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Karoun Dairies, Inc. v. Karoun Dairies

July 13, 2009

KAROUN DAIRIES, INC., PLAINTIFF,
v.
KAROUN DAIRIES, INC., ET AL. DEFENDANT.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER DENYING DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

In this trademark infringement action Defendants challenge personal jurisdiction under Rule 12(b)(2) of Federal Rules of Civil Procedure. Defendants are Karoun Dairies, Inc., a Canadian corporation ("Karoun Canada"), Karlacti, Inc., a Delaware corporation ("Karlacti"), and Ara Baghdassarian, a Virginia resident. Defendants claim they have insufficient contacts with the State of California to be subject to its jurisdiction. Plaintiff opposed the motion and Defendants replied. For the reasons which follow, the motion is DENIED.

The plaintiff has the burden of establishing personal jurisdiction. See Farmers Ins. Exchange v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). In ruling on the motion, the "court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). Where a motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts. In such cases, we only inquire into whether [the plaintiff]'s pleadings and affidavits make a prima facie showing of personal jurisdiction. Although the plaintiff cannot simply rest on the bare allegations of its complaint, uncontroverted allegations in the complaint must be taken as true. Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor.

Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002)(citations and quotation marks omitted).*fn1 A prima facie showing means that "the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Unocal, 248 F.3d at 922.

"The general rule is that personal jurisdiction over a defendant is proper if it is permitted by a long-arm statute and if the exercise of that jurisdiction does not violate federal due process." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Both the California and the federal long-arm statute, Fed. R. Civ. P. 4(k)(2), see Holland Am. Line Inc. v. Wärtsilä N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007),*fn2 require compliance with due process requirements. Pebble Beach, 453 F.3d at 1155.

There are two types of personal jurisdiction: general and specific. General jurisdiction "enables a court to hear cases unrelated to the defendant's forum activities . . .." Fields v. Sedgewick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). Specific jurisdiction allows the court to exercise jurisdiction over a defendant whose forum-related activities gave rise to the action before the court. See Bancroft & Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Plaintiff claims that the court has specific jurisdiction over Defendants.

Specific jurisdiction is established by showing three elements: (1) the out-of-state defendant purposefully directed its activities toward a resident of the forum state; (2) the cause of action arose out of or resulted from the defendant's forum-related action; and (3) the forum's exercise of personal jurisdiction is reasonable. Myers v. The Bennett Law Offices, 238 F.3d 1068, 1072 (9th Cir. 2001). "If any of the three requirements is not satisfied, jurisdiction in the forum would deprive the defendant of due process of law." Pebble Beach, 453 F.3d at 1155.

The first prong, purposeful availment, means that the defendant has "either (1) purposefully availed himself of the privilege of conducting activities in the forum, or (2) purposefully directed his activities toward the forum." Id. (internal quotation marks and citation omitted). "Evidence of availment is typically action taking place in the forum that invokes the benefits and protections of the laws in the forum. Evidence of direction generally consists of action taking place outside the forum that is directed at the forum." Id. To constitute purposeful direction toward the forum, the defendant "must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Yahoo! Inc. v. La Ligue Contre le Racisme et l' Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (internal quotation marks, brackets and citations omitted). Plaintiff contends that Defendants purposefully availed themselves of the privilege of conducting activities in California and purposefully directed their out-of-state activities toward California.

Plaintiff Karoun Dairies is a California corporation in the business of manufacturing and importing ethnic cheese and milk products and distributing them throughout the United States.*fn3

(Compl. at 2; Declaration of Anto Baghdassarian ("Anto Decl.") at 1-2.) In 1993 Plaintiff registered with the United States Patent and Trademark Office ("USPTO") trademark "Karoun Dairies" and subsequently registered three additional trademarks related to its business. (Compl. at 2-3 & Ex. 1 - 4; Anto Decl. at 1-2.) The company was founded by Anto Baghdassarian, brother of Defendant Ara Baghdassarian.*fn4 (Compl. at 4; Anto Decl. at 2; Declaration of Ara Baghdassarian ("Ara Decl.") at 1.)

