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West Marine, Inc v. Watercraft Superstore

February 14, 2012

WEST MARINE, INC., PLAINTIFF,
v.
WATERCRAFT SUPERSTORE, INC., DEFENDANT.



The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

** E-filed February 14, 2012 **

NOT FOR CITATION

ORDER (1) DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; (2) DENYING DEFENDANT'S ALTERNATIVE MOTION TO TRANSFER VENUE; AND (3) GRANTING PLAINTIFF'S REQUEST FOR JUDICIAL NOTICE [Re: Docket Nos. 3, 15]

Plaintiff West Marine, Inc. ("West Marine") brought this action against defendant Watercraft Superstore, Inc. ("Watercraft") in Santa Cruz County Superior Court for breach of oral agreement, 19 breach of the covenant of good faith and fair dealing, intentional and negligent interference with 20 economic advantage, declaratory and injunctive relief, unjust enrichment, quantum meruit, and 21 promissory estoppel. Dkt. No. 1, Exh. 1 ("Complaint"). Both of the parties are purveyors of boating 22 equipment; West Marine sells a broad array of "boating supplies and accessories," while Watercraft 23 specializes in personal watercraft, or jet skis. Complaint ¶¶ 2-3. This action arises out of failed 24 negotiations between the parties to execute an agreement to govern their shared use of a mark ("the 25 mark" or "Blacktip mark") that both parties attempted to register with the U.S. Patent and 26

Trademark Office ("USPTO"). Complaint ¶¶ 8-9, 13-14. Watercraft timely removed the action to 27 this court on the basis of diversity jurisdiction. Dkt. No. 1 ("Notice of Removal"). Both of the 28 parties have consented to the undersigned's jurisdiction.

2 transfer venue to the Middle District of Florida. Dkt. No. 3 ("Motion to Dismiss"). West Marine has 3 opposed the motions. Dkt. No. 14. Watercraft has replied. Dkt. No. 17. The court deemed the 4 motions suitable for determination without oral argument and vacated the February 14, 2012 5 hearing. Dkt. No. 34. Upon consideration of the moving papers and applicable authority, the court 6

District of Florida. The court GRANTS plaintiff's request for judicial notice. 8

LEGAL STANDARD

A defendant may move, prior to trial, to dismiss an action for lack of personal jurisdiction.

Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977); Fed. R. Civ. P. 12(b)(2). The defendant must object to the court's exercise of personal jurisdiction in the first Rule 13 12(h)(1). The party seeking to invoke jurisdiction of the federal court has the burden of establishing 15 that such jurisdiction exists. Id. at 1285. At this stage of the litigation, the plaintiff need only "make, through [his] pleadings and affidavits, a prima facie showing of the jurisdictional facts." Myers v. 17

Watercraft now moves to dismiss for lack of personal jurisdiction, or, in the alternative, to DENIES defendant's motion to dismiss and its alternative motion to transfer this case to the Middle

I.MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

motion or in the responsive pleading or be deemed to have waived the issue. Fed. R. Civ. P. 14

Bennett Law Offices, 238 F.3d 1068, 1071 (9th Cir. 2001). In ruling on a Rule 12(b)(2) motion, the 18 court should view the pleadings in a light most favorable to plaintiff and all doubts are to be 19 resolved in his favor. Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 n. 1 (9th Cir. 1995). 20

When there is no applicable federal statute governing personal jurisdiction, the law of the 21 state in which the district court is located is applicable. California's long-arm statute, Cal. Code Civ. 22 P. § 410.10, permits the exercise of jurisdiction "on any basis not inconsistent with the Constitution 23 of this state or of the United States." Aanestad v. Beech Aircraft Corp., 521 F.2d 1298, 1300 (9th 24 Cir. 1974). Due process requires that a court only exercise jurisdiction over a nonresident defendant 25 if that defendant has "minimum contacts" with the forum state such that maintenance of the suit 26 does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Wash., 326 27

Calder v. Jones, 465 U.S. 783, 790 (1984).

For the U.S. 310, 316 (1945). Each defendant's contacts with the forum state are evaluated individually. 28

Historically, a court's ability to render judgment in personam was grounded in its power over the 3 defendant's person, making the defendant's physical presence in the forum state prerequisite to a 4 binding judgment. Pennoyer v. Neff, 95 U.S. 714, 733 (1878). But, if a nonresident defendant's 5 activities within the state are "substantial" or "continuous and systematic," there is a sufficient 6 relationship between the defendant and the forum state to support general personal jurisdiction, even 7 though the claim is unrelated to the defendant's forum activities. Data Disc, 557 F.2d at 1287. But, if 8 a nonresident defendant's activities in the forum state are not "substantial" or "continuous," a court 9 may only exercise limited personal jurisdiction, and only if there is a sufficient relationship between 10 the defendant's contacts with the forum state and the claim at issue. Id.

"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 13 There are two types of personal jurisdiction: general and limited (or specific) jurisdiction.

U.S.C. § 1404(a). A district court has discretion to decide motions to transfer venue based upon a 14 case-by-case consideration of convenience and fairness. Jones v. GNC Franchising, Inc., 211 F.3d 15

DISCUSSION

495, 498 (9th Cir. 2000) (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988)).

