*1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION
SEGMENT CONSULTING
MANAGEMENT, LTD.
a British Columbia, Canada Company,
et al., Plaintiffs,
v. CIVIL ACTION FILE
NO. 1:20-CV-1837-TWT BLISS NUTRACETICALS, LLC
a Georgia Limited Liability Company,
et al., Defendants.
OPINION AND ORDER This is an action for trademark infringement. It is before the Court on Defendants Rachana Arora, Karan Arora, and Shruti Shah’s Motion to Dismiss [Doc. 97]; Defendants Shabana Patel, Faruq Patel, and Phillip Jones’ s Motion to Dismiss [Doc. 118]; Third- Party Defendant Steven Curtis Holfeld’s Motion to Dismiss [Doc. 152]; and Third-Party Defendan t Simply Marketing, Inc.’s Motion to Dismiss [Doc. 178]. For the reasons set forth below, the Court GRANTS Defendants Rachana Arora, Karan Arora, and Shruti Shah’s Motion to Dismiss [Doc. 97]; GRANTS in part and DENIES in part Defendants Shabana Patel, Far uq Patel, and Phillip Jones’ s Motion to Dismiss [Doc. 118]; and GRANTS Third- Party Defendant Simply Marketing, Inc.’s Motion to Dismiss [Doc. 178]. The Court reserves ruling on Third-Party Defendant *2 Curtis’s Motion to Dismiss [Doc. 152] to allow for jurisdictional discovery and, as appropriate, additional briefing.
I. Background This case arises out of the manufacture and sale of kratom-based powder, capsule, and beverage products that allegedly infringe on the trademark “VIVAZEN , ” whose interests are held by Plaintiffs Segment Consulting Management, Ltd. (“Segment”) and Lighthouse Enterprises Inc. (“Lighthouse”) . (Am. Compl. ¶¶ 20, 24, 35, 44.) According to the Plaintiffs, Defendants Vivazen Botanical s LLC (“Vivazen Botanicals”) an d Bliss Nutraceticals LLC (“Bliss Nutra”) were organized for the “sole purpose” of selling products that infringe on the VIVAZEN trademark, in conjunction with another Defendant Natural Vitamins Laboratory Corp. (“Natural Vitamins”) (collectively, “Corporate Defendants”) . (Id. ¶ 35.) The Plaintiffs also filed suit against a number of individuals affiliated with the Corporate Defendants. Rachana Arora , Shruti Shah, and Shabana Patel are organizers and, “upon information and belief,” members and/or officers o f Bliss Nutra and Vivazen Botanicals (id. ¶¶ 6-8); Karan Arora is an officer and director of Natural Vitamins (id. ¶ 9); Faruq Patel is an organizer and the president of Bliss Nutra (id. ¶ 10); and Phillip Jones is the chief executive officer of Bliss Nutra. (Id. ¶ 11.)
The Plaintiffs bring seven claims under the federal Lanham Act and Georgia law against all of the Defendants collectively: (1) federal trademark *3 infringement, (2) federal unfair competition/false designation of origin, (3) federal cybersquatting, (4) state trademark infringement/unfair competition, (5) federal trademark dilution, (6) accounting, and (7) state deceptive trade practices. Natural Vitamins responds with counterclaims against the Plaintiffs and third-party claims against United Naturals, Inc., Simply Marketing, Inc., and Steven Curtis Holfeld (“Curtis”). (Counterclaim & Third-Party Compl. ¶¶ 2-6.) Those claims arise out of a promissory note executed between United Naturals and Natural Vitamins in late- 2015 (“Note”) , which went into default when United Naturals failed to make any payments. (Id. ¶¶ 13-25.) Now pending before the Court are four motions to dismiss from several of the Defendants and Third-Party Defendants under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).
II. Legal Standards
On a motion to dismiss for lack of personal jurisdiction under Rule
12(b)(2), “the plaintiff has the burden of establishing a prima facie case by
presenting enough evidence to withstand a motion for directed verdict.” United
States ex rel. Bibby v. Mortgage Invs. Corp.,
A complaint should be dismissed under Rule 12(b)(6) only where it
appears that the facts alleged fail to state a “plausible” claim for relief. Ashcroft
v. Iqbal,
III. Discussion A. R. Arora, K. Arora, and Shah’s Motion to Dismiss
R. Arora, K. Arora, and Shah move to dismiss the Plaintiffs’ claims against them under Rule 12(b)(2) for lack of personal jurisdiction. All three individuals live and work in Florida and contend that they do not have the requisite minimum contacts with Georgia to support jurisdiction in this Court. (R. Arora, K. Arora, & Shah’s Br. in Supp. of R. Arora, K. Arora, & Shah’s Mot. to Dismiss, at 2.) In response, the Plaintiffs argue that personal jurisdiction is proper over R. Arora, K. Arora, and Shah based on their ownership and management of the Corporate Defendants. (Pls.’ Br. in Opp’n to R. Arora, K. Arora, and Shah’s Mot. to Dismiss, at 2-3.) According to the Plaintiffs, the “detailed factual allegations” in the Amended Complaint show that these individuals directly participated in the Corporate Defendants’ alleged tortious conduct, and the Corporate Defendants’ contacts with Georgia can thus be imputed to them for jurisdiction purposes. (Id. at 10.)
