Leapers, Inc. v. First Quality Distribs., Inc.
| Decision Date | 15 May 2012 |
| Docket Number | Case No.: 11-15058 |
| Parties | Leapers, Inc., Plaintiff, v. First Quality Distributors, Inc., and Paul Rappaport, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Sean F. Cox
Plaintiff Leapers, Inc. ("Leapers") brought this trademark and copyright infringement action against First Quality Distributors, Inc. ("First Quality") and its President, Paul Rappaport ("Rappaport") (taken together, "Defendants"). In response, First Quality filed a counterclaim, seeking a declaratory judgment that it is not infringing on Leapers' trademarks and copyrights, and also alleging violations of the Lahnam Act and fraud. The matter is currently before the Court on Defendant Paul Rappaport's Motion to Dismiss Under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction, and on Plaintiff's Motion to Dismiss Counterclaims 5-9. The parties have fully briefed the issues and the Court declines to hold oral argument pursuant to Local Rule 7.1(f)(2). For the reasons stated below, the Court shall DENY Rappaport's motion to dismiss for lack of personal jurisdiction, and GRANT Leapers' motion to dismiss counterclaims 5, 6, 7, 8, and 9.
Leapers is a Michigan corporation in the business of supplying shooting, hunting and outdoor gear. (Complaint at ¶ 7). At issue in this case is Leapers' UTG® brand of shooting, hunting, and outdoor equipment. (Id. at ¶ 9). In connection with the UTG brand, Leapers has registered the following trademarks with the United States Patent and Trademark Office: UTG - Reg. No. 3091025, UTG PRO - Reg. No. 3935736, UTG & DESIGN - Reg. No. 3800794, and UNDER THE GUN - Reg. No. 3091026.1 (Id.).
In December 2003, First Quality became an authorized dealer of Leapers products. (Id. at 11). First Quality is a New Jersey corporation, and its President, Paul Rappaport, is a New York resident.
In 2008, First Quality launched a website (the "Website") with the domain name www.U-T-G.com (the "Infringing Domain Name"). (Id. at ¶ 12). Leapers alleges that in 2008, it learned that First Quality was marketing its own brand of shooting equipment, under the marks ULTIMATE ARMS and UAG, on the Website and through other online marketplaces such as eBay.com and Amazon.com. (Id. at ¶ 13).
In early 2011, Leapers contacted Defendants and asserted that Defendants were improperly using the UTG Marks, as well as images belonging to Leapers, on the Website. (Id. at ¶ 18). In an email dated February 21, 2011, Leapers representatives expressed the following concerns to Defendants: (1) Defendants were selling counterfeit UTG products on the Website and when purchasing these products, customers believed they were purchasing UTG products;and (2) Defendants' use of the UTG Marks on the Website created confusion among customers and misrepresented that Defendants were actually the manufacturer of UTG products (Leapers). (2/21/2011 Email, Doc. No. 16, Ex. 1).
After Leapers complained to Defendants, Defendants made minor changes to the Website. (Id.). Leapers notified Defendants that the changes to the Website were not sufficient, and Defendants shut down the Website soon thereafter. (Id.)
On November 15, 2011, Leapers filed its complaint alleging: Count I - Trademark Infringement; Count II - Unfair Competition and False Designation of Origin; Count III - Cybersquatting Under 15 U.S.C. § 1125(d)(1)(A); Count IV - Trademark Dilution Under 15 U.S.C. § 1125(c) and Common Law Trademark Dilution; and Count V - Copyright Infringement.
On January 11, 2012, First Quality filed an Answer to Leapers's Complaint and also filed a Counterclaim. (D.E. No. 11). First Qualit Counterclaim alleges: Count I - Declaratory Judgment of Trademark Non-Infringement; Count II - Declaratory Judgment for Non-Dilution of Alleged Trademark Rights; Count III - Non-Infringement of Copyrights; Count IV - Non-Infringement for Alleged Cybersquatting; Count V - Mislabeling in Violation of the Lanham Act; Count VI - False Designation of Origin in Violation of the Lanham Act; Count VII - Fraud Under Michigan State Law; Count VIII - Unfair Competition Under Michigan State Law;2 Count IX - unfair and illegal business practices in violation of Michigan common law.3
Also on January 11, 2012, Rappaport filed a Motion to Dismiss Under Fed. R. Civ. P. 12(b)(2) in lieu of an answer (D.E. No. 12). On February 6, 2012, Leapers filed a Motion to Dismiss Counterclaims 5-9. (D. E. No. 18).
Rappaport brings his motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2), asserting that the Court lacks personal jurisdiction over him. When bringing an action in federal court, the plaintiff bears the burden of establishing that jurisdiction exists. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936)). Where, as here, a district court "relies solely on written submissions and affidavits to resolve a Rule 12(b)(2) motion, rather than resolving the motion after either an evidentiary hearing or limited discovery, the burden on the plaintiff is 'relatively slight,' Am. Greetings Corp. v. Cohn, 839 F.2d. 1164, 1169 (6th Cir. 1988), and 'the plaintiff must make only a prima facie showing that personal jurisdiction exists to survive dismissal.'" Air Products and Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007). "In that instance, the pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and the district court should not weigh 'the controverting assertions of the party seeking dismissal." Id.
Leapers brings its Motion to Dismiss Counterclaims 5-9 pursuant to Fed. R. Civ. P. 12(b)(6). When ruling on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the court must construe the complaint in a light most favorable to the plaintiff and accept all the well-pleaded factual allegations as true. Evans-Marshall v. Board of Educ., 428 F.3d 223, 228 (6th Cir. 2005). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).The Court need not accept a complaint's allegations as true if the allegations consist of "threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Id. at 663. Although a heightened fact pleading of specifics is not required, the plaintiff must bring forth "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 556 U.S. at 664. In practice, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory. Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996).
Personal jurisdiction exists over a nonresident defendant provided there are sufficient minimum contacts between the defendant in the forum state and that maintenance of the lawsuit does not offend "traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "Depending on the type of minimum contacts in a case, personal jurisdiction can be specific or general." Air Products, 503 F.3d at 550. Specific (or limited) personal jurisdiction arises from a defendant's activities in the state or if those activities had an in-state effect. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 888 (6th Cir. 2002). General personal jurisdiction requires the defendant to have carried on "a continuous and systematic part of its general business" in Michigan. Neogen, 282 F.3d at 889.
The basis for Rappaport's motion is that any contact he had with Michigan was the resultof his work on behalf of First Quality. Rappaport contends that the actions of First Quality alleged in Leapers' complaint cannot be imputed on to him in his personal capacity, and therefore he has no "continuous and systematic" contact with Michigan. Rappaport also contends that Leapers has not alleged any facts to suggest that he purposefully availed himself of the Michigan forum.
All of the allegations in Leapers' complaint refer to both "Defendants." In the "Jurisdiction and Venue" section of its complaint, Leapers specifically alleges:
Leapers' response focuses on whether Rappaport has purposefully availed himself of the privileges of conducting business in Michigan. Leapers does not set forth an argument for general personal jurisdiction, and therefore, the Court will look to whether specific (or limited)personal jurisdiction applies.
In determining whether a district court has personal jurisdiction over a moving...
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