Opinion
CASE NO. 4:20-CV-1442
2020-09-16
LEAFFILTER NORTH, LLC, Plaintiff, v. HOME CRAFT BUILDERS, INC. d/b/a HomeCraft Gutter Protection, Defendant.
Michael S. Weinstein, Mark E. Avsec, Benesch, Friedlander, Coplan & Aronoff - Cleveland, Cleveland, OH, for Plaintiff. Arthur M. Kaufman, Kaufman, Drozdowski & Grendell, Pepper Pike, OH, for Defendant.
Michael S. Weinstein, Mark E. Avsec, Benesch, Friedlander, Coplan & Aronoff - Cleveland, Cleveland, OH, for Plaintiff.
Arthur M. Kaufman, Kaufman, Drozdowski & Grendell, Pepper Pike, OH, for Defendant.
MEMORANDUM OF OPINION AND ORDER
[Resolving ECF No. 4 ]
Benita Y. Pearson, United States District Judge
Pending is Defendant's Motion to Dismiss or Transfer for Lack of Personal Jurisdiction and Improper Venue. ECF No. 4. Plaintiff responded in opposition. ECF No. 5. Defendant filed a reply. ECF No. 7. Because the Court lacks personal jurisdiction over Defendant, and finds it would be in the interests of justice to do so, the Court grants Defendant's motion to the extent that it seeks to transfer the case to the Northern District of Georgia.
I. Background
The parties are competitors in the home improvement industry, each of them offers gutter cover systems. ECF No. 1 at PageID #: 2-3. Plaintiff is an Ohio corporation with its principal place of business in Ohio. Id. at PageID # 1. Defendant is a Georgia corporation with its principal place of business in Georgia. Id. While Plaintiff conducts business across 87 locations in North America, Defendant has "13 locations, all in the Southeastern United States[.]" Id. at PageID #: 3. Plaintiff has 20 locations in the Southeastern United States, at least one of which is in Georgia. Id .
Plaintiff contends that Defendant has "slavishly mimicked and copied almost every aspect of [Plaintiff's] Website and [Plaintiff's] Facebook materials." ECF No. 1 at PageID #: 4. This mimickry includes the copying of copyrighted material, the use of similar graphics and logos, and assertions, such as "Learn more about out patented gutter guard[,]" that Plaintiff asserts are false as they relate to Defendant. Id. at PageID #: 4-6. Plaintiff alleges that this strategy, as well as the registration of leaffiltergutterguards.com for the purposes of redirecting consumers to homecraftgutterguards.com, is used to target its customers with "confusingly similar ads, thereby creating confusion in the marketplace." Id. at PageID #: 6-7. Plaintiff further contends that Defendant has hired Plaintiff's former employees, "each of whom were bound by non-compete and confidentiality agreements[,]" and then contacted Plaintiff's customers. Id. at PageID #: 6.
Plaintiff brings five claims under state and federal law: False Advertising in violation of 15 U.S.C. § 112(a)(1)(B); Federal Unfair Competition in violation of 15 U.S.C. § 112(a)(1)(A); a violation of the Ohio Deceptive Trade Practices Act ( O.R.C.§ 4165.02 ); and state common law claims for Unfair Competition and Unjust Enrichment. Defendant has filed a motion to dismiss under Fed. R. Civ. P. 12(b)(2) and/or Fed. R. Civ. P. 12(b)(3) , asserting the Court lacks personal jurisdiction and that venue is improper. In the alternative, Defendant asks this Court to transfer the case to the Northern District of Georgia.
II. Standard of Review
Plaintiff bears the burden of establishing that jurisdiction exists over a non-resident defendant. Neogen Corp. v. Neo Gen Screening, Inc. , 282 F.3d 883 (6th Cir. 2002). "When the district court rules on written submissions alone the burden consists of a prima facie showing that personal jurisdiction exists." Schneider v. Hardesty , 669 F.3d 693, 697 (6th Cir. 2012) (internal quotation marks omitted). When the Court elects to rule on the written submissions, rather than holding an evidentiary hearing, it may not consider any evidence submitted in support of the defense motion. Malone v. Stanley Black & Decker, Inc. , 965 F.3d 499, 505 (6th Cir. 2020) ("Although Rexon provided an affidavit that in some ways cut against jurisdiction, the district court's choice [to resolve the motion on written submissions] made that affidavit irrelevant."). The Court must view the submissions it considers in the light most favorable to the plaintiff. Calphalon Corp. v. Rowlette , 228 F.3d 718, 721-22 (6th Cir. 2000).
