Spyderco, Inc. v. Mambate U.S. Inc.

• Decision Date: 08 February 2016
• Docket Number: Civil Action No. 15-cv-00943-REB-KLM
• Parties: SPYDERCO, INC., a Colorado corporation, Plaintiff, v. MAMBATE USA INC., a New York corporation doing business as AGPtek, and BRAINYTRADE USA INC. Doing business as Brainydeal, a New Jersey corporation, Defendants.
• Court: U.S. District Court — District of Colorado

SPYDERCO, INC., a Colorado corporation, Plaintiff, v. MAMBATE USA INC., a New York corporation doing business as AGPtek, and BRAINYTRADE USA INC.Doing business as Brainydeal, a New Jersey corporation, Defendants.

Civil Action No. 15-cv-00943-REB-KLM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

February 8, 2016

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX

This matter is before the Court on Defendants Mambate USA Inc.'s and BrainyTrade USA Inc.'s (collectively, "Defendants") Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2) and Fed. R. Civ. P. 12(b)(3) [##13, 14]¹ (the "Motions"). Plaintiff filed a Response [#27], and Defendants filed a Reply [#29]. Pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72.1(c), the Motions have been referred to the undersigned for a recommendation regarding disposition. See Order Referring Motions [#15]. The Court has reviewed the Motions [##13, 14], the Response [#27], the Reply [#29], the relevant law, and the entire case file, and is advised in the premises. For the reasons stated below, the Court RECOMMENDS that the Motions [##13, 14] be GRANTED IN PART and DENIED IN PART and RECOMMENDS that the matter be TRANSFERRED. Further, given theCourt's recommendation that the matter be transferred, the Court will DENY Defendants' Motion to Stay Discovery [#33] as moot.

I. Background

On May 4, 2015, Plaintiff SpyderCo, Inc. ("SpyderCo") filed a complaint against Defendants Mambate USA Inc. ("Mambate") and BrainyTrade USA Inc. ("BrainyTrade"). Compl. Plaintiff, a Colorado corporation engaged in the design and creation of various blade-sharpening tools, see id. at ¶ 9, alleges that Defendants, incorporated and located in New York and New Jersey, infringed its trademark and other intellectual property² by copying its "Tri-Angle Sharpmaker", a handheld sharpening tool. Id. at ¶¶ 29-71. On August 10, 2015, Defendants filed motions to dismiss the complaint for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2) or, alternatively, for improper venue under Fed. R. Civ. P. 12(b)(3). Motions [##13, 14].

II. Standard of Review

A. Fed. R. Civ. P. 12(b)(2)

The purpose of a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) is to test whether the Court has personal jurisdiction over the named party. After a motion to dismiss has been filed, the plaintiff bears the burden of establishing personal jurisdiction over the defendant. Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir. 1984). The Court accepts the well-pled allegations (namely the plausible, nonconclusory, and nonspeculative facts) of the operative pleading as true to determine whether the plaintiffhas made a prima facie showing that the defendants are subject to the Court's personal jurisdiction. Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The Court "may also consider affidavits and other written materials submitted by the parties." Impact Prods., Inc. v. Impact Prods., LLC, 341 F. Supp. 2d 1186, 1189 (D. Colo. 2004). Any factual disputes are resolved in the plaintiff's favor. Benton v. Cameco Corp., 375 F.3d 1070, 1074-75 (10th Cir. 2004).

B. Fed. R. Civ. P. 12(b)(3)

The standard under 12(b)(3) is generally the same as a motion to dismiss for lack of personal jurisdiction. Mohr v. Margolis, Ainsworth & Kinlaw Consulting, Inc., 434 F. Supp. 2d 1051, 1057-58 (D. Kan. 2006); H&H Transformer, Inc. v. Battelle Energy Alliance, LLC, No. 09-cv-00442, 2009 WL 3530370, at *3 (D. Colo. Oct. 23, 2009). Plaintiff has the burden of establishing that venue is proper in this District. Walker v. U.S. Postal Service, No. 06-1754, 2007 WL 2261659, at *2 (D. Colo. July 16, 2007). The Court must accept the allegations in the complaint as true to the extent that they are not controverted by Defendants' affidavits. Wenz v. Memmery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). A prima facie showing of venue is sufficient to meet Plaintiff's burden. Behegen, 744 F.2d at 733.

