Willis Elec. Co. v. Polygroup Mac. Ltd. (BVI)

• Decision Date: 03 February 2020
• Docket Number: Case No. 15-cv-3443 (WMW/KMM)
• Parties: WILLIS ELECTRIC CO., LTD., Plaintiff, v. POLYGROUP MACAU LIMITED (BVI), Polytree (H.K) Co. Ltd., and Polygroup Trading Limited, Defendants.
• Court: U.S. District Court — District of Minnesota

437 F.Supp.3d 693

WILLIS ELECTRIC CO., LTD., Plaintiff,

v.POLYGROUP MACAU LIMITED (BVI), Polytree (H.K) Co. Ltd., and Polygroup Trading Limited, Defendants.

Case No. 15-cv-3443 (WMW/KMM)

United States District Court, D. Minnesota.

Signed February 3, 2020

Douglas J. Christensen, Larina A. Alton, Lukas Dustin Jonathon Toft, Mark P. Schneebeck, Fox Rothschild LLP, Minneapolis, MN, for Plaintiff.

Christopher J. Forstner, Robert Armistead Angle, Dabney Jefferson Carr, IV, Richmond, VA, Douglas D. Salyers, Troutman Sanders LLP, Atlanta, GA, Paige S. Stradley, Rachel C. Hughey, Thomas J. Leach, III, Merchant & Gould PC, Mpls, MN, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

Wilhelmina M. Wright, United States District Judge

Before the Court is Defendants' motion to dismiss Counts VII through XVI of Plaintiff's second amended complaint, which allege that Defendants violated federal and state law by engaging in anticompetitive conduct. (Dkt. 331.) For the reasons addressed below, Defendants' motion is granted as to Plaintiff's unfair-competition claim, (Count X), and denied in all other respects.

BACKGROUND

Plaintiff Willis Electric Co., Ltd. (Willis Electric) and Defendants Polygroup Macau Limited (BVI), Polytree (H.K) Co. Ltd., and Polygroup Trading Limited (collectively, Polygroup) are competitors in the field of artificial holiday trees. Manufacturers in this field compete based on price, product quality, and product innovation. Willis Electric began manufacturing holiday lights in 1993 and expanded its business to include pre-lit artificial holiday trees in 2008. Until 2010, Willis Electric's pre-lit holiday trees were "typical of the industry," as they were "big, bulky, complex, and difficult to assemble." But in 2010, Willis Electric began selling a "One Plug Tree that was unlike anything the holiday tree market had ever seen before." Willis Electric filed a patent application pertaining to the One Plug Tree. Polygroup subsequently began selling a "knockoff design" and applied for its own patent.

Willis Electric commenced this patent-infringement lawsuit in 2015, alleging that Polygroup has infringed and continues to infringe six of Willis Electric's United States patents pertaining to lighted artificial holiday trees. In November 2016, the magistrate judge granted the parties' stipulation to stay this case pending inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB). The magistrate judge lifted that stay in March 2019, and Willis Electric filed a second amended complaint approximately two months later. In the second amended complaint, Willis Electric continues to allege six counts of patent infringement while advancing ten additional counts alleging that Polygroup engaged in anticompetitive conduct.

The ten new counts include three counts of alleged antitrust conduct, in violation of the Sherman Act, 15 U.S.C. §§ 1, 2, and Minnesota's antitrust statute, Minn. Stat. §§ 325D.51, .52 (Counts VII, VIII, and IX). The new counts also include a related claim for common-law conspiracy based on the same alleged antitrust conduct (Count XVI). These antitrust counts in the second amended complaint are based in part on alleged bid-rigging agreements between Polygroup and another distributor pursuant to which "Polygroup would secretly manufacture its ... trees for [the other distributor], and in exchange, neither party would compete with the other party's tree slot" with respect to multiple retailers. The antitrust counts also are based in part on Polygroup's alleged "predatory pricing" and below-cost bidding that were intended to prevent Willis Electric from expanding its business to new retailers.

The ten new counts also allege unfair competition, in violation of Minn. Stat. § 325D.44 (Count X); false advertising, in violation of the Lanham Act, 15 U.S.C. § 1125(a) (Count XI); violation of Minnesota's Uniform Deceptive Trade Practices Act, Minn. Stat. §§ 325D.43 et seq. (Count XII); and common-law claims for tortious interference with prospective economic advantage (Count XIII), tortious product disparagement (Count XIV), and defamation (Count XV). These counts are based on Polygroup's alleged false and misleading statements to customers about the validity of Willis Electric's patents and the functionality of Willis Electric's products.

Polygroup moves to dismiss the ten new counts in the second amended complaint that pertain to alleged anticompetitive conduct. As to these ten counts, Polygroup argues that this Court lacks personal jurisdiction over Polygroup, venue in this District is improper, and Willis Electric fails to state a claim on which relief can be granted. Polygroup also argues that Counts X through XV are time barred.

