Snow Sys., Inc. v. Sneller's Landscaping, LLC

• Decision Date: 22 March 2019
• Docket Number: No. 18 C 5842,18 C 5842
• Parties: SNOW SYSTEMS, INC., Plaintiff, v. SNELLER'S LANDSCAPING, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

SNOW SYSTEMS, INC., Plaintiff,
v.
SNELLER'S LANDSCAPING, LLC, Defendants.

No. 18 C 5842

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 22, 2019

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER

Plaintiff Snow Systems, Inc. brings this action against defendant Sneller's Landscaping, LLC to redress alleged trademark infringement and dilution, unfair competition, and false advertising under the federal trademark statute, the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a) and (c). Currently before the Court is Sneller's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(2), R. 11. For the following reasons, the Court grants Sneller's motion.

BACKGROUND

Snow Systems is a corporation organized under the laws of Illinois with its principal place of business in Illinois. R. 1 ¶ 1. It provides commercial snow and ice removal and sidewalk shoveling in Illinois, Indiana, Ohio, Wisconsin, Pennsylvania, Colorado, Massachusetts and Tennessee. Id. ¶¶ 1, 8. Sneller's—which is headquartered in and has its principal place of business in Michigan—has been performing similar snow and ice removal services in the Grand Rapids and Lansing, Michigan areas since approximately 1999. Id. ¶¶ 2, 16, 21; R. 11 ¶ 5; R. 11-1 ¶¶ 7-10.

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Sneller's has no offices or real estate in Illinois, is not registered to do business in Illinois, has no agent in Illinois, and has never performed snow or ice removal services in Illinois. R. 11-1 ¶¶ 8, 13-15, 17.

In March 2013, the United States Patent and Trademark Office issued Snow Systems a trademark for "SNOW SYSTEMS," with notation of first use on September 1, 1979. R. 1 ¶ 10. Then, in May 2015, Sneller's registered with the Michigan Department of Licensing and Regulatory Affairs as doing business as "Sneller Snow Systems." Id. ¶ 19; R. 11-1 ¶ 5.

On August 27, 2018, Snow Systems filed a three-count complaint against Sneller's alleging trademark infringement under 15 U.S.C. §§ 1114 and 1125(a) (Count I), trademark dilution under 15 U.S.C. § 1125(c) (Count II), and unfair competition and false advertising under 15 U.S.C. § 1125(a) (Count III). R. 1. The crux of Snow Systems' complaint is that Sneller's use of the d/b/a "Sneller Snow Systems"—which is similar to Snow Systems' trademark "SNOW SYSTEMS"—in its domain name, as an Internet search engine keyword, in publications, and at trade shows and symposiums despite Snow Systems' repeated requests that it stop, capitalizes on Snow Systems' hard-earned reputation and violates the Lanham Act in various ways. Id. ¶¶ 3, 13, 19, 22-23, 25, 33. Snow Systems seeks (among other things) injunctive relief, compensatory damages, profits derived from Sneller's allegedly wrongful acts, treble damages, costs, attorneys' fees, expenses and pre- and post-judgment interest for this alleged wrongdoing. Id. at 8-10.

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On November 20, 2018, Sneller's moved to dismiss Snow Systems' complaint under both Federal Rule of Civil Procedure 12(b)(1) and (2) for lack of subject matter and personal jurisdiction. R. 11. In its motion, Sneller's contends that this Court lacks both because Sneller's serves only Michigan clients and has thus neither engaged "in commerce" within the meaning of the Lanham Act, nor purposefully availed itself of the privilege of doing business in Illinois. See generally R. 11; R. 12. Snow Systems alleges that the Court has subject matter jurisdiction because its claims arise under the Lanham Act, 15 U.S.C. § 1501, et seq.—a federal law. R. 1 ¶ 4. Snow Systems alleges that the Court has personal jurisdiction over its claims because Sneller's "caused its snow removal services to be advertised and promoted in this judicial district" through its "ongoing website presence," and the claims "arise out of [Sneller's] contacts with," and Sneller's has caused "tortious injury" to Snow Systems in, "this judicial district." Id. ¶ 6. The Court will address each jurisdictional question in turn, beginning with subject matter jurisdiction.

