Opinion
Civil Action No. 04-2302-CM.
October 18, 2004
MEMORANDUM AND ORDER
Plaintiff Silpada Designs, Inc., filed the instant suit against defendants Timothy and Shirley O'Malley for trademark infringement and false advertising. This matter is before the court on defendant Shirley O'Malley's Motion to Dismiss (Doc. 7).
Shirley O'Malley filed pro se her original appearance and the instant motion to dismiss. Given that Shirley O'Malley is not an attorney, she cannot represent Timothy O'Malley, her husband. Timothy O'Malley, not having filed or signed either of those two pleadings, is therefore in default, which the Clerk appropriately entered on September 13, 2004. As such, the court grants plaintiff's Motion to Strike (Doc. 9) the instant motion to dismiss, to the extent defendant Shirley O'Malley brought the motion on behalf of defendant Timothy O'Malley. The court will address the merits of defendant Shirley O'Malley's Motion to Dismiss and will refer to Timothy and Shirley O'Malley as "defendants," even though Timothy O'Malley is in default for failure to respond to the Complaint.
Defendants argues that this case should be dismissed, claiming that 1) service of process was improper; 2) this court lacks personal jurisdiction over defendants; 3) venue is not proper; and 4) the Complaint fails to state a claim upon which relief can be granted.
I. Background
Plaintiff is located in Stilwell, Kansas and operates a business through which it sells, among other things, jewelry. Plaintiff's jewelry is advertised on its website at www.silpada.com. Silpada owns federal trademark registrations and applications for its Silpada marks, including "SILPADA" and "SILPADA DESIGNS." Defendants are residents of Minnesota. According to documents filed with the State of Minnesota, defendants operate a business under the name "MrShirleys."
Plaintiff claims that defendants' domain name, silpadastyle.com, has caused and is likely to cause confusion as to the source of plaintiff's goods. Plaintiff contends that defendants' website contains the keyword "Silpada" in its metatags and that defendants display the term SILPADA or SILPADASTYLE as trademarks throughout their website. Plaintiff also asserts that defendants' eBay auction listings contain or have contained the following keywords in its metatags: silpada, silpada savings, silpada style, and silpada designs, and that the auction listings have improperly used the trademark SILPADA in the title of the auctions, when, at times, no genuine Silpada goods were being sold.
Defendants, through their interactive website and eBay auction listings, solicit, advertise and sell their goods nationwide. Defendants' website at www.silpadastyle.com and eBay auction listings can (or could) be viewed by anyone, including online users in Kansas. On their website, defendants provide users an opportunity to correspond with defendants by email, and allow customers to pay for purchases online at their website. Defendants sold to customers in this judicial district.
II. Discussion
A. Personal Jurisdiction
A plaintiff opposing a motion to dismiss for lack of personal jurisdiction bears the burden of establishing that the exercise of personal jurisdiction over the defendant is proper. Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir. 1996). If the motion to dismiss is submitted prior to trial on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing to avoid dismissal for lack of personal jurisdiction. Id. Although the plaintiff will be required to prove the factual basis for jurisdiction by a preponderance of the evidence at trial, on a pre-trial motion to dismiss, all factual disputes are resolved in favor of the plaintiff. Id. If the plaintiff makes the required prima facie showing that personal jurisdiction exists, "a defendant must present a compelling case demonstrating 'that the presence of some other considerations would render jurisdiction unreasonable.'" OMI Holdings, Inc. v. Royal Ins., 149 F.3d 1086, 1091 (10th Cir. 1998) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
In the instant case, the court must determine that the exercise of jurisdiction comports with due process and that an applicable statute potentially confers jurisdiction by authorizing service of process. Peay v. Bellsouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000). The Kansas long-arm statute is construed liberally to allow jurisdiction to the full extent permitted by due process; therefore, the court proceeds directly to the constitutional analysis. Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994).
Under the due process analysis, the "constitutional touchstone" is "whether the defendant purposely established 'minimum contacts' in the forum state." Burger King, 471 U.S. at 474 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). There must be some act by which the nonresident party purposefully avails itself of the privilege of conducting activities in the forum state. Hanson v. Denckla, 357 U.S. 235, 253 (1958). The purposeful availment requirement ensures that a defendant will not be sued in a foreign jurisdiction solely as a result of the unilateral activity of another party. Burger King, 471 U.S. at 475.
Consistent with due process, specific jurisdiction may be conferred over a nonresident defendant where the court's exercise of jurisdiction directly arises from a defendant's forum-related activities. To determine whether specific jurisdiction is appropriate, the court must first decide whether the defendant has such minimum contacts within the forum state "that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1979). Second, the court must consider whether the exercise of personal jurisdiction offends "traditional notions of fair play and substantial justice." Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987). This inquiry requires a determination of whether a district court's exercise of personal jurisdiction over a defendant with minimum contacts is "reasonable" in light of the circumstances surrounding the case. Id.
