Design Res., Inc. v. Leather Indus. of Am., No. 1:10CV157.

• Decision Date: 28 September 2012
• Docket Number: No. 1:10CV157.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: DESIGN RESOURCES, INC., Plaintiff, v. LEATHER INDUSTRIES OF AMERICA, Dr. Nicholas J. Cory, Ashley Furniture Industries, Inc., and Todd Wanek, Defendants.

900 F.Supp.2d 622

DESIGN RESOURCES, INC., Plaintiff,

v.LEATHER INDUSTRIES OF AMERICA, Dr. Nicholas J. Cory, Ashley Furniture Industries, Inc., and Todd Wanek, Defendants.

No. 1:10CV157.

United States District Court,

M.D. North Carolina.

Sept. 28, 2012.

Grover Gray Wilson, Wilson Helms & Cartledge, L.L.P., Winston–Salem, NC, John R. Neeleman, Lane Powell PC, Seattle, WA, for Plaintiff.

Marsha J. Lyons, Cranfill Sumner & Hartzog LLP, Charlotte, NC, Richard D. Milone, S. Mahmood Ahmad, Veronica D. Jackson, Kelley Drye & Warren LLP, Washington, DC, W. Andrew Copenhaver, Brent F. Powell, Womble Carlyle Sandridge & Rice, Winston–Salem, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge.

Presently before this court are the 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 20) filed by Defendant Todd Wanek (hereinafter “Def. Wanek's 12(b)(2) Mot. to Dismiss”) and the 12(b)(2) Motion to Dismiss Design Resources, Inc.'s Complaint for Lack of Personal Jurisdiction (Doc. 26) filed by Defendant Dr. Nicholas J. Cory (hereinafter “Def. Cory's 12(b)(2) Mot. to Dismiss”). The parties have filed the appropriate memoranda of law ( see Docs. 21, 26–2, 35, 38, 41, 43), and this court conducted a hearing on the pending motions on September 29, 2011. Both of these matters are now ripe for ruling, and, for the reasons set forth herein, this court will grant both motions.

Additionally, in its brief, Plaintiff Design Resources, Inc. (“DRI”) states that “[a]t minimum the Court should allow DRI the opportunity to conduct discovery on the jurisdictional issues.” (Pl.'s Opp'n to Def. Todd Wanek's Mot. to Dismiss for Lack of Pers. Jurisdiction (Doc. 35) at 14 ¹ [hereinafter “Pl.'s Opp'n to Wanek's 12(b)(2) Mot. to Dismiss”]. To the extent that this statement is a motion for leave to conduct jurisdictional discovery, that motion will be denied.

Following this court's hearing on September 29, 2011, Plaintiff filed a motion to amend its complaint (Doc. 46). This court has granted that motion. ( See Order (Doc. 49).) Plaintiff's amendment made two additions to its complaint. ( See Pl.'s Mot. to Amend Compl. (Doc. 46) ¶¶ 1–2.) First, the amendment added an allegation that the amount in controversy exceeds $75,000. ( See id. ¶ 1.) Second, the amendment added jurisdictional allegations regarding Plaintiff's presence at the High Point furniture shows in North Carolina. ²

I. FACTUAL AND PROCEDURAL BACKGROUNDA. The Parties

Plaintiff DRI is a Washington corporation with its principal place of business in Seattle, Washington. (Complaint (“Compl.”) (Doc. 1) ¶ 1.) DRI is in the leather products business. ( Id. ¶ 23.) More specifically, DRI markets and sells bonded leather products under the NextLeather® brand to customers primarily located in North America and Asia. ( Id. ¶ 24.)

According to the Complaint, Defendant Leather Industries of America (“LIA”) is “a non-profit corporation organized in the District of Columbia with its principal place of business in the District of Columbia.” ( Id. ¶ 2.) LIA is a trade association representing American leather tanners and suppliers. ( Id. ¶ 27.) Defendant Dr. Nicholas J. Cory (“Defendant Cory” or “Dr. Cory”) is a resident of Ohio. ( Id. ¶ 3; see also Def. Cory's 12(b)(2) Mot. to Dismiss, Attach. 2, Decl. of Dr. Nicholas J. Cory (“Cory Decl.”) (Doc. 26–3) ¶¶ 3–5.) Dr. Cory is the Technical Director and Editor of LIA, as well as the Director of the Leather Research Laboratory.³ (Compl. (Doc. 1) ¶¶ 11, 28.)

According to the Complaint, Defendant Ashley Furniture Industries, Inc., (“Ashley Furniture”) is a Wisconsin corporation that is “headquartered in Arcadia, Wisconsin.” ( Id. ¶ 4.) Ashley Furniture is the “fifth largest furniture manufacturing company in the United States,” with “various retail outlets in North Carolina.” ( Id. ¶ 26.) Todd Wanek (“Defendant Wanek” or “Mr. Wanek”) is President and Chief Executive Officer of Ashley Furniture. (Def. Wanek's Mem. of Law in Supp. of Mot. to Dismiss, Attach. 1, Decl. of Todd Wanek (“Wanek Decl.”) (Doc. 21–2) ¶ 2.) Mr. Wanek is a resident of Wisconsin. ( Id. ¶ 1; see also Compl. (Doc. 1) ¶ 5.)

