Opinion
No. 1:04-cv-00962-JDT-WTL.
October 31, 2004
James Braden Chapman II, DANN PECAR NEWMAN KLEIMAN, jchapman@dannpecar.com.
Jeffrey Michael Cromer, DANN PECAR NEWMAN KLEIMAN, jcromer@dannpecar.com.
Mark Anderson Finkelstein, HERRING McBENNETT MILLS FINKELSTEIN PLLC, mfinkelstein@hermcb.com.
Constance Regina Lindman, crlindman@sbcglobal.net.
Tami L. Napier, OVERHAUSER LAW OFFICE, tnapier@overhauser.com.
Paul B. Overhauser, OVERHAUSER LAW OFFICES, pbo@overhauser.com.
Jonathan G. Polak, DANN PECAR NEWMAN KLEIMAN, jpolak@dannpecar.com.
Amy L. Wright, DANN PECAR NEWMAN KLEIMAN, awright@dannpecar.com.
ENTRY DISCUSSING ILLUMINATOR'S MOTION TO DISMISS AND SETTING EXPEDITED BRIEFING SCHEDULE
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
Plaintiffs, Lighthouse Carwash Systems, LLC; Michael L. Kinslow and Norman Siegel, filed a Complaint against Defendants, Illuminator Building Company, LLC; Ultimate Products, Inc. f/k/a Ultimate Hvac Door Products, Inc.; Ultra Wash Systems and Barrie Metro Glass, alleging trade dress infringement, copyright infringement, patent infringement, unfair competition and a host of related causes of action. Defendant Illuminator Building Company, LLC ("Illuminator") filed a Motion to Dismiss Plaintiffs' Complaint as to them for lack of personal jurisdiction. In this Entry, the court rules on Illuminator's Motion to Dismiss and also establishes an expedited briefing schedule for two other pending motions in this case.
I. Illuminator's Motion to Dismiss
These facts are derived from the Plaintiffs' Complaint and evidence submitted by the parties. Where the parties dispute a fact, the dispute is either noted or presented according to the Plaintiffs' assertions of fact. See discussion infra. This discussion does not constitute any findings of fact with respect to the issues in dispute regarding the merits of the litigation.
The Debnam Affidavit was filed for the first time with Illuminator's Reply Brief. Plaintiffs moved to strike the Affidavit and the accompanying brief on a number of grounds, including that the Affidavit was untimely and that it failed to conform to the requirements of 28 U.S.C. § 1746. However, as discussed below, the resolution of Illuminator's Motion to Dismiss is the same regardless of whether the court considers the Debnam Affidavit and the accompanying Reply Brief. Therefore, Plaintiffs' Motion to Strike Illuminator's Reply Brief and Affidavit in Support Thereof is DENIED AS MOOT.
Also, on August 27, 2004, Defendants jointly filed a Motion to Transfer with accompanying evidence. The evidence in support of the transfer motion is not properly before this court when deciding Illuminator's Motion to Dismiss, though the court notes that consideration of this new evidence would not alter the resolution of Illuminator's Motion to Dismiss. See footnote 6, infra.
Illuminator is a North Carolina limited liability company, formed on February 6, 2004, which produces transparent carwash buildings. (Debnam Aff. ¶ 3.) Illuminator is affiliated with Defendant Ultimate Products ("Ultimate"), which acts as Illuminator's exclusive distributor. (Debnam Dep. at 192.) Illuminator, through Ultimate, sells and distributes the Illuminator carwash buildings in the United States. (Compl. ¶ 40; Debnam Dep. at 192-93.)
Illuminator itself has no direct business contacts with Indiana: it has not entered into contracts in Indiana, received funds drawn on a bank in Indiana, or advertised in Indiana. (Debnam Aff. ¶¶ 7, 11-12.) Ultimate, however, offers the Illuminator building for sale in Indiana. (Debnam Dep. at 192.) Ultimate has advertised in a national trade magazine and has sent Illuminator promotional materials to Defendant Ultra Wash Systems ("Ultra"), a distributor in Greenfield, Indiana. (Debnam Aff. ¶ 14.)
On May 6, 2004, Ultra attempted to sell the Illuminator building while at a trade show in Indianapolis, Indiana. (Compl. ¶ 41.) At that trade show, Ultra distributed the Illuminator promotional materials. (Compl. ¶ 41.)
In their Complaint, Plaintiffs allege that the Illuminator carwash building is a copy of the carwash building manufactured and sold since 1998 by Plaintiff Lighthouse Carwash Systems, LLC ("Lighthouse"). (Compl. ¶¶ 16, 33.) Plaintiffs Michael L. Kinslow and Norman Siegel own a number of patents related to the Lighthouse carwash building. (Compl. ¶¶ 25-27.) Lighthouse also owns copyrights for a number of photographs of the Lighthouse carwash building, used in Lighthouse promotional material. (Compl. ¶¶ 20-22.) Plaintiffs allege that the photographs in the Illuminator promotional materials are actually reproductions of the copyrighted photos of the Lighthouse carwash buildings. (Compl. ¶¶ 36-38.)