“A federal court … undertakes a two-step inquiry in determining
whether personal jurisdiction exists: the exercise of jurisdiction must (1) be
appropriate under the state long-arm statute and (2) not violate the Due
Process Clause of the Fourteenth Amendment to the United States
Constitution.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir.
2009). “When a federal court uses a state long -arm statute, because the extent
of the statute is governed by state law, the federal court is required to construe
*6
it as would the state ’s supreme court.” Lockard v. Equifax, Inc.,
A court of this state may exercise personal jurisdiction over any
nonresident . . . as to a cause of action arising from any of the acts,
omissions, ownership, use, or possession enumerated in this Code
section, in the same manner as if he or she were a resident of this
state, if in person or through an agent, he or she:(1) Transacts any
business within this state; (2) Commits a tortious act or omission
within this state, except as to a cause of action for defamation of
character arising from the act; [or] (3)Commits a tortious injury
in this state caused by an act or omission outside this state if the
tort-feasor regularly does or solicits business, or engages in any
other persistent course of conduct, or derives substantial revenue
from goods used or consumed or services rendered in this state[.]
O.C.G.A. § 9-10-91. The long-arm statute is not coextensive with procedural
due process but rather, “imposes independent obligations that a plaintiff must
establish for the exercise of personal jurisdiction that are distinct from the
demands of procedural due process.” Diamond Crystal Brands, Inc. v. Food
Movers Int’l, Inc. ,
The Plaintiffs completely miss the mark on this point, arguing that the
Court can disregard the Georgia long-arm statute because it confers personal
jurisdiction to the fullest extent permitted by due process. (Pls.’ Br. in Opp’n to
R. Arora, K. Arora, & Shah’s Mot. to Dismiss, at 7.) The Plaintiffs rely on
Innovative Clinical & Consulting Services, LLC v. First National Bank of
Ames,
The Court turns then to the only jurisdictional argument advanced by
the Plaintiffs: that R. Arora, K. Arora, and Shah have cognizable contacts with
Georgia based on their participation in the Corporate Defendants’ tortious
conduct. It i s axiomatic that “jurisdiction over a corporate employee or officer
‘does not automatically follow from jurisdiction over the corporation.’”
Amerireach.com, LLC v. Walker,
The Amended Complaint makes the following allegations regarding R. Arora ’s , K. Arora ’s , and Shah ’s personal conduct in the Corporate Defendants:
• R. Arora and Shah are organizers and, upon information and belief, members and/or officers of Bliss Nutra, a Georgia corporation, and Vivazen Botanicals, a Florida corporation. (Am. Compl. ¶¶ 6, 8, 31, 33, 105.)
• Upon information and belief, at some point between May 2, 2016, and January 4, 2017, K. Arora acquired an interest in Natural Vitamins and became the president, registered agent, and director of the company. (Id. ¶¶ 9, 30.) • R. Arora and K. Arora reside at the same address and, upon information and belief, K. Arora shared information about the VIVAZEN trademark and the Plaintiffs’ use of the trademark with R. Arora and potentially others, such as Shah. (Id. ¶ 9, 94-95.)
• Upon information and belief, R. Arora, K. Arora, and Shah
“have all participated in the tortious conduct alleged above at
various times and in various ways.” ( Id. ¶ 130.)
These threadbare assertions — essentially that R. Arora, K. Arora, and Shah
organized and/or manage the Corporate Defendants and shared information
about the VIVAZEN trademark — do not suggest that they were primary
participants to infringing on that trademark.
