Sarah’s Hat Boxes v Patch Me Up CV-12-399-PB 4/12/13 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Sarah's Hat Boxes, L.L.C.
v. Case N o . 12-cv-399-PB Opinion N o . 2013 DNH 058 Patch Me Up, L.L.C. et a l .
MEMORANDUM AND ORDER
Sarah’s Hat Boxes, L.L.C. (“SHB”) sues Patch Me U p , L.L.C.,
L’Artisane Box, Peter Semenoff, and Debra Mangum, alleging that
the defendants stole business from SHB by making false claims on
their website about the source, quality, and patent status of
the hat boxes listed for sale. SHB brings claims under the
Lanham Act and the New Hampshire Consumer Protection Act
(“CPA”). SHB also alleges common law tortious interference with
a contractual relationship. Defendants move to dismiss SHB’s
claims, arguing that: (i) the court lacks personal jurisdiction
over the defendants; (ii) venue is improper; and (iii) plaintiff
has failed to state a viable claim for relief. For the
following reasons, I deny defendants’ motion to dismiss on
personal jurisdiction and venue grounds. I also conclude that
plaintiff has stated plausible claims under the Lanham Act and
the CPA. I dismiss plaintiff’s tortious interference claim. I. BACKGROUND1
SHB, formerly Old Mills Box Company, began manufacturing
and selling hat boxes in 1986. Since 2006, SHB’s hat boxes have
been designed, manufactured, and shipped from its office in
Hancock, New Hampshire. Most sales are completed online through
SHB’s website. The website allows customers to choose from
various box sizes, shapes, and fabric coverings.
Patch Me U p , L.L.C. (“PMU”) began operating in 2000. The
company sells spa products, such as moisturizing lotions and
scented oils. PMU began buying SHB’s hat boxes in the summer of
2009 to use them as packaging for their spa products.
L’Artisane Box is a division of PMU that offers hat boxes for
sale online. The principal place of business for both PMU and
L’Artisane Box is Millbrae, California. Peter Semenoff is the
president and registered agent of PMU. Debra Mangum is the
founder and vice-president of PMU. Both Semenoff and Mangum
reside in California.
In the summer of 2009, Mangum contacted SHB to purchase hat
1 The facts in this section are drawn primarily from the amended complaint (Doc. N o . 8 ) and SHB’s objection to defendants’ motion to dismiss (Doc. N o . 9 ) and are considered in the light most favorable to the plaintiff.
2 boxes wholesale on behalf of PMU. Mangum told SHB that PMU
intended to use the hat boxes as packaging for its spa products.
Between July 2009 and March 2012, PMU ordered approximately 900
boxes from SHB on at least eleven separate occasions. At the
bottom of nine out of eleven of the invoices included in the
shipments from SHB to PMU, SHB wrote, “Buyer agrees that in the
event suit is brought or commenced in connection with any matter
involving the contract, said suit shall be brought in the courts
of the State of New Hampshire.” The defendants negotiated
orders with SHB via e-mail and telephone correspondence. They
also discussed shipment methods and the design of the companies’
websites.
Semenoff and Mangum collectively sent over 140 e-mails to
SHB over the course of three years. 2 Doc. N o . 1 4 . Ten of those
e-mails were from Semenoff’s e-mail address. The bulk of the e-
mail correspondence was sent from “Debra Mangum at
patchmeup@sbglobal.net.” Doc. N o . 14-1. As shown in the
plaintiff’s exhibits, however, on at least one occasion Semenoff
sent an e-mail using Mangum’s e-mail address. Doc. N o . 14-3
2 There may be more email correspondence than that listed on the exhibits because a computer virus deleted some of SHB’s emails from 2010. Doc. N o . 1 4 .
3 (documenting an e-mail Semenoff sent to SHB from Mangum’s e-mail
address stating, “Hi Pete this is (Re-Pete) hope you’re doing
well out there in N H . ” ) . Also, some e-mails sent from Mangum’s
e-mail address were actually sent on behalf of both defendants.
Doc. N o . 14-4 (“Hi Peter, Deb, Pete and Deb here . . . Regards,
Peter and (Deb is here standing behind me)”). 3 On dozens of
occasions, e-mails from Mangum’s address have “Peter” or “Pete”
in the subject line, possibly indicating that they were sent by
Semenoff.
SHB manufactured hat boxes for the defendants at their
plant in New Hampshire and shipped them to PMU in California.
According to SHB, the boxes PMU ordered were standard boxes
selected from the website; defendants did not request anything
unique or unusual. PMU asked SHB not to label the hat boxes
with “SHB.” Instead, on some boxes, SHB printed “Patch Me Up,”
as requested by defendants. Between September and March 2012,
Mangum ordered ten hat boxes with an insert for holding wine
bottles. This insert was a standard option offered by SHB.
SHB alleges that Mangum asked SHB for the name of its New
Hampshire-based web designer, which SHB provided. In May 2010,
3 Coincidentally, Peter Semenoff and Debra Mangum were communicating with people named Peter and Deborah at SHB.
4 the web designer sent Mangum a proposal to update L’Artisane
Box’s website. Doc. N o . 9-2. PMU elected not to use the
proposed design. In 2012, Mangum contacted the New Hampshire-
based web designer again and requested that the web designer
create a website for L’Artisane Box that would be identical to
the SHB website. The web designer refused. Instead, in
February 2012, the web designer sent a proposal for an
alternative design. Id. Mangum declined the proposal. Id.
