Ihf Ltd. v. Myra BagIhf Ltd. v. Myra Bag
Bеfore the Court are two motions: Defendant Markwest's Motion to Dismiss, Doc #: 28 , and Defendant's Terry Moore & Associates, Inc., Shannon Consultants, Inc., NEST, Inc., Cathy & Co., Cheryl Lynn Associates, LLC, and Peggy Lichty & Associates, Inc.'s Motion to Dismiss, Doc #: 33 . For the reasons that follow, Defendants' Motions to Dismiss are GRANTED . Moreover, the Court sua sponte dismisses without prejudice the claims against Defendants The Rep Connection and Penny Harrison & Co., Inc. for reasons set forth infra, at 18-19.
Plaintiffs IHF Ltd. ("IHF") and MONA B, LLC ("Mona B") are incorporated and headquartered in Ohio. IHF is a handbag company that owns the Mona B trademark and designs and produces goods under the Mona B name. Defendants Khemchand Handicrafts ("KH") and Myra Bag are incorporated and headquartered in India. IHF alleges it met with the owner of KH, Defendant Khemchand Katri ("Katri"), at a trade fair in India and engaged with KH to mass produce and supply Mona B handbags from April 2013 to July 2016. This relationship involved the exchange of IHF's proprietary information, such as product design files, marketing materials, and other confidential information. IHF alleges that in 2016 the supplier relationship with KH ended and shortly after, in April 2017, Plaintiffs noticed a rebrand of KH under Myra Bag. Specifically, Mona B alleges that KH and Katri copied its' designs to produce substantially similar bags.
Based on these allegations, Plaintiffs filed a Complaint against Myra Bag, KH and Katri (together, the "Indian Defendants") on May 2, 2018, alleging claims for Copyright Infringement,
On August 2, 2018, the Court granted Plaintiffs' motion for extension of time to August 1, 2019 to serve the Indian Defendants due to the difficulty and time constraints of serving overseas defеndants. Doc ##: 11, 12.
On September 10, 2018, Defendant Markwest filed a Motion to Dismiss for lack of personal jurisdiction. Doc #: 28. On September 15, 2018, Defendants Terry Moore, Shannon Consultants, NEST, Cathy, CLA, and Peggy Lichty filed a Motion to Dismiss for lack of personal jurisdiction. Doc #: 33. On October 23, 2018, the Court granted Plaintiffs' request to conduct three months of discovery limited to the question of personal jurisdiction, Doc #: 31 and Minutes of October 23, 2018, later extended at the parties' joint request to March 23, 2019, Doc #: 38 and Marginal Order of December 11, 2018.
The Court has reviewed the Motions, the response briefs, Doc ##: 30, 49, 50, the reply briefs, Doc ##: 52, 53, and the evidence and is prepared to issue a ruling.
On a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the burden of establishing jurisdiction. Theunissen v. Matthews ,
Federal courts first apply the law of the forum state when determining whether personal jurisdiction exists. Mid-West Materials, Inc. v. Tougher Indus., Inc. ,
A. The Ohio Long-Arm Statute, O.R.C. § 2307.382
The Ohio Supreme Court has held that Ohio's Long-Arm statute does not reach the limits of Due Process; therefore, the court must analyze "whether personal jurisdiction is proper under Ohio's Long-Arm statute prior to considering whether personal jurisdiction may be exercised consistent with constitutional due process." McMunigal v. Bloch , No. 09 CV 01674,
(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state;
(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of cоnduct, or derives substantial revenue from goods used or consumed or services rendered in this state;
* * *
(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state.
O.R.C. § 2307.382(A).
B. Due Process
There are two types of personal jurisdiction under the Due Process Clause,
Specific jurisdiction refers to jurisdiction over claims arising from or related to a defendant's contacts with the forum state. Intera Corp. v. Henderson ,
First, the defendant must purposefully avail himself of the privilege of acting in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.