[1]
Beyond their corporate titles,
*9
the Amended Complaint never explains R. Arora’s, K. Arora’s, or Shah’s actual
responsibilities with the Corporate Defendants or roles in the Corporate
Defendants’ alleged wrongdoing. See, e.g., Delta Air Lines, Inc. v. Wunder,
Moreover, the Plaintiffs have failed to connect R. Arora’s, K. Arora’s, or
Shah’s personal conduct, however scant, to Georgia under the state’s long -arm
statute. Aside from organizing Bliss Nutra in Georgia, there are no allegations
or evidence to show that these individuals directly facilitated the Corporate
Defendants’ marketing and distribution activities (or any other business
operations) in the state. See O.C.G.A. § 9-10-91(1); see, e.g., Amerireach.com,
B. S. Patel, F. Patel, and Jones’s Motion to Dismiss
S. Patel, F. Pa tel, and Jones move to dismiss the Plaintiffs’ claims against them under Rule 12(b)(6) for failure to state a claim for relief. They contend that the factual allegations in the Amended Complaint fail to implicate them in any wrongdoing and run afoul of federal pleading standards. (S. Patel, F. Patel, & Jones’s Br. in Supp. of S. Patel, F. Patel, & Jones’s Mot. to Dismiss, at 1-2, 5.) The Plaintiffs respond that S. Patel, F. Patel, and Jones have each been “intricately involved” in Bliss Nutra’s operations, including the infringement of the VIVAZEN trademark . (Pls.’ Br. in Opp’n to S. Patel, F. Patel, and Jones’s Mot. to Dismiss, at 3.) Therefore, the Plaintiffs argue that the “voluminous allegations” against Bliss Nutra make out a plausible case for personal liability —despite the “few allegations” referring specifically to S. Patel, F. Patel, and Jones. (Id.)
“Natural person s, as well as corporations, may be liable for trademark
infringement under the Lanham Act.” Chanel, Inc. v. Italian Activewear of
Fla., Inc.,
The Amended Complaint makes the following allegations regarding S. Patel’s, F. Patel’s, and Jones’s involvement with Bliss Nutra and its use of the VIVAZEN trademark:
• S. Patel is an organizer and, upon information and belief, a member and/or officer of Bliss Nutra and Vivazen Botanicals. (Am. Compl. ¶¶ 7, 31, 33, 105.)
• F. Patel is an organizer and the president of Bliss Nutra and, upon information and belief, resides with S. Patel. (Id. ¶ 10.) • Jones is the chief executive officer of Bliss Nutra. (Id. ¶ 11.) • Upon information and belief, K. Arora shared information about the VIVAZEN trademark with R. Arora and potentially others, such as S. Patel. (Id. ¶ 95.)
• At a tradeshow in February 2020, the Plaintiffs’ representatives met with representatives of Bliss Nutra and/or Vivazen Botanicals, including Jones. (Id. ¶ 102.) • Bliss Nutra and/or Vivazen Botanicals were actively selling and promoting infringing products at the tradeshow. (Id. ¶ 104.)
• On or about March 9, 2020, the Plaintiffs sent Jones a cease- and-desist letter advising Bliss Nutra of the Plaintiffs’ exclusive right to the VIVAZEN trademark and warning that continued use of the trademark would result in legal action. (Id. ¶¶ 107-08.)
• On March 16, 2020, Jones emailed the Plaintiffs’ counsel seeking a letter that the Plaintiffs had previously sent to Vivazen Botanicals. (Id. ¶ 118.)
• Upon information and belief, S. Patel, F. Patel, and Jones
“have all participated in the tortious conduct alleged above at
various times and in various ways.” ( Id. ¶ 130.)
According to the Plaintiffs, these allegations show that S. Patel, F. Patel, and
Jones had the “requisite corporate authority in Bliss Nutra to have
participated in the trademark infringement[.]” (Pls.’ Br. in Opp’n to S. Patel,
F. Patel, and Jones’s Mot. to Dism iss, at 8.) However, the Plaintiffs rely on the
standard for holding corporate officers personally liable for copyright
infringement. See Broadcast Music, Inc. v. Armstrong,
For example, in Steven Madden, Ltd. v. Jasmin Larian, LLC, 2019 WL 294767 (S.D.N.Y. Jan. 22, 2019), the defendant, Cult Gaia, filed a counterclaim against Steven Madden, Ltd. (“SML”) and Steven Madden (“Madden”) for trade dress infringement under the Lanham Act. Id. at *1. In support of Madden’s individual liability, Cult Gaia alleged that he (1) was the founder and Creative and Design Chief of SML; (2) wa s the principal architect of SML’s infringement of the Cult Gaia handbag; (3) was a moving, active, and conscious force behind SML and its product designs; and (4) offered the infringing handbag for sale without Cult Gaia’s permission and created more versions following its objection. Id. at *3-4. The court concluded that these allegations were *13 “ insufficient to state a Lanham Act claim against Madden personally. ” Id. at *4. First, Madden’s title , on its own, did not suggest any personal involvement in the design and sale of the handbag. Id. Second, the allegations that Madden was the “principal architect” and a “moving, active, and conscious force” behind SML’s designs , were “mere legal conclusions” that were “ not entitled to a presumption of truth.” Id. at *5. As for Cult Gaia’s final allegation — that Madden offered the handbag for sale without permission and created more versions despite an infringement notice —the court found that “[t] hese assertions contain no factual allegations as to Madden’s specific role in the purported infringement of the [handbag], but merely state conclusory allegations that conflate [SML’s] actions with Madden’s own.” Id.
