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Nubonau, Inc., Etc v. Nb Labs

October 31, 2011

NUBONAU, INC., ETC.,
PLAINTIFF,
v.
NB LABS, LTD, ETC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge

ORDER RE: JURISDICTIONAL DISCOVERY

This is a trademark infringement case. The Plaintiff, NuboNau, is a San Diego-based retailer that sells organic skin care products. Defendant NB Labs is in the same business and behind the product brand NUBO. Defendants Cult Beauty Limited and Dotcom Retail are, allegedly, online retailers of NUBO products.

The Defendants are all United Kingdom companies, and each has filed a motion to dismiss for lack of personal jurisdiction. NB Labs argues that it sells all of its products abroad and has no contacts with California or the broader United States. (Dkt. No. 11-1.) Cult Beauty argues that its website isn't directed to the United States in any way, and that it has made only de minimum sales in California. (Dkt. No. 12-1.) Dotcom Retail's argument is a little different. It maintains that it merely owns the domain name BeautyBay.com, which it licenses to a legally separate company. (Dkt. No. 8-1.)

After the Defendants filed their motions to dismiss, NuboNau filed an ex parte motion seeking limited discovery relating to the Defendants' jurisdictional arguments. NuboNau claims it "has evidence that jurisdiction does exist in this matter, but requires further discovery in order to demonstrate the extent of marketing and sales of infringing NUBO products in California and the United States by Defendants." (Dkt. No. 18-1 at 1.) The Court stayed the motions to dismiss to consider the ex parte motion, which all Defendants oppose.

I. Jurisdictional Standards

In considering whether NuboNau is entitled to jurisdictional discovery, it is useful to keep the relevant jurisdictional standards in mind. Personal jurisdiction over a defendant is proper if it complies with a state's long-arm statute and constitutional due process standards. Fireman's Fund Ins. Co. v. Nat'l Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). California's long-arm statute is co-extensive with constitutional standards, however, so it is only the latter that matter here. See Boschetto, 539 F.3d at 1015. "For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have at least 'minimum contacts' with the relevant forum such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

Personal jurisdiction may be either specific or general. Specific personal jurisdiction arises 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.

Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2002). General personal jurisdiction, on the other hand, arises when a defendant engages in "continuous and systematic general business contacts that approximate physical presence in the forum state." CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1074 (9th Cir. 2011) (internal quotations and citations omitted). "The standard is met only by 'continuous corporate operations within a state [that are] thought so substantial and of such a nature as to justify suit against [the defendant] on causes of action arising from dealings entirely distinct from those activities.'" King v. Am. Family Mut. Ins. Co., 632 F.3d 570, 579 (9th Cir. 2011) (quoting Int'l Shoe, 326 U.S. at 318)). The standard for general jurisdiction "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." Schwarzenneger, 374 F.3d at 801. NuboNau mentions both specific and general personal jurisdiction in its motion for jurisdictional discovery, but it is hard to see how general personal jurisdiction could ever be established here. (See Dkt. No. 18-1 at 5.) The Defendants are all based in the United Kingdom, and there is no indication whatsoever that their operations in California or any other state, if any, are so continuous and substantial that they can be said to be physically present there. If this Court can exercise personal jurisdiction over the Defendants, then, it will only be because NuboNau's claims truly arise out of Defendants' conduct in California.

Wholly apart from the above, jurisdiction may also arise under Fed. R. Civ. P. 4(k)(2), which is commonly known as the federal long-arm statute. Rule 4(k)(2) "permits federal courts to exercise personal jurisdiction over a defendant that lacks contacts with any single state if the complaint alleges federal claims and the defendant maintains sufficient contacts with the United States as a whole." Getz v. Boeing, 654 F.3d 852, 858 (9th Cir. 2011). For jurisdiction to arise under the Rule, the claim against the defendant must arise under federal law, the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction, and the federal court's exercise of jurisdiction must comport with due process. Holland America Line Inc. v. Wartsila North America, 485 F.3d 450, 461 (9th Cir. 2007). The Rule, in essence, applies to "foreign defendants lacking sufficient contacts with any single state [who] could . . .avoid responsibility for civil violations of our federal laws." Getz, 654 F.3d at 859.

To defeat jurisdiction under Rule 4(k)(2), a defendant "has only to name some other state in which the suit could proceed. If, however, the defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the federal court is entitled to use Rule 4(k)(2)." ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 552 (7th Cir. 2001). If a defendant's contacts with the United States are only marginally more significant than their contacts with a given state, there is no jurisdiction under Rule 4(k)(2). Holland America, 485 F.3d at 461. The Rule is implicated in this case because NuboNau argues that if Defendants' contacts with California are insufficient to support personal jurisdiction, "NuboNau would be entitled to take jurisdictional discovery on Defendants' national contacts so that Defendants' violations of NuboNau's United States trademark rights do not escape enforcement under federal laws." (Dkt. No. 18-1 at 6.)

II. Jurisdictional Discovery Standards

Now to the matter at hand. Jurisdictional discovery "may be appropriately granted where pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary." Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 1997). The mere hunch that discovery "might yield jurisdictionally relevant facts" is insufficient, however. Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008). Likewise, a court needn't permit jurisdictional discovery "where a plaintiff's claim of personal jurisdiction appears to be both attenuated and based on bare allegations in the face of specific denials made by the defendants." Terracom v. Valley Nat. Bank, 49 F.3d 555, 562 (9th Cir. 1995) (citing Rich v. KIS Cal., Inc., 121 F.R.D. 254, 259 (M.D.N.C. 1988)). A court is justified in denying jurisdictional discovery "when it is clear that further discovery would not demonstrate facts sufficient to constitute a basis for jurisdiction." Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977).

A plaintiff who seeks jurisdictional discovery needn't first make a prima facie showing that jurisdiction actually exists. Such a showing is necessary to survive a motion to dismiss, and "[i]t would . . . be counterintuitive to require a plaintiff, prior to conducting discovery, to meet the same burden that would be required in order to defeat a motion to dismiss." Orchid Biosciences, Inc. v. St. Louis Univ., 198 F.R.D. 670, 673 (S.D. Cal. 2001); see also Mentor Graphics Corp. v. EVE-USA, Inc., Case No. 10-CV-954, 2010 WL 5173560 at *2 (D. Or. Dec. 15, 2010) (adopting reasoning of Orchid Biosciences). At the same time, the plaintiff must make at least a colorable showing that personal jurisdiction exists. Mitan v. Feeney, 497 F.Supp.2d 1113, 1119 (C.D. Cal. 2007). "This 'colorable' showing should be understood as something less than a prima facie showing and could be equated as requiring the plaintiff to come forward with 'some evidence' tending to establish personal jurisdiction over the defendant." Id.; see also Martinez v. Manheim Central California, Case No. 10-CV-1511, 2011 U.S. Dist. Lexis 41666 at *10 (E.D. Cal. Apr. 18, 2011) (noting that "district courts in this circuit have required a plaintiff to establish a 'colorable basis' for personal jurisdiction before discovery is ordered").

A court's denial of a plaintiff's request for jurisdictional discovery "will not be reversed except on the clearest showing that denial of discovery results in actual and substantial prejudice to the ...


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