Id . (quoting Southern Mach. Co. v. Mohasco Indus., Inc. ,
III. ANALYSIS
As a preliminary matter, Plaintiffs ask the Court to exclude the affidavits of certain Moving Defendants attachеd to their motions to dismiss. There is no case law that precludes a defendant from attaching an affidavit with specific factual averments to its jurisdictional motion. Indeed, presented with a properly supported Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a district court has three options: "it may decide the motion upon affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions." Theunissen v. Matthews ,
A review of cases in the Sixth Circuit is murky with respect to the burden of proof a plaintiff bears when, as here, the plaintiff requests personal-jurisdiction discovery, its request is granted, and it conducts discovery over a period of five months. Compare Serras v. First Tenn. Bank Nat'l Ass'n ,
A. Defendants Terry Moore. Shannon Consultants, and Peggy Lichty
A case in point is the Motion to Dismiss the claims against these particular Defendants, all of whom attached affidavits in support of their motion. Doc #: 33, Exs. 33-2 (Terry Moore), 33-3 (Shannon Consultants), and 33-6 (Peggy Lichty). Despite five months of discovery, Plaintiffs apparently failed to discover evidence contraverting these Defendants' factual averments. Defendants have correctly pointed out that Plaintiffs have neither provided evidence nor argument supporting why these Defendants should not be dismissed. Doc #: 52 at 1. Nor have Plaintiffs filed a motion for leave to file a surreply disputing this point. Accordingly, the Court grants the Motion to Dismiss the claims against them for lack of personal jurisdictiоn.
B. Defendant Markwest
Plaintiffs allege that Markwest is subject to personal jurisdiction pursuant to Ohio's Long-Arm Statute O.R.C. §§ 2307.382(A)(1), (A)(2), (A)(4), and A(6). Supporting this contention, they have produced purchase orders evidencing that Markwest facilitates the sale of goods in Ohio through two vendors, River's Edge Products and Nora Fleming, and with Universal Direct Warehouse (UDW) in Hudson, Ohio. Doc #: 49, at 2. (citing Ex. 1, at 5; Ex. 3).
Section (A)(1) confers jurisdiction over a non-resident defendant that is "transacting any business in Ohio," which is interpreted broadly to "encompas[s] more than 'contract.' " Clark v. Connor ,
Plaintiffs have not presented any evidence that Markwest, a Minnesota company, sold Myra Bag products in Ohio, whether infringing or non-infringing. When the court is ruling without an evidentiary hearing, the plaintiff cannot rely on the pleadings alone, but must provide specific facts to establish personal jurisdiction. See Fitness Quest, Inc. v. Inxstous , No. 5:08CV2574,
Plaintiffs also fail to produce any evidence regarding Markwest's connection to vendors Gooseberry, Michel, Malden, and Artistic Reflections or sales made at the Minneapolis Mart. Plaintiffs assert that Markwest has "business relationship[s]" with these Ohio vendors, rendering Markwest subject to personal jurisdictiоn in Ohio. Doc #: 30 at 8. However, Plaintiffs have produced no evidence indicating what connection Markwest has with these vendors or how these connections are related to their Complaint. Accordingly, Plaintiffs have not met their burden to show Markwest is subject to personal jurisdiction under Section (A)(1).