A prima facie showing is made by "establishing with reasonable particularity sufficient contacts between [the defendant] and the forum state to support jurisdiction." Neogen Corp. , 282 F.3d at 887. Under this standard, dismissal is proper if all the allegations put forth by the plaintiff collectively fail to state a prima facie case for jurisdiction. Kerry Steel, Inc. v. Paragon Indus., Inc. , 106 F.3d 147, 149 (6th Cir. 1997).
When a "court finds that there is a want of [personal] jurisdiction, the court shall, if it is in the interest of justice, transfer such action" to another court in which the action "could have been brought at the time it was filed or noticed[.]" 28 U.S.C. § 1631 . A court may initiate a § 1631 transfer under sua sponte. Flynn v. Greg Anthony Constr. Co. , 95 F. App'x 726, 738 (6th Cir. 2003) ; Flatt v. Aspen Dental Mgmt., Inc. , No. 2:18-CV-1278, 2019 WL 6044159, at *3 (S.D. Ohio Nov. 15, 2019). The Court has "broad discretion in ruling on a motion to transfer." Stanifer v. Brannan , 564 F.3d 455, 457 (6th Cir. 2009).
III. Law and Analysis
A. Personal Jurisdiction
The Lanham Act does not authorize the assertion of personal jurisdiction over Defendant. 15 U.S.C. § 1125 . Accordingly, when no statute of the United States authorizes personal jurisdiction directly, the Court must determine whether jurisdiction would be permitted in the courts of the forum state. See Fed. R. Civ. P. 4(k)(1) . Jurisdiction is proper in the forum state if "the defendant [is] amenable to suit under the forum state's long-arm statute and the due process requirements of the Constitution [are] met." Reynolds v. Int'l Amateur Athletic Fed'n , 23 F.3d 1110, 1115 (6th Cir. 1994). Ohio's long-arm statute does not reach the limits of due process; therefore, the Court must analyze whether personal jurisdiction is proper under Ohio's long-arm statute prior to considering whether personal jurisdiction may be exercised consistent with constitutional due process. Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide , 545 F.3d 357, 361 (6th Cir. 2008).
1. Ohio's Long-arm Statute
Ohio's long-arm statute provides nine bases for asserting jurisdiction over a non-resident defendant. O.R.C. § 2307.382(A) . Plaintiff asserts that the Court's personal jurisdiction over Defendant is proper under the sixth basis, ECF No. 5 at PageID #: 52, which states that "[a] court may exercise personal jurisdiction over a person who acts directly or by an agent, as to cause a cause of action arising from the person's: ... [c]ausing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state." O.R.C. § 2307.382(A)(6) .
The Complaint alleges that Defendant's intentional conduct caused tortious injury to Plaintiff in Ohio. ECF No. 1 at PageID #: 10-14. Interpreting the facts in the light most favorable to Plaintiff, Defendant "might reasonably have expected that some person would be injured thereby in this state[,]" specifically that Plaintiff might suffer losses to its business and reputation. O.R.C. § 2307.382(A)(6) . Given Defendant's alleged familiarity with Plaintiff's website, former employees, and marketing materials, it is reasonable to assume that Defendant knew Plaintiff was an Ohio Company, and might suffer losses as a result of the alleged conduct. Accordingly, the effects of Defendant's alleged conduct may satisfy Ohio's long-arm statute.
However, an analysis of § 2307.382(A)(6) does not, alone, satisfy Plaintiff's burden to establish personal jurisdiction over Defendant. Plaintiff must also demonstrate that jurisdiction is proper under the federal due process clause.