III. Analysis

A. Personal Jurisdiction

The Court may only exercise personal jurisdiction over a non-resident defendant if: (1) the long-arm statute of Colorado permits personal jurisdiction in this case; and (2) the exercise of personal jurisdiction in Colorado comports with the Due Process Clause of theUnited States Constitution. Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1276 (10th Cir. 2005); see also Dudnikov, 514 F.3d at 1070. The Supreme Court of Colorado interprets Colorado's long-arm statute "to confer the maximum jurisdiction permitted by the due process clauses of the United States and Colorado constitutions." Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). Accordingly, because a due process analysis of jurisdiction in this case will also satisfy Colorado's long-arm statute, the Court need only consider whether the exercise of personal jurisdiction over Defendant is permitted by the Due Process Clause. SCC Commc'ns v. Anderson, 195 F. Supp. 2d 1257, 1260 (D. Colo. 2002) ("[The] analysis turns on a single inquiry, whether the exercise of personal jurisdiction over [the defendant] comports with due process."); Dudnikov, 514 F.3d at 1070 ("[T]he first, statutory, inquiry effectively collapses into the second, constitutional, analysis.").

The Due Process Clause requires that the Court conduct a two-step analysis of personal jurisdiction. First, the Court must examine "whether the non-resident defendant has 'minimum contacts' with the forum state such that [it] should reasonably anticipate being haled into court there." TH Agric. & Nutrition, LLC v. Ace European Grp., Ltd., 488 F.3d 1282, 1287 (10th Cir. 2007) (citation and quotation mark omitted). Second, if the defendant has sufficient contacts, the Court then asks "whether the court's exercise of jurisdiction over the defendant offends 'traditional notions of fair play and substantial justice,'" that is, whether the exercise of jurisdiction is "reasonable" under the circumstances. Id. (citation and some quotation marks omitted).

The "minimum contacts" requirement of due process may be met by showing the existence of general or of specific jurisdiction. Trierweiler v. Croxton & Trench HoldingCorp., 90 F.3d 1523, 1532 (10th Cir. 1996). The requisite minimum contacts exist if the non-resident defendant has continuous and systematic contacts with the forum state (general jurisdiction) or if the defendant (i) has purposefully directed activities at forum residents or otherwise acted to avail itself purposefully of the privilege of conducting activities there and (ii) the litigation results from alleged injuries that arise out of or relate to those activities (specific jurisdiction). Impact Prods., 341 F. Supp. 2d at 1190 (D. Colo. 2004). In short, Defendants must have purposely established minimum contacts with the forum state such that they "should reasonably anticipate being haled into court" there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985).

The aim of the "'purposeful direction' doctrine has been said by the Supreme Court to [be to] ensure that an out-of-state defendant is not bound to appear to account for merely 'random, fortuitous, or attenuated contacts' with the forum state." Dudnikov, 514 F.3d at 1071 (quoting Burger King, 471 U.S. at 475). The defendant must therefore have "deliberately" created some relationship with the forum state that would serve to make that state's potential exercise of jurisdiction foreseeable. Burger King, 471 U.S. at 475-76.

It is undisputed here that there is no general jurisdiction over Defendants; rather, Plaintiff only alleges that jurisdiction is proper based on specific jurisdiction. Compl. [#1] at ¶¶ 6-8. Accordingly, the Court must determine whether: (1) each Defendant purposefully directed its activities at Colorado or its residents or acted in some other way by which it purposefully availed itself of the benefits and protections of conducting business in Colorado, and (2) Plaintiff's claims arise out of or relate to Defendants' forum-related activities. Impact Prods., 341 F. Supp. 2d at 1190.

With respect to minimum contacts, Plaintiff alleges in the complaint that the Courthas personal jurisdiction over Defendants because "Defendants have placed the Accused Products . . . in the stream of commerce, knowing the likely destination of the Accused Products, and their conduct and connections with the state of Colorado, are such that they should reasonably have anticipated being brought into court in Colorado." Compl. at ¶ 8. Plaintiff also alleges that Defendants have "transacted and . . . are currently transacting business within Colorado." Id.

Defendants argue that neither corporation has "committ[ed] an intentional act in Colorado sufficient to establish personal jurisdiction[.]" Motion [#13] at 6; Motion [#14] at 4. In support, Defendants provide affidavits from their respective owners refuting the factual allegations of minimum contacts made by Plaintiff. See Affidavit of Charlie Wang [#13-1] ("Wang Affidavit"); Notice Re Revised Affidavit³ [#53-1] ("Chau Affidavit"). Defendant BrainyTrade states that it "does not own offices, conduct business, direct marketing, or otherwise conduct substantial, continuous, or systematic business in Colorado." Motion [#14] at 4; see also Chau Affidavit (#53-1) ¶¶ 12-17. Similarly, Defendant Mambate states that it has "never purposefully sold its goods to Colorado consumers", that its online storefronts "are accessible to all visitors in exactly the same way, regardless of a visitor's physical location," and that "Mambate has never advertised in Colorado or attempted to target Colorado visitors." Motion [#13] at 6; see also Wang Affidavit [#13-1] at ¶¶ 9-11, 14, 15, 17. Thus, Defendants maintain that there is no personal jurisdiction because "Plaintiff's cause of action would arise regardless of whether Coloradoconsumers had purchased Defendant[s'] allegedly infringing goods. . . . ...