ANALYSIS

I. Subject Matter Jurisdiction

Snow Systems alleges that this Court has subject matter jurisdiction over its claims under the Lanham Act, 15 U.S.C. § 1501, et seq., and under 15 U.S.C. § 1121, 28 U.S.C. §§ 1331, 1332, 1338 and 1367. R. 1 ¶¶ 4, 5. Snow Systems purports to allege that this Court has subject matter jurisdiction based on both diversity and a federal question. In truth, because Snow Systems brings only federal claims, only Snow Systems' allegations of federal question jurisdiction warrant discussion. In other

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words, if the federal claims fail, it is irrelevant that the parties are diverse. Sneller's argues that the Court lacks subject matter jurisdiction despite that Snow Systems presents a federal question under the Lanham Act because, in providing services only in Michigan, Sneller's is not engaged "in commerce" within the meaning of the Lanham Act. R. 12 at 11; R. 11-1 ¶ 8. In response, Snow Systems contends that whether Sneller's is acting "in commerce" goes to the merits and is not an appropriate subject for a motion under Rule 12(b)(1). R. 13 at 3.

The Court notes that there is some question as to whether this issue is properly addressed under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim instead of 12(b)(1) for lack of jurisdiction. See, e.g., Steele v. Bulova Watch Co., 344 U.S. 280, 282 (1952) (analyzing extraterritorial application of Lanham Act "in commerce" requirement under Rule 12(b)(1)); see also IPOX Schuster, LLC v. Nikko Asset Mgmt. Co., Ltd., 191 F. Supp. 3d 790, 803-804 (N.D. Ill. 2016) (collecting cases analyzing extraterritorial application of Lanham Act "in commerce" requirement under Rule 12(b)(1), but analyzing the issue under Rule 12(b)(6) instead); Slep-Tone Ent. Corp. v. Coyne, 41 F. Supp. 3d 707, 713-14 (N.D. Ill. 2014) (complaint adequately plead "use in commerce" requirement under Rule 12(b)(6)); Am. Dairy Queen Corp. v. Augustyn, 278 F. Supp. 717, 722 (N.D. Ill. 1967) (allegation that plaintiff actively engaged in interstate activities "designed to promote [its] trademark" sufficient to state a claim under Rule 12(b)(6)). And the distinction matters: analysis under Rule 12(b)(1) allows for the Court's consideration of external evidence and requires the plaintiff to demonstrate that jurisdiction is proper, while analysis under Rule 12(b)(6)

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generally requires a court to accept as true all of the well-pleaded allegations in the complaint subject to the limitations set forth in Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Id. at 806-807; see also Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009) (a court may "properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists" (quoting Evers v. Astrue, 536 F.3d 651, 656-57 (7th Cir. 2008))).

"Though subject-matter jurisdiction generally should be considered before personal jurisdiction, a district court may dismiss for lack of personal jurisdiction without determining whether subject-matter jurisdiction exists." Central States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 939 n.2 (7th Cir. 2000) (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (7th Cir. 1999)). Indeed, "there is no unyielding jurisdictional hierarchy." Ruhrgas AG, 526 at 578. As discussed below, Snow Systems failed to meet its burden to establish the Court's personal jurisdiction over Sneller's. Accordingly, the Court exercises its discretion to dismiss Snow Systems' complaint on that ground alone without deciding whether Sneller's motion is properly made under Rule 12(b)(1), and if it is, whether to grant it on that basis. See Livingston v. Hoffman-La Roche Inc., 293 F. Supp. 3d 760, 765-66 (N.D. Ill. 2018) (dismissing for lack of personal jurisdiction without first addressing subject matter jurisdiction because personal jurisdiction issue was "straightforward").

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II. Personal Jurisdiction

1. Standard

"A complaint need not include facts alleging personal jurisdiction. However, once the defendant moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the existence of jurisdiction." Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When the court rules on the motion without a hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. Id. The court reads "the complaint liberally, in its entirety, and with every inference drawn in favor" of the plaintiff to determine whether it has set forth a prima facie case for personal jurisdiction. Cent. States, Se. & Sw. Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 877-78 (7th Cir. 2006). "[O]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Purdue, 338 F.3d at 783.

2. Analysis of Lanham Act Claims

Because the Lanham Act does not contain a special rule for personal jurisdiction, the law of the forum governs. See Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 800 (7th Cir. 2014), as corrected (May 12, 2014); Fed.R.Civ.P. 4(k)(1)(A). The Illinois long-arm statute requires nothing more than the standard for federal due process: that the defendant have sufficient contacts with the forum state "such that the maintenance of the suit does not offend traditional

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notions of fair play and substantial justice." Brook v. McCormley, 873 F.3d 549, 552 (7th Cir. 2017) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

There are two types of personal jurisdiction: general...