2. Due Process
The Court may exercise personal jurisdiction over a defendant, consistent with due process "when defendant has sufficient minimum contacts such that traditional notions of fair play and substantial justice are not offended." Intera Corp. v. Henderson , 428 F.3d 605, 615 (6th Cir. 2005). The Sixth Circuit has identified three criteria for the inqury: (1) "the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence" to occur there; (2) "the cause of action must arise from the defendant's activities" in the forum state; and (3) the defendant's acts or the consequences caused by the defendant "must have a substantial enough connection with the forum state to make the exercise of jurisdiction over him reasonable." So. Mach. Co. v. Mohasco Indus., Inc. , 401 F.2d 374, 381 (6th Cir. 1968).
There are two forms of personal jurisdiction, specific and general. CompuServe, Inc. v. Patterson , 89 F.3d 1257, 1263 (6th Cir. 1996) ; Air Prod. & Controls, Inc. v. Safetech Int'l, Inc. , 503 F.3d 544, 550 (6th Cir. 2007). General jurisdiction requires a showing that the defendant is "at home" in the forum state, that is, that he has continuous and systematic contacts with the forum state to justify the state's exercise of judicial power with respect to any and all claims. Daimler AG v. Bauman , 571 U.S. 117, 122, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). On the other hand, specific personal jurisdiction "exposes the defendant to suit in the forum state only on claims that ‘arise out of or relate to’ a defendant's contacts with the forum." Id. Here, only specific personal jurisdiction is at issue. ECF No. 5 at PageID #: 55.
"[T]he question of whether a defendant has purposefully availed itself of the privilege of doing business in the forum state is ‘the sine qua non for in personam jurisdiction.’ " CompuServe, Inc. , 89 F.3d at 1263 (quoting Mohasco Indus., Inc. , 401 F.2d at 381–82 ). While a defendant need not be physically present in the forum state for personal jurisdiction to exist, there must be a substantial connection between defendant's conduct and the state such that the defendant would "reasonably anticipate being hauled into court there." Burger King v. Rudzewicz , 471 U.S. 462, 474-75, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citation and quotation marks omitted); see also J. McIntyre Mach., Ltd. v. Nicastro , 564 U.S. 873, 882, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011) (finding the principal inquiry "is whether the defendant's activities manifest an intention to submit to the power of a sovereign").
Federal courts have promulgated what has been termed the " Calder -effects test" to determine whether the effects of a defendant's intentional tortious conduct is sufficient for the forum's courts to exercise personal jurisdiction over him. Reynolds , 23 F.3d at 1118. Under the Calder -effects test Plaintiff must establish that Defendant intentionally committed a tortious action which was "expressly aimed" for dissemination in the forum state. Carrier Corp. v. Outokumpu Oyj , 673 F.3d 430, 451 (6th Cir. 2012) (citing Calder v. Jones , 465 U.S. 783, 789, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) ). The "brunt of the harm" must also be felt in the forum state. Id.
The Supreme Court and Sixth Circuit have applied the Calder -effects test narrowly. Mere allegations that intentional tortious conduct injured a forum resident does not, alone, suffice to prove a defendant possessed the constitutionally required minimum contacts with that forum to satisfy personal jurisdiction. Walden v. Fiore , 571 U.S. 277, 290, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (" Calder made clear that the mere injury to a forum resident is not always a sufficient connection to the forum, rather [t]he proper question is ... whether the defendant's conduct connects him to the forum in a meaningful way"). In short, injury to a forum resident is not enough, on its own, to establish personal jurisdiction, and the Calder -effects test has not been read to authorize personal jurisdiction in a plaintiff's home forum in the absence of additional evidence to demonstrate that the defendant "specifically directed" his actions toward the forum state. See Parker v. Winwood , 938 F.3d 833, 841 (6th Cir. 2019) (Plaintiff argued that defendant's "alleged willful copyright infringement, which occurred in England, qualifies as purposeful activity in Tennessee because he intentionally harmed Tennessee residents. But Walden v. Fiore forecloses this argument.").
See also Scotts Co. v. Aventis S.A. , 145 F. App'x 109, 114, n.1 (6th Cir. 2005) ("Although this Circuit has long held that the minimum contacts test can be satisfied either by acting or the causing of a consequence in the forum state ... we have not held that merely causing a consequence always satisfies the minimum contacts test."); Reynolds , 23 F.3d at 1118 (finding plaintiff's assertions that defendant "intentionally and purposefully directed their tortious actions toward" plaintiff insufficient, alone, to create personal jurisdiction over defendant).
