Buckley v. Universal Sewing Supply, Inc., Civil No. 1:19-CV-794

KAREN KAY BUCKLEY, Plaintiff, v. UNIVERSAL SEWING SUPPLY, INC., Defendant.

Civil No. 1:19-CV-794

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

December 9, 2020

Judge Sylvia H. Rambo

MEMORANDUM

Before the court is Defendant's Motion to Dismiss for Lack of Personal Jurisdiction and to Dismiss Plaintiff's Complaint and/or Motion to Transfer Venue under 28 U.S.C. § 1404. (Doc. 38.) For the reasons outlined below, the court will deny the motion.

I. BACKGROUND¹

This is a copyright infringement dispute. Plaintiff Karen Kay Buckley ("Plaintiff") is a quilt designer who designed multiple different types of quilting scissors. In December of 2016, Plaintiff began negotiating, by email and phone, a distributor deal with Universal, whereby it would purchase and re-sell Plaintiff's scissors while promising, among other things, not to sell the scissors throughAmazon. On March 30, 2017, Defendant issued a purchase order requesting 7,920 pairs of scissors for a price of $64,407.60. In response, Plaintiff accepted the purchase order and shipped the requested products from Pennsylvania to Missouri on April 11, 2017. The email exchange between the parties, as well as the receipt of the transaction, indicate to any reasonable person reading them that Plaintiff is located in Carlisle, Pennsylvania and would be shipping scissors directly from Carlisle. On August 24, 2017, Universal issued an additional purchase order that Plaintiff again filled by shipping the scissors from Pennsylvania. Universal paid for these purchases by mailing checks to Plaintiff at her Pennsylvania address.

At some point in 2017, Plaintiff began receiving complaints from other distributors that a competitor was selling her scissors on Amazon for cheaper prices. Plaintiff came to believe that Defendant was to blame, and she therefore informed Defendant that it had breached their agreement and that she would no longer sell scissors to the company. Defendant never responded.

According to the complaint, Defendant then began selling a set of copycat scissors with virtually identical packaging, design, and advertising, thereby encroaching on Plaintiff's intellectual property rights. On May 9, 2019, Plaintiff sued Defendant for copyright infringement and Lanham Act violations, alleging trade dress infringement and unfair competition. (Doc. 1.)

On July 9, 2019, Defendant moved to dismiss the case for lack of personal jurisdiction and improper venue; or, alternatively, to transfer the case to the Eastern District of Missouri. (Docs. 9-10.) The court denied that motion without prejudice, ordering the parties to engage in jurisdictional discovery. (See Docs. 20-21.) The parties exchanged jurisdictional discovery and held a deposition of Defendant's CEO, Philip Samuels. The court has reviewed the parties' briefing, the documentary evidence submitted by the parties, and the transcript of Mr. Samuels's deposition. The motion is thus ripe for review.

II. DISCUSSION

a. The Court Has Specific Personal Jurisdiction Over Defendant.

In reviewing a 12(b)(2) motion to dismiss for lack of personal jurisdiction, based exclusively on the pleadings, the court must take as true the facts alleged by the plaintiff. Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009) (citing O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007)). "[T]he plaintiffs need only establish a prima facie case of personal jurisdiction." Id. (internal quotations and brackets omitted). "The plaintiff meets this burden and presents a prima facie case for the exercise of personal jurisdiction by establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Mellon Bank (East) PSFS, Nat. Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992).

"When a defendant provides affidavits to support a Rule 12(b)(2) motion, the plaintiff may not simply rest on the allegations of the complaint." 4A Charles Alan Wright & Arthur R. Miller, Procedural Aspects of Personal Jurisdiction, Fed. Prac. & Proc. § 1067.6 (4th ed. 2019) ("Wright & Miller"). Instead, the plaintiff must carry its burden by presenting admissible evidence. Estate of Thompson v. Phillips, 741 F. App'x 94, 96 (3d Cir. 2018). The court may evaluate the motion on the papers and documentary evidence alone, in which case the plaintiff "need only establish a prima facie case of personal jurisdiction and they are entitled to have . . . all factual disputes drawn in their favor." Id. (internal quotations and brackets omitted); see Metcalfe, 566 F.3d at 331 (reversing district court for failing to construe disputed facts in the plaintiff's favor). The plaintiff carries this "prima facie" burden if the evidence makes its personal jurisdiction theory "seem[] to be true on first examination, even though it may later be proved to be untrue." BLACK'S LAW DICTIONARY 1441 (11th ed. 2019). But the plaintiff ultimately bears the burden of proving "by a preponderance of the evidence, facts sufficient to establish personal jurisdiction." Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Thus, "[i]f the existence of jurisdiction turns on disputed factual questions the court may resolve the challenge on the basis of a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989); accord Metcalfe,566 F.3d at 336 (explaining the personal jurisdiction process similarly). The choice of how the court resolves a factual dispute is ultimately a "discretionary" one. Wright & Miller, supra, at § 1067.6.