As in Steven Madden , the Plaintiffs’ alleg ations against S. Patel and F. Patel boil down to their titles at Bliss Nutra and the bare legal conclusion that they “ participated in the tortious conduct . . . at various times and in various ways.” (Am. Compl. ¶¶ 7, 10, 31, 33, 105, 130.) While the Plaintiffs speculate that K. Arora discussed the VIVAZEN trademark with S. Patel, there is nothing to connect S. Patel’s knowledge of the trademark, even if true, to her participation in any infringing conduct. (Id. ¶ 95.) The Amended Complaint thus fails to state a trademark infringement claim under the Lanham Act against S. Patel and F. Patel. The allegations against Jones present a different question: the Plaintiffs state that he represented Bliss Nutra at a trade show in February 2020 where the company “was actively selling and promoting” *14 infringing products. (Id. ¶¶ 102-04.) In the Court’s view , this assertion is sufficient to show that at a minimum, Jones “ratifie[d]” or “participate[d] in” the purported infringement of the VIVAZEN trademark. Babbit Elecs., 38 F.3d at 1184. Accordingly, the Plaintiffs can move forward with their federal trademark infringement claim against Jones.
Next, S. Patel, F. Patel, and Jones seek to dismiss the remaining claims
against them as an improper “ shotgun pleading. ”
[2]
(S. Patel, F. Patel, & Jones’s
Br. in Supp. of S. Patel, F. Patel, & Jones’s Mot. to Dismiss, at 10.) “ The failure
to identify claims with sufficient clarity to enable the defendant to frame a
responsive pleading constitutes a shotgun pleading. ” Beckwith v. Bellsouth
Telecomms. Inc. ,
The Eleventh Circuit has identified four categories of shotgun pleadings.
“The most common type— by a long shot — is a complaint containing multiple
counts where each count adopts the allegations of all preceding counts, causing
each successive count to carry all that came before and the last count to be a
co mbination of the entire complaint.” Weiland v. Palm Beach Cnty. Sheriff ’ s
Office,
S. Patel, F. Patel, and Jones argue that the Amended Complaint falls into all four categories of a shotgun pleading.
The Complaint, and its accompanying counts, goes on to (1) adopt the allegations of all the preceding counts, (2) is replete with conclusory and vague allegations that, even worse, are upon information and belief, (3) does not separate, or even specifically, name counts against the Bliss Individuals, and (4) asserts multiple claims against multiple defendants without specifying which defendants are responsible for which acts or omissions or which of the defendants the claim is brought against. Indeed, Plaintiffs plead all of the counts against all of the “Defendants” generally, and fails to plead specific facts tying any specific Defendant to a specific claim.
( S. Patel, F. Patel, & Jones’s Br. in Supp. of S. Patel, F. Patel, & Jones’s Mot.
to Dismiss, at 11 (emphasis in original) (citation omitted).) The Plaintiffs
muster no response or opposition to — and thus effectively concede — these
arguments. See Barnes v. AstraZeneca Pharms. LP,
While S. Patel, F. Patel, and Jones seek to dismiss the entire Amended Complaint on this basis, the appropriate response is to give the Plaintiffs “one chance to remedy such deficiencies.” Jackson v. Bank of America, N.A., 898 F.3d 1348, 1358 (11th Cir. 2018) (citation omitted); see also Vibe Micro, 878 F.3d at 1296 (“ When a litigant files a shotgun pleading, is represented by counsel, and fails to request leave to amend, a district court must sua sponte give him one chance to replead before dismissing his case with prejudice on non-merits shot gun pleading grounds.”); Twombly, 550 U.S. at 590 n.9 (Stevens, J., dissenting) (“The remedy for an allegation lacking sufficient specificity to provide adequate notice is, of course, a Rule 12(e) motion for a more definite statement.”). Accordingly, within thirty (30) days of the date of this Order, the Plaintiffs are instructed to replead Counts One through Seven to designate which of the Defendants each claim is brought against, and which of the Defendants are responsible for which alleged acts or omissions.