Delta Media Grp., Inc. v. Kee Grp., Inc. , 2007 WL 3232432 (N.D. Ohio Oct. 31, 2007) ("The entire universe of factual jurisdictional allegations against Greyhound consists of Plaintiff's contentions that (1) Greyhound ‘had to know’ that the allegedly infringing material used on Kee's website came from Delta; and (2) Greyhound ‘had also to know’ that using the allegedly infringing material would cause injury to Delta in Ohio.... [E]ven if true, the Court finds these allegations insufficient to establish purposeful availment by Greyhound in Ohio."); Weather Underground , Inc. v. Navigation Catalyst Sys. , Inc. , 688 F.Supp.2d 693, 700 (E.D. Mich. 2009). ("Without question, injury to a forum resident is not enough[.]").
Plainiffs have made no allegation that any of Defendant's conduct, suit-related or otherwise, occurred in Ohio. The only argument Plaintiff advances that it asserts concern actions rather than effects is that by registering the domain name leaffiltergutterguards.com, and redirecting traffic from that site to Defendant's own website, Defendant "took aim at an Ohio resident[ ]" and "confused consumers familiar with LeafFilter, including in Ohio, who[m] logically thought they would land on LeafFilter's website[.]" ECF No. 5 at PageID #: 55.
Defendant submitted Decelerations authored by Aaron T. Culbertson in support of its motion to dismiss or transfer. ECF No. 4-1; ECF No. 7-1; ECF No. 7-2. Because the Complaint does not establish a prima facie case for personal jurisdiction, the Court need not, and did not, consider these decelerations. Given that the Court is resolving this motion on the papers, such submissions are "irrelevant" under binding precedent. Malone , 965 F.3d at 505.
Plaintiff argues "[t]he operation of an Internet website can constitute the purposeful availment of the privilege of acting in a forum state under the first Southern Machine factor if the website reveals a specific intended reaction with residents of the state." ECF No. 5 at PageID #: 55-56. Neither case cited by Plaintiff supports the exercise of personal jurisdiction here. First, as both cases state, it is well-settled that the passive operation of a website is categorically insufficient to establish purposeful availment: "The level of contact with a state that occurs simply from the fact of a website's availability on the Internet is therefore an "attenuated" contact that falls short of purposeful availment." Neogen Corp, 282 F.3d at 890 ; see also Bird v. Parsons , 289 F.3d 865, 874 (6th Cir. 2002) ("[T]he fact that Dotster maintains a website that is accessible to anyone over the Internet is insufficient to justify general jurisdiction.").
"The operation of an Internet website can constitute the purposeful availment of the privilege of acting in a forum state under the first Mohasco factor ‘if the website is interactive to a degree that reveals specifically intended interaction with residents of the state.’ " Bird , 289 F.3d at 874 (quoting Neogen Corp. , 282 F.3d at 890 ). Whether a website is "passive" or "interactive" has nothing to do with the website's internal functions (i.e. that it redirects to a different website), but refers to the extent to which consumers can engage with the company and/or receive goods and services by using the site. See, Inc. v. Imago Eyewear Pty, Ltd. , 167 F. App'x 518, 522 (6th Cir. 2006) (applying Zippo Mfg. Co. v. Zippo Dot Com, Inc. , 952 F. Supp. 1119, 1124 (W.D. Pa. 1997) ). Plaintiff does not argue, and the Complaint does not assert, that the website has any interactive features. There are no specific allegations concerning use of the website in Ohio, only a generic assertion, in briefing, not pleadings, that some Ohio resident may have been confused. ECF No. 5 at PageID #: 55. Because there are no allegations, either in the Complaint or briefing, that the website is anything but passive, the instant case is readily distinguished from Bird and Neogen .