Anto and Ara learned the business at the family dairy plant in Lebanon, which had operated under the Karoun name since 1931. (Anto Decl. Ex. B; Ara Decl. at 1; Compl. at 4.) In 1972 the family dairy was formally established as Karoun Dairies S.A.L. (Anto Decl. Ex. B.) After the death of his father, Anto sold his interest in the family business to Ara, who in 1981 became, and remains, the general manager of the family business. (Id; Ara Decl. at 1; Compl. at 4.) In 1990 Anto immigrated to the United States and established Plaintiff, Karoun Dairies, in California. (Compl. at 4.) Anto is Plaintiff corporation's CEO and shareholder. (Anto Decl. at

In January 2006 Ara retained intellectual property counsel in California to assist with trademark matters. (Ara Decl. at 1; Second Declaration of Ara Baghdassarian ("Second Ara Decl.") at 1.) In June 2006 Ara's counsel filed a trademark application to register the Karoun mark with the USPTO on behalf of Karoun Dairies S.A.L. Plaintiff objected to the application. (Anto Decl. at 2 & Ex. A - F; Compl. at 5.) The parties' counsel exchanged at least six letters from November 2006 through at least March 2007. (Id.) Plaintiff's counsel demanded that Ara's counsel withdraw the trademark application. Ara's counsel, on the other hand, asserted that Karoun Dairies S.A.L. intended to expand its business into the United States under the Karoun name and demanded that Plaintiff cease and desist using the Karoun marks. He argued that Anto had sold his right to use the marks to Ara when he sold him his interest in the family business. In May 2007 Ara's trademark application was abandoned. (Compl. at 5.)

In July 2006, following the outbreak of military conflict in Lebanon, Ara and his immediate family settled in Arlington, Virginia. (Ara Decl. at 1; Second Ara Decl. at 1.) In October 2006 Ara and his immediate family visited Anto's family in Los Angeles. (Ara Decl. at 1; Anto Decl. at 2-3; Declaration of Talar Khatcherian ("Talar Decl.") at 2; Ohan Baghdassarian Decl. ("Ohan Decl.") at 1-2; (Declaration of Tsolak Khatcherian ("Tsolak Decl.") at 1.) This was Ara's only trip to California. (Ara Decl. at 1; Second Ara Decl. at 1.) During the visit, Ara was seen in possession of driving directions to Plaintiff's two manufacturing facilities in California. (Tsolak Decl. at 2.) Although Ara denies he personally inspected the facilities (Second Ara Decl. at 1), his possession of the directions suggests that at least one of his objectives in California was a visit to the facilities, whether personally or by delegating the task. Moreover, while in California, Ara demanded a share in Plaintiff corporation or compensation, both of which Anto denied. (Anto Decl. at 2-3.)

From October 2006 to August 2008, Ara contacted "a couple of times" Raffi Kradjian of Kradjian Importing Co. ("Kradjian") in California. (Second Ara Decl. at 1.) Kradjian is Plaintiff's associate and competitor. (Anto Decl. at 3.) He is in the business of importing and distributing Middle Eastern specialty foods in the United States. (Second Ara Decl. at 1.) According to Ara, he contacted Mr. Kradjian on behalf of Karoun Dairies S.A.L. to "get a general feel of the U.S. market." (Id.) According to Anto, Mr. Kradjian told him Ara represented that his business was the "real" Karoun Dairies and asked him to deal only with Ara to the exclusion of Plaintiff. (Anto Decl. at 3.) Defendants objected to Anto's account of the conversations between Ara and Mr. Kradjian as hearsay. (Reply at 3.) Because the objection is well-taken, the court will not consider Anto's affidavit to the extent it refers ...


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