C. Curtis’s Motion to Dismiss
Curtis moves to dismiss Natural Vitamins’ third-party claims against him under Rule 12(b)(2) for lack of personal jurisdiction. He contends that he is a Canadian citizen and resident with no cognizable ties to Georgia, and that he cannot be deemed the “alter ego” of any Party over whom the Court has independent jurisdiction. (Curtis’s Mot. to Dismiss, at 2.) Natural Vitamins responds that Segment’s undisputed contacts with Georgia can be attributed to Curtis as a result of their close relationship. ( Natural Vitamins’ Br. in Opp’n *18 to Curtis’s Mot. to Dismiss, at 13-15.) According to Natural Vitamins, Curtis has substantial control over Segment and other companies, which he has used to avoid repaying United Naturals’ debt under the Note. (Id. at 12-13.) Therefore, Natural Vitamins asks the Court to pierce the corporate veil and assert personal jurisdiction over Curtis as Segment ’s alter ego . (Id. at 14.)
The Eleventh Circuit has endorsed “jurisdictional veil piercing . . . based
on the rationale that when a defendant exerts a high degree of control over an
entity, the contacts created by the entity are, in reality, created by the
defendant.” Mortgage Invs., 987 F.3d at 1355. But first, the Court must
determine which state’s law to apply to the veil-piercing issue. A federal court
sitting in diversity is bound by the conflicts-of-law rules of the forum state.
Boardman Petroleum, Inc. v. Federated Mut. Ins. Co.,
The Court observes that the Note at the heart of Natural Vitamins’
claims contains a choice-of-law provision electing Florida law. (Counterclaim
*19
& Third-Party Compl., Ex. 1 at 4.) However, this provision does not control the
decision to pierce the corporate veil, which is “collateral to and not part of the
parties’ negotiations or expectations with respect to the contract.” Dassault
Falcon Jet Corp. v. Oberflex, Inc.,
[contracts] are to be governed as to their nature, validity and interpretation by the law of the place where they were made, except where it appears from the contract itself that it is to be performed in a State other than that in which it was made, in which case the laws of that sister State will be applied.
Id. (quotation marks and alteration omitted) (quoting General Tel. Co. of Se. v.
Trimm,
Here, the Note between United Naturals, a British Columbia
*20
corporation, and Natural Vitamins, a Florida corporation, was neither made
nor intended to be performed in Georgia. Even so, an important limitation on
the lex loci contractus rule means that Georgia law governs in this instance:
“the application of another jurisdiction ’ s laws is limited to statutes and
decisions construing those statutes. When no statute is involved, Georgia
courts apply the common law as developed in Georgia rather than foreign case
law.” Nationwide Prop. & Cas. Ins. Co. v. Renaissance Bliss, LLC, 396 F. Supp.
3d 1287, 1294 (N.D. Ga. 2019) (quoting Frank Briscoe Co. v. Georgia Sprinkler
Co.,
“ Under the alter ego doctrine, equitable principles are used to disregard
the separate and distinct legal existence possessed by a corporation where it is
established that the corporation served as a mere alter ego or business conduit
of another. ” Renee Unltd., Inc. v. City of Atlanta,
(1) the stockholders ’ disregard of the corporate entity made it a mere instrumentality for the transaction of their own affairs; (2) there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist; and
(3) to adhere to the doctrine of corporate entity would promote injustice or protect fraud.
McLean v. Continental Wingate Co., Inc., 212 Ga. App. 356, 359 (1994) (citation omitted).
In general, t he purpose of piercing the corporate veil is “ to hold an
individual stockholder liable for debts incurred by the corporation .” TMX Fin.,
LLC v. Goldsmith,
On the Court’s review, t he case law applying the alter ego doctrine is
overwhelmingly concerned with holding a corporation’s shareholders liable for
abuse of the corporate form. See, e.g., Baillie Lumber Co. v.
Although Curtis was a shareholder in United Naturals and Simply Marketing until June 30, 2008, he held no stake in either company at the time United Naturals and Natural Vitamins executed the Note dated November 17, 2015. (Curtis Decl. ¶¶ 4-6, 8-9, 22.) He has never owned shares in Segment or Lighthouse. (Curtis Decl. ¶¶ 22-23.) Accordingly, Georgia law would appear to prevent this Court from piercing the corporate veil against Curtis and, by extension, exercising personal jurisdiction over him. Nonetheless, there is at least one Georgia case in which a corporate officer who did not own shares in the defendant corporation was found personally liable under an alter ego theory. See Ishak v. Lanier Contractor’s Supply Co., Inc. , 254 Ga. App. 237 (2002). In Ishak, a building supply company sued two homebuilders, Ovel Development Company (“ODC”) and Ovel Enterprises, Inc. (“OEC”), to recover for unpaid construction materials. The plaintiff added Itimar Kleinberger, the president and sole shareholder of ODC and OEC, and Anosh Ishak, the vice president and sole employee of ODC, as defendants and charged them with the corporate debts as alter egos. The court granted the relief sought against the of the corporation;
(2) the corporate form must have been used fraudulently or for an improper purpose; and
(3) the fraudulent or improper use of the corporate form caused injury to the claimant.