In June 2012, SHB learned that PMU revised its website to
include a link to L’Artisane Box’s website and a reference to
hat boxes offered through L’Artisane Box, a division of PMU.
L’Artisane Box’s website contains numerous photographs of hat
boxes purchased from SHB. Text accompanying the photographs
makes several claims about the boxes, including:
Her [Mangum’s] decorative hatboxes are one-of-a-kind patented boxes, which have received wide recognition and acclaim. . . . They come with a signed and numbered certificate of authenticity. . . . We are the manufacturers [sic] and can give you the best price and shipping available, period. . . . We have been in the press, many magazines, radio, newspapers, and TV.
Doc. N o . 8 . The L’Artisane Box website included a list of towns
and states where it has shipped products. The list included New
Hampshire and, specifically, the towns of Concord, Dover, Derry,
Manchester, Nashua, and Salem. Doc. N o . 9-1. The website also 5 claimed that the hat boxes are “patented,” have “copyright
design,” and “design patent[s] pending.” SHB alleges that these
claims are false because the defendants have never designed a
hat box, made a hat box, copyrighted or patented a hat box, or
won any awards for hat boxes.
In August 2012, Mangum and Semenoff represented PMU and
L’Artisane Box at a booth at the International Gift Show in San
Francisco, California. Mangum and Semenoff placed SHB’s boxes
prominently around the booth and did not display any other
boxes. When SHB discovered that the defendants were advertising
hat boxes purchased from SHB as designed and manufactured by
L’Artisane Box, SHB demanded that the defendants stop
misrepresenting the origin of the boxes online and at gift
shows.
SHB also alleges that PMU and L’Artisane Box offer hat
boxes at prices below those charged by SHB to consumers in New
Hampshire. SHB alleges that the defendants intend to fulfill
the orders with hat boxes not manufactured by SHB, although
PMU’s advertisements incorporate SHB hat boxes. SHB alleges
that these other hat boxes are inferior products, not
manufactured by hand, not made in the United States, and not
manufactured with eco-friendly and non-toxic materials. 6 According to SHB, several New Hampshire consumers have
attempted to purchase SHB manufactured boxes from the L’Artisane
Box website. Each time a consumer tries to buy a SHB hat box
from the L’Artisane Box website, the defendants provide an
excuse for why the order cannot be fulfilled. In one instance,
L’Artisane Box refused an order for two SHB manufactured boxes
because one box was allegedly discontinued and they were behind
on orders on the other box. In another instance, Semenoff
declined an order for an SHB hat box citing trouble with
production machinery.
On September 6, 2012, SHB sued defendants in New Hampshire
Superior Court. On October 1 9 , 2012, the defendants removed the
case to this court.
II. PERSONAL JURISDICTION
A. Standard of Review
When a defendant contests personal jurisdiction under Fed.
R. Civ. P. 12(b)(2), the plaintiff bears the burden of showing
that a basis for asserting jurisdiction exists. See Mass Sch.
of Law at Andover, Inc. v . Am. Bar Ass’n, 142 F.3d 2 6 , 34 (1st
Cir. 1998); Rodriguez v . Fullerton Tires Corp., 115 F.3d 8 1 , 83
(1st Cir. 1997). Because I have not held an evidentiary 7 hearing, SHB need only make a prima facie showing that the court
has personal jurisdiction over each defendant with regard to
each of the plaintiff’s claims. See Sawtelle v . Farrell, 70
F.3d 1381, 1386 n.1 (1st Cir. 1995).
To make a prima facie showing of jurisdiction, SHB must
“adduce evidence of specific facts” that support the
jurisdictional claim. Foster-Miller b . Babcock & Wilcox Canada,
46 F.3d 1 3 8 , 145 (1st Cir. 1995); see also United Elec. Radio
and Mach. Workers of Am. v . 163 Pleasant S t . Corp., 987 F.2d 3 9 ,
44 (1st Cir. 1993). I assume all facts offered by the plaintiff
are true and construe them in the light most favorable to the
plaintiff’s claim. See Mass. Sch. of Law, 142 F.3d at 3 4 ;
Foster-Miller, 46 F.3d at 145. I do not act as fact-finder;
instead, I determine “whether the facts duly proffered, [when]
fully credited, support the exercise of personal jurisdiction.”
Rodriguez, 115 F.3d at 84 (citing Boit v . Gar-Tec Prods., Inc.,
967 F.2d 6 7 1 , 675 (1st Cir. 1992)).
While the prima facie standard is liberal, I need not
“credit conclusory allegations or draw farfetched inferences.”
Mass. Sch. of Law, 142 F.3d at 34 (quoting Ticketmaster-N.Y.,
Inc. v . Alioto, 26 F.3d 2 0 1 , 203 (1st Cir. 1994)). I also
8 consider facts offered by the defendant, but only to the extent
that they are uncontradicted. See id.
In a removal case such as this one, the plaintiff must meet
two requirements for personal jurisdiction. Pritzker v . Yari,
42 F.3d 5 3 , 60 (1st Cir. 1994). First, the New Hampshire long-
arm statute must authorize jurisdiction over the defendant.