Whether the website at issue in Neogen would independently support jurisdiction was a "close question." Neogen Corp., 282 F.3d at 891. Because the website, however, was not the only contact, the Court did not need to resolve the issue. The alleged content and functionality of Defendant's website falls far short of the close call described in Neogen . There, in-state consumers were given passwords to access test results, and the defendant used its website to advertise statistics generated from data resulting from tests the defendant performed on Michigan residents. Bird presents even weaker support for Plaintiff's argument, as the website at issue was alleged to have been used to conduct business with "4,666 Ohio residents." Bird , 289 F.3d at 874. Here, there are no allegations that the publicly-accessible website at issue even can be used to conduct business, as opposed to just provide users with information and advertisements.
Plaintiff has injected an alternative request for jurisdictional discovery into the single-sentence conclusion of its response brief. ECF No. 5 at PageID #: 65. Plaintiff has presented no argument on this issue. Plaintiff has not explained what jurisdictional discovery might be useful to the parties or the Court, and the Court can see none. Accordingly, the Court, in its sound discretion, denies Plaintiff's last-second request to engage in an unspecified and speculative fishing expedition. See C.H. By and Through Shields v. United States , 818 Fed.Appx. 481, 483–84 (6th Cir. 2020).
Additionally, purposeful availment is only one prong of the personal jurisdiction analysis. Plaintiff must also independently establish that the case "arises from" the alleged contacts. Cmty. Trust Bancorp, Inc. v. Cmty. Trust Fin. Corp. , 692 F.3d 469, 472 (6th Cir. 2012). In a case with similar allegations to this one, that a competitor operated a website causing a substantial risk of consumer confusion, the Sixth Circuit concluded that even proven in-state use of the website by a handful of in-state consumers was insufficiently related to the underlying claims to satisfy the "arising under" prong of due process analysis. Id.
That leaves Plaintiff with nothing but arguments regarding effects, that is, that Plaintiff has been affected by Defendant's alleged conduct, and that, as an Ohio corporation, those effects have been felt most strongly in Ohio. Plaintiff effort to establishing personal jurisdiction have fallen short of federal due process requirements. They have not shown what, if any, affirmative steps Defendant took to direct its business activities toward the State of Ohio. Assuming Plaintiff did sustain injury from customer confusion caused by Defendant's actions outside of Ohio, Defendant's contacts with the State of Ohio–through the autonomous actions of its customers–are too tenuous to require Defendant to be hailed into court here. See Walden , 571 U.S. at 291, 134 S.Ct. 1115 ("[I]t is defendant, not the plaintiff or third parties, who must create contacts with the forum state.").
This case does not arise from Defendant's activities in Ohio. Accordingly, Plaintiff has failed to state a prima facie case for personal jurisdiction.
B. Transfer in the Interests of Justice
Having concluded that the Court lacks personal jurisdiction over Defendant, the Court turns to whether the appropriate next step is to dismiss or transfer this matter. Defendant proposes a transfer to the Northern District of Georgia, where, as a Georgia corporation, it is subject to general personal jurisdiction. Plaintiff does not propose any alternate forum.
There are three federal transfer statutes: 28 U.S.C. § 1404(a) , which allows a properly filed case to be transferred "[f]or the convenience of parties and witnesses, in the interests of justice[;]" 28 U.S.C. § 1406(a), which allows an improperly filed case to be transferred to cure a venue defect; and 28 U.S.C. § 1631 , which expressly and specifically provides for the transfer of cases in which the original court finds a "want of [personal] jurisdiction." See Jackson v. L & F Martin Landscape , 421 F. App'x 482, 483 (6th Cir. 2009) (discussing the distinctions between the transfer statutes).
Defendant's request for transfer analyzes the requirements under § 1404(a) . Such a request is improper. The Sixth Circuit has expressly limited § 1404(a) transfers to "actions commenced in a district court where both personal jurisdiction and venue are proper." Newberry v. Silverman , 789 F.3d 636, 641 (6th Cir. 2015) ; Pittock v. Otis Elevator Co. , 8 F.3d 325, 329 (6th Cir. 1993) ("[A] transfer under section 1404(a) may not be granted when the district court does not have personal jurisdiction over the defendants."). Because the question of transfer stems from a successful challenge to personal jurisdiction, the Court applies 28 U.S.C. § 1631 in evaluating the transfer.
While there are cases in which the basis of transfer is functionally irrelevant, this is not one.
