Segment Consulting Mgmt. v. Bliss Nutraceticals, LLC
| Docket Number | Civil Action 1:20-CV-1837-TWT |
| Decision Date | 27 January 2022 |
| Parties | SEGMENT CONSULTING MANAGEMENT, LTD. a British Columbia, Canada Company, et al., Plaintiffs, v. BLISS NUTRACETICALS, LLC a Georgia Limited Liability Company, et al., Defendants. |
| Court | U.S. District Court — Northern District of Georgia |
This is an action for trademark infringement. It is before the Court on Defendants Rachana Arora, Karan Arora, and Shruti Shah's Motion to Dismiss [Doc. 97]; Defendants Shabana Patel, Faruq Patel, and Phillip Jones's Motion to Dismiss [Doc. 118]; Third-Party Defendant Steven Curtis Holfeld's Motion to Dismiss [Doc. 152]; and Third-Party Defendant Simply Marketing, Inc.'s Motion to Dismiss [Doc. 178]. For the reasons set forth below, the Court GRANTS Defendants Rachana Arora, Karan Arora, and Shruti Shah's Motion to Dismiss [Doc. 97]; GRANTS in part and DENIES in part Defendants Shabana Patel, Faruq Patel, and Phillip Jones's Motion to Dismiss [Doc. 118]; and GRANTS Third-Party Defendant Simply Marketing, Inc.'s Motion to Dismiss [Doc. 178]. The Court reserves ruling on Third-Party Defendant Curtis's Motion to Dismiss [Doc. 152] to allow for jurisdictional discovery and, as appropriate, additional briefing.
This case arises out of the manufacture and sale of kratom-based powder, capsule, and beverage products that allegedly infringe on the trademark “VIVAZEN, ” whose interests are held by Plaintiffs Segment Consulting Management, Ltd. (“Segment”) and Lighthouse Enterprises Inc. (“Lighthouse”). (Am. Compl ¶¶ 20, 24, 35, 44.) According to the Plaintiffs, Defendants Vivazen Botanicals LLC (“Vivazen Botanicals”) and Bliss Nutraceticals LLC (“Bliss Nutra”) were organized for the “sole purpose” of selling products that infringe on the VIVAZEN trademark, in conjunction with another Defendant Natural Vitamins Laboratory Corp. (“Natural Vitamins”) (collectively, “Corporate Defendants”). (Id. ¶ 35.) The Plaintiffs also filed suit against a number of individuals affiliated with the Corporate Defendants. Rachana Arora, Shruti Shah, and Shabana Patel are organizers and, “upon information and belief, ” members and/or officers of Bliss Nutra and Vivazen Botanicals (id. ¶¶ 6-8); Karan Arora is an officer and director of Natural Vitamins (id. ¶ 9); Faruq Patel is an organizer and the president of Bliss Nutra (id. ¶ 10); and Phillip Jones is the chief executive officer of Bliss Nutra. (Id. ¶ 11.)
The Plaintiffs bring seven claims under the federal Lanham Act and Georgia law against all of the Defendants collectively: (1) federal trademark infringement, (2) federal unfair competition/false designation of origin, (3) federal cybersquatting, (4) state trademark infringement/unfair competition, (5) federal trademark dilution, (6) accounting, and (7) state deceptive trade practices. Natural Vitamins responds with counterclaims against the Plaintiffs and third-party claims against United Naturals, Inc., Simply Marketing, Inc., and Steven Curtis Holfeld (“Curtis”). (Counterclaim & Third-Party Compl. ¶¶ 2-6.) Those claims arise out of a promissory note executed between United Naturals and Natural Vitamins in late-2015 (“Note”), which went into default when United Naturals failed to make any payments. (Id. ¶¶ 13-25.) Now pending before the Court are four motions to dismiss from several of the Defendants and Third-Party Defendants under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).