B. Standard of Review
Where the issue of personal jurisdiction is determined in the absence of an evidentiary hearing, the plaintiff need only make a prima facie showing that the defendant is subject to personal jurisdiction. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Since personal jurisdiction is raised via a motion to dismiss, see Fed.R.Civ.P. 12(b)(2), the court must accept the uncontroverted allegations in the complaint as true and resolve any factual conflicts in the affidavits and other evidence in the plaintiff's favor, see Purdue Research Foundation, 338 F.3d at 782; Hyatt International Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002).
No party has requested an evidentiary hearing to decide the personal jurisdiction issue.
C. Discussion
Jurisdiction exercised on the basis of a federal statute that does not authorize nationwide service of process, requires a federal district court to determine if a court of the state in which it sits would have personal jurisdiction. See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 550 (7th Cir. 2001). This determination of personal jurisdiction normally requires a two-step inquiry, to ascertain (1) whether the defendant falls within Indiana's long-arm statute; and (2) whether the exercise of jurisdiction over the defendant comports with the requirements of federal due process. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 779 (7th Cir. 2003). However, Indiana's long-arm statute has recently "been expanded to the full extent of the law," Richards O'Neil, LLP v. Conk, 774 N.E.2d 540, 550 n. 6 (Ind.Ct.App. 2002) (Najam, J., concurring), as it now provides that "a court of this state may exercise jurisdiction on any basis not inconsistent with the Constitutions of this state or the United States," Ind. Trial R. 4.4(A). Accordingly, "the first prong of the inquiry collapses into the second prong, and the only issue is whether the exercise of jurisdiction over [Illuminator] comports with federal due process." Litmer v. PDQUSA.com, 2004 WL 1661043, at *2 (N.D. Ind., July 27, 2004) (citing Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 1270 (Fed. Cir. 1998) ("because California's long-arm statute is coextensive with the limits of due process . . . the two inquiries collapse into a single inquiry: whether jurisdiction comports with due process" (internal citation omitted)); see Purdue Research Found., 338 F.3d at 779 n. 9 (noting the change in Indiana law).
None of the federal statutes at issue in this case authorize nationwide service of process. See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 550 (7th Cir. 2001) (no nationwide service of process under the Lanham Act); Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997) (no nationwide service of process under the Copyright Act); Fitzsimmons v. Barton, 589 F.2d 330, 333 n. 2 (7th Cir. 1979) (no nationwide service of process under the patent infringement statute); see also 35 U.S.C. § 271 et seq. (patent infringement statute).
Indiana's newly amended Trial Rule 4.4(A) is now one of "those [long-arm statutes] which direct the court to exercise jurisdiction to the extent allowed by the United States and state constitutions." Anthem Ins. Co., Inc. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1231-32 (Ind. 2000) (distinguishing Indiana's previous version of Trial Rule 4.4(A) from other states' "co-extensive" long-arm statutes). Trial Rule 4.4.(A) envisions the possibility that Indiana's Constitution could establish restrictions to the exercise of personal jurisdiction not found in the U.S. Constitution. But in the personal jurisdiction context, the Indiana Supreme Court has not held that the Indiana Constitution is more restrictive than the United States Constitution. See generally Anthem Ins., 730 N.E.2d at 1233 (holding that once the requirements of the Indiana long-arm statute are satisfied, the only remaining hurdle for personal jurisdiction is the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution). Therefore, taking the lead of the Indiana Supreme Court (and since no party has raised the issue), this court will not attempt any inquiry of what constraints the Indiana Constitution might provide on the exercise of personal jurisdiction, apart from the constraints imposed by the U.S. Constitution.
In making the due process inquiry, the court must first ascertain the proper body of law to apply. This case involves one count of patent infringement (Count V), and numerous other non-patent counts. But even if only a single count involves patent law, the Federal Circuit would have appellate jurisdiction over this case. See 28 U.S.C. § 1295(a); see also Christianson v. Colt Indus. Operating Corp., 798 F.2d 1051, 1058 (7th Cir. 1986) ("[I]f any part of the district court's jurisdiction could have been based on [patent law], the Federal Circuit has exclusive jurisdiction over the entire appeal. Non-patent issues in the suit, even if they have their genesis in federal law, are for the purposes of establishing appellate jurisdiction considered pendent to the patent claims.") (citations omitted). In a case such as this, the Federal Circuit applies its own personal jurisdiction law to the patent count and the personal jurisdiction law of the regional circuit (i.e., the Seventh Circuit) to the non-patent counts. See Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir. 2003). Even if the Federal Circuit determines under its own law that it does not have personal jurisdiction over the defendant for the patent count, if, under the regional circuit law, the court has personal jurisdiction over the defendant for any of the non-patent counts, then the court may possess personal jurisdiction over the defendant as to all of the counts (including the patent one) via the supplemental jurisdiction statute ( 28 U.S.C. § 1367(a)). See Silent Drive, 326 F.3d at 1206.
