Foreign Candy Co. v. Promotion in Motion, Inc.

• Decision Date: 20 June 2013
• Docket Number: No. 12–CV–4107–DEO.,12–CV–4107–DEO.
• Citation: 953 F.Supp.2d 934
• Parties: FOREIGN CANDY COMPANY, INC., Plaintiff, v. PROMOTION IN MOTION, INC., Defendant.
• Court: U.S. District Court — Northern District of Iowa

953 F.Supp.2d 934

FOREIGN CANDY COMPANY, INC., Plaintiff,

v.PROMOTION IN MOTION, INC., Defendant.

No. 12–CV–4107–DEO.

United States District Court,

N.D. Iowa,

Western Division.

June 20, 2013.

Michael W. Ellwanger, Rawlings Ellwanger Jacobs Mohrhauser & Nelson, L.L.P., Sioux City, IA, Alicia M. Passerin, Douglas M. Hall, Jonathan C. Parks, Pietragallo, Gordon, Alfano, Bosick & Raspanti, LLP, Pittsburg, PA, for Plaintiff.

Michael A. Dee, Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, PLC, Des Moines, IA, Jonathan Z. King, Richard S. Mandel, Cowan, Liebowitz & Latman, PC, New York, NY, for Defendant.

ORDER ON DEFENDANT'S MOTION TO DISMISS

DONALD E. O'BRIEN, Senior District Judge.

Presently before the Court is Defendant, Promotion In Motion, Inc.'s [hereinafter the Defendant], Motion to Dismiss. Docket No. 9. The parties appeared telephonically for hearing on March 26, 2013. After listening to the parties' arguments, the Court took the matters under consideration and now enters the following.

I. BACKGROUND

At this early stage of the case, few facts are before the Court. However, the following background is relevant to the present Motion to Dismiss:

This case involves two, competing candy companies. The Plaintiff, Foreign Candy Company, Inc. [hereinafter the Plaintiff], a corporation headquartered in this district, “is engaged in the business of importing, distributing, and selling candy products throughout the United States ...” Docket No. 14, p. 2. It “is a leader and an innovator in the candy industry. By virtue of the significant investment that [the Plaintiff] makes in branding its products, [the Plaintiff] has gained significant recognition in the minds of consumers throughout the United States and abroad as a source of quality candy products.” Id. Similarly, the Defendant is a “leading candy manufacturer and marketer located in New Jersey.” Docket No. 9, Att. # 1, p. 1.

In its capacity as a candy marketer, the Defendant owns the rights to (what it says is a popular) sour watermelon candy, known as Sour Jacks. [Hereinafter the Defendant's watermelon candy will be referred to as SJC.] From the parties filings, it is unclear how long SJC has been on the market, although it seems undisputed that SJC predated any watermelon candy made by the Plaintiff.

Around September 2012, the Plaintiff introduced a sour watermelon candy into the local and national marketplace, called Upnext Gummies. [Hereinafter the Plaintiff's watermelon candy will be referred to as the UNG.] According to the Plaintiff, it invested significant time and resources in bringing UNG to the market. As is demonstrated by the exhibits, there is, at the least, some superficial similarity between SJC and UNG.

Sometime in 2012, the Defendant became aware of UNG's existence. The Defendant responded to the existence of UNG by sending a cease and desist letter to the Plaintiff at its headquarters, located in this district, on November 12, 2012. See Docket No. 14, Ex. A. In short, the letter set out the Defendant's history with SJC, stated that the Defendant believes that UNG unfairly infringes SJC's trademark, and concluded that the Defendant may be entitled to legal recourse if the Plaintiff went forward with UNG.

Shortly there after, on November 28, 2012, the Plaintiff filed the present suit in this Court. See Docket No. 1. In its Complaint, the Plaintiff “sees a Declaratory Judgment of non-infringement and other equitable relief and compensatory damages arising from Defendant's conduct.” Docket No. 1, p. 1.

As will be discussed in greater detail below, the current fighting issue is whether this Court has personal jurisdiction over the Defendant. Pursuant to that dispute, the following facts are relevant:

It seems that both the Plaintiff and the Defendant have sold some of their products in the other's home state. However, while the Defendant's SJC has been sold in Iowa, this case arose before the Plaintiff had the opportunity to sell UNG in New Jersey.¹ Additional facts and allegations will be discussed below.