Second, plaintiff must allege facts to establish that each
defendant has contacts with New Hampshire sufficient to give
rise to personal jurisdiction under the Due Process Clause of
the Fourteenth Amendment.4 New Hampshire’s long-arm statute
authorizes the exercise of jurisdiction to the full extent
permitted by the federal Constitution. Sawtelle, 70 F.3d at
1388; Hemenway v . Hemenway, 159 N.H. 6 8 0 , 685 (2010). The
defendants do not dispute the applicability of the New Hampshire
long-arm statute. Accordingly, the sole inquiry is whether the
4 The Lanham Act does not have a provision authorizing nationwide service of process, therefore SHB does not base its claim to personal jurisdiction on Federal Rule of Civil Procedure 4(k)(1)(C). Instead, they base their claim to personal jurisdiction on 4(k)(1)(A), that the defendants are “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.” Accordingly, I analyze personal jurisdiction under the New Hampshire long-arm statute, which authorizes jurisdiction to extend as broadly as possible to satisfy constitutional requirements.
9 exercise of personal jurisdiction comports with constitutional
standards, and I focus only on the constitutional question.
The Fourteenth Amendment's Due Process Clause precludes a
court from asserting jurisdiction over a defendant unless “the
defendant's conduct and connection with the forum State are such
that [it] should reasonably anticipate being haled into court
there.” World–Wide Volkswagen Corp. v . Woodson, 444 U.S. 286,
297 (1980). The “constitutional touchstone” for personal
jurisdiction is “whether the defendant purposefully established
‘minimum contacts' in the forum State.” Burger King Corp. v .
Rudzewicz, 471 U.S. 4 6 2 , 474 (1985) (quoting Int'l Shoe C o . v .
Wash., 326 U.S. 3 1 0 , 316 (1945)). The inquiry into “minimum
contacts” is necessarily fact-specific, “involving an
individualized assessment and factual analysis of the precise
mix of contacts that characterize[s] each case.” Pritzker, 42
F.3d at 6 0 . A defendant cannot be subjected to the forum
state's jurisdiction based solely on “random, fortuitous, or
attenuated contacts.” Burger King, 471 U.S. at 475 (citation
and quotations omitted). Rather, “it is essential in each case
that there be some act by which the defendant purposefully
avails itself of the privilege of conducting activities within
the forum State, thus invoking the benefits and protections of 10 its laws.” Id. (quoting Hanson v . Denckla, 357 U.S. 235, 253
(1958)).
Personal jurisdiction over a defendant may be general or
specific, depending on the nature of the defendant’s contacts
with the forum state. Carreras v . PMG Collins, L.L.C., 660 F.3d
549, 552 (1st Cir. 2011); Northern Laminate Sales, Inc. v .
David, 403 F.3d 1 4 , 24 (1st Cir. 2005) (citation omitted).
General jurisdiction exists over a defendant who has engaged in
“continuous and systematic” activity in a forum sufficient to
establish jurisdiction in that state over all matters including
matters unrelated to the defendant's contacts in the forum
state. Northern Laminate, 403 F.3d at 24 (citing Phillips
Exeter Acad. v . Howard Phillips Fund, Inc., 196 F.3d 2 8 4 , 288
(1st Cir. 1999)). In contrast, specific jurisdiction is
narrower in scope and exists only when the cause of action
arises from or relates to the defendant's contacts with the
forum state. Id. In this case, SHB asserts that specific
personal jurisdiction applies.
The First Circuit has set forth three factors that apply
when analyzing whether specific jurisdiction exists:
“relatedness, purposeful availment, and reasonableness.”
Phillips v . Prairie Eve Center, 530 F.3d 2 2 , 27 (1st Cir. 2008); 11 Daynard v . Ness, Motley, Loadholt, Richardson & Poole, P.A., 290
F.3d 4 2 , 60 (1st Cir. 2002). “The plaintiff must demonstrate
that each of these three requirements is satisfied.” Phillips,
530 F.3d at 2 7 .
SHB bases its jurisdictional argument on specific
jurisdiction. Thus, I analyze personal jurisdiction under the
First Circuit's three-part analysis of relatedness, purposeful
availment, and reasonableness.
B. Analysis
Personal jurisdiction must be assessed with regard to each
claim against each defendant.5 L’Artisane Box and PMU are a
single corporate entity because L’Artisane Box is a division of
PMU. Accordingly, the jurisdictional analysis is the same for
5 The parties do not discuss personal jurisdiction with regard to each claim, but instead discuss it with regards to the claims collectively. I analyze personal jurisdiction only for SHB’s Lanham Act claim. In addition to the Lanham Act claim, SHB also asserts state law claims for unfair competition and tortious interference with business. I need not decide whether SHB has established jurisdiction over the defendants with respect to those claims because, finding personal jurisdiction over the Lanham Act claim, I will exercise pendent personal jurisdiction over the state law claims since they arise out of the same common nucleus of operative fact as the Lanham Act claim. See Wilcox Indus. Corp. v . Hansen, 11-CV-551-PB, 2012 WL 1246146, *7 (D.N.H. Apr. 1 3 , 2012); 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1069.7 (3d ed. 2010). See also Action Embroidery Corp. v . Atlantic Embroidery, Inc., 368 F.3d 1174, 1181 (9th Cir. 2004); United States v . Botefuhr, 309 F.3d 1263, 1273 (10th Cir. 2002). 12 both and I refer to L’Artisane Box and PMU collectively as “the
corporation.”