In this case, under Seventh Circuit law, the court has specific personal jurisdiction over Illuminator as to the Plaintiffs' non-patent counts. Specific personal jurisdiction exists where the suit arises out of, or is related to, the defendant's minimum contacts with the forum state. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 716 (7th Cir. 2002). In this inquiry, the court must determine whether defendants "purposefully established `minimum contacts' in the forum State" such that they "should reasonably anticipate being haled into court" in that state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
Under the "effects doctrine," specific personal jurisdiction over a nonresident defendant is proper when the defendant's intentional tortious actions aimed at the forum state cause harm to the plaintiff in the forum state, and the defendant knows such harm is likely to be suffered. See Calder v. Jones, 465 U.S. 783 (1984). The Seventh Circuit has interpreted the effects doctrine broadly. See Janmark, Inc. v. Reidy, 132 F.3d 1200, 1202 (7th Cir. 1997); Indianapolis Colts, Inc. v. Metro. Baltimore Football Club, 34 F.3d 410, 411 (7th Cir. 1994). Under the Seventh Circuit interpretation, "the state in which the victim of a tort suffers the injury may entertain a suit against the accused tort feasor" even if all the other relevant conduct took place outside of the forum state. Janmark, 132 F.3d at 1202 (citing Calder and Indianapolis Colts).
In Janmark, the plaintiff, a seller of mini shopping carts, brought an action against a competitor and its operator, seeking declaratory judgment and asserting a claim of tortious interference with prospective economic damage. See id. at 1201. Finding that a single phone call from defendant in California to a customer of the plaintiff in New Jersey could not be a tort "within" Illinois, the district court dismissed the defendant for lack of personal jurisdiction. See id. Reversing, the Seventh Circuit reasoned that since without an injury there is no tort and that a wrong does not become a tort until an injury has occurred, the location of the injury is vital to understanding where the tort occurred. See id. at 1202. Because the injury took place in Illinois, the tort occurred in Illinois and was thus actionable in Illinois. See id.; see also Indianapolis Colts, 34 F.3d at 411-12 (Maryland defendant may be sued in Indiana for the tort of trademark infringement based on the name of a football team, because the injury of the impaired trademark would be felt mainly in Indiana and someone who commits a tort in Indiana should be amenable to suit there); Riddell v. Monica, 2003 WL 21799935, at *3 (N.D. Ill., July 25, 2003) ("As defendants [who allegedly misappropriated plaintiff's trade secrets] were aware, plaintiff's principal place of business is in Illinois, and thus the injury would be felt most severely in Illinois. Under the circumstances, it was foreseeable that defendants would be required to answer for such actions in Illinois."); Int'l Molding Mach. Co. v. St. Louis Conveyor Co., 2002 WL 1838130, at *4 (N.D. Ill., Aug. 12, 2002) ("[S]pecific jurisdiction can be proper when the injury occurs in Illinois, even if all of the other relevant conduct took place elsewhere."); Bunn-O-Matic Corp. v. Bunn Coffee Serv., Inc., 88 F. Supp. 2d 914, 920 (C.D. Ill. 2000) (relying on Janmark to hold that New York corporation who commits the "torts" of trademark infringement and unfair competition against an Illinois corporation, so that the injury is felt in Illinois, submits itself to the jurisdiction of the Illinois courts).
In this case, Plaintiffs allege that Illuminator committed a variety of torts and statutory violations which sound in tort, see Hard Rock Café Licensing Corp. v. Concession Service, Inc., 955 F.2d 1143, 1150 (7th Cir. 1992) (trademark and copyright infringement treated as analogous to torts); Felsher v. University of Evansville, 755 N.E.2d 589, 598 (Ind. 2001) (unfair competition is a tort under Indiana law), when Illuminator sold its carwash buildings (allegedly copied from Plaintiffs' buildings), and distributed its brochures (allegedly containing photos copied from Plaintiffs' brochures). Illuminator's owner is affiliated with Ultimate (Compl. ¶ 28), who had a close working relationship with Plaintiffs for many years (Compl. ¶¶ 29-33). It is reasonable to assume that Illuminator was aware the Plaintiffs are based in Indiana. Hence, when Illuminator allegedly committed intentional torts against the Plaintiffs, it knew that the injury would be felt mainly in Indiana. Under Janmark, this was sufficient to confer specific personal jurisdiction over Illuminator in this court.
