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Starlight International, Ltd. LP v. Lifeguard Health

July 22, 2008

STARLIGHT INTERNATIONAL, LTD. LP, A CALIFORNIA LIMITED PARTNERSHIP PLAINTIFF,
v.
LIFEGUARD HEALTH, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DEFENDANT.



The opinion of the court was delivered by: Richard Seeborg United States Magistrate Judge

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

I. INTRODUCTION

Defendant Lifeguard Health LLC ("Lifeguard") moves to dismiss this trademark infringement and unfair competition suit for lack of personal jurisdiction or, in the alternative, to transfer venue to Pennsylvania. Plaintiff Starlight International, LTD. LP ("Starlight") opposes the motion. Because Lifeguard purposefully availed itself of the benefits of this State, its motion to dismiss for lack of personal jurisdiction will be denied.

II. BACKGROUND

Starlight is a limited partnership whose primary place of business is in Monterey, California. Starlight markets and sells dietary tablets and supplements, and alleges that it owns the registered trademarks "Lifeguard," "Lifeguard Junior," and "Lifeguard Joint Formula." Lifeguard is organized under Delaware law and operates from its principal place of business in Pennsylvania. Lifeguard also markets and sells dietary and nutritional supplements. Lifeguard maintains an interactive website where it displays and sells its dietary supplements.

On April 9, 2008, Starlight filed a complaint against Lifeguard claiming trademark infringement in violation of the Lanham Act, common law trademark infringement, and unfair competition. Starlight believes that the dietary supplements displayed on Lifeguard's website, products shipped through interstate commerce, and the use of the mark "Lifeguard" to sell, offer for sale, and advertise dietary supplements infringe on Starlight's registered trademarks. According to Lifeguard, Starlight's complaint fails to demonstrate a basis for the exercise by this court of personal jurisdiction over Lifeguard. Lifeguard's motion to dismiss for lack of personal jurisdiction is based on Lifeguard's contention that it has little or no business contacts in California, does not advertise its products in California, and does not focus its advertising on California consumers. Lifeguard points to the facts that 90% of its products go directly to physicians and doctors located outside of California, it conducts no online or physical advertising targeting California consumers, and it attributes only 0.24% of sales to California online consumers. In response, Starlight contends that five contacts allow the Court to exercise its general jurisdiction over Lifeguard. These contacts include the fact that: (1) Lifeguard conducts less than 1% of its total sales to California consumers; (2) Lifeguard sent representatives to a health and fitness-related tradeshow in San Francisco, which was hosted by the International Health Racquet & Sportsclub Association ("IHRSA") and welcomed over 420 health-related exhibitors; (3) a California company, MPower Solutions, lists Lifeguard as a "Healthy Retail Partner" and endorses a Lifeguard product on its website; (4) Lifeguard contracted California based Yahoo! Inc. to process its internet sales and agreed to a choice of forum clause naming California as the forum for disputes arising from the contract with Yahoo!; and (5) a California company, Inktomi, hosts Lifeguard's website. If general jurisdiction is lacking, Starlight also argues that Lifeguard purposefully directed its business at California through its $6,829 of direct sales, of which $2,559 were sales to California consumers via its website over thirteen months, through approximately twenty transactions. Other actions purposefully directed to California include Lifeguard's participation in a San Francisco tradeshow, a retail partnership with MPower Solutions, and an e-commerce relationship with California based Yahoo!.

III. LEGAL STANDARD

Rule 12(b)(2) of the Federal Rules of Civil Procedure governs dismissal for lack of personal jurisdiction. Doe v. Unocal Corp., 248 F.3d 915, 921 (9th Cir. 2001). As the party invoking the court's protection, plaintiff bears the burden of establishing the court's jurisdiction over defendant. Id. at 922. When the question of jurisdiction is resolved without an evidentiary hearing, plaintiff need only make a prima facie showing that jurisdiction exists; unless directly contravened, plaintiff's version of the facts will be taken as true and all conflicts resolved in its favor. Id. When, as here, there is no applicable federal statute governing personal jurisdiction, the law of the state in which the district court is located applies. Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (per curiam). California's long-arm statute permits the "exercise of jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." Cal. Civ. P. Code § 410.10. Accordingly, the exercise of jurisdiction must comport with due process. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). A defendant who is not present in the forum may be subject to jurisdiction only when it has certain minimum contacts with the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. Id. In judging the sufficiency of these minimum contacts, a court properly focuses on the relationship among the defendant, the forum, and the litigation. Shaffer v. Heitner, 433 U.S. 186, 204 (1977).