To establish that the corporation has sufficient minimum
contacts with New Hampshire to support the exercise of personal
jurisdiction, SHB may rely on “actions imputed to [PMU and
L’Artisane Box] through its agents - as indeed it must, because
any action legally attributed to a corporation is that of one
agent or another.” Jet Wine & Spirits, Inc. v . Bacardi & Co.,
298 F.3d 1 , 7 (1st Cir. 2002). Semenoff and Mangum were acting
on behalf of PMU and L’Artisane Box when they contacted New
Hampshire to purchase hat boxes.
While I may find personal jurisdiction over the principal
based on the actions of the agents, an agent ordinarily cannot
be made subject to personal jurisdiction based on the acts of a
principal. This court does not have personal jurisdiction over
Mangum or Semenoff simply because they are agents of the
corporation. Accordingly, I analyze their contacts with New
Hampshire independently.
1. Relatedness
The relatedness inquiry asks whether “the cause of action
either arises directly out o f , or is related t o , the defendant's
forum-based contacts.” Harlow v . Children's Hosp., 432 F.3d 5 0 , 13 61 (1st Cir. 2005). It is a “flexible, relaxed standard,”
Pritzker, 42 F.3d at 6 1 , considered “through the prism” of the
plaintiff's claims. Sawtelle, 70 F.3d at 1389. In the context
of tort claims, the court “must probe the causal nexus between
the defendant's contacts and the plaintiff's cause of action.”
Phillips Exeter Acad., 196 F.3d at 289. This “requirement is
not met merely because a plaintiff’s cause of action arose out
of the general relationship between the parties; rather, the
action must directly arise out of the specific contact between
the defendant and the forum state.” Sawtelle, 70 F.3d at 1389.
In the First Circuit, to determine whether a plaintiff’s
tort claim meets the relatedness prong, I ask whether “the
injury would not have occurred ‘but for’ the defendant's forum
activity” (cause-in-fact) and whether “the defendant's in-state
conduct gave birth to the cause of action” (proximate cause).
Mass. Sch. of Law, 142 F.3d at 3 5 . Accordingly, I identify the
defendant's alleged contacts with the forum state and then
consider whether those contacts are both the cause-in-fact and
proximate cause of the plaintiff’s injury.
The corporate defendants’ relevant contacts with New
Hampshire, as alleged by the plaintiff, include: more than one
hundred e-mail and telephone communications over the course of a 14 three-year relationship directed to SHB in New Hampshire
involving negotiations about the sale of hat boxes from New
Hampshire; a history of eleven purchase orders of hat boxes from
New Hampshire spanning the years 2009 to 2012; and a website
soliciting business from New Hampshire residents using images of
the hat boxes purchased from New Hampshire.
The corporation’s contacts are the cause-in-fact of the
injury claimed by SHB; SHB’s Lanham Act claims would not exist
but for the defendants’ activities in New Hampshire. The more
complicated question is whether the corporation’s contacts are
the proximate cause of SHB’s cause of action.
The touchstone of the proximate cause inquiry is the
distinction between foreseeable and unforeseeable risks of harm.
See Nowak v . Tak How Investments, Ltd., 94 F.3d 7 0 8 , 715 (1st
Cir. 1996); Peckham v . Continental Casualty Ins. Co., 895 F.2d
830, 836 (1st Cir. 1990); see also Palsgraf v . Long Island
Railroad Co., 248 N.Y. 339, 354 (1928). As the First Circuit
noted, however, the standards for proximate cause may be
loosened when circumstances require. Nowak, 94 F.3d at 716 (“We
think such flexibility is necessary in the jurisdictional
inquiry: relatedness cannot merely be reduced to one tort
concept for all circumstances.”). With this in mind, I analyze 15 the nexus between the corporation’s contacts with New Hampshire
and SHB’s injury.
Over the course of a three-year relationship, the
corporation placed several calls and sent hundreds of e-mails to
negotiate the purchase of hundreds of hat boxes from SHB in New
Hampshire. PMU used the hat boxes it purchased from New
Hampshire to prepare the allegedly misleading advertisements.
PMU’s intention upon purchasing the hat boxes was to resell
them, so it was foreseeable that PMU would advertise and market
the hat boxes it purchased. The harm SHB alleges arose directly
from the defendants’ decision to contact SHB in New Hampshire to
purchase hat boxes and to use SHB’s hat boxes from New Hampshire
to prepare the allegedly false marketing. The corporation
allegedly copied SHB’s designs from New Hampshire. They also
contacted SHB’s New Hampshire-based web designer to request that
the web designer build a website imitating SHB’s web design.
Even if the corporation’s negotiations, purchase orders,
and contact with the web designer in New Hampshire were
insufficient to constitute the proximate cause of SHB’s
injuries, the harm arose, in part, because the L’Artisane Box
website targeted New Hampshire residents. The relatedness
element is met when a website intended to be viewed in New 16 Hampshire causes harm in New Hampshire. See Gather, Inc. v .
