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Simpson Performance Products, Inc. v. Wagoner

United States District Court, W.D. North Carolina, Statesville Division

May 8, 2015

SIMPSON PERFORMANCE PRODUCTS, INC. AND SFI FOUNDATION, INC Plaintiffs,
v.
ROBERT WAGONER AND DEREK RANDALL CATHCART, Defendants.

ORDER

RICHARD L. VOORHEES, District Judge.

BEFORE THE COURT are Plaintiffs' Motion for Preliminary Injunction (Doc. 2) and Defendants' Motion to Dismiss for Lack of Jurisdiction, (Doc. 26).

On February 18, 2015, Plaintiffs Simpson Performance Products, Inc. ("Simpson") and SFI Foundation ("SFI") instituted the instant action against Defendants Robert Wagoner and Derek Randall Cathcart, alleging trademark infringement, unfair competition, unfair and deceptive trade practices, patent infringement, and common law fraud.

On February 20, 2015, this Court granted Plaintiffs' Motion for Temporary Restraining Order. (Doc. 8). After two extensions, this Court held a hearing on Plaintiffs' Motion for Preliminary Injunction. At the preliminary injunction, Defendants contested the jurisdiction of the Court. Subsequent to the hearing, Defendants renewed their objection and filed a Motion to Dismiss for Lack of Jurisdiction. (Doc. 26). In the alternative, Defendants request that this Court transfer the case to the United States District Court for the Northern District of Indiana, Hammond Division. (Id. ). Plaintiffs filed a response, (Doc. 27), to which Defendants replied, (Doc. 29).

I. STANDARD OF REVIEW

"[T]he plaintiff has the burden of making a prima facie showing in support of its assertion of [personal] jurisdiction." Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014). In determining whether a plaintiff has met this burden, this Court "must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction." Id. (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)).

This Court will solely determine whether personal jurisdiction is appropriate under the Due Process Clause because the North Carolina Supreme Court has held that its long-arm statute reaches to the limits of the Due Process Clause. Id., see also, (Doc. 27, at 2) ("conced[ing] jurisdiction under the long arm statute (subject to the constitutionality issue)....").

The Due Process Clause of the Fourteenth Amendment of the United States Constitution is satisfied for personal jurisdiction purposes if a defendant has "purposefully availed itself of the privilege of conducting business in the forum state" by establishing sufficient "minimum contacts such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985); see also International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

The Court notes that this case centers on internet-based activities. Significantly, the Fourth Circuit adopted and adapted the Zippo test in stating that:

[A] State may, consistent with due process, exercise judicial power over a person outside of the State when that person (1) directs electronic activity into the State, (2) with the manifested intent of engaging in business or other interactions within the State, and (3) that activity creates, in a person within the State, a potential cause of action cognizable in the State's courts. Under this standard, a person who simply places information on the Internet does not subject himself to jurisdiction in each State into which the electronic signal is transmitted and received. Such passive Internet activity does not generally include directing electronic activity into the State with the manifested intent of engaging business or other interactions in the State thus creating in a person within the State a potential cause of action cognizable in courts located in the State.

ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002). "The flexibility of these factors allows a court to focus its attention on the ultimate question of whether a defendant, through its actions, has subjected itself to the sovereignty of the State such that a court in the State can lawfully subject that defendant to a judgment." Unspam Technologies, Inc. v. Chernuk, 716 F.3d 322, 328 (4th Cir. 2013).

A plaintiff may not manufacture jurisdiction by purposefully engaging in purchases. Tamarian Carpets, LLC v. Ahmadi & Sons, Inc., No. CIV.A. GLR-12-2571, 2013 WL 3771375, at *5 n.3 (D. Md. July 16, 2013); Regent Lighting Corp. v. Am. Lighting Concept, Inc., 25 F.Supp.2d 705, 711 (M.D. N.C. 1997); DeSantis v. Hafner Creations, Inc., 949 F.Supp. 419, 424 (E.D. Va. 1996).

The Complaint alleges that two individuals unrelated to Plaintiffs purchased products from Defendants via the internet that were purportedly defective and then delivered them to Plaintiff. See (Doc.1, at ¶¶ 18-19); see also (Doc. 1-2, at ¶¶ 4, 6). Then Plaintiffs' employees, both residents of North Carolina, purchased items from Defendants that were shipped directly to North Carolina. (Doc. 1, at ¶¶ 20, 26, 55, 67). There are allegations that Defendants have sold similar items over the internet to other individuals. (Doc. 1-2, at ¶ 11).

In accordance with the authority stated above, the Court does not consider the purchases initiated by Plaintiffs to determine whether personal jurisdiction exists for Defendants. The two other purchases were not made by North Carolina residents. (Doc. 28, at 6). Merely sending the items to states outside of North Carolina does not ...


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