Under the Janmark analysis, it is irrelevant whether Illuminator sold one building or many buildings, or whether Illuminator sold the building(s) in Indiana or in some other state. Therefore, the evidence submitted by Illuminator with its Reply Brief (asserting that Illuminator has never made a sale in Indiana) and with its Motion to Transfer (asserting that only a single building has been produced), does not alter the result.
According to the evidence submitted by Illuminator with its Motion to Transfer, Illuminator's sole owner/manager is also the Chief Executive Officer of Ultimate.
The effects doctrine allows for a finding that minimum contacts exist in a particular forum. Traditionally, after determining that minimum contacts exist, a court next considers whether it would offend traditional notions of fair play and substantial justice to exercise personal jurisdiction over a defendant. See Burger King Corp., 471 U.S. at 477-78. In Janmark and Indianapolis Colts, the Seventh Circuit omitted this additionally inquiry (though in Janmark, the court went on to reject the defendant's "public policy" argument). To the extent this inquiry is necessary under Seventh Circuit law, the court finds that its exercise of personal jurisdiction over Illuminator does not offend traditional notions of fair play and substantial justice. Indiana has a significant interest in the adjudication of this case, since Plaintiffs are Indiana residents, and, as discussed above, Illuminator's alleged tortious activity would have caused injury in Indiana. See Riddell v. Monica, 2003 WL 21799935, at *3 (N.D. Ill., July 25, 2003). As alleged in the Complaint, Illuminator intentionally directed its activities at Indiana by co-opting an Indiana company's designs and an Indiana company's photographs. Given this, Illuminator had to come forward with a compelling case that would render jurisdiction unreasonable. See Burger King Corp., 471 U.S. at 477 ("[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable."). The burden on Illuminator of litigating this case in Indiana, while perhaps significant, is not so great as to amount to a deprivation of due process.
This discussion relates only to the issue of due process. Similar issues will be considered when the court decides the Motion to Transfer, but the standards and considerations are different on a transfer motion. See id. ("Most such considerations [as the burden on the defendant of litigating in a distant forum] usually may be accommodated through means short of finding jurisdiction unconstitutional. . . . [A] defendant claiming substantial inconvenience may seek a change of venue."). Nothing written here should be read to mean that the court has decided the Motion to Transfer.
With respect to the patent claim, it is not necessary to decide whether the Federal Circuit would adopt as broad a view of the effects doctrine as the Seventh Circuit (though it seems likely it would, see Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1206 (Fed. Cir. 2003) (citing Janmark and Indianapolis Colts with approval)). If the Federal Circuit balked at Janmark's reach, this court would have personal jurisdiction over Illuminator as to the patent claim via the supplemental jurisdiction statute ( 28 U.S.C. § 1367(a)), which provides that "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." See Silent Drive, 326 F.3d at 1206. This statute confers supplemental jurisdiction with respect to both subject matter and personal jurisdiction where the "same case or controversy" requirement is satisfied; in other words, such claims must arise out of "a common nucleus of operative fact." See id. (citations omitted). The patent claim in Count V clearly satisfies this test, being based on the same facts as the non-patent claims.
Therefore, Illuminator's Motion to Dismiss is DENIED.
II. Expedited Briefing Schedule
On August 24, 2004, Defendant Barrie Metro Glass ("Barrie") filed a Motion to Dismiss for lack of personal jurisdiction and improper venue. On August 27, 2004, all Defendants filed a Motion to Transfer this action to the Eastern District of North Carolina.
A hearing on the Plaintiffs' Motion for Preliminary Injunction is set for September 28, 2004.
It is in the interest of justice for this court to have ruled on the pending Motion to Dismiss and Motion to Transfer in advance of the preliminary injunction hearing. For instance, the court's ruling on the Motion to Transfer could result in the hearing being conducted in another forum (and likely on a different date) or conducted on schedule in this forum with the issues narrowed. Therefore, the court orders the following expedited briefing schedule:
• Plaintiffs must file their response to Barrie's Motion to Dismiss no later than September 7, 2004.
• Plaintiffs must file their response to Defendants' Motion to Transfer no later than September 7, 2004.
• Barrie must file its reply to Plaintiffs' response to its Motion to Dismiss no later than September 13, 2004.
• Defendants must file their reply to Plaintiffs' response to their Motion to Transfer no later than September 13, 2004.
III. Conclusion
Illuminator's Motion to Dismiss is DENIED. Plaintiffs' Motion to Strike Illuminator's Reply Brief and Affidavit in Support Thereof is DENIED AS MOOT. The court ORDERS the remaining briefing on Barrie's Motion to Dismiss and Defendants' Motion to Transfer to be expedited according to the schedule set out above.
ALL OF WHICH IS ORDERED.