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Lindora, LLC v. Isagenix International, LLC

United States District Court, S.D. California

August 1, 2016

LINDORA, LLC, a Delaware limited liability company, Plaintiff,
v.
ISAGENIX INTERNATIONAL, LLC, an Arizona limited liability company, and ELLA NOVOKOLSKY, Defendants.

          OPINION AND ORDER

          Hon. Cynthia Bashant United States District Judge

         This action arises from Defendant Isagenix International, LLC’s (“Isagenix”) and Defendant Ella Novokolsky’s (“Novokolsky”) alleged use of Plaintiff Lindora, LLC’s (“Lindora”) “Lean for Life” marks. Before the Court is Isagenix’s motion to dismiss for lack of personal jurisdiction and improper venue or, alternatively, to sever the claims against Isagenix and transfer those claims to the District of Arizona. (ECF No. 13.) Lindora opposes. (ECF No. 18.)

         The Court finds the motion suitable for disposition on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons explained below, the Court DENIES Isagenix’s motion.

         I. BACKGROUND

         Plaintiff Lindora is a Delaware limited liability company with its principal place of business in Costa Mesa, California. (First Am. Compl. (“FAC”) ¶ 1.) Lindora develops, markets, and sells weight management goods and services, including meal replacement shakes, protein bars, and diet planning services. (Id. ¶¶ 18, 19.) Since at least 1989, Lindora has used the marks “Lean for Life!” and “Lean for Life” (collectively, the “Lindora Marks”) to promote and sell its products. (Id. ¶ 14.) Lindora registered the “Lean for Life!” mark with the U.S. Patent and Trademark Office (“USPTO”) on December 20, 1994, and registered the “Lean for Life” mark with the USPTO on April 17, 2007. (Id. ¶¶ 18, 19.) Lindora asserts that the marks are a vital part of the company’s goodwill and reputation, signaling to consumers that the products they are purchasing come from an industry leader known for high-quality goods and services. (Id. ¶ 16.)

         Defendant Isagenix is an Arizona limited liability company with its principal place of business in Gilbert, Arizona. (Id. ¶ 2.) Founded in 2002, Isagenix is a multi-billion dollar network marketing company that develops, markets, and sells a variety of weight management products, including protein shakes and dietary supplements. (ECF No. 13 (“Mot.”) 4:24-5:2; ECF No. 18 (“Opp’n”) Exh. B.) As a network marketing company, Isagenix relies on a network of more than 500, 000 “Independent Associates, ” located in various states and countries, to act as sales representatives and distributors for its products. (Mot. 4:24-5:2; FAC ¶¶ 9, 21.) Isagenix Associates earn commissions and bonuses through retail sales and by referring new customers. (Opp’n, Exh. C.) These Associates must abide by a set of policies and procedures that govern how they market and sell Isagenix products. (Id.)

         Although Isagenix has no offices, salaried employees, or real property in California, California is a key market for Isagenix products. The company has more Associates in California than in any other state, and sells more products to purchasers in California than in any other state. (FAC ¶ 9; ECF No. 8-1 (“Suppl. Adams Decl.”) ¶ 9.) Isagenix holds a variety of training workshops, promotional events, and annual conferences in San Diego, California, and in California more generally, at which the company trains Associates, recruits new Associates, and promotes new products. (FAC ¶ 10; Suppl. Adams Decl. ¶¶ 3, 4.) An estimated 12, 000 Isagenix Associates reportedly attended the company’s 2015 annual conference in San Diego, California. (Opp’n 5:9-15.)

