Soltura, LLC v. Cerveceria La Tropical USA, LLC

• Court: District Court, S.D. California
• Decided: October 20, 2023
• Docket: 3:23-cv-01104
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SOLTURA, LLC dba BUCANERO USA, Case No.: 23-cv-1104-JES-KSC

12 Plaintiff, ORDER: 13 v. (1) GRANTING MOTION TO 14 CERVECERIA LA TROPICAL USA DISMISS; and LLC; and LA TROPICAL HOLDINGS 15 B.V., (2) DENYING AS MOOT MOTION 16 Defendants. FOR PRELIMINARY INJUNCTION 17 [ECF Nos. 7, 9] 18

19 Pending before the Court is Plaintiff’s Motion for Preliminary Injunction and 20 Defendants’ Motion to Dismiss for Improper Venue and Lack of Personal Jurisdiction. 21 ECF Nos. 7, 9. The parties filed respective oppositions and replies to these motions. ECF 22 Nos. 13-16. On October 11, 2023, the Court held a hearing on both motions and took the 23 matters under submission. ECF No. 20. After due consideration and for the reasons set 24 forth below, the Court GRANTS the motion to dismiss for improper venue, DENIES AS 25 MOOT the motion for preliminary injunction, and DISMISSES the case without 26 prejudice to refiling in a proper venue. 27 28 // 1 I. BACKGROUND 2 Plaintiff Soltura, LLC (“Soltura”) is a company based in Solana Beach, California 3 and is the originator and importer of Cerveza PALMA® beer. ECF No. 1 at ¶¶ 2, 11. 4 Soltura states that it has sold PALMA® beer since January 2019 and it is distributed 5 throughout California, Florida, Illinois, Maryland, Texas, and Wisconsin, and in many 6 retail outlets. Id. ¶¶ 13-14. Soltura has a registered trademark related to PALMA® beer. 7 Id. ¶¶ 16-22. Soltura also alleges that it markets PALMA® beer through use of distinctive 8 and protected trade dress. Id. at ¶¶ 23-27. Soltura alleges that it advertises PALMA® 9 using both the trademark and trade dress. Id. at ¶¶ 28-30. 10 Soltura accuses Defendants of using its protected intellectual property on their beer 11 products, particularly for their Tropi Crystal beer. Id. at 33-34. Soltura alleges that the 12 Tropi Crystal beer cans infringe based on the background used on the cans, the design of 13 the product name, images used on the cans, and the use of a Spanish phrase. Id. Soltura 14 alleges that the design is likely to cause consumer confusion because both products have 15 been designed to be reminiscent of a Cuban beer, Cerveza Cristal, which was popular 16 among Cuban Americans. Id. at ¶¶ 35-37. Based on these allegations, Soltura asserts 17 causes of actions for trademark and trade dress infringement and unfair competition. Id. 18 at ¶¶ 41-73. 19 Soltura filed a motion for preliminary injunction against Defendants, requesting 20 that they be enjoined from using the PALMA® trademark and trade dress on their 21 products. ECF No. 7. Defendants oppose this motion, but also filed their own motion to 22 dismiss, or in the alternative, transfer venue. ECF No. 9. These motions are now pending 23 before the Court. 24 II. MOTION TO DISMISS 25 The Court first addresses Defendants’ motion to dismiss. ECF No. 9. Defendants 26 move on two alternative grounds. First, Defendants argue that this case should be 27 dismissed under Federal Rule of Civil Procedure 12(b)(3) for improper venue, or should 28 in the alternative, be transferred to a proper venue. ECF No. 9-1 at 18. Second, 1 Defendants argue that this case alternatively should be dismissed under Federal Rule of 2 Civil Procedure 12(b)(2) for lack of personal jurisdiction. Id. at 18-30. 3 A. Venue 4 i. Legal Standard 5 28 U.S.C. § 1406(a) provides that “[t]he district court of a district in which is filed 6 a case laying venue in the wrong division or district shall dismiss, or if it be in the interest 7 of justice, transfer such case to any district or division in which it could have been 8 brought.” Federal Rule of Civil Procedure 12(b)(3) permits a party to move to dismiss a 9 complaint based on improper venue. Upon a motion challenging venue, Plaintiff bears the 10 burden of establishing proper venue. Kaia Foods, Inc. v. Bellafiore, 70 F. Supp. 3d 1178, 11 1183 (N.D. Cal. 2014) (citing Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 12 491, 496 (9th Cir. 1979)). In deciding a motion under Rule 12(b)(3), the court does not 13 need to accept the allegations in the complaint as true and may consider facts outside the 14 pleadings. Id. 15 Where a plaintiff asserts several claims, generally venue must be established for 16 each claim. Adobe Sys. Inc. v. Childers, No. 5:10-CV-03571 JF/HRL, 2011 WL 566812, 17 at *7 (N.D. Cal. Feb. 14, 2011). Here, Soltura asserts claims for trademark and trade 18 dress infringement under the Lanham Act, as well as associated unfair competition claims 19 under state law. ECF No. 1 at ¶¶ 41-73. Venue over such claims are governed by the 20 general venue statute, 28 U.S.C. § 1391. Allstar Mktg. Grp., LLC v. Your Store Online, 21 LLC, 666 F. Supp. 2d 1109, 1128 (C.D. Cal. 2009); Golden Scorpio Corp. v. Steel Horse 22 Bar & Grill, 596 F.Supp.2d 1282, 1286 n. 3 (D. Ariz. 2009) (“Because the Lanham Act 23 has no special venue provision, the general venue statute applies”). 