Sunlight Saunas, Inc. v. Sundance Sauna, Inc.

• Decision Date: 15 March 2006
• Docket Number: No. CIV.A. 04-2597.,CIV.A. 04-2597.
• Citation: 427 F.Supp.2d 1011
• Parties: SUNLIGHT SAUNAS, INC., Plaintiff, v. SUNDANCE SAUNA, INC., et al., Defendants.
• Court: U.S. District Court — District of Kansas

Page 1011

427 F.Supp.2d 1011

SUNLIGHT SAUNAS, INC., Plaintiff, v. SUNDANCE SAUNA, INC., et al., Defendants.

No. CIV.A. 04-2597.

United States District Court, D. Kansas.

March 15, 2006.

Kenneth P. Kula, Scott E. Dupree, Shook, Hardy & Bacon L.L.P., Kansas City, MO, Peter E. Strand, Sarita Pendurthi, Shook, Hardy & Bacon, L.L.P., Washington, DC, for Plaintiff.

David W. Hauber, Lee M. Baty, Baty, Holm & Numrich, PC, Jerome T. Wolf, Rebecca S. Stroder, Sonnenschein, Nath & Rosenthal, LLP, Leslie L. Lawson, Shipley Lawson & Jacob, Kansas City, MO, Robert A. Mintz, Wallace, Saunders, Austin, Brown & Enochs, Chtd., Overland Park, KS, for Defendants.

Timothy J. Finnerty, Wallace, Saunders, Austin, Brown & Enochs, Wichita, KS.

MEMORANDUM AND ORDER

VRATIL, District Judge.

Sunlight Saunas, Inc. ("Sunlight") brings suit against Sundance Sauna, Inc. ("Sundance"), Brighton Sauna, Inc., Cobalt Multimedia, Inc. ("Cobalt") and Preston Hall, alleging tortious interference with contract, tortious interference with prospective business relationship, common law trademark infringement, false advertising, false description, cybersquatting, injury to business reputation, unfair competition, business defamation, civil conspiracy, antitrust activity and other tortious or deceptive trade practices arising under the Lanham Act, 15 U.S.C. §§ 1051 et seq., the Sherman Act, 15 U.S.C. §§ 1 et seq., and the state laws of California and Kansas. This matter comes before the Court on Cobalt Multimedia Inc.'s And Preston Hall's Motion To Dismiss Third Amended Complaint (Doc. # 169) filed December 14, 2005. In this motion, defendants Cobalt and Hall challenge the exercise of personal jurisdiction. For reasons set forth below, the Court finds that defendants' motion should be sustained.

Legal Standards

The standard which governs a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), Fed.R.Civ. P., is well established. Plaintiff bears the burden of establishing personal jurisdiction over defendants. Before trial, however, when a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, plaintiff need only make a prima facie showing. The allegations in the complaint must be taken as true to the extent they are uncontroverted by defendants' affidavits. If the parties present conflicting affidavits, all factual disputes are resolved in plaintiff's favor, and plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party. Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir. 1984), cert, denied, 471 U.S. 1010, 105 S.Ct. 1879, 85 L.Ed.2d 171 (1985); see also Williams v. Bowman Livestock Equip., Co., 927 F.2d 1128, 1130-31 (10th Cir. 1991); Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1988).

Factual Background

Plaintiff's third amended complaint alleges the following facts:

Sunlight is a Missouri corporation with its principal place of business in Lenexa Kansas. Sunlight sells personal saunas in the Kansas-Missouri area and throughout the United States. Sunlight has conducted business under the trade name "Sunlight Saunas" and its "SUNLIGHT SAUNAS" trademark

Sundance is a California corporation with its principal place of business in San Diego, California. Brighton is a Nevada corporation with its principal place of business in Reno, Nevada. Cobalt is a Washington corporation with its principal place of business in Bellingham, Washington. Hall, an individual, resides in Bellingham, Washington.

Sundance collaborated and conspired with Brighton, Cobalt and Hall to register and authorize the registering of an Internet website at "www.sunlightsaunas-exposed.com" ("Exposed website") with a domain name of "sunlightsaunas-exposed.com." At the request of Sundance, defendants registered this domain name with Domains by Proxy, Inc. without knowledge or consent of Sunlight. Sunlight maintains its official Internet website at "www.sunlightsaunas.com" and uses the domain name "sunlightsaunas.com."

Sundance and Brighton conspired to unfairly compete against Sunlight by pressuring suppliers and customers not to deal with Sunlight. Sundance and Brighton shared sensitive competitive information to eliminate Sunlight from competition in the personal sauna market. The Exposed website makes the following false or misleading statements: (1) Sunlight uses heaters which expose the sauna user to harmful and toxic levels of aluminum; (2) Sunlight does not use ceramic heaters; (3) Sunlight does not comply with required industry or safety standards and its products are unsafe; (4) Sunlight advertises that it manufactures its saunas; and (5) Sunlight lies and makes false claims to customers regarding the quality and characteristics of its products. Defendants provided a link to the Exposed website to customers and potential customers of Sunlight and its competitors and disseminated information which disparaged plaintiff.