B. Background

Plaintiff filed this action on February 26, 2010, against Defendants LIA, Dr. Cory, Ashley Furniture, and Mr. Wanek. ( See generally Compl. (Doc. 1).) Plaintiff's Complaint asserts the following claims against all Defendants: (1) Count I—False Advertising under the Lanham Act; (2) Count II—Defamation/Product Disparagement/North Carolina Unfair Trade Practices Act; (3) Count III—Unfair Competition Under the Washington Consumer Protection Act; (4) Count IV—Tortious Interference with Business Relations and Expectancies; and (5) Count V—Civil Conspiracy. ( See id. at 22–27.) Additionally, Plaintiff asserts the following claims against Defendants LIA and Dr. Cory specifically: (1) Count VI—Negligence and Fraudulent Concealment; (2) Count VII—Negligent Misrepresentation and Fraudulent Concealment; and (3) Count VIII—Breach of Contract/Breach of the Duty of Good Faith and Fair Dealing. ( See id. at 27–31.) Finally, Plaintiff asserts as a separate count a claim for punitive damages against all Defendants. ( See id. at 31.)

Plaintiff's claims against Dr. Cory and Mr. Wanek arise primarily out of statements in the form of articles and advertisements published in the trade magazine Furniture Today. ( See, e.g., Compl. (Doc. 1) ¶¶ 12–13, 19–21.) According to Plaintiff's Complaint, Furniture Today, which is published in High Point, North Carolina, is “the furniture industry's leading trade publication.” ( Id. ¶ 12.) On July 2, 2007, Furniture Today published an article written by Joan Gunin, entitled, “Chemist fears confusion over imitators may hurt category.” (Compl., Ex. E (Doc. 1–6) at 2.) Ms. Gunin's article describes Dr. Cory's concerns over a new form of bonded leather and portrays Dr. Cory as “crusading to educate people about this new leather imitator.” ⁴ ( Id.) The article differentiates between the “original [form of] bonded leather,” which consists of “a sheet of ground-up leather fibers embedded in a latex matrix, bound together with a fixative,” and a “new bonded product,” which “features several layers of laminated material.” ( Id.) The article quotes Dr. Cory as having said of bonded leather, “To call it ‘leather’ is outright deception, outright fraud.... It's not leather.... It's a synthetic that has leather fibers glued to the underside.” ( Id.)

Nowhere in the article did Dr. Cory or Ms. Gunin reference DRI or the NextLeather® product by name. ( See generally id.) However, Plaintiff alleges that “DRI was the first to market with NextLeather®.” (Compl. (Doc. 1) ¶ 38.) Plaintiff also argues that the publication of the article was “carefully timed to coincide with the massive ‘markets' or ‘furniture shows' and ‘pre-markets' occurring in High Point, North Carolina.” ( Id. ¶¶ 21, 45.) According to Plaintiff, “Dr. Cory's public statements denigrating DRI's NextLeather® were motivated by his desire to protect and advance the commercial interests of the leather manufacturing industry members of LIA to the detriment of DRI and its bonded leather product, NextLeather®.” ( Id. ¶ 13.)

Plaintiff alleges that Dr. Cory “also communicated to DRI's largest competitor, [D]efendant Ashley Furniture, and other competitors, that DRI was misrepresenting its NextLeather® product as bonded leather in order to deceive and confuse consumers,” which, in turn, “supported Ashley's own smear campaign against DRI and NextLeather®.” ( Id. ¶ 19.) Plaintiff further claims that “Dr. Cory falsely told Ashley that DRI had ‘pasted and made up’ ( i.e., forged) the email communications between him and DRI.” ( Id. ¶ 20; see also id., Ex. D (Doc. 1–5).) As a result of Dr. Cory's statements published in Furniture Today and to Ashley Furniture, Plaintiff argues that DRI was “deprived ... of a unique, one-time opportunity to exploit and capitalize on its position as the first to develop a novel, successful bonded leather product and create a new, emerging market niche in the furniture industry.” ( Id. ¶ 56.)

Plaintiff's claims against Ashley Furniture and Mr. Wanek stem from double-page advertisements that Ashley Furniture ran in Furniture Today “warn[ing] furniture manufacturers and other buyers of bonded leather to beware of upholstery suppliers who ‘are using leather scraps that are misrepresented as leather.’ ” ( Id. ¶ 19; see also id., Ex. L (Doc. 1–13) at 2–3.) The advertisement also advises customers, “Know What You Are Buying,” “Don't let yourself be fooled. Don't unknowingly fool your customer: your reputation depends on it.” ( Id., Ex. L (Doc. 1–13) at 2.) The advertisement features an inset picture of a letter from the Office of the General Counsel for the U.S. Consumer Product Safety Commission.⁵ ( See id.) Plaintiff asserts that the “Ashley advertisements came in direct response to DRI's initial advertisements and product launch for NextLeather®” and were carefully timed to coincide with the furniture markets in High Point, North Carolina. ( Id. ¶ 37.)

Plaintiff also alleges that “Ashley has represented to actual and potential customers of DRI that NextLeather® is not bonded leather and that DRI was engaged in a misleading and fraudulent advertising and marketing campaign.” ( Id. ¶¶ 19, 35.) According to the Complaint, “Lisa Adair, Ashley's Vice President of Merchandizing [sic] and Design, told Alan Naness [president of DRI] that Todd Wanek had instructed Ashley's employees, including its sales force and account executives, to tell DRI's potential customers that DRI was falsely marketing NextLeather® as bonded leather.” ( Id. ¶ 39.)

C. Jurisdictional Allegations as to Defendant Dr. Cory

Plaintiff makes very few allegations in its complaint concerning Defendant Cory's individual contacts with the state of North Carolina. Plaintiff does, however, allege in a conclusory fashion that Defendant Cory “committed tortious acts in the state...