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ThermoLife International LLC v. Netnutri.Com LLC

United States District Court, D. Arizona

July 17, 2019

ThermoLife International LLC, Plaintiff,
v.
NetNutri.com LLC, Defendant.

          ORDER

         At issue is Defendant NetNutri.com, LLC's Motion to Dismiss (Doc. 19, Mot.), to which Plaintiff ThermoLife International, LLC filed a Response (Doc. 20, Resp.), and Defendant filed a Reply (Doc. 23, Reply). The Court has reviewed the parties' briefs and finds these matters appropriate for decision without oral argument. See LRCiv 7.2(f).

         Plaintiff is an Arizona company that licenses and sells its patented creatine nitrate for use in dietary supplements. (Doc. 1, Compl. ¶¶ 8, 20.) Defendant is a New Jersey based online retailer of dietary supplements that sells over 7, 000 different products on its website. (Compl. ¶ 27.) In its Complaint, Plaintiff raises claims of false designation of origin and false statements under the Lanham Act, 15 U.S.C. 1125 § 43(a); common law unfair competition; and civil conspiracy. (Compl. ¶¶ 219-41.) Defendant has now moved to dismiss for lack of personal jurisdiction. (Mot. at 4.)

         I. LEGAL STANDARD

         For a federal court to adjudicate a matter, it must have jurisdiction over the parties. Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982). The party bringing the action has the burden of establishing that personal jurisdiction exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83 (1936)); Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). When a defendant moves, prior to trial, to dismiss a complaint for lack of personal jurisdiction, the plaintiff must “‘come forward with facts, by affidavit or otherwise, supporting personal jurisdiction.'” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (quoting Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)).

         Because there is no statutory method for resolving the question of personal jurisdiction, “the mode of determination is left to the trial court.” Data Disc, 557 F.2d at 1285 (citing Gibbs v. Buck, 307 U.S. 66, 71-72 (1939)). Where, as here, a court resolves the question of personal jurisdiction upon motions and supporting documents, the plaintiff “must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant's motion to dismiss.” Id. In determining whether the plaintiff has met that burden, the “uncontroverted allegations in [the plaintiff's] complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor.” Rio Props., Inc., 284 F.3d at 1019 (citation omitted).

         To establish personal jurisdiction over a nonresident defendant, a plaintiff must show that the forum state's long-arm statute confers jurisdiction over the defendant and that the exercise of jurisdiction comports with constitutional principles of due process. Id.; Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Arizona's long-arm statute allows the exercise of personal jurisdiction to the same extent as the United States Constitution. See Ariz. R. Civ. Proc. 4.2(a); Cybersell v. Cybersell, 130 F.3d 414, 416 (9th Cir. 1997); A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995) (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”). Thus, a court in Arizona may exercise personal jurisdiction over a nonresident defendant so long as doing so accords with constitutional principles of due process. Cybersell, 130 F.3d at 416.

         Due process requires that a nonresident defendant have sufficient minimum contacts with the forum state so that “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) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)); see also Data Disc, 557 F.2d at 1287. Courts recognize two bases for personal jurisdiction within the confines of due process: “(1) ‘general jurisdiction' which arises when a defendant's contacts with the forum state are so pervasive as to justify the exercise of jurisdiction over the defendant in all matters; and (2) ‘specific jurisdiction' which arises out of the defendant's contacts with the forum state giving rise to the subject litigation.” Birder v. Jockey's Guild, Inc., 444 F.Supp.2d 1005, 1008 (C.D. Cal. 2006).

         II. ANALYSIS

         A. General Jurisdiction

         Defendant first argues that it is not subject to general personal jurisdiction in Arizona. (Mot. at 4-6.) Defendant contends that Plaintiff has not alleged “any . . . connections between [Defendant] and Arizona” to meet general jurisdiction standards and that it “has no such connections to the State.” (Mot. at 5.) It asserts that the only potential connections are its “interactive website” and sales within the state, which accounted for “less than 2 percent of [its] total revenue” between 2014 and 2018. (Mot. at 5-6.)

         Conversely, Plaintiff argues that because Defendant is “one of the most popular online retailers of Dietary Supplements” and has “developed a devoted customer base, ” general jurisdiction is appropriate. (Resp. at 7-8.) It argues that Defendant has “significant sales in Arizona” and that Defendant's argument regarding Arizona's two percent sales share lacks merit because “if you divide total sales by 50 states, it results in 2%.” (Resp. at 8.)

         General jurisdiction exists where a defendant's activities within a state are “so substantial” or “continuous and systematic” that they essentially “render the corporation at home in that State.” Daimler AG v. Bauman, 571 U.S. 117, 138, 159 n.19 (2014). However, the inquiry is not based “solely on the magnitude of the defendant's in-state contacts.” Id. at 159 n.20. Instead, general jurisdiction “calls for an appraisal of a corporation's activities in their entirety.” Id. Ultimately, “a corporation that operates in many places can scarcely be deemed at home in all of them.” Id.

         Defendant's activities in Arizona are insufficient to be considered at home in the state. The fact that two percent of Defendant's revenue is from online sales to customers who happen to be in Arizona is not sufficient to demonstrate substantial, continuous, systematic contacts with Arizona. Accordingly, the Court does not have general personal jurisdiction over Defendant. See In re Bard IVC Filters Prods. Liab. Litig., No. CV-16-02442-PHX-DGC, 2016 WL 6393595 at *3-4 (D. Ariz. Oct. 28, 2016) (finding that the plaintiffs' argument “plainly is insufficient for general jurisdiction” where the plaintiffs claim general jurisdiction over the defendants “because [the defendants] purposefully directed their marketing activities at [the forum state] and derived substantial revenues from the State”).

         B. ...


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