UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
February 9, 2007
BEDAVAILABILITY.COM, A CALIFORNIA CORPORATION, PLAINTIFF,
A BED AVAILABLE, LLC, A WASHINGTON LIMITED LIABILITY CORPORATION, JOSEPH PAFFILE, DEFENDANTS.
The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND FOR FAILURE TO STATE A ORDER DENYING DEFENDANTS' CLAIM
On October 30, 2006, Plaintiff filed its Complaint against Defendants A Bed Available, LLC, ("A Bed Available") and a Defendant identified as "Jim Paffile," and a summons was issued as to both. On November 8, 2006, before any responsive pleading was filed, Plaintiff filed an Amended Complaint naming A Bed Available and Joseph Paffile, a managing member of A Bed Available, as Defendants. Summonses were issued as to both, and were returned and filed November 27, 2006. That same day, Defendants filed a motion pursuant to Fed. R. Civ. P. 12(b)(2), (4), and (6) to dismiss for lack of personal jurisdiction, or for defects in process, or for failure to state a claim (the "Motion").
According to the pleadings, Bedavailability.com is a California corporation with its principal place of business in this district, while A Bed Available is a limited liability company organized under the laws of the state of Washington, where it has its principal place of business. Both Bedavailability.com and A Bed Available allegedly operate websites that provide information on the availability of accommodations in retirement care facilities, skilled nursing facilities, and assisted living facilities (collectively, "Care Facilities") in the United States. Plaintiff alleges Defendants are liable pursuant to the Lanham Act because the website (including the name and logos) used by A Bed Available is confusingly similar to its own, and because A Bed Available is allegedly intentionally confusing consumers and drawing away Bedavailability.com's customers. Plaintiff alleges both Defendants engaged in the Lanham Act violations. Plaintiff has also brought California state claims, which it contends arise from the same set of operative facts.
I. Personal Jurisdiction
Defendants characterize the services offered by A Bed Available as listing services for Care Facilities, and contend the services are to be performed entirely within the state of Washington. They provide documentation that these agreements are expressly subject to venue and jurisdiction in Washington and are to be construed under Washington law. (Paffile Decl. in Supp. of Mot. to Dismiss, ¶ 12.) Defendants add, however, that A Bed Available "is engaged in the business of helping families and advocates locate a care facility for a loved one or client." (Id. at ¶ 9.) Defendants contend that Defendant Paffile has had no contacts with the state of California at all for the past fifteen years, and that A Bed Available has only limited contacts with California.
Defendant Paffile's declaration states that each Care Facility pays a fee of $99 to be listed on its website, and that the total fees paid by Care Facilities in California amounts to less than $2000. (Paffile Decl., ¶¶ 12, 13.)
Defendant Paffile declares specifically that its website "is not directed at California residents.(Paffile Decl., ¶ 11.) A Bed Available "does not direct any of its advertising specifically toward California residents, nor does it advertise in any publications that are directed primarily toward California residents." (Id., ¶ 21.)
Defendant Paffile has declared that "all of the activities complained of by the Plaintiff were undertaken by Defendant A Bed Available LLC and/or me in my capacity as a managing member, not as an individual." (Paffile Decl., ¶ 23.) His declaration further makes special mention of the precautions he and A Bed Available took to limit fora for litigation against them to Washington courts. (Id., ¶ 25.)
Defendants contend that they were not served in the state of California, are not domiciled within the state, have not consented to suit in the state, and lack minimum contacts with the state. Plaintiff does not contest the first three denials, but argues Defendants do have the required minimum contacts with the state to make them amenable to suit in California.
The parties have cited no federal statute governing personal jurisdiction, so the Court applies California law. Panavision Int'l., L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998) (citing Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1484 (9th Cir. 1993)). In this case, California's long-arm statute permits courts to exercise personal jurisdiction to the extent permitted by the Constitution's Due Process Clause. Cal. Code Civ. P. § 410.10.
"The Due Process Clause protects an individual'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." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471--72 (1985) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945) (internal quotation marks omitted). Individuals must have "fair warning" that a particular activity may subject them to the jurisdiction of the forum state. Id. at 472 (quoting Shaffer v. Heitner, 433 U.S. 186, 218 (1977)). "[The] 'fair warning' requirement is satisfied if the defendant has 'purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that 'arise out of or relate to' those activities. . . ." Id. (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
In the internet context, maintenance of a website or internet advertisement alone is not enough to subject a party to personal jurisdiction in the forum; rather, there must be "something more" to "indicate that the defendant purposefully (albeit electronically) directed his activity in a substantial way to the forum state." Panavision Int'l, 141 F.3d at 1321 (quoting Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir.1997)). Personal jurisdiction may be based on a the effects of intentional actions expressly aimed at the forum stat and causing harm, the brunt of which is suffered - and which the defendant knows is likely to be suffered - in the forum state. Id. at 1321 (citing Core-Vent, 11 F.3d at 1486.) The Ninth Circuit has spoken clearly to this issue, holding that, even where a defendant never enters the plaintiff's home state but merely posts material accessible on the internet giving rise to a Lanham Act claim, a district court in the plaintiff's home state has personal jurisdiction over the defendant because infringement would create an injury which would be felt mainly in that state. Id. at 1322.
