United Tactical Sys. LLC v. Real Action Paintball, Inc.

• Decision Date: 11 May 2015
• Docket Number: Case No. 14–cv–02435–MEJ,Case No. 14–cv–04050–MEJ
• Citation: 108 F.Supp.3d 733
• Parties: United Tactical Systems LLC, Plaintiff, v. Real Action Paintball, Inc., et al., Defendants. Real Action Paintball, Inc., Plaintiff, v. Advanced Tactical Ordnance Systems, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of California

108 F.Supp.3d 733

United Tactical Systems LLC, Plaintiff,

v.Real Action Paintball, Inc., et al., Defendants.

Real Action Paintball, Inc., Plaintiff,

v.Advanced Tactical Ordnance Systems, LLC, et al., Defendants.

Case No. 14–cv–04050–MEJ

Case No. 14–cv–02435–MEJ

United States District Court, N.D. California.

Signed May 11, 2015

John Christopher Kirke, Jason Mattson Flom, Donahue Fitzgerald LLP, Oakland, CA, Michael Lawrence Blumenthal, Milton M. Blumenthal and Associates, Chicago, IL, for Plaintiff.

B. Douglas Robbins, Kelley Anne Harvilla, Wood Robbins LLP, San Francisco, CA, Paul B. Overhauser, Overhauser Law Offices LLC, Greenfield, IN, for Defendants.

[REDACTED VERSION]^* ORDER DENYING MOTIONS TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND VENUE

ORDER CONSOLIDATING RELATED ACTIONS AND DENYING MOTIONS TO DISMISS AND MOTIONS TO STRIKE AS MOOT

MARIA–ELENA JAMES, United States Magistrate Judge

INTRODUCTION

Real Action Paintball, Inc. ("Real Action") and United Tactical Ordnance Systems LLC ("UTS") are competitors in the irritant projectile market. They have sued and counter-sued one another as well as related parties in the above-captioned actions over disputes involving the "PepperBall" trademark, unfair competition claims, and other issues. Pending before the Court are Motions to Dismiss for Lack of Personal Jurisdiction or Lack of Venue by Perfect Circle Projectiles LLC, Gary Gibson, Michael Blumenthal, and David Piell (the "Moving Parties"). ATO Dkt. Nos. 13 & 39; UTS Dkt. No. 96.¹ Real Action has also recently filed a Motion to Amend its Complaint. ATO Dkt. No. 153. Having considered the parties' positions, relevant legal authority, and the record in this case, the Court DENIES the Motions for the reasons set forth below.

Additionally, in the process of reviewing the parties' motions, pleadings, and related materials, the Court has determined that the above captioned actions involve common questions of law and fact. Separate consideration of the claims in these cases wastes time and effort by the Court and the parties. Consequently, the Court consolidates these actions pursuant to Federal Rule of Civil Procedure 42(a)(2) ("If actions before the court involve a common question of law or fact, the court may: ... consolidate the actions"). Although the case first filed in this District was Real Action Paintball, Inc. v. Advanced Tactical Ordnance Systems, LLC et al., Case No. 14–2435–MEJ (N.D.Cal.) (the "ATO Case"), the Court will consolidate the actions under United Tactical Systems, LLC v. Real Action Paintball, Inc. et al., Case No. 14–4050–MEJ (N.D.Cal.) (the "UTS Case"). The UTS Case effectively represents the earliest filed action as UTS advances the interests of Advanced Tactical Ordinance Systems, LLC ("ATO"), which filed the first action pertaining to the issues arising in these cases: Advanced Tactical Ordinance Systems, LLC v. Real Action Paintball, Inc., et al., Case No. 12–00296–JVB–RBC (N.D.Ind.) (the "Indiana Action"). The above captioned cases are thus CONSOLIDATED for pretrial proceedings before this Court.

The consolidated case will continue to be referred to as United Tactical Systems, LLC v. Real Action Paintball, Inc., Case No. 14–4050–MEJ (N.D.Cal.). All documents shall be filed in Case No. 14–4050. Additionally, in light of this consolidation, the Court DENIES Real Action's Motion to Amend its Complaint, and DENIES WITHOUT PREJUDICE the remaining pending Motions to Dismiss and Motions to Strike.² That said, the Court will grant all parties leave to amend their pleadings should they choose to do so. UTS will have until May 27, 2015 to file any amended complaint, and Real Action will have until June 17, 2015 to file any amended counterclaims. Any motions pursuant to Rule 12 shall be filed by July 9, 2015. Additionally, the Court welcomes the parties to agree to a more expedited schedule and will consider such a stipulation if they are able to agree to an alternative timetable.

The Court now turns to the substance of the Motions to Dismiss for Lack of Personal Jurisdiction and Venue.

BACKGROUND

UTS and Real Action sell irritant filled projectiles. Real Action's Compl. ("RAP Compl.") ¶ 13, ATO Dkt. No. 1; UTS Compl. ¶ 2, UTS Dkt. No. 1. Typically used by law enforcement or military, these projectiles are non-lethal capsules that contain a pepper substance and can be shot like paintballs. RAP Compl. ¶ 12. UTS's predecessor in interest, ATO, an Indiana corporation, previously brought suit against Real Action,³ a California Company, in the Indiana Action, alleging that Real Action infringed on its "PepperBall" trademark by making statements implying that Real Action sold PepperBall projectiles, among other things. RAP Compl. ¶¶ 18–19; UTS Compl. ¶ 36. ATO obtained a temporary restraining order and later a preliminary injunction to stop Real Action's use of the PepperBall mark and related acts by Real Action. RAP Compl. ¶ 24; UTS Compl. ¶ 36.

