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Salu, Inc. v. Original Skin Store

August 13, 2008

SALU, INC., A DELAWARE CORPORATION, PLAINTIFF,
v.
THE ORIGINAL SKIN STORE, AN ARIZONA LIMITED LIABILITY COMPANY, DEFENDANT.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter comes before the court on defendant The Original Skin Store's ("TOSS") motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and for improper venue pursuant to Rule 12(b)(3). In the alternative, defendant moves to transfer this action to the United States District Court in Arizona pursuant to 28 U.S.C. § 1404. Plaintiff Salu, Inc. ("Salu") opposes the motion, asserting that this court has both general and specific personal jurisdiction over Latitude. For the reasons set forth below,*fn1 TOSS' motion to dismiss for lack of personal jurisdiction and improper venue is DENIED. TOSS' motion to transfer venue is also DENIED.

BACKGROUND

Plaintiff Salu, dba SkinStore is a Delaware corporation with its principal place of business in Rancho Cordova, California. (Compl., filed May 9, 2008, ¶ 4.) Salu owns and operates the website SkinStore.com, through which it has advertised and sold a variety of skin care and related products since 1997. (Id. ¶ 7.) On May 30, 2000, Salu obtained federal trademark registration for SKIN STORE on the supplemental register. (Id. ¶ 8.) On May 2, 2005, Salu applied to register its SKINSTORE mark on the principal register; this registration was issued on May 2, 2006. (Id. ¶ 9.)

Defendant TOSS is an Arizona limited liability company with its principal place of business in Tucson, Arizona. (Decl. of Julie Simons ("Simons Decl."), filed June 17, 2008, ¶ 1.) TOSS is a home-based, single-employee internet business. (Id. ¶ 10.) Julie Simons ("Simons") is the only employee or person acting on behalf of TOSS. (Id. ¶ 4.) Simons has sold skin related products on eBay, using the name TOSS, since February 2004. (Reply Aff. of Julie Simons ("Simons Aff."), filed Aug. 5, 2008, ¶ 3.) In May 2005, Simons opened an eBay "virtual store" using the name TOSS. (Id. ¶ 4.) On August 28, 2005, Simons registered the domain name theoriginalskinstore.com and has continuously used the domain name for the sale of skin care products. (Id. ¶ 5; Compl. ¶ 11.) For the year 2007, TOSS' total sales did not exceed $50,000. (Id. ¶ 11.) The 2007 sales to persons located in California did not exceed $6,950. (Id.)

TOSS has never had a California address or phone number or owned any real property in California. (Simons Decl. ¶¶ 5, 7.) Simons has never resided in California. (Id. ¶ 4.) Simons has never performed any duties on behalf of TOSS in California. (Id.) The only form of advertising done by TOSS is through Google AdWords, which provides commercial advertisements in response to an internet user's relevant search terms. (Id. ¶ 8.) Products ordered from TOSS' website have been processed through Google Checkout. (Decl. of Lare M. Bloodworth ("Bloodworth Decl."), filed July 25, 2008, ¶ 2.) At least one shipment also included Julie Simons' TOSS business card and a product user guide. (Id. ¶ 3.) Salu contends that TOSS entered into contracts with both Google and eBay that include forum selection clauses requiring TOSS to submit to jurisdiction in California.*fn2

On or about January 15, 2008, Salu's counsel discovered TOSS' website. (Compl. ¶ 12.) On that same day, Salu mailed TOSS a letter, informing it of Salu's federally registered trademarks and its belief that TOSS' website infringed those marks. Salu's letter also requested that TOSS cease and desist from using the terms "theoriginalskinstore" or "skinstore."

(Id.) Subsequently, TOSS' counsel e-mailed Salu's counsel to inform him that the claim was being reviewed. (Id. ¶ 13.) In April 2008, counsel for both parties participated in a conference call regarding Salu's claims. (Id. ¶ 14.) At least one shipment was made by TOSS to a California customer in May 2008 after these communications between plaintiff and defendant regarding the use of the mark. (See Bloodworth Decl. ¶¶ 2-3.)

On May 9, 2008, plaintiff filed a complaint against TOSS in the Eastern District of California, alleging federal claims for trademark infringement and cybersquatting and a state law unfair business practice claim based upon the same conduct. (Compl. ¶¶ 16-32.)