24 Pursuant to the general venue statute, venue is proper in: “(1) a judicial district in 25 which any defendant resides, if all defendants are residents of the State in which the 26 district is located; (2) a judicial district in which a substantial part of the events or 27 omissions giving rise to the claim occurred, or a substantial part of property that is the 28 subject of the action is situated; or (3) if there is no district in which an action may 1 otherwise be brought as provided in this section, any judicial district in which any 2 defendant is subject to the court’s personal jurisdiction with respect to such action.” 28 3 U.S.C. § 1391(b). Here, Plaintiff relies on § 1391(b)(2) only, alleging in his complaint 4 that venue is proper in the Southern District of California because “a substantial part of 5 the events giving rise to the claims in this complaint occurred in this judicial district,” 6 thus relying on § 1391(b)(2). ECF No. 1 at ¶ 9. 7 For trademark infringement claims arising under the Lanham Act, a “substantial 8 part of the events giving rise to the claims” occurs in “any district where consumers are 9 likely to be confused by the accused goods.” See Adobe Sys. Inc. v. Childers, No. 5:10- 10 CV-03571 JF/HRL, 2011 WL 566812, at *7 (N.D. Cal. Feb. 14, 2011). This could be met 11 by showing that “a substantial number of consumers of plaintiff’s trademarks products 12 who reside in this district may be confused by defendant’s use of the allegedly infringing 13 mark.” Id. (internal quotation marks and citations omitted). Id.; see also Vanity Fair Mills 14 v. T. Eaton Co., 234 F.2d 633, 639 (2d Cir.1956) (“[I]n cases involving trademark 15 infringement and unfair competition, the wrong takes place not where the deceptive 16 labels are affixed to the goods or where the goods are wrapped in the misleading 17 packages, but where the passing off occurs, i.e., where the deceived customer buys the 18 defendant's product in the belief that he is buying the plaintiff's.”). 19 ii. Discussion 20 Defendants put forth several arguments for why venue is not proper in the Southern 21 District of California. First, Defendants submit evidence to show that Tropi Crystal beer 22 is produced and sold only in Florida, primarily in Miami, and has never been advertised 23 or sold anywhere in California. ECF No. 9-1 at 12-13. Mr. Manuel Portuondo, executive 24 in charge of La Tropical, submitted a declaration stating that he formed a business with 25 his partner and they started brewing La Tropical beer in Miami in 1998. ECF No. 9-2 at ¶ 26 12. The La Tropical brand was purchased by an entity associated with the Heineken 27 Group in 2017, and thereafter, construction began for a new La Tropical brewery in 28 Miami. Id. at ¶ 15. In March 2023, the company introduced the Tropi Crystal beer. Id. 1 Mr. Portuondo stated that the beer is only sold in Florida, primarily advertised and sold in 2 the greater Miami area, but there is also some distribution in the Broward and Palm 3 Beach areas of Florida. Id. at ¶¶ 16, 18, 24. Importantly, he states that the beer has never 4 been sold or advertised for sale in any part of California and neither defendant is licensed 5 by the California Department of Beverage Control to import, produce, or sell the beer in 6 California. Id. at ¶¶ 17, 19, 24. Thus, Defendants maintain that none of the events giving 7 rise to Soltura’s claims of infringement have occurred within this district for venue 8 purposes. ECF No. 9-1 at 12-13. Second, while Defendants do have a website that is 9 generally accessible across the United States, including from this district, the website is 10 “passive” and does not let consumers purchase any beer through the website. ECF No. 9- 11 2 at ¶ 21. Further, Mr. Portuondo states that nothing on the website is targeting California 12 consumers for Tropi Crystal beer, nor have there ever been any print, television, or radio 13 advertisements placed in California for the beer. Id. at ¶¶ 22-23. Finally, Defendants also 14 argue that the only connection to this district that Soltura could make is that it suffers 15 alleged harm here, but that is not sufficient to confer proper venue in this district. ECF 16 No. 9-1 at 14-15. 