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Ultra Athlete LLC v. Araujo

United States District Court, S.D. Indiana, New Albany Division

March 1, 2019

ULTRA ATHLETE LLC, Plaintiff,
v.
JALMAR ARAUJO, JB SPORTS, LLC d/b/a FLEXIBRACE, JOHN DOE MANUFACTURERS, Defendants.

          ENTRY ON DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED, IMPROPER VENUE OR, IN THE ALTERNATIVE, MOTION FOR MORE DEFINITE STATEMENT

          RICHARD L. YOUNG, JUDGE

         Plaintiff, Ultra Athlete LLC, owns patents that cover the functional and design aspects of an ankle brace product. Plaintiff alleges the Defendants, Jalmar Araujo and JB Sports, LLC d/b/a Flexibrace, sell the “Flexibrace Ankle Brace Hinged Support Guard” which infringes its patents and trade dress. Defendants move to dismiss Plaintiff's Complaint on three grounds: lack of personal jurisdiction, failure to state a claim, and improper venue. In the alternative, they move for a more definite statement. For the reasons explained below, Defendants' motion is GRANTED in part and DENIED in part.

         I. Background

         JB Sports' principal place of business is in Everett, Massachusetts. (Filing No. 33-2, Amended Declaration of Jalmar Araujo (“Am. Araujo Decl.”) ¶ 10). Mr. Araujo, the owner and principal officer of JB Sports, testified that between May 2016 and May 2018, JB Sports sold 18[1] infringing ankle brace products to Indiana residents. (Filing No. 47-1, Deposition of Jalmar Araujo at 53). Defendants allegedly sold these products on eBay, Amazon.com, and other outlets. (Filing No. 25, First Amended Complaint (“Am. Compl.”) ¶ 10; Filing No. 25-5, Araujo-Flexibrace eBay Seller's Page).

         Plaintiff, a resident of Indiana, brought suit against Defendants because the Defendants' Flexibrace product allegedly infringes Plaintiff's patents and trade dress rights, and amounts to unfair competition. (Am. Compl. ¶¶ 3, 8, 14).

         II. Motion to Dismiss for Lack of Personal Jurisdiction

         When “[a] defendant moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the existence of jurisdiction.” Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). As such, a plaintiff need only make a prima facie showing of jurisdictional facts. See Felland v. Clifton, 682 F.3d 655, 672 (7th Cir. 2012). “In evaluating whether the prima facie standard has been satisfied, the plaintiff ‘is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record.'” Purdue Research, 338 F.3d at 782 (quoting Nelson by Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983)).

         Since Plaintiff brought claims under the Lanham Act, which does not authorize nationwide service of process, a federal district court has personal jurisdiction over a non- resident defendant if a court of the state in which it sits would have such jurisdiction. Id. at 779. In Indiana, personal jurisdiction depends on whether the requirements of the state's long-arm statute are met and whether federal due process requirements are satisfied. Id. Indiana Trial Rule 4.4(A) serves as Indiana's long-arm statute. Because Indiana's long-arm statute expands personal jurisdiction to the full extent permitted by the Due Process Clause, LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 966-67 (Ind. 2006), the sole inquiry before the court is whether exercising personal jurisdiction over the Defendants would offend due process.

         Personal jurisdiction over a nonresident defendant meets the standard of due process when the defendant has established minimum contacts within the state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Tamburo v. Dworkin, 601 F.3d 693, 700-01 (7th Cir. 2010) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Personal jurisdiction may be either general or specific. The parties focus their arguments on specific, rather than general, jurisdiction. Specific jurisdiction is appropriate when: (1) “the defendant has purposefully directed its activities at the forum state or purposefully availed himself of the privilege of conducting business in that state”; (2) “the alleged injury arises out of the defendant's forum-related activities”; and (3) “[t]he exercise of jurisdiction [] comport[s] with traditional notions of fair play and substantial justice.” N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 492 (7th Cir. 2014) (citing Tamburo, 601 F.2d at 702).

         Defendants argue the court does not have specific jurisdiction over them because they have not purposely directed their activities at Indiana, Plaintiff's alleged injuries did not arise from Defendants' Indiana-related activities, and the exercise of jurisdiction over them would not comport with traditional notions of fair play and substantial justice.

         To establish a defendant's conduct was purposefully directed at the forum state, a plaintiff must show that “the defendant's suit-related conduct . . . create[s] a substantial connection with the forum State.” Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). The Walden Court emphasized that “the plaintiff cannot be the only link between the defendant and the forum”; “it is the defendant's conduct that must form the necessary connection with the forum State.” Id. at 1122 (citing Burger King v. Rudzewicz, 471 U.S. 462, 478 (1985)).

         The Seventh Circuit's decision in Illinois v. Hemi Group LLC is instructive. 622 F.3d 754 (7th Cir. 2010). Hemi, based out of New Mexico, sold cigarettes over the internet to 49 states, specifically excluding New York. Id. at 755-56. The only specific sales to an Illinois resident were instigated by an Illinois Department of Revenue agent, who purchased more than 300 packs of cigarettes from Hemi-operated websites in 2005 and 2007. Id. at 755. Despite the fact that Hemi was “not registered to do business in Illinois, [did] not have any offices or employees in Illinois, [did] not bank in Illinois, . . . [had] not advertised in print media in Illinois, ” and did not “single out Illinois residents on any of its websites, ” the Seventh Circuit affirmed the district court's exercise of specific jurisdiction over Hemi. Id. at 756-58. The Seventh Circuit based its decision on how Hemi conducted its internet-based business.

Hemi created several commercial, interactive websites through which customers could purchase cigarettes from Hemi. Hemi held itself out as open to do business with every state (including Illinois) except New York. After the customers made their purchases online, Hemi shipped the cigarettes to their various destinations. It is Hemi reaching out to residents of Illinois, and not the residents reaching back, that creates the sufficient minimum contacts with Illinois that justify exercising personal jurisdiction over Hemi in Illinois.

Id. at 758. Thus, where an internet company holds itself out as open to do business with a forum state and actually does sell products to residents of the forum, specific jurisdiction is proper. Payton v. Kale Realty, LLC, Case No. 13 C 8002, 2014 U.S. Dist. LEXIS 118590, at *8 (N.D. Ill. Aug. 26, 2014) (citation omitted).

         Like the defendant in Hemi Group, Factory Direct operates internet retail stores for the promotion and sale of its Flexibrace product on interactive websites like Amazon.com and eBay.com. Defendants hold themselves out as open to do business with every state and directly ship the items sold from various internet websites to customers in Indiana. Defendants were therefore “ready and willing” to do business with [Indiana] residents, ...


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