ZO Skin Health, Inc. v. Skincare Market, Inc.

CourtDistrict Court, D. Nebraska
DecidedJanuary 20, 2022
Docket8:21-cv-03196
StatusUnknown

This text of ZO Skin Health, Inc. v. Skincare Market, Inc. (ZO Skin Health, Inc. v. Skincare Market, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ZO Skin Health, Inc. v. Skincare Market, Inc., (D. Neb. 2022).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

ZO SKIN HEALTH, INC.,

Plaintiff, 8:21-CV-3196

vs. MEMORANDUM AND ORDER SKINCARE MARKET, INC.,

Defendant.

I. INTRODUCTION ZO Skin Health, Inc., (“ZOSH”) has sued Skincare Market, Inc., for various claims arising from Skincare Market allegedly selling products bearing ZOSH’s trademarks without ZOSH’s permission. Before the Court is Skincare Market’s Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. Filing 8. Alternatively, Skincare Market requests that the Court transfer this case to the United States District Court for the Central District of California under 28 U.S.C. § 1404(a). Filing 8 at 1. For the reasons stated herein, the Court finds that it has personal jurisdiction over Skincare Market. However, the Court concludes that, for the convenience of the parties and witnesses and in the interest of justice, transfer to the United States District Court for the Central District of California is warranted. The Court therefore denies Skincare Market’s Motion to dismiss insofar as it argues the Court lacks personal jurisdiction and grants it insofar as it requests transfer under 28 U.S.C. § 1404(a). II. BACKGROUND ZOSH is a California corporation with its main distribution center in Omaha, Nebraska. Filing 1 at 1. ZOSH creates, markets, and sells “cosmeceutical”1 products. Filing 1 at 3. Because ZOSH’s products are medical grade, it sells its products exclusively through a network of licensed physicians. Filing 1 at 3. The agreements ZOSH has with these licensed physicians allow it to

ensure quality control and consumer safety. Filing 1 at 5–7. ZOSH forbids distributors and the physicians from selling its products on third-party platforms and instead requires consumers to visit the location of one of ZOSH’s Authorized Account Customers to receive a consultation. Filing 1 at 5, 8. ZOSH prohibits the Authorized Account Customers from selling its products to third parties who intend to resell them. Filing 1 at 12. Several of ZOSH’s products are trademarked with the United States Patent and Trademark Office. Filing 1 at 4. While tracking its online sales, ZOSH discovered that Skincare Market was selling products bearing ZOSH’s trademarks on its website. Filing 1 at 9. Skincare Market is a California corporation with its principal place of business in California. Filing 1 at 1; Filing 8-1 at 1. Skincare

Market does not have any offices or employees in Nebraska. Filing 8-1 at 1. ZOSH has not authorized Skincare Market to sell ZOSH’s products through its Authorized Account Customer system. Filing 1 at 9. According to ZOSH, Skincare Market selling its products prevents it from ensuring quality control and consumer safety. Filing 1 at 10. ZOSH also claims that the unauthorized sale of its products causes customer confusion because consumers believe they are purchasing genuine ZOSH products when, in fact, they are not. Filing 1 at 10. Skincare Market

1 The cosmetic industry uses the word “cosmeceutical” to refer to cosmetic products that have medicinal or drug-like benefits. “Cosmeceutical,” U.S. Food & Drug Administration, https://www.fda.gov/cosmetics/cosmetics-labeling- claims/cosmeceutical (last visited Jan. 7, 2022). admits that, since December of 2020, it has made fifteen sales of ZOSH products to Nebraska residents. Filing 8-1 at 2. On September 24, 2021, ZOSH sued Skincare Market. Filing 1. ZOSH brought claims for trademark infringement, false advertising, unfair competition, trademark dilution, intentional interference with contractual relations under California and Nebraska Law, unfair competition

under the California Business and Professions Code, common-law unfair competition, common- law trademark infringement, and violation of the Racketeer Influenced and Corrupt Organizations Act. Filing 1 at 14–36. Skincare Market filed its Motion to Dismiss on October 22, 2021, arguing that the Court lacks personal jurisdiction or, alternatively, that the Court should transfer this suit to the Central District of California. Filing 8; Filing 9 at 10. III. ANALYSIS A. Standard of Review “When personal jurisdiction is challenged by a defendant, the plaintiff bears the burden to show that jurisdiction exists.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir.

2014). To defeat a motion challenging personal jurisdiction, a plaintiff must make “a prima facie showing of personal jurisdiction over the challenging defendant.” Id. Although the evidentiary showing at the prima facie stage is minimal, “the showing must be tested, not by the pleadings alone, but by the affidavits and exhibits supporting or opposing the motion.” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011) (internal quotation marks omitted) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)). The Court must view the evidence “in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff made the requisite showing.” Deloney v. Chase, 755 F. App’x 592, 595 (8th Cir. 2018) (quoting K-V Pharm, 648 F.3d at 592). “[H]owever, the party seeking to establish the court’s personal jurisdiction carries the burden of proof and that burden does not shift to the party challenging jurisdiction.” Fastpath, 760 F.3d at 820. B. The Court Has Specific Personal Jurisdiction over Skincare Market Skincare Market argues that the fifteen sales of ZOSH products it has made to Nebraska residents since December of 2020 are insufficient to confer specific personal jurisdiction. Filing 9

at 7–8. It further contends that Nebraska has little interest in a lawsuit between two California corporations and that it is inconvenient for both parties to litigate this case in Nebraska. Filing 9 at 7–8. In response, ZOSH asserts that personal jurisdiction exists because Skincare Market sold and shipped ZOSH products, in violation of trademark law, to Nebraska residents through its website, and that Nebraska has an interest in preventing Skincare Market from unlawfully selling ZOSH products to its residents.2 Filing 12 at 5–6. The Court finds that it has specific personal jurisdiction over Skincare Market because its website sells products to residents in Nebraska and it made fifteen shipments of ZOSH products to Nebraska residents. The forum state’s long-arm statute and the Due Process Clause must permit the exercise of

personal jurisdiction. K-V Pharm., 648 F.3d at 592. Nebraska’s long-arm statute allows jurisdiction to the extent permitted by the United States Constitution; therefore, the only issue is whether exercising personal jurisdiction over Skincare Market comports with due process. See Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003) (noting that Nebraska’s long-arm

2 ZOSH also argues that the fact that its main distribution center is in Nebraska supports finding personal jurisdiction exists in this case. Filing 12 at 4–5, 7. According to ZOSH, virtually all its products are shipped from this distribution center.

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ZO Skin Health, Inc. v. Skincare Market, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/zo-skin-health-inc-v-skincare-market-inc-ned-2022.