On a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), “the plaintiff has the burden of establishing a prima facie case by presenting enough evidence to withstand a motion for directed verdict.” United States ex rel. Bibby v. Mortgage Invs. Corp., 987 F.3d 1340, 1356 (11th Cir. 2021). In evaluating a plaintiff's case, “[t]he district court must construe the allegations in the complaint as true, to the extent they are uncontroverted by defendant's affidavits or deposition testimony.” Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988). Where the defendant contests the allegations of the complaint through affidavits, “the burden shifts back to the plaintiff to produce evidence supporting personal jurisdiction, unless the defendant's affidavits contain only conclusory assertions that the defendant is not subject to jurisdiction.” Stubbs v. Wyndham Nassau Resort & Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir. 2006). “And where the evidence presented by the parties' affidavits and deposition testimony conflicts, the court must draw all reasonable inferences in the plaintiff's favor.” Mortgage Invs., 987 F.3d at 1356.
A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for relief. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); Fed.R.Civ.P. 12(b)(6). A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote and unlikely.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff. See Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983). Generally, notice pleading is all that is required for a valid complaint. See Lombard's, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir. 1985). Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests. See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555).
R. Arora, K. Arora, and Shah move to dismiss the Plaintiffs' claims against them under Rule 12(b)(2) for lack of personal jurisdiction. All three individuals live and work in Florida and contend that they do not have the requisite minimum contacts with Georgia to support jurisdiction in this Court. (R. Arora, K. Arora, & Shah's Br. in Supp. of R. Arora, K. Arora, & Shah's Mot. to Dismiss, at 2.) In response, the Plaintiffs argue that personal jurisdiction is proper over R. Arora, K. Arora, and Shah based on their ownership and management of the Corporate Defendants. (Pls.' Br. in Opp'n to R. Arora, K. Arora, and Shah's Mot. to Dismiss, at 2-3.) According to the Plaintiffs, the “detailed factual allegations” in the Amended Complaint show that these individuals directly participated in the Corporate Defendants' alleged tortious conduct, and the Corporate Defendants' contacts with Georgia can thus be imputed to them for jurisdiction purposes. (Id. at 10.)
“A federal court … undertakes a two-step inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). “When a federal court uses a state long-arm statute, because the extent of the statute is governed by state law, the federal court is required to construe it as would the state's supreme court.” Lockard v. Equifax, Inc., 163 F.3d 1259, 1265 (11th Cir.1998). Relevant here, the Georgia long-arm statute provides:
A court of this state may exercise personal jurisdiction over any nonresident . . . as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he or she were a resident of this state, if in person or through an agent, he or she:(1) Transacts any business within this state; (2) Commits a tortious act or omission within this state, except as to a cause of action for defamation of character arising from the act; [or] (3)Commits a tortious injury in this state caused by an act or omission outside this state if the tort-feasor 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 state[.]
O.C.G.A. § 9-10-91. The long-arm statute is not coextensive with procedural due process but rather, “imposes independent obligations that a plaintiff must establish for the exercise of personal jurisdiction that are distinct from the demands of procedural due process.” Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1259 (11th Cir. 2010).
The Plaintiffs completely miss the mark on this point, arguing that the Court can disregard the Georgia long-arm statute because it confers personal jurisdiction to the fullest extent permitted by due process. The Plaintiffs rely on Innovative Clinical & Consulting Services, LLC v. First National Bank of Ames, 279 Ga. 672 (2005), for this proposition. However, the Eleventh Circuit has interpreted Innovative Clinical to mean that in fact, “a trial court must undertake two inquiries, one under the Georgia long-arm statute and another under due process.” Diamond Crystal Brands, 593 F.3d at 1259. Due to this fundamental misunderstanding of Innovative Clinical, the Plaintiffs sidestep their obligation to demonstrate that the requirements of the long-arm statute are met. Instead, they summarily state in a footnote that subsections (1), (2), and (3) confer personal jurisdiction over R. Arora, K. Arora, and Shah without identifying any facts necessary to reach that...
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