Laboratory Corp. of America Holdings v. Schumann

474 F. Supp. 2d 758, 2006 U.S. Dist. LEXIS 95144, 2006 WL 4005319
CourtDistrict Court, M.D. North Carolina
DecidedSeptember 28, 2006
Docket1:06-m-00054
StatusPublished
Cited by6 cases

This text of 474 F. Supp. 2d 758 (Laboratory Corp. of America Holdings v. Schumann) is published on Counsel Stack Legal Research, covering District Court, M.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Laboratory Corp. of America Holdings v. Schumann, 474 F. Supp. 2d 758, 2006 U.S. Dist. LEXIS 95144, 2006 WL 4005319 (M.D.N.C. 2006).

Opinion

ORDER

BEATY, District Judge.

On June 28, 2006, the United States Magistrate Judge’s Order and Recommendation [Document # 30] was filed and notice was served on the parties pursuant to 28 U.S.C. § 636(b). Plaintiffs Laboratory Corporation of America Holdings and Dia-non Systems, Inc. filed timely Objections. [Document # 32], The Court has now reviewed the Objections and the portions of the Recommendation to which objections were made, and has made a de novo determination that is in accord with the United States Magistrate Judge’s rulings. The Court will adopt the Recommendation and transfer the case to the District of Connecticut pursuant to 28 U.S.C. § 1404(a). IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss for Lack of Jurisdiction or in the Alternative to Transfer to the District of Connecticut [Document # 7] is GRANTED as to the Motion to Transfer and this case is thereby DISMISSED.

ORDER AND RECOMMENDATION OF MAGISTRATE JUDGE ELIASON

ELIASON, United States Magistrate Judge.

I. Facts and Claims

The central motion before the Court is defendants’ motion to have the case dismissed or, in the alternative, transferred to the United States District Court for the District of Connecticut. 1 Defendants, a Connecticut resident and a Connecticut corporation with its principal place of business in Connecticut, contend that this Court does not have personal jurisdiction over them. They als<? maintain that, even if jurisdiction is present, the interests of justice dictate that the case be transferred to the District of Connecticut pursuant to 28 U.S.C. § 1404(a). Plaintiff Laboratory Corporation of America Holdings (Lab-Corp) is a Delaware corporation with its principal place of business in North Carolina, while plaintiff Dianon Systems, Inc. (Dianon) is a Delaware corporation with its principal place of business in Connecticut. Dianon is a wholly-owned subsidiary of LabCorp. Plaintiffs believe that personal *760 jurisdiction does exist and that this District is the • proper venue for the case.

The parties before the Court are embroiled in what is essentially a trademark dispute that has its genesis more than thirteen years in the past. Both plaintiff Dianon and defendants claim to have been involved in the creation of the mark “MI-CROCYTE” 2 , which is used in conjunction with a form of urinalysis testing and reporting.

Whoever created the MICROCYTE mark, it apparently originated in the 1992/1993 time frame. In 1993, Dianon signed a “Technical Service Agreement” (TSA) with defendant Schumann Cytology Laboratories, Inc. (SCL). That agreement stated that “SCL has technical knowledge and has developed a testing service (Mi-crocyte and Renalcyte).” (Schumann Aff. Ex. A) The TSA generally obligated SCL to aid Dianon in using and performing the testing services and obligated Dianon to market and sell the services. Dianon was to compensate SCL through royalty payments for a five-year period, after which Dianon would have “a paid in full nonexclusive license in perpetuity.” (Id.) For the five-year period, the license was apparently exclusive and non-transferable. The agreement was to be governed by Connecticut law.

In addition to signing the TSA with SCL, Dianon also hired defendant G. Berry Schumann as an employee. Schumann is president of SCL, but also worked for Dianon in various capacities from 1993 until early 2005. He states in his affidavit that he always maintained control and approval over all aspects of the MICRO-CYTE testing standards, including accuracy and quality. (Id-¶ 6)

In 2003, Dianon was purchased by Lab-Corp. As a part of this purchase, Lab-Corp assumed whatever interest Dianon had in the MICROCYTE marks. (Palmi-eri Decl. ¶¶ 5-6) Schumann continued his work for Dianon/LabCorp 3 after the purchase, but was eventually terminated in April of 2005. That termination is the subject of a wrongful termination suit filed by Schumann against Dianon in the state courts in Connecticut. (Schumann Aff. Ex. D.)

The claims raised by plaintiffs in this suit do not appear to be directly connected to the suit filed by Schumann in Connecticut. Instead, they relate mainly to the filing of an application made by SCL in the United States Patent and Trademark Office which seeks to register the MICRO-CYTE mark in connection with medical and diagnostic testing and reporting services, as well as instructional material and medical literature. The filing was made on March 4, 2005 and allegedly states that no one else has the right to use the mark in commerce.

Following the filing of the application, counsel for the parties exchanged letters, with each side asserting ownership of the MICROCYTE marks. Eventually, eleven days after Schumann’s suit in Connecticut was filed, plaintiffs filed the present suit in this District. In their complaint, they raise the following claims (1) a claim for a declaratory judgment and injunction setting out and protecting their ownership rights in the MICROCYTE marks, (2) a *761 claim under the Lanham Act alleging that defendants have engaged in business and advertising that has led to them providing materials that imitate or are derived from the MICROCYTE marks and falsely assert ownership over the marks, (3) a common law infringement of service mark claim, (4) a claim for unfair or deceptive trade practices under North Carolina law, and (5) a claim seeking cancellation of defendants’ registration application. Plaintiffs seek a long list of relief which is generally geared toward having defendants have nothing more to do with the MICROCYTE marks and also having them pay damages to plaintiffs.

II. Discussion

A. Personal Juiisdiction

The primary basis for defendants’ motion to dismiss or transfer is that personal jurisdiction is lacking in this District. They claim that neither they nor the facts giving rise to the allegations in the complaint have any real connection to the District so that jurisdiction exists.

It is undisputed that neither defendant is a resident of North Carolina. Still, personal jurisdiction over nonresidents exists where state law and the Due Process Clause of Fourteenth Amendment of the United States Constitution allow for it. ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 622-23 (4th Cir.1997). Here, the applicable state law would be North Carolina’s long-arm statute, N.C. Gen.Stat. § 1-75.4. The parties have not presented arguments as to whether jurisdiction under that statute would be proper and the Court will not delve into the matter on its own because the statute has been construed to reach to the constitutional limits of due process.

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474 F. Supp. 2d 758, 2006 U.S. Dist. LEXIS 95144, 2006 WL 4005319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/laboratory-corp-of-america-holdings-v-schumann-ncmd-2006.