Gatheroo, L.L.C., 443 F. Supp. 2d 1 0 8 , 115 (D. Mass. 2006). The
L’Artisane Box website stated that the company sells hat boxes
in six cities and towns in New Hampshire. As plaintiff’s
counsel explained at oral argument, by listing cities and towns
in New Hampshire, the L’Artisane Box website is designed to
appear in New Hampshire consumers’ search results. The
corporation intended to serve the New Hampshire hat box market
and directed its website to New Hampshire consumers. SHB also
alleges that New Hampshire customers have tried to purchase hat
boxes from the L’Artisane Box website. SHB cites at least two
instances when New Hampshire consumers attempted to buy hat
boxes from L’Artisane. Accordingly, the defendant designed the
website to reach into New Hampshire and in doing so caused harm
to SHB in New Hampshire.
The individual defendants, Mangum and Semenoff, also have
sufficient contacts with New Hampshire to meet the relatedness
prong of the minimum contacts analysis. As the e-mail
correspondence demonstrates, both Mangum and Semenoff personally
participated in the negotiations with SHB. There are 132 e-
mails sent from Mangum’s e-mail address to SHB. Doc. N o . 14-1.
Mangum reached out to the web designer in New Hampshire and 17 negotiated the purchase of hat boxes from SHB.
While there are only ten e-mails sent from Semenoff on the
e-mail log, it is clear from the alleged facts that he was
closely involved in the negotiation and purchase of hat boxes
from New Hampshire. Doc. N o . 14-2. As explained above, some of
the e-mails sent from Mangum’s e-mail address were actually sent
by both defendants. SHB alleges that Semenoff called SHB in New
Hampshire to discuss buying hat boxes, shipping the hat boxes,
and the companies’ websites. Doc. N o . 8 . As the president of
PMU, Semenoff had an ongoing relationship with SHB. Id.
Defendants do not argue that personal jurisdiction is improper
with regards to Semenoff because he was less involved with the
business than any of the other defendants. I find that
Semenoff’s contacts with New Hampshire meet the relatedness
requirement.
2. Purposeful Availment
“The function of the purposeful availment requirement is to
[ensure] that personal jurisdiction is not premised solely on a
defendant’s ‘random, isolated, or fortuitous’ contacts with the
forum state.” Sawtelle, 70 F.3d at 1391 (citing Keeton v .
Hustler Magazine, Inc., 465 U.S. 7 7 0 , 774 (1984)).
Voluntariness and foreseeability are the touchstones of the 18 analysis. Id. The purposeful availment inquiry often resembles
the relatedness inquiry. Phillips Exeter Acad., 196 F.3d at 289
(“[T]here is a natural blurring of the relatedness and
purposeful availment inquiries in cases . . . in which the
alleged contacts are less tangible than physical presence.”).
Defendants argue that purchasing products from a foreign
jurisdiction does not constitute purposeful availment, and that
they could not reasonably have foreseen being haled into New
Hampshire court based on that activity. SHB argues that
defendants voluntarily subjected themselves to suit in New
Hampshire and that the defendants’ false advertisements caused
foreseeable harm to SHB in New Hampshire.6
Defendants’ communications directed to New Hampshire were
not random, isolated, or fortuitous. See Keeton, 465 U.S. at
774. The contacts were knowing and purposeful. Many of the
6 SHB also cites the forum selection clause at the bottom of the invoices as evidence that defendants knew they could be subject to suit in New Hampshire. A boilerplate forum selection clause is not sufficient to establish personal jurisdiction, but it is a factor that may be considered to “reinforce . . . the reasonable foreseeability of possible litigation.” Burger King, 471 U.S. at 482. Defendants argue that the forum selection clause found on the invoices is limited to claims “involving this contract” and therefore is inapplicable to the present tort claim. I find that defendants meet the “purposeful availment” requirement and therefore do not consider the forum selection clause. 19 same knowing and purposeful contacts discussed in the
relatedness inquiry above are relevant here. At the time they
placed orders for hat boxes, the defendants knew SHB was a New
Hampshire corporation. Thus, the defendants could have foreseen
that, should a claim arise, they would likely be haled into
court in New Hampshire.
3. Reasonableness
Once a court has determined that a defendant has
purposefully established minimum contacts with the forum state,
other factors are relevant to determining whether the assertion
of personal jurisdiction would comport with “fair play and
substantial justice.” Burger King, 471 U.S. at 476 (quoting
Int’l Shoe, 326 U.S. at 3 2 0 ) . The relevant factors for
consideration include:
(1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
163 Pleasant St., 960 F.2d at 1088 (citing Burger
King, 471 U.S. at 4 7 7 ) .
20 These factors “are not ends in themselves, but they are,
collectively, a means of assisting courts in achieving
substantial justice. In very close cases, they may tip the
constitutional balance.” Ticketmaster, 26 F.3d at 209. Here, I
find these factors do not weigh strongly in either direction
and, accordingly, do not tip the constitutional balance.
Defendants argue that it would be unfair and unreasonable
to require them to defend this action in New Hampshire for
several reasons. First, they argue that the burden of
litigating this case would be particularly great for Mangum
because she has an autonomic disease, which they neither specify
nor document, that prevents her from traveling.7 Mangum does not
need to travel to New Hampshire to litigate this case. This
case is unlikely to proceed to trial, but if it does and if
Mangum must testify, she may do so via videoconference.
