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Firebirds International, LLC v. Firebird Restaurant Group, LLC

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

October 2, 2017

FIREBIRDS INTERNATIONAL, LLC, Plaintiff,
v.
FIREBIRD RESTAURANT GROUP, LLC and FIREBRID IP, LLC Defendants.

          ORDER

          Robert J. Conrad, Jr. United States District Judge.

         THIS MATTER comes before the Court on Defendants' Motion to Dismiss for Lack of Personal Jurisdiction, (Doc. No. 9); Defendants' Brief in Support, (Doc. No. 9-1); Plaintiff's Memorandum in Opposition, (Doc. No. 14); Defendants' Reply, (Doc. No. 17); the Magistrate Judge's Memorandum and Recommendation (“M&R”), (Doc. No. 18); Plaintiff's Objections, (Doc. No. 19); and Defendant's Reply, (Doc. No. 20).

         I. BACKGROUND

         Firebird International, LLC, (“Plaintiff”) is a limited liability company with its principal place of business in Charlotte, North Carolina. (Doc. No. 1 at 2). Defendants Firebird Restaurant Group, LLC (“FRG”) and Firebird IP, LLC, (“FIP”) are limited liability companies with their principal place of business in Dallas, Texas. (Id.). According to the Complaint, Plaintiff operates over 40 restaurants in various states across the country. (Id. at 1). Plaintiff alleges that Defendants also operate restaurants, but only in Texas and Oklahoma. (Id.). In addition to physical locations, Defendants also operate an online store that provides food items shipped from their restaurants. (Id.). Because the Court is reviewing a motion to dismiss for lack of personal jurisdiction, it accepts the factual allegations of Plaintiff's Complaint as true.

         Plaintiff continues to expand across the nation, opening new restaurants in different states and markets. To support its mission, Plaintiff registered several trademarks including FIREBIRDS, FIREBIRDS WOOD FIRE GRILL, FIREBIRDS FIREBAR, FIREBIRDS for wine, FIREBIRDS , FIREBIRDS INNER CIRCLE, and FB. (Id. at 4). In 2008, Plaintiff became aware that FRG purchased El Fenix, another restaurant chain. (Id. at 5). FRG was operating under a business trade name at the time. Concerned that the use of the term “firebird” within the FRG's name would result in consumer confusion, Plaintiff sent a letter to FRG's principal informing them of Plaintiff's rights to the FIREBIRDS mark. (Id.).

         In 2013, Defendant FIP filed an intent-to-use application with the Trademark Office for “FIREBIRD RESTAURANT GROUP ” to use for “restaurant management services for others.” (Id.) The trademark examining attorney denied FIP's application, concluding that their mark would result in consumer confusion when compared to Plaintiff's registered marks. (Id. at 5-6). FIP appealed the examining attorney's refusal of their application and subsequently received approval from another examining attorney on remand. (Id. at 6). Plaintiff promptly responded by filing a Notice of Opposition with the Trademark Trial and Appeal Board and, through discovery, learned that Defendants were using the Firebird Restaurant Group mark through their restaurant services on menus and websites. (Id. at 6-7). Plaintiff cited instances of actual confusion including four letters addressed to Defendants' executives that were delivered to Plaintiff's address and an email to Plaintiff from Adobe Systems, Inc. requesting a meeting with Defendant. (Id. at 7).

         On November 8, 2016, Plaintiff filed their complaint before this Court against Defendants alleging trademark infringement under the Lanham Act, 15 U.S.C. § 1051, et seq. as well as state law claims for unfair and deceptive trade practices. (Id. at 1). Defendants responded asserting that this Court lacks personal jurisdiction because Defendants have not sold products in North Carolina using the mark alleged by Plaintiff, nor do they own property or maintain business or bank accounts in North Carolina. (Doc. Nos. 9-1 at 5-7). In response, Plaintiffs argue that personal jurisdiction is proper in this District because Defendants maintain an interactive website that sells food products and apparel to “anywhere the website is accessible, including North Carolina residents.” (Doc. No. 14 at 4). This website, Plaintiff claims, “clearly identified the owner and operator of the site as ‘Firebird, ' which it defined on the site as FRG, El Fenix (identified as an ‘affiliated company' of FRG), and the ‘other affiliated companies of [FRG]' (which would include Firebird IP, LLC), collectively.” (Id. at 5). Defendants respond, stating that El Fenix-a non-party affiliated with FRG-maintained the website and holding Defendants responsible would amount to an improper basis for piercing the corporate veil. (Doc. No. 20 at 3). Furthermore, Defendants argue that El Fenix's website “does not focus on, or target residents of North Carolina.” (Id.).

         The Magistrate Judge submitted an M&R recommending this Court to grant Defendant's Motion to Dismiss and find no evidence that Defendants “directed any activities toward North Carolina other than for a period of time when a subsidiary corporation offered food items through a website displaying the name Firebird.” (Doc. No. 18 at 3). This Court agrees with the M&R and thereby grants Defendant's Motion to Dismiss for Lack of Personal Jurisdiction.

         II. LEGAL STANDARD

         A district court may assign dispositive pretrial matters, including motions to dismiss, to a magistrate judge for “proposed findings of fact and recommendations.” 28 U.S.C. § 636(b)(1)(A) and (B). The Federal Magistrate Act provides that “a district court shall make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made.” Id. at § 636(b)(1)(C); Fed.R.Civ.P. 72(b)(3); Camby v. Davis, 718 F.2d 198, 200 (4th Cir. 1983).

         “[W]hen the court addresses the personal jurisdiction question by reviewing only the parties' motion papers, affidavits attached to the motion, supporting legal memoranda, and the allegations in the complaint, a plaintiff need only make a prima facie showing of personal jurisdiction to survive the jurisdictional challenge.” Grayson v. Anderson, 816 F.3d 262, 268 (4th Cir. 2016). In such cases, the Court must construe all allegations and evidence available relating to the issue of personal jurisdiction in the light most favorable to the plaintiff. Id.

         III. DISCUSSION

         Rule 4 of the Federal Rule of Civil Procedure prescribes that state law controls the extent to which a federal court may exercise personal jurisdiction over a defendant. Fed.R.Civ.P. 4(k)(1)(A). Accordingly, North Carolina's Long Arm Statute governs the reach of courts over out-of-state defendants. N.C. Gen. Stat. Ann. § 1-75.4. However, the Due Process Clause of the Fourteenth Amendment limits the authority of a state in the application of its long-arm statute. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011). Plaintiffs, therefore, must navigate a two-step analysis, proving that exercising personal jurisdiction over a defendant comports both with the state long-arm statute as well as the requirements of due process. English & Smith v. Metzger, 901 F.2d 36, 38 (4th Cir. 1990).

         Because courts have held North Carolina's long-arm statute to extend to the maximum boundaries allowed by the Due Process Clause, the two-tiered analysis essentially folds into one: “whether the defendant has such ‘minimal contacts' with the forum state that ‘maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Christian Sci. Bd. of Directors of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (US 1945)). To establish minimum contacts, a plaintiff has two options: they may pursue either general or specific jurisdiction. ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 711-12 (4th Cir. 2002). Under specific jurisdiction, the court exercises its power over a defendant when its contacts within the state are the basis of the plaintiff's cause of action. Id. In analyzing the contacts for specific jurisdiction, courts “consider (1) the extent to which the defendant ‘purposefully ...


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