Section (A)(2) confers jurisdiction over a non-resident defendant "contracting to supply services or goods" in Ohio. Plaintiffs allege that Markwest's electronic purchase orders with UDW Minnesota constitute "contracts" under Ohio law and thereby confer jurisdiction because the court in ALTA Analytics, Inc. v. Muuss held that " 'transacting business' subsumes the narrower act of contracting in Ohio." Doc #: 49 at 4 (citing ALTA Analytics, Inc. v. Muuss ,
Section (A)(4) of the statute confers jurisdiction over a non-resident defendant that "caus[еs] tortious injury
Plaintiffs have failed to meet their burden to show that Markwest regularly solicits business or engages in any other persistent course of conduct in Ohio. Further, Plaintiffs have failed to show that Markwest derives substantial revenue from goods used or consumed or servicеs rendered in Ohio. Generally, sales amounting to less than 5% of total sales are not considered substantial revenue. See Hoover v. Robeson Indus. Corp. ,
Section A(6) of the statute confers jurisdiction over a non-resident defendant that "caus[es] tortious injury in" Ohio "to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in" Ohio. As described in the preceding long-arm analyses, Plaintiffs have failed to meet their burden to produce specific evidence that Markwest sold the infringing Myra Bag products in Ohio. In Campinha-Bacote v. Wick , the court denied jurisdiction under section A(6) when plaintiffs failed to provide evidence that defendant's copyright infringement caused injury to the plaintiff in Ohio. Wick , No. 1:15-CV-277,
Since Plaintiffs have not met their burden tо prove the Court has jurisdiction over Markwest pursuant to the Ohio Long-Arm statute, the Court does not need to conduct a Due Process inquiry. See
C. Defendants Cathy and NEST
Plaintiffs allege that Cathy and NEST are subject to personal jurisdiction pursuant to Ohio Long-Arm statute O.R.C. §§ 2307.382(A)(1)-(4).
Plaintiffs allege that from January 1, 2009 to January 1, 2019, Cathy sold its products (in total, not just Myra Bag products) to mоre than one hundred Ohio vendors, with sales amounting to almost $120,000.00. Ex. 6. Similarly, Plaintiffs allege that from January 1, 2016 to December 7, 2018, NEST sold its products (in total, not just Myra Bag products) to thirty-three businesses in Ohio, with sales amounting to approximately $71,000.00. Ex. 7. Cathy and NEST counter that the only orders with any connection to Ohio were made by representatives of Ohio companies who visited their Dallas, Texas and Las Vegas, Nevada showrooms, respectively. Cathy and NEST also indicate that even though they act as sales representatives for Ohio-based companies, their sales territories do not include Ohio. Exs. C, D.
Plaintiffs have failed to show that the Court has jurisdiction over these Defendants under Sections (A)(1) and (A)(2) of the Long-Arm statute because they have failed to show proximate cause, i.e., that these Defendants sold infringing Myra Bag products in Ohio. "The Court will not assume that such sales occur just because defendan[t] ... has no reason to doubt that such a sale occurred." Bridgeport Music, Inc. v. Agarita Music, Inc. ,
Section (A)(3) provides jurisdiction over a non-resident defendant that "caus[es] tortious injury by an act or omission in" Ohio. Again, Plaintiffs have provided no evidence that these Defendants sold infringing products in Ohio. Rather, Plaintiffs arguе that the "[s]ales of Myra Bag goods, even if not directly infringing those Mona B products set forth in the Complaint, caused tortious injury in Ohio by establishing a foothold of the Myra Bag brand throughout the stream of commerce in Ohio , thereby ensuring that Ohio consumers will purchase the infringing products." Doc #: 50 at 10 (emphasis added). Plaintiffs have not provided, and the Court is unaware of, any case law supporting the proposition that "establishing a foothold" of a brand in Ohio that may someday include infringing products is sufficient to confer jurisdiction in Ohio. Thus, Plaintiffs have not met their burden to show the Court has Long-Arm jurisdiction over these Defendants under Section (A)(3). Plaintiffs' argument is no different when it comes to analyzing jurisdiction under Section (A)(4), thus, Plaintiffs have failed to show the Court has personal jurisdiction over these Defendants under Section (A)(4).
The Court does not need to conduct a Due Process inquiry for Cathy or NEST as Plaintiffs have not met their burden to prove that the Ohio Long-Arm statute confers jurisdiction over them. Accordingly, the Court grants Cathy and NEST's motion to dismiss.
Dеfendant CLA appears to concede long-arm jurisdiction by confining its argument to Due Process jurisdiction only. Doc #: 33-1, at 8 n.1.