The defendants’ burden of litigating this case in New
Hampshire falls short of constitutional significance. Burger
King, 471 U.S. at 474 (explaining that “it usually will not be
7 Defendants cite Murphy v . Schneider Nat’l Inc., 362 F.3d 1133, 1142 (9th Cir. 2004) for the proposition that a combination of physical and financial hardships may effectively deprive a party of his or her day in court. Murphy, however is inapposite because it addresses venue, not personal jurisdiction.
21 unfair to subject [a nonresident defendant] to the burdens of
litigating in another forum for disputes relating to [in-forum
economic] activity”). If the litigation were to proceed in
California, as the defendants wish, the burden of traveling from
New Hampshire to California would be felt by the plaintiffs.
Either way, one party will have the burden of traveling across
the country.
Second, New Hampshire has a demonstrable interest in
adjudicating the dispute. As the First Circuit has noted,
“[t]he purpose of [this] inquiry is not to compare the forum’s
interest to that of some other jurisdiction, but to determine
the extent to which the forum has an interest.” Foster-Miller,
Inc., 46 F.3d at 151 (emphasis in original). New Hampshire has
an interest in the prosecution of this case involving an out-of-
state defendant that contacted a New Hampshire business,
obtained hat boxes from the New Hampshire business, and then
allegedly injured the New Hampshire business by falsely
advertising those hat boxes. Accordingly, this factor cuts in
favor of jurisdiction.
Third, SHB has an interest in obtaining convenient and
effective relief in its home state. I need not dwell on this
factor because “plaintiff’s choice of forum must be accorded a 22 degree of deference with respect to the issue of convenience.”
Sawtelle, 70 F.3d at 1395.
Fourth, the judicial system’s interest in obtaining the
most effective resolution of the controversy does not appear to
cut in either direction here, as is frequently the case. See
Jet Wine & Spirits, 298 F.3d at 1 2 ; Sawtelle, 70 F.3d at 1395;
Ticketmaster, 26 F.3d at 211. The loci of discovery will be in
both New Hampshire and California.
The fifth and final factor, which implicates the common
interests of all sovereigns in promoting substantive social
policies, weighs in favor of finding jurisdiction in New
Hampshire. The policy implicated by the final factor is “the
ability of a state to provide a convenient forum for its
residents to redress injuries inflicted by out-of-forum actors.”
Sawtelle, 70 F.3d at 1395. When a company does business in New
Hampshire, state tort law may be frustrated if out-of-state
actors are insulated from the legal consequences of their
actions in New Hampshire. Jet Wine & Spirits, 298 F.3d at 1 2 .
Hence, this factor weighs in favor of the exercise of
jurisdiction.
Overall, the reasonableness factors do not weigh strongly
in either direction. Because SHB’s injury is related to the 23 defendants’ contacts with New Hampshire, and the defendants
purposefully availed themselves of the benefits of doing
business in New Hampshire, I find that this court has
jurisdiction over SHB’s Lanham Act claim, and, under
supplemental jurisdiction, the plaintiff’s state law claims.
III. VENUE
While the First Circuit has not specified the standard a
district court should use to resolve venue disputes, it has
determined the standard in the related context of a challenge to
personal jurisdiction. See Boit, 967 F.2d at 675-77. In that
context, in cases in which no hearing is held, the plaintiff
must make only a prima facie determination of jurisdiction. Id.
Accordingly, the court does not find facts, but rather accepts
the truth of the plaintiff's factual averments to the extent the
record supports them. Id. Since at least one other circuit
court requires district courts within its circuit to use a
similar standard in venue disputes, see Home Ins. C o . v . Thomas
Indus., Inc., 896 F.2d 1352, 1355 (11th Cir. 1990), and the
parties have not drawn my attention to any precedent suggesting
24 a different approach, I will determine the venue question under
the prima facie standard outlined in Boit.
Both venue and personal jurisdiction are concerned with
fairness to the defendant, but the two concepts are distinct.
Johnson Creative Arts v . Wool Masters, 743 F.2d 9 4 7 , 952 (1st
Cir. 1984). The fact that a court asserts personal jurisdiction
over a defendant is not dispositive of the issue of venue. Id.
The proper venue for an action under the Lanham Act is
determined by 28 U.S.C. § 1391, the general venue statute for
non-diversity actions.8 Woodke v . Dahm, 70 F.3d 983, 985 (8th
Cir. 1995); Gary Scott Int'l, Inc. v . Baroudi, 981 F. Supp. 7 1 4 ,
717-18 (D. Mass. 1997).
Section 1391(b)(1) provides that a civil action may be
brought in “a judicial district in which any defendant resides.”
28 U.S.C. §1391(b)(1). Section 1391(c)(2) provides that a
defendant corporation “shall be deemed to reside . . . in any
judicial district in which [it] is subject to the court’s
personal jurisdiction. . .” Id. §1391(c)(2). Since I found
8 SHB errs in relying on 28 U.S.C. § 1400(a), the venue provision for “patents and copyrights, mask works, and designs.”
25 personal jurisdiction over PMU and L’Artisane Box, venue is
also proper.
With regard to the individual defendants, Mangum and
Semenoff, section 1391(b)(2) provides that a claim may be
brought in a “judicial district in which a substantial part of
the events or omissions giving rise to the claim occurred.” Id.