ANALYSIS

I. Personal Jurisdiction and Venue

Polygroup argues that, because it has no connection with Minnesota, Counts VII through XVI of Willis Electric's second amended complaint must be dismissed for lack of personal jurisdiction and improper venue. See Fed. R. Civ. P. 12(b)(2), 12(b)(3). Because Polygroup moves to dismiss for lack of personal jurisdiction, Willis Electric must make a prima facie showing that personal jurisdiction exists. K-V Pharm. Co. v. J. Uriach & CIA, S.A. , 648 F.3d 588, 591–92 (8th Cir. 2011). To do so, Willis Electric must plead sufficient facts to support a reasonable inference that Polygroup can be subjected to jurisdiction within Minnesota, the forum state. Id. The evidentiary showing required at the prima facie stage is minimal, Johnson v. Arden , 614 F.3d 785, 794 (8th Cir. 2010), but a plaintiff's prima facie showing is "tested, not by the pleadings alone, but [also] by the affidavits and exhibits" supporting and opposing the motion to dismiss, Dever v. Hentzen Coatings, Inc. , 380 F.3d 1070, 1072 (8th Cir. 2004) (internal quotation marks omitted). When determining whether personal jurisdiction exists, a district court views the evidence in the light most favorable to the plaintiff, resolving all factual conflicts in the plaintiff's favor. K-V Pharm. , 648 F.3d at 592.

Willis Electric argues that personal jurisdiction and venue are established as to its antitrust claims (Counts VII through IX and Count XVI) pursuant to the Clayton Act, 15 U.S.C. § 22. Willis Electric also contends that personal jurisdiction and venue are established, pursuant to pendant personal jurisdiction, as to its claims for unfair competition, false advertising, deceptive trade practices, and common-law business torts (Counts X through XV). The Court addresses each argument in turn.

A. Personal Jurisdiction and Venue Under the Clayton Act

According to Willis Electric, personal jurisdiction and proper venue in this Court are established as to the antitrust claims (Counts VII, VIII, IX, and XVI) pursuant to the Clayton Act. Special venue and service-of-process rules apply to private antitrust lawsuits brought against corporate defendants under the Clayton Act:

Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

15 U.S.C. § 22. When Congress has provided for worldwide service of process, as it has done in the Clayton Act, "due process requires only that [a defendant] have sufficient minimum contacts with the United States as a whole to support personal jurisdiction." KM Enters., Inc. v. Global Traffic Techs., Inc. , 725 F.3d 718, 730–31 (7th Cir. 2013) ; accord In re Fed. Fountain, Inc. , 165 F.3d 600, 601–02 (8th Cir. 1999) (holding that, when a federal statute permits nationwide service of process, Congress has "exercised its authority to furnish federal district courts with the power to exert personal jurisdiction nationwide"). As Polygroup concedes, the Clayton Act provides for personal jurisdiction over a corporate defendant so long as venue is established under 15 U.S.C. § 22. See KM Enters. , 725 F.3d at 730–31 ; Daniel v. Am. Bd. of Emergency Med. , 428 F.3d 408, 422–27 (2d Cir. 2005) ; accord Fed. Fountain , 165 F.3d at 601–02.

Under the Clayton Act, venue over a corporate defendant is proper "in any district wherein it ... transacts business." 15 U.S.C. § 22.¹ "[A] corporation is engaged in transacting business in a district if in fact, in the ordinary and usual sense, it transacts business therein of any substantial character." United States v. Scophony Corp. of Am. , 333 U.S. 795, 807, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) (internal quotation marks omitted). The purpose of the "transacts business" language in the Clayton Act is to make the "practical, everyday business or commercial concept of doing or carrying on business ‘of any substantial character’ [ ] the test of venue." Campos v. Ticketmaster Corp. , 140 F.3d 1166, 1173 (8th Cir. 1998) (quoting Scophony , 333 U.S. at 807, 68 S.Ct. 855 ). For example, "[a] defendant manufacturer that promotes its goods in a judicial district through product demonstrations, that solicits orders through its [workforce] in that district, and that ships its goods into that district clearly ‘transacts business’ under [the Clayton Act]." Daniel , 428 F.3d at 429 (citing Eastman Kodak Co. of N.Y. v. S. Photo Materials Co. , 273 U.S. 359, 374–77, 47 S.Ct. 400, 71 L.Ed. 684 (1927) ).

Here, the second amended complaint alleges that Polygroup conducts business in Minnesota "by offering to sell, selling, importing, and/or distributing lighted artificial trees." More specifically, Willis Electric alleges that Polygroup sells its products at retail stores in Minnesota, including Target, Walmart, Lowe's, Home Depot, and Costco. And Willis Electric has submitted exhibits demonstrating that Polygroup has worked with a Minnesota advertising firm and directed its representatives to attend trade shows in Minnesota to...