Dakota Industries, Inc. v. Dakota Sportswear, Inc.

• Citation: 946 F.2d 1384,20 USPQ2d 1450
• Decision Date: 16 October 1991
• Docket Number: No. 90-5481,90-5481
• Parties: DAKOTA INDUSTRIES, INC., Appellant, v. DAKOTA SPORTSWEAR, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1384

946 F.2d 1384

20 U.S.P.Q.2d 1450

DAKOTA INDUSTRIES, INC., Appellant, v. DAKOTA SPORTSWEAR, INC., Appellee.

No. 90-5481.

United States Court of Appeals Eighth Circuit.

Submitted May 15, 1991.

Decided Oct. 16, 1991.

Donald N. Srstka, Sioux Falls, S.D., for appellant.

Scott A. Hindman, Sioux City, Iowa, argued (F. Joseph Du Bray and Scott A. Hindman, on the brief), for appellee.

Before ARNOLD and JOHN R. GIBSON, Circuit Judges, and FLOYD R. GIBSON, Senior Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

Dakota Industries, Inc., appeals from the district court's dismissal of its trademark infringement claim against Dakota Sportswear, Inc., for lack of personal jurisdiction and venue. On appeal, Dakota Industries argues that the court can exercise jurisdiction under the tort accrual provision of the South Dakota long-arm statute, that Sportswear's contacts with South Dakota are sufficient to satisfy due process requirements, and that venue is proper because Dakota Sportswear can be deemed to "reside" in South Dakota under 28 U.S.C. § 1391(c) (1988). We reverse the order of the district court.

Dakota Industries, a South Dakota corporation based in Tea, South Dakota, manufactures women's clothing, including jumpsuits, shorts, shirts, pants, and outerwear. Dakota Sportswear, a California corporation based in North Hollywood, California, primarily manufactures warm weather clothing for large-size women but also produces a smaller line for petite women.

Since 1972, Dakota Industries has been the registered holder of the trademark "Dakota" for snowmobile suits, jackets, coats, coveralls, ski pants and jackets, jumpsuits, and jackets. The trademark has been approved as incontestable under federal law. The United States Patent Office, according to an uncontroverted sworn statement by Industries' president, has rejected at least twice Sportswear's application to register the "Dakota" trademark.

In January 1989, one of Dakota Sportswear's suppliers mistakenly sent a $475 invoice for bias binding to Dakota Industries. When Industries investigated the mix-up, it discovered that the order had been placed by Dakota Sportswear. Later that month, Dakota Industries' president, Donald Mackintosh, placed a call to Sportswear at its California office and spoke with its president, Kerry Jolna. After Mackintosh explained who he was, Jolna said that he had been expecting the phone call and that his attorney had told him Mackintosh would be calling.

In April 1989, one of Dakota Industries' attorneys sent by certified mail a "cease and desist" letter to Dakota Sportswear, demanding that Sportswear immediately discontinue manufacturing, advertising, and selling goods with the "Dakota" trademark.

Four months later, in August, Mackintosh purchased a size 11 pair of women's pants bearing Dakota Sportswear's label, "DAKOTA SPORT," at the 1/2 Price Store in Sioux Falls, South Dakota. In October 1989, three months before Industries filed this lawsuit, lawyers in an unrelated case deposed Dakota Sportswear's executive vice president, Steven W. Jolna. In his deposition, Jolna stated that: (1) the end purchasers of Sportswear's large-size and "missy" pants are located throughout the entire United States; (2) Dakota Sportswear sold its "Dakota Sport" clothes on a "national basis"; (3) he was "sure" that Sportswear sold to major chains with outlets in South Dakota but that Sportswear markets its clothes "mostly in New York and California" and does not market in South Dakota; and (4) if the chains to which Sportswear sells have outlets in South Dakota, Sportswear's clothes may be shipped there but that he could not recall having sent a shipment to South Dakota. Jolna identified several major retail chains to which Sportswear sells or has sold its products, including Women's World, Monica Scott, Richman Gordman, and the 1/2 Price Stores. He described the locations of the Monica Scott stores as being "mostly northwest, midwest and northern California."

After Dakota Industries filed this trademark infringement action in January 1990, Mackintosh discovered that Dakota Sportswear garments were available in five more stores in Sioux Falls in addition to the 1/2 Price Store where he had earlier purchased the size 11 pants. One of these stores carried jackets bearing the "DAKOTA SPORT" label. Mackintosh later filed a supplemental affidavit in which he stated that Dakota Sportswear was "drop" shipping its garments directly into South Dakota. Mackintosh rested his assertion on an exchange in Jolna's deposition. When asked "Does Dakota Sportswear sell to any retailers in the State of South Dakota?", Jolna replied: "I am--I'm sure that there are some of the major chains who may have outlets there. We do not market in South Dakota. We market mostly in New York and California. If they happen to have stores that are located there, they may be shipped there ...." (Emphasis in affidavit). Mackintosh did not include in his affidavit the rest of Jolna's statement, which was: "... but I cannot say that I recall having sent a shipment there."