         Isagenix operates the website www.isagenix.com, from which it promotes Isagenix products and touts the income opportunities associated with becoming an Isagenix Associate. (FAC ¶¶ 5, 10.) Defendant Novokolsky is one such Associate who resides in San Diego County, California. (FAC ¶ 3.) Isagenix allows Associates such as Novokolsky to use www.isagenix.com as a platform for their own “back office” webpages, through which Associates can promote, sell, and order Isagenix products. (FAC ¶ 11; Mot. 5:16-21.) Novokolsky operates the back office webpage www.lean-for-life.isagenix.com as part of her sales and distribution efforts. (FAC ¶ 11.) In addition, Isagenix allegedly operates its own back office webpage at backoffice.isagenix.com from which consumers can directly place orders for Isagenix products. (ECF No. 18-1 (“Mikulka Decl.”) ¶ 9.)

         Lindora alleges that Isagenix has used the Lindora Marks, and confusingly similar marks, without permission, in marketing materials used to promote Isagenix products. The infringement is alleged to have taken several forms, including (1) Isagenix’s use of the Lindora Marks in promotional materials on Isagenix’s website, www.isagenix.com, (2) Isagenix’s use of infringing marks during Isagenix training events, promotional tours, and annual conferences held in California, (3) Isagenix’s use of the infringing marks in marketing materials that it provides to Isagenix Associates in California, and (4) Isagenix’s approval of, or acquiescence to, the use of infringing materials on Associates’ back office webpages, such as www.lean-for-life.isagenix.com. (FAC ¶¶ 9-11, 21-23, 36.) Lindora raises similar allegations against Novokolsky, alleging that she infringed the Lindora Marks on her back office webpage, and in related marketing materials. (Id. ¶¶ 5, 11, 36.) Finally, Lindora alleges that Isagenix willfully infringed the Lindora Marks by continuing to use the marks after Lindora sent a cease-and-desist letter to Isagenix on October 30, 2015. (Id. ¶ 28.)

         Based on these allegations, Lindora brings claims against both Isagenix and Novokolsky for trademark infringement under the Lanham Act, 15 U.S.C. § 1114; false designation of origin and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); trademark infringement under California common law; and unfair competition under California common law and California Business & Professions Code § 17200 et seq. (FAC 7-12.) Lindora also brings a claim for contributory trademark infringement against Isagenix only. (Id. 12-13.) Lindora alleges that Defendants’ infringement has created a likelihood of customer confusion and has resulted in loss profits, damage to Lindora’s goodwill and reputation, and diminution of the value of the Lindora Marks. (Id. ¶¶ 30, 33, 40.)

         Isagenix now moves to dismiss the case for lack of personal jurisdiction and improper venue, or, alternatively, to sever the claims against Isagenix and transfer those claims to the District of Arizona.[1] Lindora opposes, and Isagenix has replied.[2]

         II. LEGAL STANDARD

         A federal court may only exercise personal jurisdiction where such jurisdiction satisfies both the forum state’s long-arm statute and constitutional principles of due process. See Lee v. City of Los Angeles, 250 F.3d 668, 692 (9th Cir. 2001) (citation omitted). Here, California’s long-arm statute permits the exercise of jurisdiction to the fullest extent permitted by the U.S. Constitution. See Cal. Civ. Proc. Code § 410.10 (“[A] court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.”) Thus, in this case, the jurisdictional analyses under state and federal law are the same, and the inquiry centers on whether the exercise of personal jurisdiction comports with federal due process. Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (citation omitted).

         For a court to exercise personal jurisdiction over a defendant consistent with due process, that defendant must have sufficient “minimum contacts” with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). In assessing minimum contacts, the Supreme Court has emphasized that “the defendant’s conduct and connection with the forum State” must be such that the defendant “should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The personal jurisdiction requirement thus protects an individual’s liberty interest “in not being subject to the binding judgments of a forum with which he has established no meaningful ‘contacts, ties, or relations.’” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quoting Int’l Shoe Co., 326 U.S. at 319). The nature and quality of contacts necessary to support personal jurisdiction depend upon whether the plaintiff asserts general or specific jurisdiction against the defendant. See Picot, 780 F.3d at 1211; Nutrishare, Inc. v. BioRX, L.L.C., No. CIV. S-08-1252 WBS EFB, 2008 WL 3842946, at *2 (E.D. Cal. Aug. 14, 2008).

