Jeffers Handbell Supply, Inc. v. Schulmerich Bells, LLC
| Decision Date | 18 August 2017 |
| Docket Number | Civil Action No.: 0:16-cv-03918-JMC |
| Court | U.S. District Court — District of South Carolina |
| Parties | Jeffers Handbell Supply, Inc. Plaintiff, v. Schulmerich Bells, LLC, Defendant. |
Plaintiff Jeffers Handbell Supply, Inc. ("Jeffers") filed a complaint against Defendant Schulmerich Bells, LLC ("Schulmerich"), seeking a declaratory judgment that Jeffers' goods and services do not infringe on any trademark or trade dress associated with Schulmerich's handbell products and packaging. (ECF No. 1.) Before the court is Schulmerich's motion to dismiss the complaint or, alternatively, to transfer the action to the U.S. District Court for the Eastern District of Pennsylvania, pursuant to 28 U.S.C. § 1404(a) and Fed. R. Civ. P. 12(b)(1) and (3). (ECF No. 6.) For the reasons that follow, the court DENIES the motion.
On November 29, 2016, a little more than two weeks before the instant declaratory judgment action was filed in this court, Schulmerich filed a complaint in Pennsylvania state court against Shawn Lackey,1 an employee of Jeffers, asserting infringement and dilution of Schulmerich's trademarks and trade dress under federal and Pennsylvania law. (See ECF No. 11-1.) The complaint alleged that Lackey, had "recently beg[u]n to manufacture and distributecomponent parts related to musical handbells" with "design, color scheme[,] and overall aesthetic appearance" that were "virtually identical to those of Schulmerich's" such that "buyers will likely confuse the two product lines of musical handbell component parts" in violation of Schulmerich's rights under the trademark laws. (Id. at 3; see also id. at 8-12 ().) The complaint alleged further that Lackey had distributed the offending products through Jeffers, which acted as a retailer and advertised the products. (See id. at 3, 8-9.)
The original state-court complaint did not name Jeffers as a defendant (see id.), and Jeffers filed the instant suit in this court on December 15, 2016, seeking a declaratory judgment of non-infringement of Schulmerich's trademarks and trade dress and involving substantially the same trademark matters at issue in Schulmerich's state-court complaint against Lackey (see ECF No. 1); see also Schulmerich, No. 3:17-cv-00186-JMC, ECF No. 7 at 1. Among other things, in the complaint in the instant action, Jeffers alleges that "Schulmerich has taken the position that handbells distributed . . . [and] sold by Jeffers infringe Schulmerich's alleged rights" under the trademark laws (ECF No. 1 at 2), and Jeffers seeks a declaratory judgment that it has not infringed Schulmerich's trademark rights (see id. at 5-8.)
After learning of the instant action, Schulmerich, on January 5, 2017, amended its state-court complaint to include Jeffers as a named defendant. See Schulmerich, No. 3:17-cv-00186-JMC, ECF No. 1 at 6-24. The amended complaint alleged that Jeffers, along with Lackey, had begun manufacturing, distributing, and selling component parts for musical handbells that "employ virtually the same aesthetic appearance as those produced by Schulmerich[,] . . . are confusingly similar to the well-known trade dress of Schulmerich's handbells[, and] . . . mimic[] nearly every element of the Schulmerich aesthetic design," in violation of Shulmerich's rights under the trademark laws. Id. at 13-14. Thereafter, on January 18, 2017, Jeffers removed the state-courtaction to the U.S. District Court for the Eastern District of Pennsylvania, pursuant to 28 U.S.C. § 1446(a). See Schulmerich, No. 3:17-cv-00186-JMC, ECF No. 1 at 1.
On January 30, 2017, Schulmerich filed the instant motion to dismiss the complaint or, in the alternative, to transfer the action to the U.S District Court for the Eastern District of Pennsylvania. (ECF No. 6.) First, Schulmerich argues that the action should be dismissed for lack of subject-matter jurisdiction under Rule 12(b)(1) because Jeffers failed to plead a sufficient injury-in-fact necessary to demonstrate its standing to bring a declaratory judgment action. (See id. at 2; ECF No. 6-1 at 7-11.) Second, Schulmerich argues that the action should be dismissed or transferred under Rule 12(b)(3) and § 1404(a) because this district is not the proper venue. (ECF No. 6 at 3-4; ECF No. 6-1 at 11-18.) In this regard, Schulmerich asserts that this district is an improper venue because Jeffers has failed to demonstrate that a substantial part of the events or omissions giving rise to the claim occurred in South Carolina (see ECF No. 6 at 3; ECF No. 6-1 at 11-14) and because, in a series of purchase orders for Schulmerich handbell parts, Jeffers agreed to resolve any dispute arising under such purchase orders in certain state or federal courts in Pennsylvania (see ECF No. 6 at 3-4; ECF No. 6-1 at 14-18.) Third, Schulmerich argues that this court should abstain from proceeding with the declaratory judgment action until the action brought against Lackey and Jeffers in the U.S. District Court for the Eastern District of Pennsylvania is resolved. (See ECF No. 6 at 4-6; ECF No. 6-1 at 18-30.)
