Sensory Techs., LLC v. Sensory Tech. Consultants, Inc.

Decision Date17 September 2013
Docket NumberCAUSE NO. 1:13-cv-834-SEB-DKL
CourtU.S. District Court — Southern District of Indiana

Plaintiff's Motion for Leave to Conduct Limited Jurisdictional Discovery [dkt. 15],

Defendant's Motion to Stay Proceedings [dkt. 16],


Order to Show Cause or Amend Complaint

Plaintiff Sensory Technologies, LLC ("Sensory Indiana") alleges that defendant Sensory Technology Consultants, Inc. ("Sensory Utah") has infringed Sensory Indiana's registered trademark "SENSORY TECHNOLOGIES," falsely designated the origin of its goods and services, and engaged in unfair competition by conducting business under a confusingly similar name. Sensory Indiana asserts federal and state claims and seeks a declaratory judgment, preliminary and permanent injunctive relief, damages (compensatory, statutory, trebled, and punitive), attorney's fees, and costs. Sensory Utah, which is incorporated and has its principal place of business in Utah, Complaint [dkt. 1] ¶ 4; Rawson Declaration [dkt. 14-2] ¶ 2, has moved the Court to dismiss this Cause for lack ofpersonal jurisdiction on the ground that it lacks the required minimum contacts with Indiana. [Dkt. 14.] Sensory Indiana — which the Court assumes, for the purposes of the present motions, has only Indiana citizenship (more on that below) — filed the present motion for leave to conduct limited jurisdictional discovery before responding to Sensory Utah's motion to dismiss. [Dkt. 15 ("Discovery Motion").] In response, Sensory Utah filed the second present motion, to stay these proceedings, including discovery, until the Court rules on its motion to dismiss. [Dkt. 16 ("Stay Motion").] The Court concludes that Sensory Indiana has not shown justification for subjecting Sensory Utah to jurisdictional discovery, that this Cause should be stayed pending the Court's ruling on Sensory Utah's motion to dismiss, and that briefing should be resumed on that motion.

A plaintiff does not have an automatic right to discovery relating to personal jurisdiction: rather, it must first make a prima facie or colorable showing, with some competent evidence, that a plausible basis for personal jurisdiction over Sensory Utah exists. Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000); Andersen v. Sportmart, 179 F.R.D. 236, 241-42 (N.D. Ind. 1998); Ellis v. Fortune Seas, Ltd., 175 F.R.D. 308, 312 (S.D. Ind. 1997). "This standard is quite low, but a plaintiff's request for discovery will nevertheless be denied if it is only based upon 'bare,' 'attenuated,' or 'unsupported' assertions of personal jurisdiction . . . ." Andersen, 179 F.R.D. at 242. Courts must require this threshold showing and carefully control discovery in order to protect out-of-forum defendants from unjustifiably beingsubjected to the burdens of discovery and litigation in the forum state, which would undermine the very purpose of personal jurisdiction. Central States, 230 F.3d at 947; Ellis, 175 F.R.D. at 312.

Status of Sensory Indiana

A preliminary procedural matter first must be addressed. Sensory Utah included a footnote in its Stay Motion advising that, according to the records of Indiana's Secretary of State, "Sensory Technologies, LLC", the name by which Plaintiff has sued, is not a limited-liability company but is a "d/b/a" of Markey's Video Images, L.L.C., which is registered with the Secretary of State as a limited-liability company. (Memorandum in Support of Motion to Stay [dkt. 16-1] ("Stay Brief") at 2 n. 1.) The Secretary of State's website shows that "Sensory Technologies" (without the "LLC" designation) was registered by Markey's Video Images, L.L.C., as an "assumed name".1

According to subdivision (a) of Fed. R. Civ. P. 17, "[a]n action must be prosecuted in the name of the real party in interest" and, according to subdivision (b)(3), "[c]apacity to sue or be sued is determined . . . by the law of the state where the court is located . . . ."

Under Indiana law, a trade name is not a legal entity and "has no proper standing" to litigate as a party or to sue or be sued. Pein v. Miznerr, 84 N.E. 981, 983 (Ind. 1908); Wine & Canvas Development, L.L.C. v. Weisser, 886 F.Supp.2d 930, 942 (S.D. Ind. 2012) ("In Pein,the Indiana Supreme Court held a trade name is a non-entity that lacks the capacity to be sued"). Unless Markey's Video Images, L.L.C., can show that, under Indiana law, it has the capacity to sue in its assumed name, and that its assumed name is a real party in interest under state and federal law, Fed. R. Civ. P. 17(a) and (b), then it must amend its complaint to name itself as the plaintiff.