17 Soltura counters that venue is proper in this district because it is where it is located 18 and where it feels the injury that has been caused by Defendants’ alleged infringement. 19 ECF No. 14 at 28-29. Soltura does not factually dispute any of the evidence put forth by 20 Defendants through Mr. Portuondo’s declaration. Id. 21 The Court finds that Soltura has not met its burden to show that venue is proper in 22 the Southern District of California. As cited above, many cases within this circuit have 23 held that the place where a “substantial part” of the events take place for venue purposes 24 in trademark infringement cases is where there is likelihood of consumer confusion. In 25 order to have that, generally, it must be a district where sales of the allegedly infringing 26 product is sold. See Monster Energy Co. v. Metro Giant, Inc., No. 27 EDCV202616JGBSHKX, 2021 WL 3524125, at *7 (C.D. Cal. Apr. 9, 2021) (“Venue is 28 therefore proper wherever infringing sales occur.”). Here, uncontroverted evidence shows 1 that no infringing sales of Tropi Crystal have ever been made in California, let alone this 2 district, and Soltura itself does not even argue that there was any customer confusion 3 here. 4 Two of the cases that Soltura cites to support its argument that the situs of the injury 5 is a proper venue are not specific to trademark infringement but general torts. See Myers 6 v. Bennett L. Offs., 238 F.3d 1068, 1076 (9th Cir. 2001) (venue was proper in district 7 where “harms” were felt by plaintiffs where claim was for invasion of privacy); Sung v. 8 Bussio, No. 5:13-CV-01786-RMW, 2013 WL 6086030, at *4 (N.D. Cal. Nov. 19, 2013) 9 (claims for tort-like claims including RICO, unfair competition, and common law fraud 10 and conversion). The only case that Soltura cited that did include trademark infringement 11 claims was Rhapsody Int’l Inc. v. Lester, No. C 13-05489 CRB, 2014 WL 709899 (N.D. 12 Cal. Feb. 24, 2014). The court there found venue proper in the Northern District of 13 California, citing Sung and Myers, that the plaintiff “allegedly suffered trademark 14 infringement, a loss of goodwill, and consumer confusion in the Northern District, and 15 thus this is an appropriate venue.” Id. at *9. But the court’s own reasoning also highlights 16 that trademark infringement and consumer confusion were suffered in the district in 17 question. Here, because the uncontroverted evidence shows that Tropi Crystal beer was 18 never sold or marketed in California, there is no evidence that the trademark or trade 19 dress infringement occurred in this district or that consumer confusion occurred here. 20 In Rhapsody, the connection to the forum was based on the defendant’s website, 21 which the court found to be interactive rather than a “passive website containing an 22 advertisement,” because the website allowed users to register, create user names, and 23 download music files. Id. at *6. This differs from Defendants’ website here, which they 24 characterize to be merely passive, doing nothing to target this district outside of its 25 general accessibility to the public. Defendants cite to many cases to support their 26 argument, and the Court is persuaded that this differentiates the situation from Rhapsody. 27 See, e.g., Kaia Foods, 70 F. Supp. 3d at 1184 (“courts have generally held that the mere 28 fact that a website that displays the allegedly infringing mark can be accessed in the 1 district is not sufficient for venue in the absence of sales in the district or other activities 2 aimed at the district”); Jamba Juice Co. v. Jamba Grp., Inc., No. C-01-4846 VRW, 2002 3 WL 1034040, at *2 (N.D. Cal. May 15, 2002) (rejecting proposition that venue is 4 conferred based on website assessable anywhere because that “would [] adopt a rule that 5 would subject any corporation with a website to venue in the district in which plaintiff 6 does business”); Shari’s Berries Int’l, Inc. v. Mansonhing, No. 02:06CV0768GEBGGH, 7 2006 WL 2382263, at *2 (E.D. Cal. Aug. 17, 2006) (website not permitting online orders 8 or other ways to engage with defendant insufficient for venue); Munson v. Legal One L. 9 Grp., No. 21-CV-07178-JCS, 2022 WL 1137082, at *6 (N.D. Cal. Apr. 18, 2022) (“The 10 fact that a website is accessible within the district where an action is brought is not, by 11 itself, enough to establish that venue is proper there.”); see also Life Alert Emergency 12 Response, Inc. v. MedScope Am. Corp., No. CV 08-6735 PSG (CTX), 2009 WL 13 10674028, at *4 (C.D. Cal. Aug. 5, 2009); Knuttel v. Omaze, Inc., 572 F. Supp. 3d 866, 14 870 (N.D. Cal. 2021); J & J Acquisition Partners, Inc. v. Alvernaz Partners, LLC, No. 15 CV1707011SJOPLAX, 2018 WL 4959026, at *3 (C.D. Cal. Feb. 28, 2018). 