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Merola Sales Company, Inc. v. Tabarka Studio, Inc.

United States District Court, D. Arizona

February 1, 2019

Merola Sales Company, Inc., Plaintiff,
v.
Tabarka Studio, Inc., Defendant.

          AMENDED ORDER [1]

          HONORABLE STEVEN P. LOGAN, UNITED STATES DISTRICT JUDGE.

         Plaintiff Merola Sales Company, Inc. (“Merola”) filed suit against Tabarka Studio, Inc. (“Tabarka”) seeking a declaratory judgment against any copyright infringement claims, and other relief. (Doc. 1) Tabarka filed counterclaims against Home Depot U.S.A. Incorporated (“HD Stores”) and Home Depot Product Authority LLC (“HD Web”, and together with HD Stores, the “Home Depot Defendants”)[2] for copyright infringement and injunctive relief. (Doc. 29) Before the Court is the Home Depot Defendants' motion to dismiss (the “Motion”) seeking dismissal of Tabarka's infringement counterclaims against them. (Doc. 41) The Court's ruling is as follows.

         I. Background

         Meir Zenati (“Zenati”) is a designer that creates hand-painted tiles, pottery, furniture, and other housewares. (Doc. 29 at 14) Zenati has created many collections of hand-painted tiles, which he manufactures and sells to several of the largest tile distributors throughout the United States. (Doc. 29 at 15) At issue in this case are four of Zenati's designs, Paris Metro 1 (“PM 1”) created in 2008, Casablanca 2 (“C2”) created in 2007, Paris Metro 11 (“PM 11”) created in 2008, and Touareg 6 created in 2011. In 2017, Tabarka began the process of obtaining registered copyrights for PM 1, PM 11, C2, and Touareg 6 with the U.S. Copyright Office. (Doc. 29 at 16) On August 15, 2017, PM 1, PM 11 and Touareg 6 were issued copyright registrations for the artwork on the tiles. (Doc. 29 at 16) However, the registration application for C2 was denied on March 22, 2018.[3] (Doc. 29 at 17)

         In 2015, prior to the filing of the copyright registration applications, Tabarka became aware that several of its designs, including PM 1, PM 11, and C2, were being copied and sold in nearly-identical tiles throughout the United Kingdom. (Doc. 29 at 17) In 2017, Tabarka became aware that Merola, along with the Home Depot Defendants, was selling unlicensed tiles that were identical copies of Tabarka's tiles. (Doc. 29 at 22, 25) Tabarka sent a letter to the Home Depot Defendants on May 1, 2017, stating that the Home Depot Defendants were violating Tabarka's copyright interests through sale of the tiles. (Doc. 41 at 2) Merola, the supplier of the tiles to the Home Depot Defendants, responded to the first letter seeking proof of ownership of valid copyrights. (Doc. 41 at 2-3) On August 23, 2017, Tabarka sent a second letter to the Home Depot Defendants alleging copyright infringement. (Doc. 41 at 3)

         On January 23, 2018, Merola initiated this lawsuit seeking a declaratory judgment that it did not infringe on Tabarka's copyright interests. (Doc. 1 at 12-13) On May 1, 2018, Tabarka filed its answer and asserted counterclaims against Merola and the Home Depot Defendants for copyright infringement and injunctive relief. (Doc. 29 at 12-34) The Home Depot Defendants filed the Motion on June 7, 2018, seeking dismissal of Tabarka's counterclaims for lack of personal jurisdiction and improper venue, among other reasons. (Doc. 41)

         II. Dismissal for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2)

         A. Legal Standard for General Jurisdiction

         It is well settled that only a limited set of affiliations with a forum will render a defendant amenable to general jurisdiction there, and the paradigm forum for the exercise of general jurisdiction over a corporation is one in which the corporation is fairly regarded as at home, such as the place of incorporation and principal place of business. Best Odds Corp. v. iBus Media Ltd., 655 Fed.Appx. 582-83 (9th Cir. 2016). Only in an exceptional case will general jurisdiction be available anywhere else. Id. It is undisputed that HD Stores is a Delaware corporation with its principal place of business in Georgia, and HD Web is a limited liability company organized under the laws of Georgia with its principal place of business in Georgia. (Doc. 41 at 5; Doc. 29 at 13) Accordingly, the Court finds that the Home Depot Defendants are not subject to the general jurisdiction of the Court.

         B. Legal Standard for Specific Jurisdiction

         Under Rule 4.2(a) of the Arizona Rules of Civil Procedure, an Arizona court may exercise personal jurisdiction over parties, whether found within or outside the state, to the maximum extent permitted by the Arizona Constitution and the Constitution of the United States. Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 416 (9th Cir. 1997) (stating that under Rule 4.2(a), Arizona will exert personal jurisdiction over a nonresident litigant to the maximum extent allowed by the federal constitution). Due process requires that to exercise jurisdiction over a non-resident defendant, the defendant have certain minimum contacts with a forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Courts employ a three-part test to determine if a defendant has sufficient minimum contacts to be subject to specific personal jurisdiction: (1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.[4] Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004).

         “The plaintiff bears the burden of satisfying the first two prongs of the test.” Schwarzenegger, 374 F.3d at 802. If the plaintiff meets that burden, “the burden then shifts to the defendant to ‘present a compelling case' that the exercise of jurisdiction would not be reasonable.” Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1068-69 (9th Cir. 2017). Although the burden is on a plaintiff to show that a court has jurisdiction over a defendant, in the absence of an evidentiary hearing, a plaintiff need only make a “prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).

         C. Analysis

         i. ...


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