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Nutrition Distribution LLC v. IQ Formulations LLC

United States District Court, D. Arizona

March 7, 2019

Nutrition Distribution LLC, Plaintiff,
v.
IQ Formulations LLC, et al., Defendants.

          ORDER

          G. MURRAY SNOW, CHIEF UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant IQ Formulations, LLC's Motion to Dismiss and alternative Motion to Transfer (Doc. 21). For the following reasons the motion to dismiss is granted and the alternative motion to transfer is denied as moot.

         BACKGROUND

         Nutrition Distribution (“Nutrition”) and IQ Formulations (“IQ”) compete in the exercise supplements industry. Nutrition is an Arizona limited liability company with its principal place of business in Phoenix. IQ is a Florida limited liability company with its principal base of business in Tamarac, Florida. Nutrition alleges in its First Amended Complaint (“FAC”) that two IQ products, “E.S.P. Extreme” and “Synadrex, ” contain a chemical known as DMHA. Nutrition alleges that DMHA is a dangerous substance and that by marketing products containing DMHA as safe exercise supplements, IQ has violated the Lanham Act's prohibition of false, misleading, or deceptive advertising practices, thus injuring Nutrition, which is forced to compete against products that can be sold much cheaper because DMHA is inexpensive to produce.

         IQ sells its products to a third party that has discretion to then resell the products nationwide or to other third-party resellers. IQ also operates a website-accessible in all fifty states-through which it sells its own products. This site generates approximately 8% of IQ's annual sales. IQ's website previously contained a feature that allowed users to locate third-party stores near them that might sell IQ products. The store-locator feature listed multiple stores in Arizona where customers could potentially purchase IQ products from a third party. Additionally, two Arizona-based websites sell Synadrex and E.S.P. Extreme. IQ does not, however, directly sell its products to the stores listed on its website or the two Arizona websites.

         IQ moves to dismiss under Federal Rule of Civil Procedure 12(b)(2), arguing that due process prevents this court's exercise of jurisdiction over it because it lacks sufficient minimum contacts with Arizona.

         DISCUSSION

         I. Legal Standard

         Nutrition bears the burden of establishing personal jurisdiction. See Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). It can meet this burden by alleging facts that, if true, would support personal jurisdiction over IQ. See Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). However, Nutrition cannot “simply rest on the bare allegations of its complaint” if IQ presents affirmative evidence contradicting the jurisdictional allegations in the complaint, Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977), but must present proof of personal jurisdiction through affidavits and declarations. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996). Once the parties have presented affidavits or other jurisdictional evidence, uncontroverted statements in the complaint are taken as true, and conflicts between facts contained in competing affidavits are resolved in Nutrition's favor. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).

         II. Analysis

         Arizona's long arm statute extends jurisdiction “to the maximum extent permitted by the . . . Constitution of the United States, ” so resolution of the issues here requires only a Due Process analysis. See Ariz. R. Civ. P. 4.2(a); Davis v. Metro Prod., Inc., 885 F.2d 515, 520 (9th Cir. 1989). The Due Process Clause requires that nonresident defendants have sufficient “minimum contacts” with the forum state so that the exercise of personal jurisdiction “does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Due process protects a defendant's “liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful ‘contacts, ties or relations.'” Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269-70 (9th Cir. 1995) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985)). Courts must determine whether the defendant's contacts with the forum are sufficient to support either “general” or “specific” jurisdiction. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 (1984).

         B. General Personal Jurisdiction

         To be subjected to general personal jurisdiction, the Defendant must have “affiliations so continuous and systematic as to render the foreign corporation essentially at home in the forum State, i.e., comparable to a domestic enterprise in that state.” Ranza v. Nike, Inc., 793 F.3d 1059, 1069 (9th Cir. 2015). IQ contends that Nutrition has failed to allege facts establishing that IQ is subject to general personal jurisdiction in Arizona. Nutrition concedes the point by failing to respond to it. At any rate, IQ's contacts with Arizona are insufficient to subject it to general personal jurisdiction.

         C. ...


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