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Younique, L.L.C. v. Youssef

United States District Court, D. Utah

November 30, 2016

YOUNIQUE, L.L.C., Plaintiff,
v.
MARK M. YOUSSEF, Defendant.

          MEMORANDUM DECISION ON DEFENDANT'S MOTION TO DISMISS FOR LACK OF JURISDICTION

          Honorable Jill N. Parrish United States District Court Judge

         Before the court is Defendant Mark M. Youssef 's Motion to Dismiss for Lack of Jurisdiction filed March 28, 2016. (Docket No. 31). As discussed below, the court concludes that it may not properly exercise personal jurisdiction over Dr. Youssef here, but grants leave for Younique to submit a request for transfer before the court dismisses the case.

         BACKGROUND

         This action arises from a trademark dispute between Plaintiff Younique, L.L.C., a cosmetics company headquartered in Lehi, Utah, and Defendant Mark M. Youssef, a medical doctor who owns and operates the YOUnique Cosmetic Surgery Center in Santa Monica, California. In 2012, Younique allegedly began selling a variety of cosmetics, skincare, and beauty products under the "YOUNIQUE PRODUCTS" brand. (Docket No. 2, ¶ 13). Younique registered a federal trademark for the "YOUNIQUE PRODUCTS" brand name in 2014 (Reg. No. 4, 504, 512), and an associated logo in 2015 (Reg. No. 4, 821, 584). Dr. Youssef alleges his practice has provided surgical and non-surgical cosmetic treatments under the "YOUNIQUE" mark since 2005. Dr. Youssef also alleges he has sold certain "medicated and non-medicated cosmetics" under the "YOUNIQUE" mark since 2006. (Docket No. 31, at 3-4). Dr. Youssef registered a federal service mark for "YOUNIQUE" in 2008 (Reg. No. 3, 543, 530). Thus, both Younique and Dr. Youssef lay claim to some form of a "Younique" mark.

         Late in 2014, Dr. Youssef filed an application for a trademark on the "YOUNIQUE" mark in order to further his sales of cosmetic products. His application was denied when the U.S. Patent and Trademark Office determined that his "YOUNIQUE" mark was likely to cause confusion with Younique's sales of cosmetics under the preexisting "YOUNIQUE PRODUCTS" trademark. In response, Dr. Youssef sent a cease-and-desist letter to Younique in Lehi, Utah, alleging infringement of his service mark and threatening litigation. Shortly thereafter, in August of 2015, Dr. Youssef filed a petition to cancel Younique's trademark and supplant it with his own application, arguing that he was the first to use the mark. That petition is pending before the U.S. Trademark Trial and Appeals Board ("TTAB").

         In response to Dr. Youssef's letter and petition to the TTAB, Younique filed this action for declaratory relief in the District of Utah under the Federal Declaratory Judgments Act. See 28 U.S.C. §§ 2201, 2202. Younique seeks a declaration that its use of the "YOUNIQUE PRODUCTS" trademark does not infringe on or dilute any rights Dr. Youssef may have in his service mark or pending trademark under federal and state law, and that its use of the "YOUNIQUE PRODUCTS" trademark does not constitute unfair competition, deceptive trade practice, or other tortious activity under federal or state law. Younique also seeks an order dismissing Dr. Youssef's petition, which is currently pending at the TTAB, and an injunction against any further action by Dr. Youssef to challenge Younique's trademark registration. (See Docket No. 2, ¶¶25-37).

         On March 28, 2016, Dr. Youssef filed the instant Motion to Dismiss for Lack of Personal Jurisdiction. (Docket No. 31). Dr. Youssef argues that he does not have the required "minimum contacts" with this forum to create general or specific personal jurisdiction, that any contacts he has with this forum are unrelated to Younique's claim, and, finally that any exercise of personal jurisdiction would not be reasonable or fair under due process principles. Younique timely filed a Memorandum in Opposition on August 10, 2016. (Docket No. 40). Dr. Youssef timely filed an appropriate reply on August 24, 2016. (Docket No. 43). Oral argument was held before the court on September 20, 2016. The court now considers the arguments of the parties on this matter under jurisdiction granted by 28 U.S.C. § 2201.

         DISCUSSION

         As described above, the motion at hand contests this court's exercise of personal jurisdiction over Dr. Youssef. "[W]hen the court's jurisdiction is contested, the plaintiff has the burden of proving jurisdiction exists." Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). Where, as here, no evidentiary hearing has been held and the motion for personal jurisdiction is based on affidavits and other preliminary materials, the plaintiff "need only make a prima facie showing of personal jurisdiction." Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (citing Wenz, 55 F.3d at 1505). Moreover, any factual disputes must be resolved in favor of the plaintiff. Id.