Plaintiffs allege that from May 1, 2012 to December 27, 2018, CLA sold its products (in total, not just Myra Bag products) to more than seven hundred Ohio vendors, accumulating over $4,000,000.00 in sales. Ex. 1. Plaintiffs also allege that CLA made more than 2,300 sales of Myra Bag products in Ohio and that seven of the allegedly infringing Myra Bag products were sold by CLA to Ohio. Ex. 2; Ex. 3; Ex. 5. Plaintiffs further allege that CLA has three independent contractors whо sell Myra Bag products in Ohio. Ex. 9.
CLA asserts that it does not have a mailing address or office in Ohio, it has no employees or agents in Ohio, and it owns no accounts or real property in Ohio. Ex. F, ¶¶2-6. CLA does sell to three independent contractors in Ohio, but it has not trained or visited them in Ohio, and it has no control over the prices or types of Myra Bag products that these independent contractors sell in Ohio. Id . at ¶13. When CLA's independent contractors sell Myra Bag products, the orders and customеr payments go directly to Myra Bag, which then ships the order directly to the Ohio customer. Id . at ¶7. CLA states that is a sales representative for one vendor located in Ohio, but its territory does not include Ohio. Id .
The Court finds that it does not have general jurisdiction over CLA because CLA is at home in Michigan, where it is incorporated and headquartered. The only tangible connection to Ohio is via independent contractors over whom it has little control, and via one Ohio vendor whose produсts it represents outside the State of Ohio. This is not an "exceptional case" where CLA's operations render it at home in Ohio. "Maintaining extensive operations within a state alone does not satisfy the general-jurisdiction exception. See, e.g., BNSF ,
CLA denies specific jurisdiction based on the second prong of the Due Process test, the "arising from" requirement. "When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State. " Bristol-Myers Squibb Co. v. Superior Ct. of Cal., S.F. Cty. , --- U.S. ----,
Plaintiffs have failed to meet their burden to show CLA is subject to general or specific jurisdiction in Ohio. The Court does not have jurisdiction over CLA pursuant to the Due Process Clause, and grants CLA's motion to dismiss.
E. Defendants The Rep Connection and Penny Harrison & Co., Inc.
On July 23, 2018, Plaintiffs tried to serve these Defendants. Doc #: 10. On December 4, 2018, Plaintiffs filed applications for entry of default against them. Doc #: 36 (Penny Harrison), Doc #: 37 (The Rep Connection). On December 13, 2018, Plaintiffs filed a notice of withdrawal of the aforementioned default applications. Doc #: 39 (Penny Harrison), Doc #: 40 (The Rep Connection). Fed. R. Civ. P. 4(m) requires plaintiffs to serve defendants within 90 days after a cоmplaint is filed. A review of the docket shows that these particular Defendants have not been served. As it is nearly a year since Plaintiffs tried to serve them and Plaintiffs have not asked for more time to do so, these defendants are hereby dismissed without prejudice.
IV. CONCLUSION
Accordingly, Defendant Markwest's Motion to Dismiss, Doc #: 28 , is GRANTED . Defendant's Terry Moore & Associates, Inc., Shannon Consultants, Inc., NEST, Inc., Cathy & Co., Cheryl Lynn Associates, LLC, and Peggy Lichty & Associates, Inc.'s Motion to Dismiss, Doc #: 33 , is GRANTED . The claims against Defendants The Rep Connection and Penny Harrison are sua sponte dismissed based on the foregoing. All Defendants are dismissed without prejudice except for the Indian Defendants who must be served no later than August 1, 2019.
IT IS SO ORDERED.
Notes
From 2012-2014, IHF contracted with Markwest to act as a sales representative in Minnesota, Wisconsin, South Dakota, North Dakota, and Iowa. Doc #: 30, Ex. B. However, as Markwest correctly notes in its Reply, this contract does not give rise to the claims asserted herein as Plaintiffs produce no evidence demonstrating Markwest sold goods to Ohio under this contract and the contract period precedes the alleged infringement. Therefore, this contract is not relevant to the jurisdictional analysis.
Trademark infringements are "analogous to tort cases" when reviewing jurisdiction. Bird v. Parsons ,