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T&T Enterprises LLC v. Aztec Secret Health and Beauty Limited

United States District Court, D. Arizona

December 21, 2018

T&T Enterprises LLC, Plaintiff,
v.
Aztec Secret Health and Beauty Limited, et al., Defendants.

          ORDER

          DOMINIC W. LANZA UNITED SLATES DISTRICT JUDGE.

         Pending before the Court are three motions: (1) Defendant Aztec Secret Health and Beauty Ltd.'s (“Aztec”) Motion to Dismiss under 12(b)(6) (Doc. 17), (2) Plaintiff T & T Enterprises LLC's (“T&T”) Motion to Expedite Hearing on Its Declaratory Judgment Claim (Doc. 10), and (3) Defendant Oceanside Health Products, LP's (“Oceanside”) Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 14). As explained below, the Court will deny Aztec's Motion to Dismiss, deny T&T's Motion to Expedite, and grant Oceanside's Motion to Dismiss.

         BACKGROUND

         I. Allegations

         T&T is an Arizona limited liability company with its primary place of business in Lake Havasu City, Arizona. (Doc. 26 ¶ 1.) Aztec is a Nevada corporation. (Id. ¶ 2.) Oceanside is a California limited partnership. (Id. ¶ 3.)

         T&T sells products from its brick-and-mortar store located in Lake Havasu City, Arizona, and on online marketplaces. (Id. ¶ 7.) T&T predominantly uses Amazon.com (“Amazon”) as its online marketplace. (Id.) Among the products T&T sells on Amazon is Aztec Secret Indian Healing Clay (“Healing Clay”), which T&T purchased from Aztec. (Id. ¶¶ 8, 10, 15.)

         In November 2016, T&T received a “counterfeit notice” from Amazon regarding one of the Aztec products it was selling. (Id. ¶ 15.) In response, T&T asked Aztec for help in resolving the issue. (Id.) Aztec's office manager, in turn, provided a letter authorizing T&T to sell Aztec products on Amazon (“authorization letter”). (Id. ¶¶ 15, 16; id. at Ex. 2.) The authorization letter stated, in relevant part: “It has been brought to our attention that you require verification that T&T Enterprises, LLC dba Our Pampered Home, is authorized to sell our products listed below in the United States, including on the site www.Amazon.com. We grant full permission to T&T Enterprises, LLC dba Our Pampered Home to sell our product in the United States and their inventory is provided to them directly from our stock.” (Id. ¶ 16; id. at Ex. 2.) The issue with Amazon was quickly resolved. (Id. ¶ 17.)

         On August 26, 2018, T&T received another counterfeit notice from Amazon related to an Aztec product it was trying to sell. (Id. ¶ 19.) Again, T&T asked Aztec to help resolve the issue with Amazon. (Id. ¶ 20.) This time, an unspecified Aztec employee directed T&T to contact “Paul” to resolve the issue. (Id. ¶ 20.) “Paul” is Paul Baeyens, a general partner of Oceanside, which claims to be a “contract manufacturer” for Aztec. (Id. ¶¶ 20, 9.) T&T notified Baeyens that T&T had received the counterfeit notice (id. ¶ 21), and Baeyens retracted the counterfeit claim after confirming that T&T's inventory levels of Healing Clay were not greater than that which T&T had purchased from Aztec (id. ¶¶ 23, 30).

         Baeyens, however, explained in the email exchange that T&T would no longer be able to sell Healing Clay on Amazon. (Id. ¶ 24.) Mr. Baeyens represented that Aztec had enrolled in an Amazon program called “Transparency, ” which “requires Aztec Secret products to be packaged in a new manner.” (Id. ¶ 24.) Because the Healing Clay in T&T's possession would not have been packaged in accordance with the “Transparency” standards, any Healing Clay that T&T sent to Amazon for sale would be “set aside and marked as defective.” (Id.)

         Baeyens then stated in an email: “[i]f you have additional pallets of new product that you want us to buy back from you, please let me know and we can arrange that so you do not have inventory you cannot sell stuck at your warehouse.” (Id. ¶ 25; id. at Ex. 3.) Further, Baeyens stated: “You mentioned you had 10 pallets of 1 lb. clay and 4 pallets of 2 lb. clay that you purchased from Aztec in May but have not sent to Amazon that is still in your warehouse, so if you want us to take those back now is the time to arrange that.” (Id.)