ATO also sued Conrad Sun, Sun LLC, and Apon in the Indiana Action. RAP Compl. ¶¶ 68–69. Apon manufactured irritant projectiles, while Conrad Sun and his company Sun LLC had previously helped broker a deal for the sale of irritant filled projectiles from Apon to Real Action. UTS Compl. ¶ 11, RAP Compl. ¶ 16. ATO settled with these defendants in the Indiana Action, based on terms discussed more thoroughly within this Order. RAP Compl. ¶ 29. Specifically, Real Action alleges that Sun, Sun LLC, and Apon settled the Indiana Action "on abusive terms," which made it so that Real Action was unable to acquire the irritant projectiles contracted for from Sun LLC and Apon, and consequently harmed Real Action's position in the market place. Id. ¶ 72. Meanwhile, Real Action challenged the Northern District of Indiana's jurisdiction, arguing that Indiana did not have personal jurisdiction over it. The Court of Appeals for the Seventh Circuit agreed, and the suit was dismissed. See Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir.2014).

Real Action then filed suit in this Court (the ATO Case). It asserts 17 claims against ATO, including claims for wrongful injunction, declaratory relief, unfair competition, and restraint of trade. Real Action also sues attorneys Michael Blumenthal and David Piell, who represented ATO in the Indiana Action. RAP Compl. ¶ 18; Piell Decl. ¶ 5, ATO Dkt. No. 42, UTS Dkt. No. 98. Blumenthal and Piell are both residents of Illinois and have offices in Illinois. Blumenthal Decl. ¶ 3, ATO Dkt. No. 41, UTS Dkt. No. 99; Piell Decl. ¶ 3. Real Action alleges claims against these attorneys for malicious prosecution, abuse of process, and conspiracy, among other things.

Additionally, Real Action sues Gary Gibson and Perfect Circle Projectiles LLC. Perfect Circle is an Illinois limited liability company with its principal place of business in Lake Forest, Illinois. RAP Compl. ¶ 3; ATO Dkt. No. 13 (Gibson and Perfect Circle's Motion, "PC & Gibson Mot.") at 2, 5, ATO Dkt. No. 13; Gibson Decl. ¶ 3, ATO Dkt. No. 15. It owns 50% of ATO and once supplied irritant projectiles to Pepperball Technologies, Inc., a California company that ATO purportedly acquired in 2012. Gibson Decl. ¶ 10; Gibson Dep. at 63:13–16, ATO Dkt. No. 159–16. In turn, Gibson owns Perfect Circle. Gibson Dep. at 63:5–9. Gibson likewise is a resident of Illinois who lives in Riverwoods, Illinois. RAP Compl. ¶ 4; Gibson Decl. ¶ 2. Gibson is not personally a shareholder in ATO. Gibson Decl. ¶ 10. Real Action brings numerous claims against Perfect Circle, including claims for monopoly and restraint of trade under the Sherman Act, combination in restraint of trade under California's Cartwright Act, unfair competition under California Business and Professions Code §§ 17200 and 17500, and conspiracy. Real Action asserts claims against Gary Gibson for intentional interference with contractual relations, intentional or negligent interference with prospective economic advantage, and conspiracy, among other claims.

After Real Action originally filed suit in this Court, UTS was formed and purchased ATO and the PepperBall mark. UTS Compl. ¶ 2. UTS then filed a lawsuit against Real Action in this Court (the UTS Case) and moved for an ex parte temporary restraining order. UTS Dkt. No. 27. The Court denied that motion but construed it as a motion for a preliminary injunction. UTS Dkt. No. 34. The Court ultimately granted in part and denied in part UTS's motion for a preliminary injunction, which, among other things, enjoined Real Action from using the PepperBall name to refer to its irritant projectiles. UTS Dkt. No. 85 at 41. Real Action subsequently counter-sued UTS for various claims (many of which are similar to those asserted against ATO) as well as Blumenthal and Piell for misappropriation of trade secrets related to information published with the filing of UTS's motion for a temporary restraining order. UTS Dkt. No. 51. Real Action served both attorneys in California while they attended UTS's preliminary injunction hearing. UTS Dkt. No. 73 (Blumenthal served in San Francisco, California) & UTS Dkt. No. 74 (Piell served in San Francisco, California).

The Moving Parties filed their motions challenging the Court's personal jurisdiction over them several months ago. ATO Dkt. No. 13, PC & Gibson Mot.; ATO Dkt. No. 39 (Blumenthal and Piell's Motion, "ATO B & P Mot."); UTS Dkt. No. 96 (Blumenthal and Piell's Motion, "UTS B & P Mot."). During that time, the Court has permitted Real Action the opportunity to conduct targeted discovery on the jurisdictional issue. ATO Dkt. No. 80. The Court also invited the parties' input on whether to consolidate these actions. ATO Dkt. No. 126; UTS Dkt. No. 87. The Court consolidated the personal jurisdiction motions on January 7, 2015 and set a schedule for Real Action's Opposition and the Moving Parties' Reply. ATO Dkt. No. 130; UTS Dkt. No. 117; see also Modified Order, ATO Dkt. No. 138; UTS Dkt. No. 127. At a subsequent case management hearing,...