         Having established the parameters of the burden on Younique, the court now turns to the substance of Dr. Youssef's motion. As discussed above, Dr. Youssef challenges this court's exercise of personal jurisdiction over him as a non-resident of this forum. When determining the extent of its own personal jurisdiction over a non-resident defendant, the court "begins [its analysis] with two questions." See Id. The first question asks whether the exercise of personal jurisdiction by this court aligns with the applicable jurisdictional statute. The second question asks whether the exercise of personal jurisdiction by this court comports with principles of constitutional due process. See Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006). As to the first question, neither the Lanham Act, 15 U.S.C. § 1051 et seq., nor the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., provide for nationwide service of process. See Capitol Fed. Sav. Bank v. E. Bank Corp., 493 F.Supp.2d 1150, 1158 (D. Kan. 2007) (Lanham Act); Dudnikov, 514 F.3d at 1070 (Declaratory Judgments Act). Thus, the applicable jurisdictional statute is Utah's long-arm statute, see Fed. R. Civ. P. 4(k)(1)(A), which "authorizes jurisdiction to the full extent of the federal constitution." Emp 'rs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1159 (10th Cir. 2010); see also Utah Code Ann. § 78B-3-201(3); Starways, Inc. v. Curry, 980 P.2d 204, 206 (Utah 1999). Because the applicable long-arm statute and due process are coextensive in this case, "the first, statutory, inquiry effectively collapses into the second, constitutional, analysis." Dudnikov, 514 F.3d at 1070. As a result, this court need not conduct a separate statutory inquiry, Emp'rs Mut., 618 F.3d at 1159, but will instead focus its personal jurisdiction analysis on the requirements of due process.

         As noted above, Younique must satisfy this court that the exercise of personal jurisdiction over Dr. Youssef comports with due process. "The Supreme Court has held that, to exercise jurisdiction in harmony with due process, defendants must have 'minimum contacts' with the forum state, such that having to defend a lawsuit there would not 'offend traditional notions of fair play and substantial justice.'" Dudnikov, 514 F.3d at 1070 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154 (1945)). Personal jurisdiction over a non-resident defendant may take either general or specific form. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn.8, 9, 104 S.Ct. 1868 (1984). General personal jurisdiction arises from a non-resident defendant's "continuous and systematic" contact with the forum. Daimler AG v. Bauman, 134 S.Ct. 746, 754 (2014) (internal quotations omitted) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846 (2011)). Such pervasive contact subjects a non-resident defendant to any claim arising in the forum because he is "essentially at home" there. Id. (quoting Goodyear, 564 U.S. at 919); Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011) (explaining that general jurisdiction subjects a non-resident defendant to the court's jurisdiction "for any lawsuit"). Where a non-resident defendant does not have sufficient contact with the forum to be considered "essentially at home" there, a court may nonetheless exercise specific personal jurisdiction over him in claims that arise out of, or are specific to, his contact with the forum. See Walden v. Fiore, 134 S.Ct. 1115, 1121 n.6 (2014); Anzures v. Flagship Rest. Grp., 819 F.3d 1277, 1280 (10th Cir. 2016).

         Here, Younique argues that Dr. Youssef has "minimum contacts" with Utah sufficient to permit the exercise of specific personal jurisdiction.[1] As noted above, a court may not exercise personal jurisdiction over a non-resident defendant unless he has "minimum contacts with the forum state, such that having to defend a lawsuit there would not offend traditional notions of fair play and substantial justice." Dudnikov, 514 F.3d at 1070 (internal quotations omitted). In the context of specific personal jurisdiction, the "minimum contacts" inquiry "depends 'on the relationship among the defendant, the forum, and the litigation[.]'" See Anzures, 819 F.3d at 1280 (quoting Walden, 134 S.Ct. at 1121). More precisely, in evaluating whether the exercise of specific personal jurisdiction comports with due process, courts make three inquiries: "(1) whether the defendant purposefully directed its activities at residents of the forum state; (2) whether the plaintiff's injury arose from those purposefully directed activities; and (3) whether exercising jurisdiction would offend traditional notions of fair play and substantial justice." Newsome v. Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013); see also Dudnikov, 514 F.3d at 1071.

         The Supreme Court recently clarified the contours of the first inquiry: "For a State to exercise jurisdiction consistent with due process, the defendant's suit-related conduct must create a substantial connection with the forum State." Walden, 134 S.Ct. at 1121. The Court focused on two essential attributes of a non-resident defendant's "substantial connection with the forum State." Id. at 1121-22. First, the defendant-forum "relationship must arise out of contacts that the 'defendant himself creates with the forum State[, ]" and not from contacts the plaintiff or third parties have with the forum State. Id. at 1122 (emphasis in original) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174 (1985)). Second, the relationship must arise from "the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there." Id. Thus, "the mere fact that [a defendant's] conduct affected [a] plaintiff[] with connections to the forum State does not suffice to authorize jurisdiction." Id. at 1126.

         In arguing that this court may properly exercise specific personal jurisdiction over Dr. Youssef, Younique first alleges multiple commercial contacts between Dr. Youssef and the State of Utah. Younique alleges that Dr. Youssef traveled to Utah and performed certain "medical services" for visitors at the Sundance Film Festival in 2007, that he has "actively solict[ed] and treat[ed]" Utah residents at his cosmetic surgery practice in California, that he sold "YOUNIQUE"-branded products to Utah residents in California, that he shipped some of those products to Utah after they were purchased in California, and finally, that he operated an online store that advertised beyond California and could theoretically sell and ship products to Utah. (Docket No. 40, at 1-3). Younique claims that these contacts suffice to ground personal jurisdiction in this instance. Id. at 3. In the alternative, Younique points to Dr. Youssef's recent conduct that precipitated this declaratory action, specifically his sending of a cease-and-desist letter to Younique's headquarters in Lehi, Utah. Id. Plaintiff argues that this conduct alone is also sufficient to create personal jurisdiction over Dr. Youssef in Utah. Id. at 14. In short, Younique argues that Dr. Youssef's ...


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