Gasparini v. Pordomingo, 972 So.2d 1053, 1055 (Fla. Dist. Ct. App. 2008) (emphasis added).
individual defendants, and Ishak appealed. Id. The Georgia Court of Appeals upheld the trial court’s decision to pierce the corporate veil against Ishak, even though he was not a shareholder in ODC or OEC. Id. at 238. Specifically, the evidence showed that Ishak conveyed one of ODC’s primary assets to himself without paying adequate consideration and appropriated corporate funds to his personal use. Id.
In other cases to pierce the corporate veil, it was similarly obvious that the individual defendants had ignored corporate formalities and merged their personal affairs with those of the corporation. For example, in Christopher, 313 Ga App. 866 (2012), a couple filed suit against a two-man construction business and its officers, R. Dennis Christopher and Joe Spell, over uncompleted work and unpaid subcontractors. The evidence showed that the officers:
never signed the corporation’s bylaws; no stock certific ates were ever issued; no minutes of corporate meetings were ever kept; no annual registrations for the corporation were filed after 2005; the lots upon which [the corporation] built its houses were titled in Christopher’s name and then transferred to [the corporation] at or near closing (and then conveyed to third parties); the corporation did not have a physical location; funds obtained at the closing of the [plaintiffs’] home and during construction were paid to Christopher’s and Spell’s other businesses ; Christopher made undocumented loans to [the corporation]; and Christopher and Spell paid some of the corporation’s creditors from their personal funds.
Id. at 868. Further, at the closing of the plaintiffs’ home, Spell knowingly and falsely executed a se ller’s affidavit stating that all debts and obligations had been paid. Id. at 869. The Georgia Court of Appeals held that this evidence *25 supported a finding that the corporate form had been abused, and that adherence to the corporate entity would promote injustice and fraud. Id.
By contrast, Natural Vitamins’ allegations and evidence come nowhere
near showing the same degree of personal entanglement between Curtis and
Segment. First, Natural Vitamins contends that Curtis has a “broad -based
consulting role” with Segment giving him “access to virtually every portion of
Segment’s business.” (Natural Vitamins’ Br. in Opp’n to Curtis’s Mot. to
Dismiss, at 12-13.) Under the consulting agreement, Curtis agreed to assist
Segment with sales and marketing, manufacturing, distribution, and
ingredient sourcing and to attend periodic meetings related to those areas of
the business, including financial review and budgeting meetings as necessary.
(Id., Ex. D ¶ 1.2.) But the mere operation of corporate business, absent evidence
of fraud or abuse, does not subject Curtis to personal liability for corporate acts.
See Amason,
Next, Natural Vitamins describes a WhatsApp exchange purporting to show that Curtis “ had the ability to cause Segment to sue [Natural Vitamins] or engage [Natural Vitamins] in a business relationship.” ( Natural Vitamins’ Br. in Opp’n to Curtis’s M ot. to Dismiss, at 12.) During the exchange, Curtis *26 communicated to a Natural Vitamins principal that he “can probably pull [Segment] back and release you if you are interested in making product on the right terms.” (Id., Ex. E at 3.) He also sought to “connect legal teams” so that Natural Vitamins could support the lawsuit against Bliss Nutra. (Id., Ex. E at 4.) However, in context, these messages reveal only that Curtis was working to broker a deal between Segment and Natural Vitamins, not that he had the authority to act on Segment ’s behalf . (See id., Ex. E at 4 (“[Segment] are telling me they have to either add or not add you today. Unless I come back to them with something, they will likely add you.”), 5 (“[Segment] are pressing me and i [sic] am trying to make this bottle instead of lawsuit.”).) Even the consulting agreement states that Curtis “ shall not have any right to legally bind [Segment] to any contractual or other commitments, except if specifically granted such authority by [Segment], in writing. ” ( Id., Ex. D ¶ 1.2.)
As between Curtis and Segment, there are insufficient allegations and
evidence of fraud, abuse of the corporate form, or commingling of assets to
make a prima facie case for piercing the corporate veil. Natural Vitamins raises
a separate argument that , under Curtis’s control, Segment, United Naturals,
and Lighthouse have conspired in “corporate shell games” to avoid liability for
the Note. (Id. at 13.) However, Segment and United Naturals do not share any
common owners or employees (Feitor Decl. ¶¶ 4-7; Curtis Decl. ¶¶ 22-25), nor
do Segment and Lighthouse have any common officers, directors, or employees.
