, 18 L.Ed.2d 954 (1967). The Court established an extremely narrow construction of "claim arose," noting

In our view, therefore, the broadest interpretation of the language of § 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably even more) districts that with approximately equal plausibility — in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff) — may be assigned as the locus of the claim.

Id. 443 U.S. at 185, 99 S.Ct. at 2717.

In recent decisions, the First Circuit and the District of Columbia Circuit have applied the general principles established in Leroy to trademark infringement cases. The First Circuit in Johnson Creative Arts v. Wool Masters, 743 F.2d 947 (1st Cir. 1984); found, on facts similar to those here, that venue was improper in Massachusetts. In that case, a Massachusetts plaintiff brought a trademark suit in Massachusetts against two Massachusetts retailers and two New York defendants. In sustaining the New York defendants' motion to dismiss for improper venue, the Court found that as to these defendants the plaintiff's cause of action did not arise in Massachusetts because their Massachusetts sales amounted to only between six and fourteen percent of their total sales. Id. at 955. The Court based its decision largely on an application of the principles established by the Supreme Court in Leroy. Id.

The District of Columbia Circuit gave the "claim arose" language similar construction in Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurants, 760 F.2d 312 (D.C.Cir.1985) ("Noxell I"); see also "Noxell II," 771 F.2d 521 (D.C.Cir.1985) (holding in Noxell I approved in decision assessing attorneys' fees against plaintiff). The plaintiff in Noxell brought a trademark infringement suit in the District of Columbia even though that area accounted for less than one and one-half percent of the defendant's total sales. In contrast, the defendant made forty percent of its sales in California. In remanding the action to the district court with instructions to dismiss it, the D.C. Circuit found the Supreme Court's decision in Leroy to be definitive and particularly applicable to trademark infringement cases. 760 F.2d at 315-17.

These decisions establish that a plaintiff in a trademark action cannot bring suit in its home state under the "claim arose" language simply because some of the suspect transactions occurred in that state. The cases' factual similarity to the situation here makes their holdings and rationale extremely compelling.

Plaintiff argues that Noxell and Wool Masters conflict with the Eighth Circuit's interpretations of the "claim arose" language in contexts other than trademark actions. Two of these Eighth Circuit decisions, Gardner Engineering Corp. v. Page Engineering Corp., 484 F.2d 27 (8th Cir. 1973), and Cochrane v. Iowa Beef Processors, 596 F.2d 254 (8th Cir.1979) cert. denied 442 U.S. 921, 99 S.Ct. 2848, 61 L.Ed.2d 290 (1979) are clearly dated since each rests on the principle that the plaintiff's convenience is the key consideration when a court construes a venue statute. See 484 F.2d at 33 and 596 F.2d at 261. In Leroy, the Supreme Court specifically states that the plaintiff's convenience is irrelevant to venue consideration. 443 U.S. at 185, 99 S.Ct. at 2717.

Plaintiff also cites an Eighth Circuit decision, In Re Nine Mile, 692 F.2d 56 (8th Cir.1982); as evidence that the Eighth Circuit, even after Leroy, views the "claim arose" language in the venue statute as a broadening device which Congress inserted to provide for greater flexibility for aggrieved parties. The Eighth Circuit's discussion of the "claim arose" language, though, occurs in dictum in a footnote. Id. at 60 (footnote 6). Of note too, the breach of contract/breach of fiduciary duty action in Nine Mile differs dramatically from the transitory trademark action before the Court. The underlying events in Nine Mile occurred in only two or, at most, three states. Here, the events giving rise to plaintiff's causes of action occurred in a large number of states, and no place in particular. The policies delineated in Leroy have more significance in actions where, as here, the transitory nature of the alleged wrongful acts would allow the plaintiff to forum shop if a court were to broadly construe the term "claim arose." Finally, the Eighth Circuit's "c.f." citation to Leroy surely cannot mean the Court, while noting a relevant Supreme Court decision, has taken an alternative approach to the "claim arose" language in § 1391.

Under the principles set forth in Leroy and applied to trademark infringement actions in Wool Masters and Noxell, if Eclectic were the only defendant named in plaintiff's suit, venue would unquestionably not be proper in this district. But, another portion of the Leroy decision, in which the Supreme Court discusses the history of the "claim arose" phrase in § 1391(b), suggests that a plaintiff may sometimes file suit against multiple defendants in a venue which would be inappropriate in a suit against one defendant. See Leroy, 443 U.S. at 184, 99 S.Ct. at 2717 (footnote 17); and Brunette Machine Works v. Kockum Industries, 406 U.S. 706, 710, 92 S.Ct. 1936, 1939, 32 L.Ed.2d 428 (footnote 8) (1971). Prior to 1966, a plaintiff could bring a case within the federal courts' 28 U.S.C. § 1331 federal question jurisdiction only in the district where all defendants resided. If defendants resided in more than one district, a plaintiff could not bring a single suit in federal court against all of them. The addition in 1966 of the "claim arose" language eliminated this gap in the venue statutes by providing a venue in most cases in which defendants reside in different federal districts.

Plaintiff contends that the Court must keep this Congressional purpose in mind when construing § 1391(b). If the Court interprets the "claim arose" language strictly as defendant suggests it should, plaintiff cannot bring one suit against all three of the named defendants, since two "reside" in Missouri and one "resides" in California. It...