II. ISSUES

The Defendant's Motion to Dismiss raises two primary issues. The first is that this Court lacks personal jurisdiction over the Defendant. Specifically, the Defendantargues the Court does not have specific personal jurisdiction because none of the events giving rise to the Complaint occurred in Iowa, and the Court does not have general personal jurisdiction because it did not have continuous and systematic contacts with this jurisdiction.

Second, the Defendant argues that the case should be dismissed, because the Plaintiff's Complaint is an anticipatory declaratory judgment action, filed for the express purpose of depriving the Defendant of its choice, home, forum. Specifically, the Defendant argues that the Plaintiff filed this case shortly after receiving a cease and desist letter from the Defendant that alerted the Plaintiff to the impending litigation.

The court will consider each of these issues in turn.

III. STANDARD

An action may be dismissed for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).² The party asserting jurisdiction has the burden to make a prima facia showing that jurisdiction is proper. Viasystems, Inc. v. EBM–Papst St. Georgen GmbH & Co., KG, 646 F.3d 589 (8th Cir.2011). A court considering whether jurisdiction is proper must view the evidence then available in a light most favorable to the party asserting jurisdiction and resolve all factual conflicts in favor of that party. Goss Graphic Systems, Inc. v. Man Roland Druckmaschinen Aktiengesellschaft, 139 F.Supp.2d 1040 (N.D.Iowa 2001) (citing Dakota Industries, Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991)).

IV. ANALYSISA. Personal Jurisdiction

The Defendant first argues that this Court has neither general nor specific personal jurisdiction over the Plaintiff's claim. The Supreme Court has recognized the existence of two types of jurisdiction: specific and general. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Specific jurisdiction refers to the exercise of “personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum.” Id. at 414, fn. 8, 104 S.Ct. 1868. General jurisdiction occurs when, though the suit does not arise out of a defendant's contacts with the forum, the defendant's independent contacts with the forum are so “continuous and systematic” that the exercise of jurisdiction remains justified. Id. at 415, 104 S.Ct. 1868 (citations omitted). Thus, the distinction between specific and general jurisdiction is a recognition that fairness requires more or less contacts with a forum depending on whether the conduct of the defendant at issue is part of the purported basis for jurisdiction.

The first question a court must take up when considering jurisdiction is the extent of the forum State's long-arm statute. In order for a court to exercise jurisdiction, the forum State's long-arm statute must provide sufficient grounds. See Romak USA, Inc. v. Rich, 384 F.3d 979, 984 (8th Cir.2004). If jurisdiction is proper under the forum state's long-arm statute, the exercise of jurisdiction must still comport with a defendant's constitutional due process rights. Id.

Iowa Rule of Civil Procedure 1.306 provides for personal jurisdiction over a defendantto the full extent of the Constitution. Med–Tec, Inc. v. Kostich, 980 F.Supp. 1315 (N.D. of Iowa 1997). Thus, the question becomes whether forcing the Defendant to defend itself in this Court, located in the Northern District of Iowa, would violate its constitutional due process rights.

Due process requires that a defendant “have certain minimum contacts with” a forum “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Minimum contacts are contacts, ties or relations with a forum State such that a defendant “should reasonably anticipate being haled into court there.” World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Traditional notions of fair play and substantial justice refer to the reasonableness of requiring a defendant “to defend a particular suit” in the forum in which it is brought. Id. at 292, 100 S.Ct. 559 (citing 326 U.S. at 317, 66 S.Ct. 154). A determination of whether the exercise of jurisdiction is ultimately reasonable requires a court to consider the defendant's burden of defending in the forum State, as well as:

the forum State's interest in adjudicating the dispute ... the plaintiff's interest in obtaining convenient and effective relief ... the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies ....

Id. (internal citations omitted).

In interpreting the due process case law, the Eighth Circuit has identified five factors to be considered when determining whether an exercise of jurisdiction comports with constitutional Due Process:

(1) the nature and quality of the [defendant's] contacts with the forum state; (2) the quantity of the [defendant's] contacts with the forum state; (3) the relation of the cause of action to the [defendant's] contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties.

Dakota Industries, Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1390 (8th Cir.1991) (citing Land–O–Nod Co. v. Bassett Furniture Industries, Inc., 708 F.2d 1338 (8th Cir.1983)).

The first three factors are the predominant “factors, and the remaining two factors are secondary ....” Johnson v. Arden, 614 F.3d 785, 794 (8th...