Endless Pools, Inc. v. Wave Tec Pools, Inc.

• Decision Date: 16 March 2005
• Docket Number: Civil Action No. 04-4725.
• Citation: 362 F.Supp.2d 578
• Parties: ENDLESS POOLS, INC., Plaintiff, v. WAVE TEC POOLS, INC., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

362 F.Supp.2d 578

ENDLESS POOLS, INC., Plaintiff, v. WAVE TEC POOLS, INC., Defendant.

Civil Action No. 04-4725.

United States District Court, E.D. Pennsylvania.

March 16, 2005.

Brett A. Schlossberg, Greenberg Traurig, LLP, Philadelphia, PA, for Plaintiff.

Glenn E. Davis, Buckley, Nagel, Brion, McGuire, Morris & Sommer, LLP, Exton, PA, for Defendant.

ORDER AND MEMORANDUM

DuBOIS, District Judge.

ORDER

AND NOW, this 16th day of March, 2005, upon consideration of Defendant's Motion to Dismiss Plaintiff's Suit for Lack of Personal Jurisdiction and Improper Venue (Document No. 4, filed), Plaintiff Endless Pools, Inc.'s Memorandum of Law in Opposition to Defendant's Motion to Dismiss Plaintiff's Suit for Lack of Personal Jurisdiction and Improper Venue (Document No. 9, filed January 12, 2005), and the related submissions of the parties, for the reasons set forth in the attached Memorandum, IT IS ORDERED that Defendant's Motion to Dismiss Plaintiff's Suit for Lack of Personal Jurisdiction and Improper Venue is DENIED.

IT IS FURTHER ORDERED that a Preliminary Pretrial Conference will be scheduled in due course.

MEMORANDUM

I. INTRODUCTION

Plaintiff, Endless Pools, Inc. ("Endless Pools"), commenced this action against Wave Tec Pools, Inc. ("Wave Tec") pursuant to the Lanham Act, 15 U.S.C. § 1125, for trademark infringement, use of false designations of origin and false representations in commerce, cyberpiracy, and common law trademark infringement and unfair competition. Wave Tec filed a Motion to Dismiss the Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or in the alternative, for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). For the reasons set forth below, Wave Tec's Motion to Dismiss is denied.

II. FACTS¹

Plaintiff, a Pennsylvania corporation, is a manufacturer of counter-current swimming pools and water exercise machines. Defendant, a Texas Corporation with its principal place of business in Georgetown, Texas, manufacturers counter-current swimming pools and exercise machines similar to those manufactured by plaintiff.

On October 7, 2004, plaintiff filed a Complaint against Wave Tec alleging that Wave Tec adopted the confusingly similar mark, "Infinite Pools," to identify its directly competitive counter-current swimming pools and water exercise machines in order to capitalize on Endless Pools goodwill and reputation. (Comp.¶ 9, 10). Plaintiff also alleges in the Complaint that Wave Tec purchased "Endless Pools" as a keyword from various Internet search engines and uses the term "endless swim" as a meta-tag in the source code of its website in an effort to divert customers searching for plaintiff's website to defendant's website. Finally, in its Response to the Motion to Dismiss plaintiff alleges that as part of "Wave Tec's scheme to capture Endless Pools' notoriety and customer base," Wave Tec hired a former Endless Pools employee, Steven Harad, as a sales representative in the eastern region of the United States, which includes plaintiff's home state of Pennsylvania.

Presently before the Court is defendant's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue. Wave Tec contends that it does not have the requisite contacts with the State of Pennsylvania to subject it to personal jurisdiction and that the case should be dismissed or transferred to the Western District of Texas.

III. STANDARD OF REVIEW

Rule 4(e) of the Federal Rules of Civil Procedure "authorizes personal jurisdiction over non-resident defendants to the extent permissible under the laws of the state where the district court sits." Pennzoil Prods. Co. v. Colelli & Assocs., 149 F.3d 197, 200 (3d Cir.1998). Pennsylvania's long arm statute permits courts to exercise personal jurisdiction over nonresident defendants "to the constitutional limits of the Due Process Clause of the Fourteenth Amendment." Id.

A court may obtain personal jurisdiction over a defendant in one of two ways. First, general jurisdiction is established when the defendant has engaged in "systematic and continuous" contacts with the forum state and the exercise of jurisdiction is "reasonable." Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Second, specific jurisdiction exists when the "claim is related to or arises out of the defendant's contacts with the forum." Mesalic v. Fiberfloat Corp., 897 F.2d 696, 699 (3d Cir.1990).

Once a defendant has filed a motion to dismiss for lack of personal jurisdiction, burden rests on the plaintiff to prove that jurisdiction exists in the forum state. IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 257 (3d Cir.1998). When considering the motion, the court construes any factual averments and resolves all doubts in the plaintiff's favor. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir.2002).