18 jurisdiction, the court believes the better argument is for general personal jurisdiction, as discussed 19 below. When general jurisdiction is found, there is no need to consider whether specific personal 20 jurisdiction could also exist. Data Disc, 557 F.2d at 1287 (explaining that courts consider specific 21 jurisdiction only when a nonresident's activities in the forum state are insufficient to give rise to 22 general jurisdiction). 23

West Marine shows the following contacts between Watercraft and the state of California as 24 proof that personal jurisdiction exists: (1) Watercraft operates two interactive websites accessible to 25 Californians, one for purchasing Watercraft products ("the store website"), and one where users can 26 access discussion boards, classified ads, listings for products available on the store website, news, 27 and other content relating to personal watercraft use (the "forum website"); (2) Watercraft, through 28 the forum website, establishes and promotes "riding groups" for jet ski users in specific geographic

Although the plaintiff devotes much of its attention to arguing for specific personal regions, including two such groups in California; (3) Watercraft mails print catalogs to past 2 customers and to "'mailing lists [Watercraft] ha[s] purchased,'" including to California residents; 3 (4) Watercraft's sales to California consumers, which from 2009 through September 30, 2011 were 4 approximately $230,000, or 7.4% of its total sales in the three years it has been in business; (5) 5 Watercraft's purchases of products from 13 California suppliers, which from 2009 through 2011 6 totaled $1.96 million; (6) Watercraft's sales of products though Ebay, a California company; (7) 7

California companies; and (8) Watercraft's use of Paypal, a California company, as its online 9 payment processor. Dkt. No. 14, pp. 4-7 ("Opposition"). Since the claims at issue in this action do 10 not arise out of any of these contacts, they support general, rather than specific, personal jurisdiction.

Watercraft's contracts for the marketing of its products with YouTube, Facebook, and Google, all 8 California customer who purchased products from its website or by calling its telephone number

Watercraft argues that these contacts are misleading and insubstantial. It contends that any

"reache[ed] into Florida" to do so. Motion to Dismiss at 4. It also argues that the forum website is 15 actually owned by a separate company called SBT, which permits Watercraft to advertise on the site in exchange for paying all hosting fees and moderating the website, and which created the "riding 17 groups" in 2006, before Watercraft came into existence (although Greg Pickren owns both 18 Watercraft and SBT). Reply, p. 5; Dkt. No. 18, p. 2 ("Supp. Pickren Dec."); Dkt. No. 14, Exh. 2 19

West Marine is a much larger company than it is, this court should discount the amount of sales it 21 has done in California because that amount is far less than what West Marine sold during the same 22 period. Reply at 4. Finally, Watercraft argues that the fact that it has entered into contracts with 23 other California companies and agreed to venue in California is irrelevant to this inquiry and 24 threatens to expand this district's exercise of personal jurisdiction over all users of those companies. 25

Reply at 5-6. These arguments tend to address specific rather than general jurisdiction, and, as 26 discussed below, may be inapposite to an analysis of general jurisdiction. 27

("Chang Dec.") at Exh. A, p. 14:23 ("Pickren Deposition"). Next, Watercraft argues that because 20

A. General Personal Jurisdiction

domiciled in the forum state or if its activities there are "substantial" or "continuous and 3 systematic." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). 4

"Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in 5 business in the state, serves the state's markets, designates an agent for service of process, holds a 6 license, or is incorporated there." Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 7 Racisme Et L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006) (en banc). The assertion of general 9 jurisdiction must always be reasonable. Amoco Egypt Oil Co. v. Leonis Navigation Co., 1 F.3d 848, 10 Yahoo! Inc., 433 F.3d at 1205.

As a preliminary matter, the court acknowledges that none of Watercraft's contacts with California, standing alone, would be adequate to confer general jurisdiction over Watercraft. But, 14 the court considers these contacts in the aggregate and finds that, while it is a close call, general 15 jurisdiction is warranted.

18 jurisdictional analysis." Coremetrics, Inc. v. AtomicPark, LLC, 370 F. Supp. 2d 1013, 1021 (N.D. 19 Cal. 2005). The federal courts have adopted a sliding scale test that considers a website's level of 20 interactivity "directly proportionate" to the likelihood that personal jurisdiction can be 21 constitutionally exercised. Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. 22 Pa. 1997). While "[t]he 'mere accessibility of the defendants' websites'" is insufficient to establish 23 jurisdiction, a website that allows customers to "engage in electronic transactions" with the 24 defendant may well prove sufficient. Gorman v. Ameritrade Holding Corp., 293 F.3d 506, 512 25 199 F.3d 1343, 1350 (D.C. Cir. 2000)). The Gorman court noted in particular that a defendant 27 whose website permits customers to conduct transactions in the same way that they could over the 28 phone or in person makes the defendant even more "susceptible to application of the 'doing

General personal jurisdiction may be exercised as to any cause of action, if the defendant is 1086 (9th Cir. 2000) overruled in part on other grounds by Yahoo! Inc. v. La Ligue Contre Le 8 852-53 (9th Cir. 1993). The Ninth ...


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