Alcon Labs., Inc. v. Lens.Com, Inc., 18-cv-407 (NG) (RLM)

ALCON LABORATORIES, INC., Plaintiff, v. LENS.COM, INC., Defendant.

18-cv-407 (NG) (RLM)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

FILED: January 17, 2019

January 16, 2019

OPINION AND ORDER

GERSHON, United States District Judge:

Plaintiff Alcon Laboratories, Inc. ("Alcon") brings this action alleging trademark infringement under 15 U.S.C. § 1114 and New York common law; false designation of origin under 15 U.S.C. § 1125(a); deceptive trade practices under New York General Business Law § 349; false advertising under New York General Business Law § 350; and unfair competition under New York common law. Defendant Lens.com, Inc. ("Lens.com") is a corporation that operates websites selling contact lenses, including contact lenses produced by plaintiff Alcon. Alcon alleges that Lens.com's sales of its products are "unauthorized" and consequently injurious to consumer safety and Alcon's reputation. Lens.com maintains that it purchases genuine Alcon contact lenses in the United States and abroad and sells them to customers at discount prices in frustration of Alcon's anticompetitive distribution scheme. The merits of the claims are not now under consideration. Before me is defendant's motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or alternatively, to transfer venue to the District of Nevada pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, Lens.com's motion is denied.

I. BACKGROUND

Alcon is a corporation organized under the laws of Delaware with its principal place of business in Texas. In 2017, Alcon sold nearly $15 million of Alcon contact lenses to New York eye care practitioners. Lens.com is a corporation organized under the laws of Nevada with its principal place of business in Nevada. Lens.com ships orders of contact lenses purchased from its websites from a warehouse and distribution center in Missouri.

According to the Amended Complaint and declarations accompanying this motion, in Fall 2017, Alcon hired a private investigator to purchase its products from Lens.com. Between October and December 2017, the investigator placed orders for Alcon products "Dailies Aquacomfort Plus" and "02 Optix" from Lens.com. The orders arrived, containing the products, at an address in Queens, New York with shipping labels indicating shipment from Lens.com in Missouri. A second investigator, subcontracted by the first investigator, placed an order in November 2017 for "Dailies Aquacomfort Plus" from Lens.com and received the products at an address in Staten Island, New York apparently from Lens.com in Missouri.

As it relates to jurisdiction, Alcon alleges that Lens.com is subject to specific jurisdiction in New York under New York's long-arm statute, N.Y. C.P.L.R. § 302, based on its actions as described in the First Amended Complaint. Those actions include:

1. Operating multiple highly interactive internet sales websites through which consumers, including New York consumers, can order contact lenses shipped anywhere in the United States, including to New York (Am. Compl. ¶¶ 71, 74);

2. Shipping products, including Alcon products, to New York (Id. ¶ 84);

3. Importing hundreds of thousands of dollars' worth of contact lenses into the United States through John F. Kennedy International Airport in Queens, New York (Id. ¶ 79);

4. Verifying contact lens prescriptions with New York eye care practitioners (Id. ¶ 80);5. Featuring reviews from hundreds of customers in New York on its website, including one New York customer displayed as having placed 42 orders (Id. ¶ 77);

6. Promoting itself on social media where it engages with thousands of "fans" and "followers," many of whom are New York residents (Id. ¶ 78); and

7. Contracting with New York based company LivePerson, Inc. to provide customer service "live chat" software on its websites (Id. ¶ 75).

II. PERSONAL JURISDICTION

1. Standard of Review

Prior to discovery, a plaintiff may defeat a Rule 12(b)(2) motion to dismiss by making a prima facie showing of personal jurisdiction. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 196 (2d Cir. 1990). A district court construes any factual averments in the light most favorable to the plaintiff and resolves all doubts in the plaintiff's favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). The court may consider materials outside the pleadings without converting a motion to dismiss for lack of personal jurisdiction into a motion for summary judgment. See Dorchester Fin. Secs., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 86 (2d Cir. 2013).