IV. DISCUSSION

A. Personal Jurisdiction

1. General Jurisdiction

To obtain general jurisdiction over a corporation in Pennsylvania, the corporation must either (1) be incorporated in Pennsylvania or licensed as a foreign corporation in the Commonwealth, (2) consent to jurisdiction, or (3) carry on a "continuous and systematic part of its general business" within the Commonwealth. 42 PA. CONS.STAT. § 5301(a)(2)(2004).

Wave Tec, a Texas corporation, is not licensed to conduct business in Pennsylvania, nor did it consent to jurisdiction in this matter. Therefore, the only possible basis for exercising general jurisdiction over Wave Tec is that it maintained a "continuous and systematic" presence in Pennsylvania.

In analyzing whether Wave Tec is subject to general jurisdiction, "the Court should consider whether defendant's activities in the forum are extensive and pervasive and are a continuous and central part of defendant's business." Automated Med. Prods. Corp. v. Int'l Hosp. Supply Corp., 1998 WL 54351, at *3, 1998 U.S. Dist. LEXIS 1231, at *8 (E.D.Pa. Jan. 29, 1998) (DuBois, J.) (citing Provident Nat'l Bank v. California Fed. Savings and Loan Ass'n, 819 F.2d 434, 438 (3d Cir.1987)). "Factors the Court should consider in this analysis include: the nature and quality of business contacts the defendant has initiated with the forum; direct sales in the forum, maintenance of a sales force in the state, [and] advertising targeted at the residents of the forum state." Id.

Plaintiff argues that Wave Tec's contacts with Pennsylvania have been continuous and systematic, enabling the Court to exercise general jurisdiction. In support of this contention, plaintiff cites the following activities: (1) Wave Tec hired a Pennsylvania resident and former Endless Pools employee, Steven Harad, as a sales representative; (2) through Harad, Wave Tec maintains a physical presence in Pennsylvania; (3) Harad works out of his Pennsylvania-based home office; (4) Harad has contacted 4-6 customers in the Philadelphia region; (5) Harad uses a Wave Tec provided cell phone with a Pennsylvania area code; and (6) Harad provided at least one estimate to a Pennsylvania resident, resulting in the sale of one of defendant's swimming pools.

Based on these facts, the Court concludes that Wave Tec has not maintained the "continuous and systematic" contacts with Pennsylvania necessary for the Court to exercise general jurisdiction over it. Wave Tec only began conducting business in Pennsylvania when it hired Harad — more than one month after Endless Pools instituted this action. Since that time, Wave Tec has contacted only 4-6 Pennsylvania residents and completed one sale to a Pennsylvania resident. Moreover, Wave Tec does not maintain a bank account in Pennsylvania and does not directly advertise in Pennsylvania — Pennsylvania residents can only view Wave Tec advertisements on its website and nationally distributed television commercials.

Because Wave Tec does not have a longstanding presence in Pennsylvania, the Court will not exercise general jurisdiction over defendant in this case. See Provident Natl. Bank v. Ca. Fed. Savings & Loan Assn., 819 F.2d 434, 437 (3d Cir.1987) ("Mere minimum contacts are not enough to establish general jurisdiction. The nonresident's contacts to the forum must be continuous and substantial.")(internal citations omitted); see also Lesser & Kaplin, P.C. v. Am. Ins. Co., 723 F.Supp. 1099, 1102 (E.D.Pa.1989) (finding insufficient contacts for general jurisdiction even though defendant "may have occasionally solicited bids from Pennsylvania contractors, may have entered into contracts with a few of these firms, may have sold bonds indirectly to Pennsylvania residents, and may have advertised in publications of general circulation which find their way into Pennsylvania").

2. Specific Jurisdiction

Specific jurisdiction arises when a plaintiff's claim is related to or arises out of the defendant's contacts with the forum. Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir.2004). On this issue, the Pennsylvania long-arm statute extends jurisdiction to any person who "causes harm or tortious injury in the Commonwealth by an act or omission outside the Commonwealth." 42 PA. CONS.STAT. ANN. 5322(a)(4). This provision is often referred to as the "tort out / harm in" provision.

In this case, although Wave Tec's alleged conduct occurred outside Pennsylvania, the Court concludes that personal jurisdiction over Wave Tec can be maintained because plaintiff suffered injury in Pennsylvania, thus satisfying the requirements of § 5322(a)(4). However, the determination that Pennsylvania's long-arm statute extends jurisdiction to Wave Tec does not end the inquiry. After it has been determined that § 5322(a)(4) applies, the Court must then determine (1) whether the defendant has sufficient minimum contacts with the forum state; and (2) whether the exercise of personal jurisdiction comports with the notions of far play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct....