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Urban Textile, Inc. v. A&E Stores, Inc.

United States District Court, C.D. California

August 11, 2014

URBAN TEXTILE, INC.
v.
A&E STORES, INC. ET AL.

CIVIL MINUTES - GENERAL

CHRISTINA A. SNYDER, District Judge.

Proceedings: (In Chambers:) DEFENDANT KNITWORK PRODUCTIONS II LLC'S MOTION TO QUASH SERVICE OF PROCESS AND DISMISS THE COMPLAINT FOR LACK OF PERSONAL JURISDICTION (Dkt. #20, filed April 14, 2014)

I. INTRODUCTION AND BACKGROUND

Plaintiff Urban Textile, Inc. filed this action on March 3, 2014, against defendants A&E Stores, Inc., Strawberry Stores, Inc., Pay Half Newburgh, LLC, and Knitwork Productions II LLC ("Knitwork"). Dkt. #1. Knitwork is the sole remaining defendant. Dkt. #51. The complaint asserts claims for copyright infringement and contributory copyright infringement. Id . In particular, the complaint alleges that plaintiff is the holder of a registered copyright in a two-dimensional image entitled "Urban Design-30." Compl. ¶ 13. Plaintiff alleges that Knitwork infringed plaintiff's copyright by selling, without plaintiff's authorization, garments bearing Urban Design-30. Id . ¶¶ 16-17.

On April 14, 2014, Knitwork filed a motion to quash service of process and dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2), or, in the alternative, dismiss this action on the grounds of forum non conveniens. Dkt. #20. Plaintiff filed an opposition on April 21, 2014, dkt. #25, and Knitwork replied on April 28, 2014, dkt. #26. In its opposition, plaintiff contended that it had made a prima facie showing that this Court has personal jurisdiction over Knitwork. However, plaintiff requested jurisdictional discovery to further substantiate this contention. By order dated May 6, 2014, the Court found that jurisdictional discovery was appropriate. Dkt. #28. Accordingly, the Court reserved ruling on Knitwork's motion, and granted plaintiff leave such discovery. Id . On August 4, 2014, plaintiff filed a supplemental brief summarizing the results of the jurisdictional discovery, and Knitwork responded on August 11, 2014, dkt. #59. After considering the parties' arguments, the Court finds and concludes as follows.

II. ANALYSIS

California's long-arm jurisdictional statute is coextensive with federal due process requirements, so that the jurisdictional analysis under state law and federal due process are the same. Cal. Civ. Proc. Code § 410.10; Roth v. Garcia Marquez , 942 F.2d 617, 620 (9th Cir. 1991). In order for a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have "minimum contacts" with the forum state so that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316 (1945). Depending on the nature of the contacts between the defendant and the forum state, personal jurisdiction is characterized as either general or specific.

Where, as here, a court decides a motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp. , 27 F.Supp.2d 1174, 1181 (C.D. Cal. 1998), aff'd, 248 F.3d 915 (9th Cir. 2001). Plaintiff's version of the facts is taken as true for purposes of the motion if not directly controverted, and conflicts between the parties' affidavits must be resolved in plaintiff's favor for purposes of deciding whether a prima facie case for personal jurisdiction exists. AT & T v. Compagnie Bruxelles Lambert , 94 F.3d 586, 588 (9th Cir. 1996); Unocal , 27 F.Supp.2d at 1181. However, "[t]he plaintiff cannot simply rest on the bare allegations of its complaint, ' but uncontroverted allegations in the complaint must be taken as true." CollegeSource, Inc. v. AcademyOne, Inc. , 653 F.3d 1066, 1073 (9th Cir. 2011).

A. General Jurisdiction

A court has general jurisdiction over a nonresident defendant when that defendant's activities within the forum state are "substantial" or "continuous and systematic, " even if the cause of action is "unrelated to the defendant's forum activities." Perkins v. Benguet Consol. Mining Co. , 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v. Sys. Tech. Assocs., Inc. , 557 F.2d 1280, 1287 (9th Cir. 1977).

The standard for establishing general jurisdiction is "fairly high" and requires that the defendant's contacts be substantial enough to approximate physical presence. Bancroft & Masters, Inc. v. Augusta Nat'l Inc. , 223 F.3d 1082, 1086 (9th Cir. 2000). "Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Id . (finding no general jurisdiction when the corporation was not registered or licensed to do business in California, paid no taxes, maintained no bank accounts, and targeted no advertising toward California). Occasional sales to residents of the forum state are insufficient to create general jurisdiction. See Brand v. Menlove Dodge , 796 F.2d 1070, 1073 (9th Cir. 1986).

Here, the Court concludes that plaintiff has not made a prima facie showing of jurisdictional facts to support the exercise of general jurisdiction. As an initial matter, it is undisputed that Knitwork is a New York corporation with its principal place of business in New York, New York. Compl. ¶ 8. The Court therefore turns to the question of whether Knitwork has other contacts that are sufficiently "continuous and systematic." See Perkins , 342 U.S. at 446-47.

Plaintiff provides the following evidence in support of its contention that the exercise of general jurisdiction is appropriate. First, Knitwork has an agreement with a company called Best Delivery Services ("BDS"). Dkt. #54, Ex. A. Pursuant to this agreement, Knitwork has paid BDS "over $3, 600, 000 within the last five years" to store 10, 000, 000 Knitwork products and to ship 1, 235, 00 boxes containing Knitwork products from California. Plaintiff also asserts that BDS transports Knitwork products throughout California, including to 18 wholesale customers. Jeong Decl. ¶¶ 3-4; Exs. B-C. Plaintiff also asserts that Knitwork maintains a non-interactive website with hyperlinks to a third-party website. Dkt. #25, Ex. 1. In turn, that third-party website contains hyperlinks to retailers such as JC Penney, which, according to plaintiff, sell Knitwork products. Id . Exs. 2-3. Additionally, Knitwork provides uncontroverted evidence that it has no real estate, employees, agents, bank accounts, or telephone numbers in California. Navon Decl. ¶ 2.

The Court concludes that plaintiff has not made the requisite factual showing to support the exercise of general jurisdiction over Knitwork. In this regard, "engaging in commerce with residents of the forum state is not in and of itself the kind of activity that approximates physical presence within the state's borders" such that general jurisdiction is appropriate. Bancroft & Masters, Inc. v. Augusta Nat'l, Inc. , 223 F.3d 1082, 1086 (9th Cir. 2000). For example, in Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 411, 418 (1984), the Supreme Court held that a Texas district court lacked general jurisdiction over a Colombian helicopter transport company even though the company purchased "approximately 80%" of its helicopter fleet from Texas, and also sent its prospective pilots to Texas to receive training. Similarly, in Emery v. BioPort Corp. , 273 Fed.Appx. 694, 695-96 (9th Cir. April 16, 2008), the Ninth Circuit held that the defendant's bulk shipments of its products to a third-party facility in the forum state "may mean that the corporation is doing business with'" the forum state, but "does not mean that the corporation is doing business ...


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