Determining whether a prima facie case of personal jurisdiction over a foreign defendant has been made requires a two-step inquiry. Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). First, the court must determine whether the defendant is subject to jurisdiction under the law of the forum state. Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224 (2d Cir. 2014). Second, the court must consider whether the exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. Id.

2. Personal Jurisdiction under New York Law

New York extends personal jurisdiction over non-domiciliaries under two statutes: CPLR §§ 301 (general jurisdiction) and 302 (specific jurisdiction). Plaintiff relies solely on CPLR§ 302(a)(1), which provides that a court may exercise personal jurisdiction over any non-domiciliary who "transacts any business within the state or contracts anywhere to supply goods or services in the state . . . ." Section 302(a)(1) confers personal jurisdiction if two conditions are met: "first, the non-domiciliary must transact business within the state; second, the claim against the non-domiciliary must arise out of that business activity." CutCo Indus., 806 F.2d at 365 (internal quotation marks omitted).

"Proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted." Eades v. Kennedy, PC Law Office, 799 F.3d 161, 168 (2d Cir. 2015) (alterations omitted) (quoting Chloé, 616 F.3d at 170). "Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. (quoting Fischbarg v. Doucet, 9 N.Y.3d 375, 380 (N.Y. 2007)). Thus, a "single act of shipping a product might well be sufficient, by itself, to subject a nondomiciliary to the jurisdiction of a New York court under section 302(a)(1)." Hypnotic Hats, Ltd. v. Wintermantel Enter., LLC, 2016 WL 7451306, at *2 (S.D.N.Y. Dec. 27, 2018) (alterations omitted) (quoting Chloé, 616 F.3d at 170).

Alcon has readily established that jurisdiction over Lens.com is proper under § 302(a)(1). Lens.com does not dispute that it operates highly interactive websites offering products for sale in New York or that it has shipped orders of Alcon contact lenses to New York. Instead, Lens.com argues that "test buys" by investigators do not establish jurisdiction. However, Lens.com's contention conflicts with Chloé, the leading case in this Circuit on "personal jurisdiction in the age of internet commerce." Chloé, 616 F.3d at 165.

In Chloé, the Second Circuit held that personal jurisdiction could be exercised over an out-of-state employee where the employee had shipped a single counterfeit handbag into New York to an administrative assistant at plaintiff's law firm, and the employer engaged in extensive business activity involving New York. Id. The defendant employer's extensive business contacts with New York principally consisted of operating a website offering handbags for sale to New York consumers and shipping 52 orders of non-Chloé handbags into New York. Id. at 166. It was of no consequence that the only purchase of a Chloé-branded handbag was to an employee of plaintiff's counsel. Id. at 170; see Cartier v. Seah LLC, 598 F. Supp. 2d 422, 425 (S.D.N.Y. 2009). Here, Alcon alleges not only the particular sales described in detail but also that Lens.com has made countless other sales unconnected to this litigation to customers in New York, as well as imported goods through New York airports and engaged with New York customers on social media. Accepting Alcon's allegations as true, it has satisfied the first requirement of § 302(a)(1).

The second requirement has also been met, as the claims asserted arise out of allegations that Lens.com offered and sold allegedly unauthorized contact lenses in New York through its websites. Lens.com argues that, to the extent this court finds that its activities support personal jurisdiction in New York, the "arising from" prong limits consideration of its activities to those that concern the specific "product lines" of Alcon contact lenses at issue in this case. This argument too was rejected in Chloé where the Second Circuit found that all of defendant's sales of handbags in New York, not just its sales of Chloé handbags, were relevant to contacts with New York. Id. at 167. In this case, Lens.com's alleged activity in New York demonstrate "a larger business plan purposefully directed at New York consumers." Id. Accordingly, Alcon has made a prima facie showing of jurisdiction under § 302(a)(1).

3. Due Process

I must next "analyze whether personal jurisdiction comports with the Due Process Clause." Id. at 164. This analysis consists of two components—the "minimum contacts" inquiry and the "reasonableness" inquiry. Id. at 171.

"Due process considerations require that the defendant 'have certain minimum contacts [with the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Licci ex rel. Licci v. Lebanese Canadian Bank, SA...