         Under Federal Rule of Civil Procedure 12(b)(2), a defendant may move to dismiss a complaint for lack of personal jurisdiction. In opposing a Rule 12(b)(2) motion, the plaintiff bears the burden of establishing that jurisdiction is proper. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where, as here, the court considers the motion without holding an evidentiary hearing, “the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1223 (quoting Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010)). In other words, “the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant.” Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995).

         In resolving a Rule 12(b)(2) motion, the court may consider evidence outside the pleadings, including affidavits and other materials submitted on the motion.[3] See Daimler AG v. Bauman, 571 U.S. ___, 134 S.Ct. 746, 752 (2014) (noting that plaintiffs opposing the motion to dismiss for lack of personal jurisdiction submitted declarations and exhibits purporting to demonstrate defendant’s contacts in the forum state); Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). “The plaintiff cannot ‘simply rest on the bare allegations of the complaint, ’ but uncontroverted allegations in the complaint must be taken as true.” Mavrix Photo, 647 F.3d at 1223 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (quotation omitted)). Furthermore, while the court may not assume the truth of allegations that are contradicted by affidavit, Mavrix Photo, 647 F.3d at 1223, the court draws all reasonable inferences from the complaint, and resolves all factual disputes, in favor of the plaintiff. Fiore v. Walden, 688 F.3d 558, 575 (9th Cir. 2011) (“We will draw reasonable inferences from the complaint in favor of the plaintiff where personal jurisdiction is at stake, and will assume credibility.”), rev’d on other grounds, 571 U.S. ___, 134 S.Ct. 1115 (2014); Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).

         III. DISCUSSION

         Lindora argues that Isagenix is subject to both general and specific jurisdiction. For the reasons that follow, the Court finds that while general jurisdiction is improper, specific jurisdiction over Isagenix comports with federal due process.

         A. General Jurisdiction

         General jurisdiction allows a court to hear any and all claims against a defendant regardless of whether the claims relate to the defendant’s contacts with the forum state. See Schwarzenegger, 374 F.3d at 801 (“[A] finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities in the world.”). For general jurisdiction to exist, a defendant’s affiliations with the forum state must be “so ‘continuous and systematic’ as to render them essentially at home in the forum[.]” Daimler, 571 U.S. ___, 134 S.Ct. 746, 751 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). In the case of a corporation, “[t]he paradigmatic locations where general jurisdiction is appropriate . . . are its place of incorporation and its principal place of business.” Ranza v. Nike, Inc., 793 F.3d 1059, 1069 (9th Cir. 2015) (citing Daimler, 571 U.S. ___, 134 S.Ct. 746 at 760). “Only in an ‘exceptional case’ will general jurisdiction be available anywhere else.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014) (quoting Daimler, 571 U.S. ___, 134 S.Ct. 746 at 761 n. 19).

         Lindora concedes that California falls outside the traditional bases for general jurisdiction recognized in Daimler-Isagenix is an Arizona corporation with its principal place of business in Arizona. (FAC ¶ 2.) Nevertheless, Lindora contends that Isagenix is subject to general jurisdiction on the basis of the following contacts: (1) Isagenix is registered to do business in California; (2) Isagenix sells more of its products to purchasers in California than in any other state; (3) Isagenix has more Associates in California than in any other state; (4) Isagenix directly sells and ships its products to Associates and customers in California; (5) Isagenix holds annual conferences, training workshops, and other promotional events in California; (6) Isagenix maintains an interactive website to promote its products and provide a platform for California Associates to market Isagenix products; and (7) Isagenix’s website includes a page directed specifically to California consumers regarding the company’s compliance with a California consumer protection statute. (Mot. 9:2-15.) In Lindora’s view, the importance of the California market to Isagenix’s business, and the aggregate of the company’s activities in the state, demonstrate continuous and systematic contacts such that general jurisdiction is appropriate. (Id. 10:11-12.)