Hall alleges by affidavit the following facts:

Hall is the president and sole shareholder of Cobalt. Through Cobalt, Hall provides professional Internet services, including website design, consulting, website hosting and database development. Hall does not have clients or customers in Kansas, has not transacted business in Kansas, and does not manufacture, sell or distribute sauna products. Sundance hired Cobalt as an independent contractor to develop, host and maintain its website, "http://www.sundance-sauna.com." GoDaddy.com hosted the Exposed website. The Exposed website allowed users to send email to an Internet address to which Cobalt, Hall and Sundance had access, "sunlightsaunas@yahoo.com." Hall and Cobalt did not respond to or acknowledge any email, however.

Cobalt does not do business in the state of Kansas, and it has no designated agent, employee or sales agent in Kansas. Cobalt does not direct advertising or marketing towards the State of Kansas.

Procedural Background

On May 19, 2005, plaintiff added Cobalt and Hall to this action. Second Amended Complaint (Doc. # 38). On July 14, 2005, Hall attended mediation with plaintiff. Second Affidavit Of Preston Hall, Exhibit 1 to Defendants Cobalt Multimedia Inc.'s And Preston Hall's Reply To Plaintiffs Brief In Opposition To Defendants Cobalt Multimedia Inc.'s And Preston Hall's Motion To Dismiss (Doc. # 196) filed January 20, 2006, ¶¶ 3-4. On August 10, 2005, Cobalt and Hall filed a motion to dismiss asserting lack of personal jurisdiction. Attorney Leslie L. Lawson entered an appearance on defendants' behalf to argue a motion to dismiss for lack of jurisdiction. Limited Entry of Appearance (Doc. # 64). On August 11, 2005, defendants served initial disclosures pursuant to Rule 26, Fed.R.Civ.P. Doc. # 69.

On December 12, 2005, the Court held a pretrial conference which defendants attended. On December 21, 2005, Cobalt and Hall joined other defendants in a motion to strike damage claims stated in a proposed pretrial order. Defendants' Joint Motion (Doc. # 172). On January 19, 2006, the Court entered its pretrial order. Doc. # 187. Cobalt and Hall have not filed an answer to plaintiffs complaint.

Analysis

The Court has discretion to consider a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), Fed.R.Civ. P., based on affidavits and other written material. See Behagen, 744 F.2d at 733. If the Court so chooses, plaintiff must make only a prima facie showing of jurisdiction to avoid dismissal. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). Of course plaintiff eventually must establish jurisdiction by a preponderance of the evidence, either at a pretrial evidentiary hearing or at trial. Until such a hearing is held, a prima facie showing suffices, notwithstanding any contrary presentation by the moving party. See Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir. 1996). If defendants challenge the jurisdictional allegations, plaintiff must support the jurisdictional allegations of the complaint by competent proof of the supporting facts. Pytlik v. Prof'l Res., Ltd., 887 F.2d 1371, 1376 (10th Cir. 1989). All factual disputes, however, are resolved in plaintiffs favor. See id. Further, the allegations in the complaint must be taken as true to the extent that they are uncontroverted by defendants' affidavits. Intercon. Inc. v. Bell Atl. Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000) (only well-pled facts, as distinguished from conclusory allegations, accepted as true).

The Court applies a two-part test to analyze Rule 12(b)(2) motions to dismiss for lack of personal jurisdiction over a nonresident defendant. First, defendants' conduct must fall within a provision of the Kansas long-arm statute, K.S.A. § 60-308. Kansas courts construe the long-arm statute liberally to assert personal jurisdiction over nonresident defendants to the full extent permitted by the limitations of due process. Volt Delta Res. Inc. v. Devine, 241 Kan. 775, 777, 740 P.2d 1089, 1092 (1987). Second, defendants must have sufficient minimum contacts with Kansas to satisfy the constitutional guarantee of due process. See Equifax Servs., Inc. v. Hitz, 905 F.2d 1355, 1357 (10th Cir. 1990); see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (court may exercise personal jurisdiction over nonresident defendant only so long as "minimum contacts" exist between defendant and forum state).

I. Waiver

Plaintiff first argues that defendants waived personal jurisdiction when they entered an appearance through counsel by filing motions and other documents.¹ Plaintiff specifically argues that defendants engaged in litigation by filing Rule 26 initial disclosures, participating in mediation, attending depositions (through counsel), participating in the parties' pretrial conference and joining in a motion to strike certain claims. Defendants respond that the only...