         T&T emailed back that “it believed it had approximately 29 pallets, based on a quick count, to return to Aztec, but that it had ‘estimated it could be upwards of 50.'” (Id. ¶ 27; id. at Ex. 3.) Baeyens “responded with ‘Got it' and asked for further clarification on the product so that the parties could ‘discuss logistics and payment terms.'” (Id. ¶ 28; id. at Ex. 3.) The parties continued to exchange emails regarding the amount of Healing Clay that T&T had purchased. (Id. ¶ 29; id. at Ex. 3.) Baeyens further stated that T&T would receive payment on the same day that inventory was received and that Oceanside's driver would be able to pick up the Healing Clay. (Id. ¶ 31; id. at Ex. 3.) Finally, Baeyens offered to sign a buy back contract with T&T. (Id.)

         On September 5, 2018, Baeyens sent a draft of the buy back agreement to T&T and explained that Oceanside would be buying back the Healing Clay on Aztec's behalf. (Id. ¶ 34; id. at Ex. 7.) The draft provided that Oceanside would buy back 24 pallets of Healing Clay. (Id. ¶ 35; id. at Ex. 7.) In addition, the draft buy back agreement included other terms, such as a choice of law provision, which T&T and Baeyens had not previously discussed. (Id. ¶ 35; id. at Ex. 7.) T&T objected to the draft buy back agreement and counsel for T&T and Oceanside became involved after the parties could not resolve their dispute. (Id. ¶¶ 35, 36; id. at Ex. 7.)

         On September 14, 2018, counsel for Oceanside sent T&T's counsel a revised buy back agreement, again “offering to purchase only 24 of the 36 to 37 pallets of [Healing Clay] currently in T&T's warehouse” and noting that this was Oceanside's “last and final offer.” (Id. ¶¶ 38, 39; id. at Ex. 8.) In response, counsel for T&T stated that T&T “would continue to sell the [Healing Clay] on Amazon.com[.]” (Id. ¶ 40; id. at Ex. 8.) In turn, Oceanside stated that if T&T continued selling product on Amazon, Oceanside would notify Amazon's Seller Central. (Id. ¶ 41.) A notification to Amazon's Seller Central “could result in a number of very serious consequences for T&T, up to and including closing T&T's Amazon.com account.” (Id. ¶ 42.)

         II. Procedural Posture

         T&T initiated this lawsuit on September 21, 2018. (Doc. 1.) The complaint does not specifically identify any causes of action or legal theories that would entitle T&T to relief. The Prayer for Relief requests only declaratory relief-specifically, a declaration (1) “that T & T is authorized to sell, on Amazon.com, the Aztec Secret products purchased in good-faith reliance on being able to sell these products on Amazon.com”; or (2) “that in the event T & T cannot sell its product on Amazon due to Aztec Secret's enrollment in the Amazon ‘Transparency' program or through other interference by Aztec or Oceanside, Aztec, or its designee, must buy back all of the Aztec Secret products T & T purchased from Aztec and has not yet sold through Amazon.com at the cost T & T paid for the products, including the original and return shipping costs, as well as costs to package/prepare the product for return shipping.” (Doc. 26 at 13.)

         On September 25, 2018, T&T filed a motion to expedite, asking the Court to order a “speedy hearing” on its declaratory judgment action so it can “sell Aztec Secret product before that product expires[.]” (Doc. 10 at 5.)

         On October 24, 2018, Oceanside filed a motion to dismiss pursuant to Rule 12(b)(2), asserting that the Court lacks personal jurisdiction over it. (Doc. 14.)

         On October 31, 2018, the matter was transferred to a new judge. (Doc. 16.)

         On November 2, 2018, Aztec moved to dismiss under Rule 12(b)(6). (Doc. 17.)

         On November 9, 2018, the Court ordered T&T to amend its complaint to properly allege diversity jurisdiction. (Doc. 22.)

         On November 15, 2018, T&T filed an amended complaint to comply with the Court's order. (Doc. 26.)

         On November 16, 2018, the parties stipulated that “for each of the motions, responses and replies currently pending before the Court . . . all references to the Verified Complaint at Docket Entry 1 shall be read as referring to the Verified Amended Complaint at Docket Entry 26.” (Doc. 27.)

         On December 17, 2018, the Court held oral argument on the three ...


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