§ 1391(b)(2). The relevant question is “whether the district
the plaintiff chose had a substantial connection to the claim,
whether or not other forums had greater contacts.” Setco Enter.
Corp. v . Robbins, 19 F.3d 1278, 1281 (8th Cir.1994). I look
“not to a single ‘triggering event’ prompting the action, but to
the entire sequence of events underlying the claim.” Uffner v .
La Reunion Francaise, S.A., 244 F.3d 3 8 , 42 (1st Cir. 2001).
For the same reasons I conclude that there is specific
personal jurisdiction over the individual defendants based on
their contact with New Hampshire, I also find that a substantial
part of the events or omissions giving rise to SHB’s claim
occurred in New Hampshire. See 28 U.S.C. § 1391(b)(2).
Accordingly, venue is proper in New Hampshire for all
defendants.
26 IV. FAILURE TO STATE A CLAIM
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff
must make factual allegations sufficient to “state a claim for
relief that is plausible on its face.” See Ashcroft v . Iqbal,
556 U.S. 6 6 2 , 663 (2009) (quoting Bell Atl. Corp. v . Twombly,
550 U.S. 5 4 4 , 547 (2007)). A claim is facially plausible when
it pleads “factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged. The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Iqbal, 556
U.S. at 678 (citations omitted).
In deciding a motion to dismiss, I employ a two-pronged
approach. See Ocasio–Hernández v . Fortuño–Burset, 640 F.3d 1 ,
12 (1st Cir. 2011). First, I screen the complaint for
statements that “merely offer legal conclusions couched as fact
or threadbare recitals of the elements of a cause of action.”
Id. (citations, internal quotation marks, and alterations
omitted). A claim consisting of little more than “allegations
that merely parrot the elements of the cause of action” may be
dismissed. Id. Second, I credit as true all non-conclusory 27 factual allegations and the reasonable inferences drawn from
them, and then determine if the claim is plausible. Id. The
plausibility requirement “simply calls for enough fact to raise
a reasonable expectation that discovery will reveal evidence” of
illegal conduct. Twombly, 550 U.S. at 556. The “make-or-break
standard” is that those allegations and inferences, taken as
true, “must state a plausible, not a merely conceivable, case
for relief.” Sepúlveda–Villarini v . Dep't of Educ., 628 F.3d
2 5 , 29 (1st Cir. 2010); see Twombly, 550 U.S. at 555 (“Factual
allegations must be enough to raise a right to relief above the
speculative level.”).
1. Violation of the Lanham Act (Count II)
Defendants argue that the plaintiff failed to properly
allege a violation of the Lanham Act’s prohibition on false
advertising. See 15 U.S.C. § 1125(a). To state a claim under
this statute, a plaintiff must allege:
(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false 28 statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products.
Southland Sod Farms v . Stover Seed Co., 108 F.3d 1134, 1139 (9th
Cir. 1997).
“A plaintiff can succeed on a false advertising claim by
proving either that an advertisement is false or that the
advertisement is literally true or ambiguous, but likely to
mislead and confuse consumers.” Clorox C o . P.R. v . Proctor &
Gamble Commercial Co., 228 F.3d 2 4 , 33 (1st Cir. 2000). If the
advertisement is false, the plaintiff may be entitled to relief
without evidence of consumer reaction. Id. If the
advertisement is literally true, the plaintiff must show that
the advertisement conveys a misleading message that is likely to
confuse consumers and show how consumers have actually reacted
to the challenged advertisement. Id.
Defendants argue that SHB has failed to allege a violation
of the Lanham Act because: (1) no advertising claim made by PMU
or L’Artisane is false or misleading; (2) SHB knew that PMU
intended to rebrand the boxes under PMU’s own label; and (3)
SHB’s hat boxes are not protected under the Lanham Act because
29 they are not distinctive.9 These are all factual issues that do
not bear on the sufficiency of the pleadings.
SHB alleges that the defendants placed pictures of SHB hat
boxes on the PMU and L’Artisane Box websites and stated on the
websites that the boxes were designed, manufactured,
copyrighted, and patented by Mangum or L’Artisane Box. The
complaint alleges that these and other similar statements are
false. SHB alleges that defendants misled consumers by claiming
that the SHB boxes were “patented” by Mangum. They argue that
such a statement is not only false, but would also mislead
consumers to believe that defendants are the only source of SHB
hat boxes. SHB knew that defendants would rebrand and resell
9 Defendants incorrectly cite Zenith Electronics Corp. v . Exzec, Inc. for the proposition that a plaintiff must allege bad faith in a Lanham Act claim if the marketplace statements are about having a patent. 182 F.3d 1340 (Fed. Cir. 1999). In Zenith, the Court of Appeals for the Federal Circuit held that “before a patentee may be held liable under § 43(a) for marketplace activity in support of its patent, and thus be deprived of the right to make statements about potential infringement of its patent, the marketplace activity must have been undertaken in bad faith.” Id. at 1353. The court was concerned that the Lanham Act may conflict with the patent laws when an accused patent infringer attempts to use antitrust law to frustrate an honest patentee’s right to enforce a patent. Zenith is not on point in this case because defendants do not hold a valid patent. I do not decide whether there is a bad faith requirement for “patent pending” claims under the Lanham Act. The patent pending claims are only one of several alleged violations of the Lanham Act.