(Reply Br. in Supp. of Curtis’s Mot. to Dismiss, Ex. 1 at 7.) The only connection
*27
between the three companies is that (1) Curtis is the director and chief
executive officer of United Naturals, a director of Lighthouse, and a consultant
for Segment, and (2) Segment acquired the VIVAZEN trademark from
Lighthouse in 2019, which had licensed the brand to United Naturals until its
regulatory troubles in late-2015. (Id., Ex. 1 at 6-7; Curtis Decl. ¶¶10-14.) In the
Court’s view, these facts do not suggest that Curtis, Segment, United Naturals,
and Lighthouse are a “family of corporations” such that jurisdiction over one
confers jurisdiction over all. Derbyshire,
Even so , the Court will grant Natural Vitamins’ request to conduct
additional discovery in support of its jurisdictional claims. The Eleventh
Circuit “long has recognized a qualified right to jurisdictional discovery.” Seiz
v. Quirk, 2013 WL 12290850, at *2 (N.D. Ga. Jan. 3, 2013) (citing Eaton v.
Dorchester Dev., Inc.,
D. Simply Marketing’s Motion to Dismiss
Simply Marketing moves to dismiss Natural Vitamins’ third -party claims against it under Rule 12(b)(2) for lack of personal jurisdiction. Simply Marketing contends that it is a Canadian corporation with no Georgia contacts and no connection to Natural Vitamins or the Note. (Simp ly Marketing’s Br. in Supp. of Simply Marketing’s Mot. to Dismiss, at 2.) Natural Vitamins counters that Simply Marketing has waived any jurisdictional objections by (1) not raising them on a timely motion under Local Rule 7.1(A)(2) and (2) defending this case on the merits for several months. ( Natural Vitamins’ Br. in Opp’n to Simply Marketing’s Mot. to Dismiss, at 7 -8.) Moreover, Natural Vitamins contends that personal jurisdiction is proper under subsection (1) of the Georgia long-arm statute based on Un ited Naturals’ alleged contacts with th is state. (Id. at 17.) According to Natural Vitamins, Simply Marketing is a “related company” to United Naturals under the Lanham Act such that any *29 business transacted by United Naturals in Georgia is attributable to Simply Marketing for jurisdiction purposes. (Id.)
“[I]t is well -settled that lack of personal jurisdiction is a waivable defect,
and that a defendant waives any objection to the district court’s jurisdiction
over his person by not objecting to it in a responsive pleading or a motion to
dismiss[.] ” Stubbs v. Wyndham Nassau Resort & Crystal Palace Casino, 447
F.3d 1357, 1364 (11th Cir. 2006) (citation and alteration omitted). Local Rule
7.1(A)(2) provides that a motion to dismiss must be filed within 30 days after
the beginning of discovery unless the filing party has obtained prior permission
from the Court to file later. LR 7.1(A)(2), NDGa. Simply Marketing argues that
it could not have met this deadline because it was not added to the case until
after the start of discovery. (Reply Br. in Supp. of Simply Marketing’s Mot. to
Dismiss, at 2.) The Court agrees with Simply Marketing that its Motion does
not violate the Local Rules, consistent with McCarthy v. Yamaha Motor
Manufacturing Corp., 994 F. Supp. 2d 1318, 1322 (N.D. Ga. 2014). In any
event, the Court has “discretion to waive a local rule requirement . . . in the
interests of justice and efficient disposition[.]” Puhy v. Delta Air Lines, Inc.,
A defendant may also waive a jurisdictional defense when his conduct “does not reflect a continuing objection to the power of the court to act over the defendant’s person[.]” Roberts v. Owings-Corning Fiberglass Corp., 101 F. Supp. 2d 1076, 1081 (S.D. Ind. 1999) (quotation marks and citation omitted). *30 Thus far, Simply Marketing has responded to discovery requests, conferred with opposing counsel about its discovery responses, and joined a motion to extend the discovery deadline. ( Natural Vitamins’ Br. in Opp’n to Simply Marketing’s Mot. to Dismiss, at 12.) It has not served its own discovery requests, made any appearances at depositions, or sought any substantive relief from the Court prior to this Motion. The Court finds that “[t]his quantum of participation ranks far below the levels deemed to constitute a waiver[.]” Matthews v. Brookstone Stores, Inc., 431 F. Supp. 2d 1219, 1226 (S.D. Ala. 2006) ( participating in other parties’ deposit ions, filing required documents, and joining a request to extend time for a deposition did not constitute a waiver); see also McCarthy, 994 F. Supp. 2d at 1322 (appearing at the plaintiffs’ depositions, making representations about future involvement in th e case to the court, propounding one set of interrogatories, and filing a motion to determine the governing law did not effect a waiver).
