Jth Tax, Inc. v. Liberty Services Title, Inc.

• Decision Date: 10 April 2008
• Docket Number: Civil Action No. 2:08cv80.
• Citation: 543 F.Supp.2d 504
• Court: U.S. District Court — Eastern District of Virginia
• Parties: JTH TAX, INC. d/b/a Liberty Tax Service, Plaintiff, v. LIBERTY SERVICES TITLE, INC. d/b/a Liberty Services, Defendant.

Page 504

543 F.Supp.2d 504

JTH TAX, INC. d/b/a Liberty Tax Service, Plaintiff, v. LIBERTY SERVICES TITLE, INC. d/b/a Liberty Services, Defendant.

Civil Action No. 2:08cv80.

United States District Court, E.D. Virginia, Norfolk Division.

April 10, 2008.

Lindsay Alison Cole, JTH Tax, Inc., d/b/a Liberty Tax Ser., Virginia Beach, VA, for Plaintiff.

James Robert Creekmore, The Creekmore Law Firm PC, Daleville, VA, for Defendant.

ORDER

ROBERT G. DOUMAR, District Judge.

This matter comes before the Court upon the motion of Liberty Services Title, Inc., d/b/a Liberty Services ("Defendant" or "Liberty Services") to dismiss or, in the alternative, to transfer. For the reasons set forth herein, the Court hereby GRANTS Liberty Services' motion to transfer and hereby TRANSFERS jurisdiction to the United States District Court for the Southern District of Florida.

I. FACTUAL AND PROCEDURAL BACKGROUND

JTH Tax, Inc., d/b/a Liberty Tax Service ("Plaintiff or "Liberty Tax") is a Delaware corporation with its headquarters and principal place of business in Virginia Beach, Virginia. Liberty Services is a Florida Corporation with its headquarters and principal place of business in Lake Worth, Florida. Liberty Tax alleges the following relevant facts in its Complaint:

1. "In or about December 2006, Liberty Tax learned that Liberty Services was displaying advertisements which unlawfully used Liberty Tax's federally registered trademarks." (PL's Comp. ¶ 6.)

2. "On December 19, 2006, Liberty Tax sent a letter to defendant enclosing its trademark registrations and requested that defendant cease and desist its infringement on Liberty Tax's trademarks. In response to Liberty Tax's letter, defendant temporarily ceased use of Liberty Tax's marks." (PL's Comp. ¶ 7.)

3. "On or about January 30, 2008, Liberty Tax learned that Liberty Services had resumed operation of its tax preparation business in Florida using signage, advertising and a website displaying Liberty Tax's marks and/or marks confusingly similar to Liberty Tax's federally registered trademarks." (PL's Comp. ¶ 9.)

4. "Also, plaintiff discovered that defendant is making a material false representation of a loan product on its website claiming to offer tax refunds the same day, with no mention that the product is in truth a bank loan." (PL's Comp. ¶ 9.)

On February 13, 2008, Liberty Tax filed a Complaint seeking an injunction and damages for trademark infringement (Count One) and false advertising (Count Two). On March 10, 2008, Liberty Services filed a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R.Civ.P. 12(b)(2) or for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). In the alternative, Liberty Services moves to transfer venue to the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. § 1404(a) or § 1406(a). On March 24, 2008, Liberty Tax filed a Response. On March 30, 2008, Liberty Services filed a Reply. The Motion has been fully briefed and is ripe for review by this Court.

II. STANDARD OF REVIEW

Fed.R.Civ.P. 12(b)(2) permits a party to move the court to dismiss an action if the court lacks personal jurisdiction over the party. When a defendant moves to dismiss a Complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), the burden ultimately rests on the plaintiff "to prove the existence of a ground for jurisdiction by a preponderance of the evidence." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). However, a plaintiff need only make a prima facie showing of jurisdiction when the Court "rules on a Rule 12(b)(2) motion without conducting an evidentiary hearing or without deferring ruling pending receipt at trial of evidence related to the jurisdictional issue." In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). In making its ruling, the Court "must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction." Combs, 886 F.2d at 676.