1. Minimum Contacts
The first step in the minimum contacts analysis requires a determination of whether plaintiff has made a showing of some act by which the defendant purposefully availed itself of the privilege of conducting business in the jurisdiction of this court, thus invoking the benefits and protections of its laws. Plaintiff argues that defendants' actions of knowingly operating an Internet website that allegedly infringes upon plaintiff's registered service mark establishes minimum contacts with Kansas.
The Tenth Circuit has adopted the analysis set forth in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997). See Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1297 (10th Cir. 1999). At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet web site which is accessible to users in foreign jurisdictions. A passive web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. The middle ground is occupied by interactive websites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the website.
In this case, the court concludes that defendants' website falls within the category of "clearly doing business over the Internet." Similar to the website at issue in Rainy Day Books, Inc. v. Rainy Day Books Café, L.L.C., 186 F. Supp. 1158, 1163-64 (D. Kan. 2002), the website in this case provides information about upcoming events and new features; permits an Internet user to purchase jewelry online by clicking on a link and using the PayPal method; permits an Internet user to click on a link, redirecting the user to the defendants' auction listing on eBay, where goods may be purchased online; permits consumers to search for specific products or browse through categories of jewelry and see suggested purchase recommendations specified by defendants; permits a customer to place items in virtual shopping carts; and permits the purchase of products through "checkout" by providing credit card and shipping information.
Also significant is the fact that defendants admit to making sales in Kansas, stating in the Motion: "No sales of Products by MrShirleys have been made in the State of Kansas other than Sales initiated by the Plaintiff (Silpada Designs) themselves, which I believe were made solely for the purpose of filing their complaint in the State of Kansas." (Motion to Dismiss, pg. 1). As explained in Rainy Day Books:
Because the inquiry is under specific personal jurisdiction, the individual book orders placed by Kansas residents at Plaintiff's behest are not determinative. Instead, the focus of the inquiry is on Defendant's actions in setting up and maintaining a commercial website, which targeted Kansas residents by its alleged use of Plaintiff's service marks. Plaintiff's activities in obtaining evidence that a Kansas resident could purchase books from Defendant's website do not constitute the manufacture of the contacts necessary for the Court to exercise personal jurisdiction. Proof of an actual book sale to a Kansas resident from Defendant's website merely supports Plaintiff's contention that Defendant's website is a commercial website accessible by Kansas residents.Rainy Day Books, 186 F. Supp. 2d at 1165.
Apparently, the actual number of bona fide sales to date of jewelry to Kansas residents ordering through defendants' website or eBay auction listings is unknown. Nonetheless, by engaging in Internet commerce with Kansas residents through its website and auction listings, defendants have established the minimum contacts sufficient to exercise specific personal jurisdiction.
2. Reasonableness
If a plaintiff makes a prima facie showing that minimum contacts exist, the defendants can defeat the exercise of personal jurisdiction by demonstrating that it is incompatible with "traditional notions of fair play and substantial justice" — a reasonableness inquiry conducted in light of the circumstances surrounding the case. OMI Holdings, Inc., 149 F.3d at 1090. Factors relevant to the inquiry include: 1) the burden on the defendant; 2) the forum state's interest in resolving the dispute; 3) the plaintiff's interest in receiving convenient and effective relief; 4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and 5) the shared interest of the several states in furthering fundamental substantive social policies. Id. at 1095 (citing Asahi Metal Indus. Co., 480 U.S. at 113).
An examination of these factors shows that the exercise of jurisdiction in this case is not unreasonable. Defendants' burden in litigating in this forum is a factor in the reasonableness assessment. Having said that, the court is mindful that, because defendants reside in Minnesota, litigating this case in Kansas would be inconvenient. However, unless the inconvenience is so great as to constitute a deprivation of due process, this burden would not overcome justification for the exercise of jurisdiction. Defendants have failed to make such a showing.
In addition, this court has a strong interest in adjudicating disputes that involve the alleged infringement of a Kansas corporation's service marks. The court notes that plaintiff is a Kansas resident and, therefore, litigating this action in Kansas would be more convenient for plaintiff. Plaintiff, its employees, and its business records are located in Kansas. Defendants admit that they have no employees. As such, Kansas appears to be advantageous in terms of a forum providing a more efficient resolution of the action. Finally, the shared interest in furthering the fundamental substantive social policies factor is not a compelling factor in deciding whether the exercise of personal jurisdiction over defendants is reasonable.
On the whole, the court concludes that the exercise of jurisdiction over defendants in this case is not unconstitutionally unreasonable. Accordingly, the court concludes that its exercise of specific personal jurisdiction over defendants comports with the requirements of due process. Defendants' motion to dismiss on this basis is denied.
B. Venue
Venue is based on 28 U.S.C. § 1391. Under § 1391(b)(2), a civil action can be brought in any "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred."
Defendants contend that venue is improper in this district. However, plaintiff's Complaint is based upon alleged infringement in this judicial district. Moreover, based on the court's findings that defendants advertised to Kansans and sold to Kansas customers via the alleged infringing website, the court finds that a substantial part of the events giving rise to the claim occurred in Kansas. Venue is proper in this district.