         Lindora, however, has misconceived the relevant test. The test for general jurisdiction is not whether an out-of-state corporation’s in-state contacts are “in some sense” continuous and systematic, but whether the corporation’s contacts “are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” Daimler, 571 U.S. ___, 134 S.Ct. 746 at 761 (quoting Goodyear, 564 U.S. at 919) (emphasis added). Outside the traditional bases of general jurisdiction, this inquiry is a necessarily comparative one, “call[ing] for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide.” Id. at 762, n. 20; Ranza, 793 F.3d at 1070 (“[T]he general jurisdiction inquiry examines a corporation’s activities worldwide-not just the extent of its contacts in the forum state-to determine where it can be rightly considered at home.”); Richard D. Freer, Some Specific Concerns with the New General Jurisdiction, 15 Nev. L.J. 1161, 1171 (2015) (“The implication arises from the Court’s instruction [in Daimler] that a defendant’s contacts with the forum are assessed holistically, in the context of its overall business.”). If the magnitude of a corporation’s business activities in the forum state substantially exceeds the magnitude of the corporation’s activities in other places, general jurisdiction may be appropriate in the forum state. See Daimler, 571 U.S. ___, 134 S.Ct. 746 at 761 nn. 19, 20. Absent such a showing, however, general jurisdiction will be improper. See, e.g., Brown v. Lockheed Martin Corp., 814 F.3d 619, 629 (2d Cir. 2016) (determining that general jurisdiction over defendant was improper where the number of defendant’s employees in the forum represented less than 0.05% of defendant’s full workforce and where the amount of gross revenue that defendant derived from operations in the forum never exceeded 0.107% of defendant’s total annual revenue); Martinez, 764 F.3d at 1070 (finding general jurisdiction lacking where corporation’s California contacts were minor compared to its other worldwide contacts).

         Here, Lindora fails to make the required comparative assessment of Isagenix’s business activities, or proffer facts and evidence sufficient to show that Isagenix is essentially at home in California. For example, although the record indicates that Isagenix sells more products in California than in any other state, and has more distributors in California than in any other state, Lindora provides no information regarding the nature and magnitude of Isagenix’s business activities in other key Isagenix markets such as New York, New Jersey, and Ontario, Canada. (Opp’n, Exh. D.) Similarly, while Lindora emphasizes that Isagenix holds training workshops, promotional events, and conferences in California, Lindora does not show that these activities represent a more continuous and systematic affiliation with California than with other states where Isagenix holds similar events. (Suppl. Adams Decl. ¶¶ 3, 4.) In other words, while Lindora demonstrates that California is a key forum for Isagenix’s business activities, it fails to assess those contacts in light of Isagenix’s overall business. Without an assessment of Isagenix’s business activities in their entirety, even continuous and systematic contacts in California will not support a finding of general jurisdiction. See Daimler, 571 U.S. ___, 134 S.Ct. 746 at 762 n. 20.

         In sum, Lindora has not made a prima facie showing that the magnitude of Isagenix’s business activities in California, as compared to other fora, is sufficient to render Isagenix essentially at home in the state. Accordingly, the Court finds that this is not the exceptional case where general jurisdiction can be asserted outside a corporation’s place of incorporation and principal place of business.

         B. Specific Jurisdiction

         Lindora argues in the alternative that specific jurisdiction is proper. “The inquiry whether a forum State may assert specific jurisdiction over a nonresident defendant ‘focuses on the relationship among the defendant, the forum, and the litigation.’” Walden v. Fiore, 571 U.S. ___, 134 S.Ct. 1115, 1121 (2014) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984) (internal quotation omitted)). For specific jurisdiction to exist, “the defendant’s suit-related conduct must create a substantial connection with the forum State.” Id. at 1121; see also Nissan Motor Co. Ltd. v. Nissan Comput. Corp., 89 F.Supp.2d 1154, 1158 (C.D. Cal. 2000) (“Specific personal jurisdiction may be exercised when the nature and quality of the defendant’s contacts with the forum state are significant in relation to the specific cause of action.”) (internal quotation and citation omitted). This connection “must arise out of contacts that the ‘defendant himself’ creates with the forum State.” Walden, 571 U.S. ___, 134 S.Ct. at 1122 (quoting Burger King, 471 U.S. at 475). A defendant’s affiliation with the plaintiff, or with persons who reside in the forum, standing alone, is insufficient to confer specific jurisdiction. Id. at 1122-23.

