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Blue Diamond Growers v. Texas Best Smokehouse

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


December 19, 2008

BLUE DIAMOND GROWERS, PLAINTIFF,
v.
TEXAS BEST SMOKEHOUSE, INC. DEFENDANT.

The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER*fn1

Defendant moves to dismiss Plaintiff's Complaint for lack of personal jurisdiction. Plaintiff alleges in its Complaint that Defendant has used its trademark "SMOKEHOUSE" with the knowledge that Plaintiff is a California corporation that owns rights to the trademark. Defendant's President Ali Sharaf declares Defendant is a Texas corporation whose sole business activity is licensing the use of the trademark "TEXAS BEST SMOKEHOUSE" to four other Texas entities.

Sharaf also declares Defendant does not own or lease property in California, does not have any employees or agents in California, does not maintain a bank account in California, has not sold any goods or services in California, has not purchased any goods or services from California, and has not entered into any contracts with a resident of California.

Plaintiff opposes the motion, arguing Defendant's actions after Defendant received notice of Plaintiff's rights to the trademark justifies finding specific jurisdiction exists over Defendant under the "effects test." Specifically, Plaintiff's counsel declares Defendant responded to Plaintiff's complaints in a telephone conversation, stating that it would stop using the trademark. Subsequently, in a letter sent from Defendant in Texas to Plaintiff in California, Defendant stated that it had stopped using the trademark. However, Plaintiff has submitted declarations evincing Defendant has continued using the trademark in Texas.

Specific jurisdiction over a defendant is found when "(1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) (citation omitted).

Under the "effects test," "a foreign act that is both aimed at and has effect in the forum satisfies the first prong of the specific jurisdiction analysis." Id. at 1156 (citation omitted). "To satisfy this test the defendant 'must have (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.'" Id. (citation omitted).

Defendant's communications with Plaintiff in response to Plaintiff's complaints are insufficient to confer specific jurisdiction over Defendant since those communications do not "give rise to the current suit." Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Plaintiff's suit concerns Defendant's allegedly infringing use of the trademark, not Defendant's alleged misrepresentations about use of the trademark after it was put on notice of Plaintiff's rights to the trademark.

Further, Defendant's continued use of the trademark after it was put on notice of Plaintiff's rights to the trademark is insufficient to satisfy the second prong of the "effects test" since "[t]he fact that [Defendant] has knowledge of [Plaintiff's presence in California] goes to the [third] prong of the 'effects test' and is not an independent act that can be interpreted as being expressly aimed at California." Pebble Beach, 453 F.3d at 1158. Therefore, Plaintiff has not shown a jurisdictional basis for suing Defendant in California.

Plaintiff also seeks jurisdictional discovery. Defendant counters the requested discovery would not reveal jurisdictionally relevant facts. A request for jurisdictional discovery may be denied when it is "based on little more than a hunch that it might yield jurisdictionally relevant facts." Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008). Since Plaintiff does not indicate why such discovery would be fruitful, the request is denied.

For the reasons stated, Defendant's motion is granted. The Clerk of the Court shall close this action.


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