United States District Court, S.D. California
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). ...