During the deposition, Jolna had been asked whether his company directly shipped garments to the chains' branch stores. His attorneys objected, and he did not answer the question.

In May 1990, Steven Jolna filed an affidavit in this lawsuit stating that Dakota Sportswear has no offices, outlets, agents or employees in South Dakota, that it has never marketed or advertised in South Dakota, and that it has never directly or indirectly shipped its products into South Dakota. If the retail chains to which Dakota Sportswear sells its clothes ship those clothes to South Dakota, that action is something that Dakota Sportswear "cannot predict or control," Jolna stated.

In June 1990, Dakota Industries sought discovery of the interstate common-carrier numbers assigned to Dakota Sportswear's shipments. Industries' stated purpose was to ascertain whether Dakota Sportswear was in fact shipping its garments into South Dakota. Dakota Sportswear refused and filed a motion for a protective order and to quash discovery on the ground that information sought exceeded the jurisdictional issue before the court.

The district court did not rule on the motion for a protective order, but instead granted Sportswear's motion to dismiss for lack of personal jurisdiction and venue. Dakota Industries, Inc. v. Dakota Sportswear, Inc., 742 F.Supp. 548, 552 (D.S.D.1990). The district court held that Dakota Sportswear lacked the necessary minimum contacts with South Dakota to support personal jurisdiction and thus could not be deemed to reside there for venue purposes. Id. It further held that venue was improper under 28 U.S.C. § 1391 because the claim did not arise in South Dakota. Id. at 550. This appeal followed.

I.

Dakota Sportswear asserts that Dakota Industries has the burden of proving personal jurisdiction. It cites Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651 (8th Cir.1982), for the proposition that the party seeking to invoke the court's jurisdiction bears the burden of proof on that issue and that " 'the burden may not be shifted to the party challenging the jurisdiction.' " Id. at 653 n. 3 (quoting Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 490 (5th Cir.1974)).

While it is true that the plaintiff bears the ultimate burden of proof on this issue, jurisdiction need not be proved by a preponderance of the evidence until trial or until the court holds an evidentiary hearing. Cutco Ind. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986). To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction. Watlow Elec. Mfg. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir.1988); Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373 (8th Cir.1990). If the district court does not hold a hearing and instead relies on pleadings and affidavits, as it did here, the court must look at the facts in the light most favorable to the nonmoving party, Watlow Elec. Mfg., 838 F.2d at 1000, and resolve all factual conflicts in favor of that party. Nieman v. Rudolf Wolff & Co., Ltd., 619 F.2d 1189, 1190 (7th Cir.), cert. denied, 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148 (1980). On appeal, we examine de novo the question of whether the nonmoving party has established a prima facie case of personal jurisdiction. Cutco Indus., 806 F.2d at 365.

A.

We approach our analysis of personal jurisdiction on two levels, first examining whether the exercise of jurisdiction is proper under the forum state's long-arm statute. Austad Co. v. Pennie & Edmonds, 823 F.2d 223, 225 (8th Cir.1987). If the activities of the non-resident defendant satisfy the statute's requirements, we then address whether the exercise of personal jurisdiction comports with due process. Id.; see also Watlow, 838 F.2d at 1001.

Dakota Industries asserts that the court's jurisdiction is proper under the tort accrual provision of the South Dakota long-arm statute. That provision confers jurisdiction over any person involved in "[t]he commission of any act which results in accrual within this state of a tort action." S.D.Codified Laws Ann. § 15-7-2(2) (1984 & Supp.1991).

Infringement of a trademark is a tort, Union National Bank v. Union National Bank, 909 F.2d 839, 843 n. 10 (5th Cir.1990); Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215, 218 (1st Cir.1989), and requires the use, without the owner's consent, of the same or a similar mark in connection with the sale of goods that is likely to cause confusion. Keds Corp., 888 F.2d at 218; Co-Rect Prod., Inc. v. Marvy! Advertising Photography, Inc., 780 F.2d 1324, 1329-30 (8th Cir.1985). ¹

Dakota Sportswear argues that section 15-7-2 does not apply because it has performed no acts that would fall under any section of the long-arm statute. Specifically, it asserts that it has no offices, agents or property in South Dakota and has not...