IV. DISCUSSION

A. General Jurisdiction

Starlight asserts that it presented a prima facie case of general jurisdiction in California. "General jurisdiction refers to jurisdiction to adjudicate claims that do not arise from the defendant's contacts with the forum state. Thus, if a defendant is amenable to general jurisdiction in a state, the state may exercise jurisdiction over the defendant based on any claim, including claims unrelated to the defendant's contacts with the state." Coremetrics, Inc. v. AtomicPark.com, LLC, 370 F. Supp. 2d 1013, 1016 (N.D. Cal. 2005) (citation and quotation omitted). In order for a court to exercise general jurisdiction over a non-resident defendant, that defendant must engage in "continuous and systematic" or "substantial" activities within the forum state, such that its contacts "approximate physical presence" within the state. Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). The Ninth Circuit considers a number of factors in determining whether general jurisdiction exists, including "whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Bancroft, 223 F.3d at 1086. Courts use these factors to examine the "economic reality" of a defendant's activities instead of a mechanical checklist. Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1331 (9th Cir. 1984). "The foreseeability that is critical to due process analysis . . . is that the defendant's conduct and connection with the forum are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 287 (1980).

Here, Starlight asserts that five Lifeguard contacts, when considered in their totality, give rise to general jurisdiction in this forum. As mentioned previously, these contacts include the fact that: (1) Lifeguard conducts less than 1% of its total sales to California consumers; (2) Lifeguard sent representatives to a health and fitness-related tradeshow in San Francisco, which was hosted by the IHRSA and welcomed over 420 health-related exhibitors; (3) a California company, MPower Solutions, lists Lifeguard as a "Healthy Retail Partner" and endorses a Lifeguard product on its website; (4) Lifeguard contracted California based Yahoo! Inc. to process its internet sales and agreed to a choice of forum clause naming California as the forum for disputes arising from the contract with Yahoo!; and (5) a California company, Inktomi, hosts Lifeguard's website. Considered independently or together, these contacts are not so substantial, continuous, and systematic that Lifeguard can be deemed present in California for all purposes. First, Lifeguard satisfies few of the traditional Bancroft factors: Lifeguard is incorporated in Delaware and has its primary place of business in Pennsylvania. Neither does Lifeguard own property, have bank accounts, hold licenses, or retain employees or agents to receive process in California, nor does it market its products in California or specifically target California consumers through agents, internet search engines, internet advertisers, or its interactive website.

Additionally, in asserting general jurisdiction, Starlight relies heavily upon analogy to Coremetrics. The Coremetrics court found that a totality of circumstances supported a finding of general jurisdiction, where defendant had no physical presence in California but: (1) maintained an interactive website by which it sold its products and which was accessible to California consumers; (2) advertised its services through Yahoo! and other California firms; (3) sold products to California consumers; and (4) agreed to personal jurisdiction in California and/or application of California law in its agreements with Yahoo! and other California firms. 370 F. Supp. 2d at 1017-19, 1021. The economic realities surrounding the Coremetrics defendant, however, are easily distinguished from those involving Lifeguard. First, over a ten-month period, defendant used its interactive website to sell 14%, or $3.3 million, of its total product to California consumers, representing the highest percentage of product sold to consumers from any one state. Id. at 1022.

Here, Lifeguard sold only 0.6%, or $6,829, of its product to California over thirteen months. Second, while defendant engaged in most of its website sales to California consumers, Lifeguard conducted only forty-five transactions in California. Id. Moreover, defendant was foremost an online retailer, which broadly advertised its products to online consumers and hosted a website designed to provide all the same products and services available in a physical store. Id. at 1021. Lifeguard, on the other hand, sells 90% of its product directly to physicians and doctors located outside of California, conducts no online or physical advertising targeting California consumers, and attributes only 0.24% of sales to California online consumers. Finally, the Coremetrics court considered a choice of forum clause as the least significant factor to consider linking defendant to California. Id. at 1024.Regardless, Lifeguard's choice of forum agreement with Yahoo! applies only to disputes arising out of that agreement. See Gates, 743 F.2d at 1331 (determining there was no general jurisdiction ...


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