Turning now to the Georgia long-arm statute, the “transacting business” provision in subsection (1) confers jurisdiction over a non-resident defendant:
(1) [if] the nonresident defendant has purposefully done some act
or consummated some transaction in this state, (2) if the cause of
action arises from or is connected with such act or transaction,
and (3) if the exercise of jurisdiction by the courts of this state
does not offend traditional fairness and substantial justice.
Amerireach.com, 290 Ga. at 269 (citation omitted). According to Natural
Vitamins, subsection (1) is satisfied because United Naturals previously sold
VIVAZEN products in Georgia and those contacts can be attributed to Simply
*31
Marketing as a related company. ( Natural Vitamins’ Br. in Opp’n to Simply
Marketing’s Mot. to Dismiss, at 17.) But this argument fails the second prong
of the “transacting business” standard . Even if United Naturals sold products
in this state, and even if Simply Marketing and United Naturals are related
companies under the Lanham Act, Natural Vitamins has not shown that its
cause of action “arises from or is connected with” any VIVAZEN sales in
Georgia. Amerireach.com,
Natural Vitamins’ claims against Simply Marketing arise out of the Note executed between United Naturals and Natural Vitamins on or around November 17, 2015. (Counterclaim & Third-Party Compl. ¶¶ 39-73.) By that time, Simply Marketing had already sold the VIVAZEN trademark to Lighthouse, thus severing the licensor-licensee relationship between Simply Marketing and United Naturals that is the basis of Natural Vitamins’ jurisdiction theory. (Curtis Decl. ¶¶ 7,10.) Moreover, the Court can discern no connection — and Natural Vitamins does not suggest any connection — between United Naturals’ alleged VIVAZEN sales in Georgia and its default on the Note. Nothing about the terms of the Note suggests that it is related to VIVZEN sales anywhere, much less in Georgia. Accordingly, subsection (1) of the Georgia long-arm statute does not confer personal jurisdiction over Simply Marketing. Because Natural Vitamins raises no other grounds for jurisdiction, the Court will deny its request to conduct jurisdictional discovery as no additional, presently unknown facts could conceivably change this outcome.
IV. Conclusion For the foregoing reasons, the Court GRANTS Defendants Rachana Arora, Karan Arora, and Shruti Shah’s Motion to Dismiss [Doc. 97]; GRANTS in part and DENIES in part Defendants Shabana Patel, Faruq Patel, and Phillip Jones’ s Motion to Dismiss [Doc. 118]; and GRANTS Third-Party Defendant Simply Marketing, Inc.’s Motion to Dismiss [Doc. 178]. The Court reserves a ruling on Third-Party Defendant Steven Curtis Holfeld ’s Motion to Dismiss [Doc. 152] to allow for jurisdictional discovery and, as appropriate, additional briefing. 27th SO ORDERED, this day of January, 2022. ______________________________ THOMAS W. THRASH, JR. United States District Judge
Notes
[1] While the Plaintiffs allege that all three individuals have “participated
in the tortious conduct . . . at various times and in various ways” (Am. Compl.
¶ 130), “[c] onclusory allegations made upon information and belief are not
entitled to a presumption of truth, and allegations stated upon information and
belief that do not contain any factual support fail to meet the Twombly
standard. ” Phoenix Ent. Partners, LLC v. Orlando Beer Garden, Inc., 2016 WL
1567590, at *5 (M.D. Fla. Mar. 30, 2016) (citation omitted); see also Zhejian
Dushen Necktie Co., Ltd v. Blue Med, Inc.,
[2] S. Patel, F. Patel, and Jones contend that the entire Amended
Complaint, including presumably Count One for federal trademark
infringement, is a shotgun pleading. However, the Motion to Dismiss
undermines their position by making specific, well-reasoned arguments as to
why Count One fails to state a claim for personal liability against them. (S.
Patel, F. Patel, & Jones’s Br. in Supp. of S. Patel, F. Patel, & Jones’s Mot. to
Dismiss, at 18- 20; Reply Br. in Supp. of S. Patel, F. Patel, & Jones’s Mot . to
Dismiss, 2-9.) In other words, the Amended Complaint, at least with respect to
the federal trademark infringement claim , was not “so vague or ambiguous”
that they could not “reasonably prepare a response . ” Fed. R. Civ. P. 8(e); see
also Amin v. Mercedes-Benz USA, LLC,
[3] The court in Dassault,
[4] Florida law also sets out a three-factor test to determine whether a plaintiff can pierce the corporate veil: (1) the shareholder dominated and controlled the corporation to such an extent that the corporation's independent existence, was in fact non-existent and the shareholders were in fact alter egos