The next day, on January 31, 2017, Jeffers filed a motion to stay the Pennsylvania action, dismiss it, or transfer it to this district. See Schulmerich, No. 3:17-cv-00186-JMC, ECF No. 4. In regard to transferring the action, the parties' arguments focused largely on application of the first-filed rule and exceptions to it. See id., ECF No. 4-1 at 8-15; id., ECF No. 6 at 7-19; see generally Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005). While Jeffers' motion remainedpending in the Pennsylvania action, the parties proceeded to brief this court on the instant motion filed by Schulmerich, with Jeffers filing a response on February 10, 2017, Schulmerich filing a reply on February 17, 2017, and Jeffers filing a sur-reply on February 21, 2017. (See ECF Nos. 11, 12, 14, 16.)
On February 21, 2017, the district court in Pennsylvania granted Jeffers' motion. See Schulmerich, No. 3:17-cv-00186-JMC, ECF Nos. 7, 8. The district court determined that, for purposes of the first-filed rule, Jeffers' declaratory judgment action filed in this court was the first action filed in federal court and, thus, was filed before Schulmerich's trademark action was filed in federal court in Pennsylvania. See id., ECF No. 7 at 3-4. The district court also rejected Schulmerich's arguments that an exception to the first-filed rule applied under the circumstances presented. See id. at 4-6. Accordingly, the district court transferred Schulmerich's trademark action to this court.2 See id., ECF Nos. 7, 8, 13.
The next day, on February 22, 2017, Jeffers filed a supplemental response to the instant motion to dismiss or transfer, addressing the transfer order from the district court in Pennsylvania. (See ECF No. 17.) Jeffers argues that the transfer renders Schulmerich's arguments for abstention moot. (See id.) Schulmerich has not attempted to file a supplemental reply or to otherwise address how the transfer order might affect the court's consideration of the instant motion.
A motion to dismiss for lack of subject matter jurisdiction raises the fundamental question of whether a court has jurisdiction to adjudicate the matter before it. Fed. R. Civ. P. 12(b)(1)."Federal courts are courts of limited subject matter jurisdiction, and as such there is no presumption that the court has jurisdiction." Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999). "In determining whether jurisdiction exists, the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). "The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Id. In a motion to dismiss pursuant to Rule 12(b)(1), "[t]he burden of establishing subject matter jurisdiction rests with the plaintiff." Demetres v. E. W. Constr., Inc., 776 F.3d 271, 272 (4th Cir. 2015).
"The power of federal courts to entertain suits is circumscribed by Article III of the United States Constitution, which limits judicial authority to 'Cases' and 'Controversies.'" Bishop v. Bartlett, 575 F.3d 419, 423 (4th Cir. 2009) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Warth v. Seldin, 422 U.S. 490, 498 (1975)). "'[T]he doctrine of standing serves to identify those disputes which are appropriately resolved through the judicial process,' and thus meet the requirements of Article III." Id. (quoting Whitmore v. Arkansas, 495 U.S. 149, 154-55 (1990)). To have constitutional standing, a party must meet three requirements:
(1) the party has suffered an "injury in fact" that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Id. (brackets omitted) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000) (citing Lujan, 504 U.S. at 560-61; Long Term Care Partners, LLC v. United States, 516 F.3d 225, 231 (4th Cir. 2008)).
To grant a motion under Rule 12(b)(3), the court must find that the venue is improper. See Fed. R. Civ. P. 12(b)(3). "'When a defendant objects to venue under Rule 12(b)(3), the plaintiff bears the burden of establishing that venue is proper.'" Ameristone Tile, LLC v. Ceramic Consulting Corp., Inc., 966 F. Supp. 2d 604, 616 (D.S.C. 2013) (...
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