16 Thus, in summary, Soltura’s cases to support its position that the place it suffers 17 harm is sufficient to confer venue are not persuasive. Soltura’s cases do not persuade this 18 Court to depart from the cases holding that venue in trademark cases should be measured 19 based on where consumer confusion occurs, not where injury is suffered. Rather, many 20 cases within this Circuit have expressly rejected that argument in Lanham Act cases. The 21 Jamba Juice court approved of the case Woodke v. Dahm, 70 F3d 983, 985 (8th Cir. 22 1995), which found that the central purpose of the venue statute is to protect defendants 23 from being haled into districts having no real relationship to the dispute and that the focus 24 is on the “relevant activities of the defendants, not of the plaintiff.” Thus, the place of 25 injury to the plaintiff is not central to this inquiry. Id. Accordingly, the Court concludes 26 that Soltura has not met its burden to show that venue is proper in this district. 27 Having found venue to be improper, the Court has discretion to dismiss the 28 complaint or transfer it to a proper venue. Jezign Licensing, LLC v. Maxima Apparel 1 Corp., No. 20-CV-1438-JLS (AGS), 2021 WL 3493294, at *1 n.1 (S.D. Cal. Aug. 9, 2 2021) (“Whether to dismiss a case or to transfer it to a proper venue is at the discretion of 3 the district court.”) (citing King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992)). A 4 transfer will be in the interests of justice “as a means to prevent the injustice of penalizing 5 a party for an honest procedural mistake.” Amity Rubberized Pen Co. v. Mkt. Quest Grp. 6 Inc., 793 F.3d 991, 996 (9th Cir. 2015); Puri v. Gonzales, 464 F.3d 1038, 1043 (9th Cir. 7 2006) (“we have found a transfer to be in the interest of justice because the litigant was 8 unaware of or confused about the proper forum in which to file his action”). Here, 9 Soltura’s attempt to show that venue is proper in this district appears to be based on the 10 legal theory that venue is proper where the plaintiff suffers injury in trademark cases, but 11 this is against the weight of the authority. There was nothing to prevent Soltura from 12 discovering the facts regarding where Tropi Crystal was sold before the filing of this 13 lawsuit and performing a more thorough venue analysis at that time. See Glovebox Techs. 14 Inc. v. Da Cruz, No. 22-CV-1420-AGS-BLM, 2023 WL 3398532, at *2 (S.D. Cal. May 15 11, 2023) (finding that dismissal was appropriate where “Plaintiff offers no colorable 16 justification for filing in this district”). 17 Accordingly, the Court GRANTS Defendants’ motion to dismiss under Rule 18 12(b)(3) for improper venue and DISMISSES the complaint without prejudice to refiling 19 in the proper venue. 20 B. Personal Jurisdiction 21 Defendants alternatively moved to dismiss the complaint under Rule 12(b)(2) for 22 lack of personal jurisdiction. However, since the Court granted the dismissal of the 23 complaint for improper venue, the Court need not address this issue and DENIES this 24 request as moot. See Glovebox, 2023 WL 3398532, at *2; Jezign Licensing, 2021 WL 25 3493294, at *1 n.1. 26 III. MOTION FOR PRELIMINARY INJUNCTION 27 Also pending before the Court is Soltura’s Motion for Preliminary Injunction. ECF 28 No. 7. Because the Court concludes above that venue is not proper in this district, the 1 || motion is DENIED AS MOOT, without prejudice to its refiling. 2 IV. CONCLUSION 3 For the reasons discussed above, the Court GRANTS the motion to dismiss for 4 ||improper venue, DENIES AS MOOT the motion for preliminary injunction, and 5 || DISMISSES the case without prejudice to refiling in the proper venue. 6 IT IS SO ORDERED. 7 3 Dated: October 20, 2023 “| phe SF acne 4, 9 Honorable James E. Simmons Jr. 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28