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Nutramax Laboratories Inc. v. Hashtag Fulfillment LLC

United States District Court, D. Utah

June 14, 2018

NUTRAMAX LABORATORIES, INC., Plaintiff,
v.
HASHTAG FULFILLMENT, LLC; PRIVATE LABEL SK.IN NA, LLC; SPINZAR FULFILLMENT CORPORATION; and DOES I - X, Defendants.

          MEMORANDUM DECISION AND ORDER ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS

          Jill N. Parrish United States District Court Judge

         Before the court are motions to dismiss filed by Defendant Hashtag Fulfillment (ECF No. 29) and by Defendant Private Label Sk.In (ECF No. 30). The motions are substantially similar, and both argue that this court does not have personal jurisdiction over them in this action. For the reasons below, those motions are denied.

         I. BACKGROUND

         Plaintiff Nutramax Laboratories, Inc. (“Nutramax”) is a South Carolina corporation headquartered in Lancaster, South Carolina. For decades, it has sold nutritional supplements in the United States and abroad under the trademarked name NUTRAMAX LABORATORIES. Defendant Hashtag Fulfillment, LLC (“Hashtag”) is or was (there is some debate) a Florida LLC with a principal place of business in St. Petersburg, Florida. Defendant Private Label Sk.In NA, LLC (“Private Label”) is a Delaware LLC with a principal place of business also in St. Petersburg, Florida. Defendant Spinzar Fulfillment Corporation (“Spinzar”) is a Utah corporation with a principal place of business in Bluffdale, Utah.

         Nutramax's verified complaint alleges that Hashtag, Private Label, and Spinzar all “manufacture, package, distribute, advertise, market, offer to sell, and sell ‘natural' supplements” that include “Steelcut Testosterone” and “Muscle Boost XT.” ECF No. 2 at ¶ 28. Those products, and the defendants' websites advertising them, allegedly employ counterfeit iterations of Nutramax's name and trademark. Id. at ¶ 29.

         In this action, Nutramax brings claims for trademark infringement, false designation of origin, violations of the Utah Unfair Competition Act, and a request for preliminary and permanent injunction.

         II. PERSONAL JURISDICTION

         Hashtag and Private Label move to dismiss Nutramax's verified complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure.[1] As the plaintiff, Nutramax bears the burden of establishing personal jurisdiction. Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011). “[B]ut where, as here, the issue is raised early on in litigation, based on pleadings (with attachments) and affidavits, that burden can be met by a prima facie showing.” Id. In determining whether Nutramax has made its prima facie showing of jurisdiction, the court must “resolve any factual disputes in the plaintiff's favor.” Id.

         Nutramax claims federal jurisdiction under the Lanham Act's trademark law, 15 U.S.C. § 1121. But the Lanham Act does not provide for nationwide service of process. See Blueberry Hill LLC v. Shalom Int'l Corp., No. 2:17-cv-00385-DS, 2017 WL 5508347, at *2 (D. Utah Nov. 15, 2017). Consequently, the court looks to Utah law for the limits of its jurisdiction over out-of-state defendants. See Fed. R. Civ. P. 4(k)(1)(A).

         Utah's long-arm statute “should be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution.” Utah Code Ann. § 78B-3-201(3); accord SII MegaDiamond, Inc. v. Am. Superabrasives Corp., 969 P.2d 430, 433 (Utah 1998). Therefore, the court need only address whether the exercise of personal jurisdiction over the defendants comports with due process demands.

         “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 v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A defendant's contacts with the forum state may give rise to either general or specific personal jurisdiction. But Nutramax concedes that Hashtag and Private Label are not subject to general personal jurisdiction in Utah. Therefore, the question is whether those defendants are subject to specific jurisdiction in Utah.

         Specific jurisdiction is a two-step inquiry. The court must consider “(a) whether the plaintiff has shown that the defendant has minimum contacts with the forum state; and, if so, (b) whether the defendant has presented a ‘compelling case that the presence of some other considerations would render jurisdiction unreasonable.'” Old Republic Ins. Co. v. Continental Motors, Inc., 877 F.3d 895, 904 (10th Cir. 2017) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)).

         A. Minimum Contacts

         First, the court must consider whether a defendant has sufficient contacts with the forum state. A defendant's contacts with the forum state are sufficient when two requirements are met: (1) “the defendant purposefully directed its activities at residents of the forum, ” and (2) “the plaintiff's claim arises out of or results from the actions by the defendant himself that create a substantial connection with the forum state.” Pro Axess, Inc. v. Orlux Distribution, Inc., 428 F.3d 1270, 1277 (10th Cir. 2005) (citation omitted). Here, both requirements are satisfied.

         1. Purposeful Direction/Availment

         The first consideration in the minimum contacts analysis is whether the defendants purposefully directed activities at residents of the forum. “In the tort context, we often ask whether the nonresident defendant ‘purposefully directed' its activities at the forum state; in contract cases, meanwhile, we sometimes ask whether the defendant ‘purposefully availed' itself of the privilege of conducting activities or consummating a transaction in the forum state.” Dudnikov, 514 F.3d at 1071. Regardless of the particular word choice, this “requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or third person.” Burger King, 471 U.S. at 475 (citations omitted). Instead, jurisdiction is proper “where the contacts proximately result from actions by the defendant himself that create a substantial connection with the forum State.” Id. (citation omitted). Consequently,

where the defendant deliberately has engaged in significant activities within a State, or has created continuing obligations between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by the benefits and protections of the forum's laws it is presumptively ...

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