ANALYSIS

A. Personal Jurisdiction

Defendant TOSS moves to dismiss plaintiff Salu's complaint for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure. "Where, as here, there is no applicable federal statute governing personal jurisdiction, the law of the state in which the district court sits applies." Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1484 (9th Cir. 1993) (citation omitted). "California's long-arm statute allows courts to exercise personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the United States Constitution." Id. at 1484 (citation omitted). Thus, only constitutional principles constrain the jurisdiction of a federal court in California. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). "Due process requires that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of suit does not offend traditional notions of fair play and substantial justice." Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003) (internal quotations omitted); see Burger King v. Rudzewciz, 471 U.S. 462, 476 (1985).

Once a defendant challenges jurisdiction, the burden of proof to show that jurisdiction is appropriate lies with the plaintiff. Sher, 911 F.2d at 1361. When a defendant's motion to dismiss is to be decided on the pleadings, affidavits, and discovery materials, the plaintiff need only make a prima facie showing that personal jurisdiction exists in order for the action to proceed. Id.

1. General Jurisdiction

Salu argues that TOSS has sufficient contacts with California to establish general jurisdiction. Specifically, plaintiff asserts that defendant's contacts with California are substantial because California sales make up a significant percentage of defendant's total sales, defendant encloses advertising materials in shipments to California customers, and defendant has already submitted to the jurisdiction of California courts in agreements with Google and eBay.

A court may exercise either general or specific jurisdiction over a non-resident defendant. "General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are 'substantial' or 'continuous and systematic.'" Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998) (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-416 (1984)). When a defendant does not reside in the forum state, the contacts must be such that they "approximate physical presence in the forum state." Schwarzenegger v. Fred Martin Co., 374 F.3d 797, 801 (9th Cir. 2004) (quoting Bancroft v. Masters, 223 F.3d 1082, 1086 (9th Cir. 2000)). "This is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world." Id. (citing Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986) (collecting cases where general jurisdiction was denied despite the defendants' significant contacts with forum)).

Defendant TOSS' contact with California is neither sufficiently "substantial" nor "continuous and systematic" as to "approximate physical presence" in the state. Defendant has never had a California address or telephone number or owned real property in California. Defendant's sole representative and employee has never resided in California or acted on behalf of TOSS in California. Plaintiff's contention that 14% of a $50,000 business operation is comprised of sales to California and that business cards are sent in conjunction with delivery of product shipments falls far short of establishing the equivalence of physical presence under the "exacting standard" required to demonstrate general jurisdiction.

Moreover, plaintiff's reliance on TOSS' purported contractual relationship with Google and eBay is misplaced. As an initial matter, there is no evidence that the "terms and conditions" proffered by plaintiff applies to defendant; these are generic documents discovered by plaintiff's counsel through a Google search and by clicking on eBay's policy page. However, even assuming these terms dictate the choice of law and forum selection disputes between TOSS and its service providers, such contracts are insufficient to approximate physical presence in the state, even in conjunction with the sales and distribution of advertising in shipments. See, e.g., Helicopteros, 466 U.S. at 416 (no jurisdiction over foreign corporation that sent officer to forum for one negotiating session, accepted checks drawn on a forum bank, purchased equipment from the forum, and sent personnel to the forum to be trained); Cubbage v. Merchent, 744 F.2d 665, 667-68 (9th Cir. 1984) (no jurisdiction over doctors despite significant numbers of patients in forum, use of forum's state medical insurance system and telephone directory listing that reached forum); Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1330-31 (9th Cir. 1984) (no jurisdiction over defendants despite several visits and purchases in forum, solicitation of contract in forum which included choice of law provision favoring forum, and extensive communication with forum), cert. denied, 471 U.S. 1066, 105 S.Ct. 2143, 85 L.Ed. 2d 500 (1985); Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240, 1243 (9th Cir. 1984) (developing sales force in forum state insufficient). Furthermore, the court notes that, despite carrying the burden of establishing jurisdiction, plaintiff has failed to cite a single case to support its argument that the exercise of general jurisdiction would be appropriate under these or similar facts.

Therefore, because defendant's contacts with California are not regular, systematic, or substantial, the court cannot ...


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