Plaintiff has also pointed out that its claims arise out of Defendants' activities specifically aimed at California residents. As noted, Defendants admit they entered into agreements with Care Facilities in California. Given the nature of the services advertised, it is reasonable to infer A Bed Available's website is aimed at California residents who are interested in locating available beds in California Care Facilities. Finally, Plaintiff has submitted evidence showing Defendants directly targeted California residents. Plaintiff has submitted evidence showing that A Bed Available direct mailed individuals in California advertising the website. (Opp'n, Exs. A (electronic mail messages from California residents to Bedavailability.com referencing direct mail), B (example of direct mailed post card to California resident).) Plaintiff has also submitted evidence showing that A Bed Available's website directed users to at least twelve Care Facilities in various cities in California known to have available beds (including Care Facilities in this district), and large numbers of other Care Facilities without known beds available. (Id., Exs. D--F.)
Defendants' contentions notwithstanding, it appears Defendants intentionally solicited business from substantial numbers of customers in California. This is sufficient to show, as a threshold matter, that Defendants purposefully directed their activities to California residents, including residents of this district.
Defendant Paffile's contention that "[a]ll of the activities complained of by the Plaintiff were undertaken by A Bed Available LLC and/or Mr. Paffile in his capacity as a managing member, and not as an individual," is of no help to him. Plaintiff has alleged that both Defendants committed the infringing acts. A corporate officer or director is "personally liable for all torts which he authorizes or directs or in which he participates, notwithstanding that he acted as an agent of the corporation and not on his own behalf." Committee for Idaho's High Desert, Inc. v. Yost, 92 F.3d 814, 823 (9th Cir. 1996) (quoting Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir. 1986)) (holding that officers could be personally sued for claims in Lanham Act violations).
Defendants' citation to their agreements' forum selection clauses in agreements is unavailing, because Plaintiff's claims do not arise out of these agreements, and Plaintiff in any event is not a party to them.
Because it appears Defendants purposely directed their allegedly infringing activities into California; because Defendants could reasonably anticipate that tortious infringement of Plaintiff's rights would give rise to a cause of action in Plaintiff's home forum; and because infringement of Plaintiff's trademark rights would naturally affect Plaintiff most in its home state, this Court's exercise of personal jurisdiction over Defendants is reasonable.
II. Defective Service of Process
Defendants' sole contention in this respect is that Defendant Joseph Paffile was served as Jim Paffile. As noted, Plaintiff filed an amended complaint and served Joseph Paffile anew. The Amended Complaint lists "Joseph Paffile" as a Defendant. The summons is addressed to "Jim Paffile;" the return of service lists "Jim Paffile" as the party, but notes that "Joseph Paffile" is his correct name. Mr. Paffile obviously has received actual notice and knows Plaintiff is attempting to sue him for his actions on behalf of A Bed Available. Fed. R. Civ. P. 15(c)(3) provides, in pertinent part, that an amendment of a pleading relates back to the date of the original pleading when the amendment changes the party or the naming of the party against whom a claim is within the period provided by Rule 4(m) for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
The Court holds that both conditions (A) and (B) have been met, and that Plaintiff has therefore properly added Defendant Joseph Paffile by amendment. Service on Defendant Paffile, though slightly irregular, is adequate and need not be repeated. See Campbell v. Fernando-Sholes, 2006 WL 2917353, slip op. at *2 (D.Ariz. 2006) (refusing to quash summons that used slightly incorrect name but that was served on the correct defendant). See also United Food and Commercial Workers Union, Locals 197, et al. v. Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir. 1984) ("Rule 4 is a flexible rule which is liberally construed to uphold service as long as defendant receives sufficient notice of the complaint.").
III. Failure to State a Claim
Defendants argue that Plaintiff has failed to define what services that infringe Plaintiff's rights A Bed Available has offered in interstate commerce, Plaintiff has failed to state a claim. Defendants contend Plaintiff has failed to state which services were offered in interstate commerce, and whether A Bed Available or Joseph Paffile allegedly caused the infringement. This argument is based largely on what appears to be a clerical error in the Amended Complaint, at ¶ 27, in which "Infringing Services" is used as a defined term when it has not been previously defined. A drafter's note to herself to correct this error was apparently left in the Amended Complaint. In view of the previous two paragraphs, which identify the services offered by Plaintiff and A Bed Available as being the same and as being offered on the A Bed Available website, any confusion caused by this clerical error is minor at most. Under notice pleading rules, a simple and obvious clerical error is not an appropriate basis for dismissal. See Horne v. New England Patriots Football Club, Inc., 489 F. Supp. 465, 468 n.1 (D.Mass. 1980).
The Amended Complaint alleges that both Defendants offered the infringing services for sale in interstate commerce. (Amended Complaint, ¶¶ 12, 14, 15, 26.) Defendants have not shown that this fails to state a claim.
IV. Conclusion and Order
For these reasons, Defendants' Motion is DENIED. In view of the correction of Mr. Paffile's name in the Amended Complaint, the Clerk of this Court shall correct the caption in this action to reflect the fact that Mr. Paffile's first name is Joseph.
IT IS SO ORDERED.
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