         The Ninth Circuit employs a three-prong test to assess whether a defendant’s contacts with the forum state are sufficient to subject it to specific jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.

Picot, 780 F.3d at 1211 (citing Schwarzenegger, 374 F.3d at 802). Lindora bears the burden of satisfying the first two prongs. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011). If Lindora does so, the burden then shifts to Isagenix to present a “compelling case” that the exercise of jurisdiction would be unreasonable. Id. (quoting Burger King, 471 U.S. at 477).

         1. Purposeful Direction

         The first prong of the specific jurisdiction test refers to both purposeful availment and purposeful direction. In infringement actions, the Ninth Circuit typically employs a purposeful direction analysis. Mavrix Photo, 647 F.3d at 1228 (citing Schwarzenegger, 374 F.3d at 802). This analysis, in turn, involves application of an “effects” test that “focuses on the forum in which the defendant’s actions were felt, whether or not the actions themselves occurred within the forum.” Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (en banc). Under this test, which derives from the Supreme Court’s decision in Calder v. Jones, 465 U.S. 783 (1984), “the defendant allegedly 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.” CollegeSource, 653 F.3d at 1077 (internal quotation marks omitted). The Court addresses these requirements in turn.

         a. Intentional Act

         Lindora must first sufficiently allege that Isagenix committed an intentional act. In the context of the Calder test, an intentional act is “an external manifestation of the actor’s intent to perform an actual, physical act in the real world, not including any of its actual or intended results.” Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 674 (9th Cir. 2012); see also Schwarzenegger, 374 F.3d at 806. Lindora alleges that Isagenix provided its California Associates with infringing marketing materials, held training workshops and promotional events in California using the Lindora Marks, and operates a website where the infringing marks are used. These are sufficient allegations of intentional acts within the meaning of Calder. See Mavrix Photo, 647 F.3d at 1229 (finding an intentional act where defendant reposted allegedly infringing photos on a website); California Brewing Company v. 3 Daughters Brewing LLC, No. 2:15-cv-02278-KJM-CMK, 2016 WL 1573399 (E.D. Cal. Apr. 18, 2016) (marketing and selling products that allegedly infringed plaintiff’s trademark constituted intentional acts under Calder); Lang v. Morris, 823 F.Supp.2d 966, 971 (N.D. Cal. 2011) (creation of paintings that allegedly infringed plaintiffs’ copyright “easily satisfied” intentional act requirement). Although Isagenix contends that any use of the Lindora Marks in connection with these acts did not constitute infringement, this prong of the Calder test focuses on whether an act was performed, not whether the act produced a particular result. See Washington Shoe, 704 F.3d at 673-74 (quoting Schwarzenegger, 374 F.3d at 806). Thus, the Court finds the first prong of the Calder test satisfied.

         b. Express Aiming

         The second prong of the purposeful direction inquiry is whether the defendant expressly aimed its conduct at the forum state. The Ninth Circuit has emphasized that express aiming requires “something more” than “a foreign act with foreseeable effects in the forum state.” Washington Shoe, 704 F.3d at 675 (quoting Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000)). In assessing whether a defendant has done “something more, ” courts consider several factors, including “the interactivity of the defendant’s website, the geographic scope of the defendant’s commercial ambitions, and whether the defendant ‘individually targeted’ a plaintiff known to be a forum resident.” Mavrix Photo, 647 F.3d at 1229 (citation omitted). ...


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