30 the hat boxes, but they did not consent to the allegedly
deceptive and misleading way that defendants advertised the
boxes.
In a motion to dismiss, I assume all of the allegations in
the complaint are true. The defendants have challenged the
plaintiff’s factual allegations, but not plaintiff’s legal
claims. Assuming SHB’s allegations are true, the defendants
have not offered any argument that the pleadings are
insufficient to state a claim under the Lanham Act.
Accordingly, their motion to dismiss is denied.
2. Unfair Competition in Violation of NH CPA (Count I )
Section 358:A-2 of the CPA provides, in relevant part, that
“[i]t shall be unlawful for any person to use any unfair method
of competition or any unfair or deceptive act or practice in the
conduct of any trade or commerce within the state.” N.H. Rev.
Stat. Ann. § 358-A:2. Acts in violation of the CPA include:
“(I) Passing off goods or services as those of another; (II)
Causing likelihood of confusion or misunderstanding as to the
source, sponsorship, approval, or certification of goods or
services; . . . (IX) Advertising goods or services with intent
not to sell them as advertised; (X) Advertising goods or
services with intent not to supply reasonably expectable public 31 demand, unless the advertisement discloses a limitation of
quantity.” New Hampshire RSA 358-A:10 provides that “[a]ny
person injured by another's use of any method, act or practice
declared unlawful under this chapter may bring an action for
damages and for such equitable relief, including an injunction,
as the court deems necessary and proper.” Accordingly, a
competitor may bring suit under the CPA. See Pacamor Bearings,
Inc. v . Minebea Co., 918 F. Supp. 4 9 1 , 499 (D.N.H. 1996).
A plaintiff must prove that an injury was felt, either
directly or indirectly, in New Hampshire in order to state a
claim under the CPA. Precourt v . Fairbank Reconstruction Corp.,
856 F. Supp. 2d 3 2 7 , 343 (D.N.H. 2012). SHB alleges that the
defendants made the false or misleading statements on their
website and used the website to solicit New Hampshire consumers
by listing several New Hampshire towns where L’Artisane Box
allegedly conducted business. In other words, New Hampshire
residents were the targets of defendants’ allegedly false and
misleading information.
Defendants move to dismiss this claim. An alleged
violation of the Lanham Act provision prohibiting false
advertising will also constitute an “unfair practice” within the
meaning of the CPA. See Pacamor Bearings, Inc., 918 F. Supp. at 32 499. Accordingly, for the same reasons discussed above in the
section on the Lanham Act, plaintiff has pleaded sufficient
facts to support a claim under the CPA. Defendants’ motion to
dismiss is denied.
3. Tortious Interference with a Business (Count III)
Plaintiffs allege that the defendants’ intentional
misrepresentations caused SHB to “lose customer orders and
suffer damages because the public perceived that defendants were
manufacturers of SHB’s pictured boxes as well as the owner of
copyrights, patents and awards on the boxes.” Doc. N o . 9. It
is unclear whether SHB is asserting a claim for tortious
interference with an existing contractual relationship or
tortious interference with a prospective contractual
relationship. Either way, the claim must fail.
To state a claim for tortious interference with an existing
relationship, the plaintiff must allege that: “(1) the plaintiff
had an economic relationship with a third party; (2) the
defendant knew of this relationship; (3) the defendant
intentionally and improperly interfered with this relationship;
and (4) the plaintiff was damaged by such interference.” Emery
v . Merrimack Valley Wood Prods., Inc., 701 F.2d 985, 988 (1st
Cir. 1983). SHB fails to allege an existing economic 33 relationship with a third party.
To state a claim for tortious interference with a
prospective contractual relationship under New Hampshire law the
plaintiff must show that the defendant “induce[d] or otherwise
purposely cause[d] a third person not to . . . enter into or
continue a business relation with another” and thereby caused
harm to the other. Bricker v . Crane, 118 N.H. 249, 252 (1978)
(quoting Restatement (Second) of Torts § 766(B) (1979)). The
claim cannot be based “solely on [a plaintiff’s] potential
relationship with consumers in a given market.” Fuller Ford,
Inc. v . Ford Motor Co., N o . 00–530–B, 2001 WL 920035, at *14
(D.N.H. Aug. 6, 2001) (emphasis in original). It arises only
when a third party interferes with the ongoing or prospective
business relations of two other parties. Emery, 701 F.2d at 988
(citations omitted); Alexander v . Fujitsu Bus. Commc’n Sys.,
Inc., 818 F.Supp. 4 6 2 , 468–69 (D.N.H. 1993); Jay Edwards, Inc.
v . Baker, 130 N.H. 4 1 , 46 (1987). SHB fails to allege that the
defendants interfered with ongoing or prospective business
relations with a third party. Accordingly, the claim fails.
V. CONCLUSION
For the reasons discussed above, I deny defendants’ motion 34 to dismiss (Doc. N o . 5 ) for lack of personal jurisdiction,
improper venue, and failure to state a claim under the Lanham
Act and CPA. I grant defendants’ motion to dismiss for failure
to state a claim of tortious interference with business.
SO ORDERED.
/s/Paul Barbadoro Paul Barbadoro United States District Judge
April 1 2 , 2013
cc: Daniel A . Laufer Paul David Marotta Joshua M . Wyatt