[W]hen a case that is in federal court [and involves state claims] is transferred from one forum to another, "the choice of law is dependent on the nature of the transfer." Martin v. Stokes , 623 F.2d 469, 473 (6th Cir. 1980). If a case is transferred for the convenience of the parties pursuant to 28 U.S.C. § 1404(a), then the state law of the transferor court applies. Id. On the other hand, if a case is transferred under 28 U.S.C. § 1406(a) because it was originally filed in the wrong venue, then the state law of the transferee district court applies. Id. The same goes for a case transferred under 28 U.S.C. § 1631 for want of jurisdiction. 28 U.S.C. § 1631.
Newberry v. Silverman , 789 F.3d 636, 640 (6th Cir. 2015). This ensures that the aggrieved defendant is not subject to the laws, or choice of law rules, of a jurisdiction that lacked authority over it in the first place. Because Plaintiff seeks relief under state law, it is important that the Court transfer under an appropriate provision.
In its reply, Defendant raises the possibility of transfer under 28 U.S.C. § 1406(a). ECF No. 7 at PageID #: 83. Because any determination on the propriety of venue required a determination of where the Defendant is subject to personal jurisdiction, the Court resolved the personal jurisdiction question first. 28 U.S.C. § 1391. Because personal jurisdiction is lacking, the Court need not reach Defendant's venue arguments. As the sole Defendant resides in Northern District of Georgia, venue will be proper upon transfer. Id.
Having concluded that personal jurisdiction is lacking, the sole remaining question for the Court is whether it would be in the interests of justice to transfer, rather than dismiss, the case. 28 U.S.C. § 1631 . The Court sees no need for the parties to need to restart the litigation anew, or for Plaintiff to lose out on any benefit it may otherwise be entitled to based on its initial filing date. Furthermore, it seems unlikely that Plaintiff would be meaningfully inconvenienced by the transfer. While its corporate headquarters are here in Ohio, Plaintiff operates at least one location in Georgia, suggesting that it is at least not entirely unprepared to engage in litigation in that state. ECF No. 1 at PageID #: 3.
Because transfers under § 1631 inherently involve an improper forum, the Court does not apply "strong presumption in favor of a plaintiff's [original] selected forum" as it would in evaluating a § 1404(a) transfer for forum non conveniens. Zions First Nat. Bank v. Moto Diesel Mexicana, S.A. de C.V. , 629 F.3d 520, 523–24 (6th Cir. 2010). Plaintiff has stated no preference as to non-Ohio fora for the Court to consider.
Defendant, on the other hand, operates exclusively in the Southeastern United States. ECF No. 1 at PageID #: 3. Plaintiff even boasts that its own presence in the Southeast United States is more significant than Defendants. Id. at PageID #: 4. ("HomeCraft falsely advertises that it "is the largest gutter guard company in the Southeast," which is false and materially misleading because HomeCraft is not the largest gutter guard company in the Southeast (e.g., it has at least seven fewer locations than LeafFilter in the Southeastern United States).").
Furthermore, there is nothing about this case that suggests a significant number of the witnesses will be in Ohio, as opposed to Georgia. While it may be reasonable to assume, as Plaintiff states, that at least some witnesses who can speak to Plaintiff's damages are located near its corporate headquarters, it is equally reasonable to assume that at least some witnesses who can speak to Defendant's alleged conduct are located near its corporate headquarters in Georgia. To the extent that this litigation requires travel or in-person proceedings at all, in light of current COVID-19 precautions and resulting practices, there will be work to be done in both states. However, there is no reason to believe that an overwhelming majority of the discovery will relate to damages rather than Defendant's conduct. Accordingly, the Court finds that it would be in the interests of justice to transfer, rather than dismiss, this case.
Accordingly, this matter will be transferred to the Northern District of Georgia, where both personal jurisdiction and venue lie.
IV. Conclusion
Based on the foregoing, Defendant's Motion to Dismiss or Transfer (ECF No. 4 ) is granted to the extent that it seeks transfer. The Court hereby directs the Clerk of Courts to transfer this action to the United States District Court for the Northern District of Georgia.
IT IS SO ORDERED.