Naming of the real party in interest is also necessary for establishing subject-matter jurisdiction in diversity cases, especially when a party is a limited-liability company whose citizenships are the citizenships of each of its members. Thomas v. Guardsmark, L.L.C., 487 F.3d 531, 534 (7th Cir. 2007). While there is no dispute that federal-question jurisdiction exists over the Lanham-Act and other federal-law claims in this case and, therefore, that supplemental jurisdiction exists over any state claims, in the event the federal claims are dropped or dismissed, it will become necessary for Markey's Video Images, L.L.C. to identify its members and their citizenships in order to establish diversity jurisdiction over the remaining state claims.

Plaintiff will be ordered either to show cause why the Complaint should not be dismissed for failure to name the real party-in-interest as plaintiff or to amend its Complaint to name the real party-in-interest.Personal jurisdiction

A court acquires personal jurisdiction over a defendant when it has been duly served with process or has voluntarily appeared. See Mobile Anesthesiologists Chicago, LLC v. Anesthesia Associates of Houston Metroplex, P.A., 623 F.3d 440, 443 (7th Cir. 2010); Fed. R. Civ. P. 4(k)(1). The due-process clauses of the Fifth and Fourteenth Amendments to the United States Constitution limit courts' exercises of extra-territorial jurisdiction to only those defendants who have enough minimum contacts with the sovereign that created the court such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. See Stafford v. Briggs, 444 U.S. 527, 553-54 (1980) (J. Stewart, dissenting); International Shoe Co. v. State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 316 (1945); Medical Mutual of Ohio v. deSoto, 245 F.3d 561, 567-68 (6th Cir. 2001); Board of Trustees, Sheet Metal Workers' National Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 1035-37 (7th Cir. 2000). The general principle is that there must be "some act by which the defendant 'purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" See J. McIntyre Machinery, Ltd. v. Nicastro, 131 S.Ct. 2780, 2787 (2011 ) (plurality opinion). For cases falling under a district court's federal-question subject-matter jurisdiction, the due-process clause of the Fifth Amendment requires that a defendant have minimum contacts with the United States, not the particular state forum in which the court sits. Id. However, unless a federal statute provides for nationwide service of process, Rule 4(k) of the Federal Rules of Civil Procedure constricts the exercise of this Constitutionally broad jurisdiction bylimiting the territorial reach of the district courts' service of process to the limits of jurisdiction that their forum states define for their own courts of general jurisdiction. Fed. R. Civ. P. 4(k)(1)(A) and (C). The due-process clause of the Fourteenth Amendment limits the reach of states' extra-territorial, or "long-arm" jurisdiction to defendants who have enough minimum contacts with the state that the exercise of jurisdiction would not offend traditional notions of fair play and substantial justice.

There is no dispute in this Cause that no federal statute provides nationwide service of process for any of Sensory Indiana's federal causes of action. Indiana's long-arm, or extra-territorial, jurisdiction is defined by its procedural rule, Ind. Trial Rule 4.4(A). Thus, whether personal jurisdiction exists over Sensory Utah in this Cause depends on whether (1) Sensory Utah was duly served with process, (2) Indiana's T.R. 4.4(A) is satisfied, (3) Sensory Utah has the contacts with Indiana required by due process, and (4) the exercise of jurisdiction would not offend traditional notions of fair play and substantial justice. See Williams v. RCP Corp., 302 F.3d 660, 666 (7th Cir. 2002). Sensory Utah's motion to dismiss argues that the Court lacks personal jurisdiction over it because it does not have the required minimum contacts with Indiana and subjecting it to jurisdiction would not comport with traditional notions of fair play and substantial justice. Neither party has indicated any issue regarding satisfaction of Ind. T.R. 4.4(A) or the sufficiency of service of process on Sensory Utah.

Sensory Indiana wants to conduct limited written and oral discovery into relevantjurisdictional facts and to test the accuracy of Ms. Rawson's declaration. It attached to its motion five proposed interrogatories and nine proposed requests for production.2 It also wants to conduct a deposition of Ms. Rawson and/or a Rule 30(b)(6) deposition of Sensory Utah. No subjects of inquiry for the deposition were submitted. Sensory Indiana concedes that "[t]o be allowed to conduct discovery, Sensory Indiana must make a threshold of [sic] prima facie showing in its pleading that personal jurisdiction might exist over Sensory Utah." (Discovery Motion ¶ 5 (citing Andersen, 179 F.R.D. at 241).)

When a defendant challenges personal jurisdiction by a motion to dismiss, the...

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