Although the general remedy applied by Courts lacking personal jurisdiction over a party is dismissal of the case, 28 U.S.C. § 1406(a) has been interpreted to permit transfer of the case as an alternative remedy. The statute states, in relevant part:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

28 U.S.C. § 1406(a). "[S]ection 1406(a) has been interpreted to authorize transfers in cases where venue is proper but personal jurisdiction is lacking or some other impediment exists that would prevent the action from going forward in that district." In re Carefirst of Maryland, Inc., 305 F.3d 253, 255-56 (4th Cir.2002); see also Saudi v. Northrop Grumman Corp., 427 F.3d 271, 277 (4th Cir.2005); Porter v. Groat, 840 F.2d 255, 257 (4th Cir.1988).

III. ANALYSIS

In its Motion, Liberty Services claims that this Court lacks personal jurisdiction and that venue is improper because the company has no contacts whatsoever with Virginia. Specifically, Liberty Services argues that the company: (1) does not conduct business or advertise its business in Virginia; (2) is not registered to conduct business in Virginia; (3) has no agents employees in Virginia; (4) does not have property, bank accounts, offices, or mailing addresses in Virginia; and (5) has paid no taxes in Virginia. In its Response, Liberty Tax claims that this Court has specific personal jurisdiction and that venue is proper because Liberty Services intentionally directed a tort at Liberty Tax in Virginia and because that tort had effects on Liberty Tax in Virginia. In its Reply, Liberty Services argues that it did not intentionally direct a tort at Liberty Tax in Virginia and that the effects of any tort were felt by Liberty Tax in Florida and not in Virginia.

In Virginia, a court has personal jurisdiction over a defendant if: (1) jurisdiction is authorized by Virginia's Long-Arm Statute, Va.Code § 8.01-328.1, and (2) jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Hartford Cos. Ins. Co. v. JR Marketing, LLC, 511 F.Supp.2d 644, 647 (E.D.Va. 2007). As a threshold matter, Virginia's Long-Arm Statute does not confer personal jurisdiction over Liberty Services. The relevant portion of the statute authorizes courts to exercise personal jurisdiction over a defendant when the cause of action arises from the defendant:

(1) Transacting any business in this Commonwealth;

(2) Contracting to supply services or things in this Commonwealth;

(3) Causing tortious injury by an act or omission in this Commonwealth;

(4) Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth.

Va.Code § 8.01-328.1(A)(1)-(4). Although Liberty Services may arguably have caused "tortious injury in this Commonwealth by an act or omission outside this Commonwealth," the company does not have sufficient contacts with Virginia to satisfy the explicit requirements of category four.

Even if the Long-Arm Statute did confer personal jurisdiction over Liberty Services, exercising personal jurisdiction over Liberty Services would violate the Due Process Clause. "[B]ecause Virginia's long-arm statute extends personal jurisdiction to the extent permitted by the Due Process Clause, the statutory inquiry necessarily merges with the constitutional inquiry, and the two inquiries essentially become one." Young v. New Haven Advocate, 315 F.3d 256, 261 (4th Cir.2002) (internal quotations and citations omitted). To satisfy the Fourteenth Amendment's due process requirements, a defendant must have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotations omitted). The minimum contacts analysis considers whether the "defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Personal jurisdiction may be general or specific under the Due Process Clause. "[W]hen a defendant's contacts with the forum state are continuous and systematic, irrespective of whether the transaction in question had sufficient contacts with the state, a court may exercise general personal jurisdiction over the defendant. In the absence of continuous and systematic contacts, a court may still exercise specific personal jurisdiction when the contacts relate to the cause of action and create a substantial connection with the forum state." Diamond Healthcare of Ohio, Inc. v. Humility of Mary Health Partners, 229 F.3d 448, 450 (4th Cir.2000) (internal citations omitted). Courts must apply a three-pronged test to determine whether specific personal jurisdiction satisfies the Due Process Clause asking: "(1) whether the defendant purposefully availed itself of the privileges of conducting activities in the forum state, (2) whether the plaintiffs claim arises out of the defendant's forumrelated activities, and (3) whether the exercise of personal jurisdiction over the defendant would be constitutionally reasonable." Young v. New Haven Advocate, 315 F.3d 256, 261 (4th Cir.2002) (internal quotations and citations omitted).

The central issue in the dispute between Liberty Tax and Liberty Services is whether Liberty Services "purposefully availed itself of the privileges of conducting activities" in Virginia. Id. Because this first prong of...