C. Service of Process
Defendants argue that process was ineffective because (1) the Summonses do not comply with Fed.R.Civ.P. 4 because the plaintiff's attorneys' names and addresses were not printed on the Summonses; and (2) the Summonses were found in defendants' front yard, "along with hundreds of other papers scattered about." (Motion to Dismiss, pg. 2).
Service of process is proper upon a nonresident of a state where the action is filed if made in the manner provided by the forum state law. Pedi Bares, Inc. v. PC Food Markets, Inc., 567 F.2d 933, 936 (10th Cir. 1977). Kan. Stat. Ann. § 60-204 provides that substantial compliance with the provisions for process service suffices if a party is made aware of the action. That rule is construed liberally. "Under Kansas law, substantial compliance with the requirements for service and awareness of the action are all that is necessary." Id. at 936.
Here, the name and address of plaintiff's attorneys were not included on the Summons but clearly appeared on the Complaint. Defendants apparently were made sufficiently aware of the action, as Shirley O'Malley filed an appearance on July 28, 2004, which included the court and case number. Furthermore, defendants knew the identify of plaintiff's attorneys, as evidenced by the correspondence between them prior to the filing of the lawsuit.
With respect to the manner in which the Summonses and Complaint were served, the court turns to the sworn affidavit of plaintiff's process server, Rick Sinner.
On July 1, 2004, plaintiff's process server attempted to serve defendants at their residence in White Bear Lake, Minnesota. (Sinner Affidavit ¶ 5). A man at that address claimed he was not defendant Timothy O'Malley and not a resident of the home. ( Id. at ¶ 5). The man stated that no other individuals were present at home, although other vehicles were in the drive, and ordered the process server "off his property," although he had just said he did not live there. ( Id. at ¶ 5). On July 6, 2004, plaintiff's process server again attempted to serve defendants. ( Id. at ¶ 8). After knocking on the door of the residence in the early morning, someone looked out the window, locked the door, and turned off the lights. ( Id. at ¶ 8).
On July 7, 2004, the process server again returned to the residence. ( Id. at ¶ 9). At 6:35 a.m., an adult male exited the house. ( Id. at ¶ 10). This was the same man that the process server attempted to serve on July 1, 2004. ( Id. at ¶ 10). The man refused to identify himself, denied he was Timothy O'Malley, and would not take anything into his hands. ( Id. at ¶ 10). The process server placed the Summonses and Complaint for both defendants at the man's feet and stated, "consider yourself served." ( Id. at ¶ 10). The process server stated under oath that the documents were placed neatly at the man's feet; they were not thrown or in anyway spread out.
Accordingly, defendants' claim that the documents were scattered about the front yard is contradicted by a sworn declaration. Importantly, upon receiving Shirley O'Malley's Answer, in which she requested another copy of the documents, plaintiff's counsel sent a copy of the Summonses and Complaint via overnight mail, to the same address at which service took place, confirmation of which plaintiff attached as exhibit to its response. Thus, defendants received a second copy of the Complaint on July 29, 2004.
The court finds that plaintiff has substantially complied with the governing rules concerning service of process. Clearly, defendants were aware that an action was pending in the United States District Court for the District of Kansas. Defendant Shirley O'Malley had enough information to file her initial Answer and subsequent Motion to Dismiss. Defendants have received a duplicate copy of the Complaint, as well as the Notice of Service of the Duplicate Complaint. Defendants, therefore, have suffered no prejudice. In fact, defendants have not alleged that they were not made fully aware of the commencement of this action when process was served. As defendants have been duly served, there is no basis to dismiss the lawsuit.
D. Failure to State a Claim
The court will dismiss a cause of action for failure to state a claim only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the theory of recovery that would entitle him or her to relief, Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998), or when an issue of law is dispositive, Neitzke v. Williams, 490 U.S. 319, 326 (1989). The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations, Maher, 144 F.3d at 1304, and all reasonable inferences from those facts are viewed in favor of the plaintiff, Witt v. Roadway Express, 136 F.3d 1424, 1428 (10th Cir. 1998). The issue in resolving a motion such as this is not whether the plaintiff will ultimately prevail, but whether he or she is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183 (1984).
Defendants' motion on this basis rests entirely on the following two allegations: "The Plaintiff's claims are substantially moot, inaccurate or unfounded," and "Since I, the Defendant, have no substantial personal assets, have made Absolutely No Profit dba MrShirleys, there can be no possible financial relief obtainable."
Upon review of the Complaint, the court concludes that plaintiff has pled a prima facie case for each of its claims. Moreover, the ability of plaintiff to collect a monetary award from defendants is irrelevant in determining whether defendants are liable, especially in light of the fact that plaintiff also seeks equitable relief. Defendants' motion to dismiss for failure to state a claim is denied.
IT IS THEREFORE ORDERED that plaintiff's Motion to Strike (Doc. 9) is granted in part, and defendant Shirley O'Malley's Motion to Dismiss (Doc. 7) is denied.