"A District Court typically exercises personal jurisdiction according to the law of the state where it sits, in this case Pennsylvania." Cruickshank-Wallace v. CNA Fin. Corp., 769 F. App'x 77, 79 (3d Cir. 2019) (citing FED. R. CIV. P. 4(k)(1)(A)). Pennsylvania's long-arm statute establishes a scope of personal jurisdiction co-extensive with constitutional boundaries. See id. at 79 (citing 42 Pa. C.S.A. § 5322(b)).

The due process clause of the United States Constitution permits the exercise of two types of personal jurisdiction: specific and general. O'Connor, 496 F.3d at 317. "For a corporation, general jurisdiction is the state(s) where the corporation's 'affiliations with the State are so continuous and systematic as to render it essentially at home in the forum State.'" Gress v. Freedom Mortg. Corp., 386 F. Supp. 3d 455, 463 (M.D. Pa. 2019) (quoting Daimler AG v. Bauman, 571 U.S. 117, 139 (2014)) (internal brackets omitted). "[A] court with general jurisdiction may hear any claim against that defendant." Bristol-Myers Squibb Co. v. Superior Ct. of Ca., S.F. Cty., 137 S.Ct. 1773, 1780 (2017) (emphasis in original).

The Third Circuit has laid out a three-part test for determining whether the court has specific jurisdiction. "First, the defendant must have purposefully directedits activities at the forum." O'Connor, 496 F.3d at 317 (internal citations, quotations, and brackets omitted). "Second, the litigation must arise out of or relate to at least one of those activities." Id. "And third, if the prior two requirements are met, a court may consider whether the exercise of jurisdiction otherwise comports with fair play and substantial justice." Id. While no majority opinion of the United States Supreme Court has resolved whether the stream-of-commerce theory of personal jurisdiction is valid, the Third Circuit has rejected it. See Shuker, 885 F.3d at 780 (citing J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 877-85 (2011); Asahi Metal Indus. Co. v. Superior Ct., 480 U.S. 102, 108-13 (1987) ("Asahi")). Thus, in the Third Circuit, a vendor indirectly "inject[ing] its goods into the forum state" or engaging in "efforts to exploit a national market that necessarily include Pennsylvania" is not subject to personal jurisdiction. Id. (internal quotations omitted). Instead, generally, "what is necessary is a deliberate targeting of the forum," such as an effort "to sell products . . . in Pennsylvania specifically." Id. (internal quotations omitted). Physical entry into the forum, however, is not required; for example, "[m]ail and telephone communications sent by the defendant into the forum may count toward the minimum contacts that support jurisdiction." O'Connor, 496 F.3d at 317-18 (internal quotations omitted) (holding a vacation company purposefully contacted Pennsylvania by mailing brochures and calling Pennsylvania residents).

Here, the record demonstrates that Defendant has engaged in two different types of intentional contact with the Middle District of Pennsylvania. First, Defendant initiated a commercial transaction with a Pennsylvania seller by reaching out to her unilaterally, by telephone, and purchasing scissors from her. It contacted a seller in Carlisle, Pennsylvania, requested she mail scissors from Carlisle, and paid tens of thousands of dollars to her business in Carlisle. Defendant argues that this does not constitute intentional contact with the forum because Mr. Samuels did not know he was purchasing scissors from the state of Pennsylvania. This argument is weak, given the emails and purchase orders would have revealed to any reasonable purchaser that the scissors were being shipped from Carlisle, Pennsylvania. Even if Defendant's claim is true, however, it is irrelevant because Mr. Phillips is not a named defendant in this lawsuit; his company is. Moreover, the parties' emails demonstrate that a separate person working for Defendant was the agent responsible for handling the purchases, and her knowledge is imputed to the company itself. Reichard v. United of Omaha Life Ins. Co., 331 F. Supp. 471, 472 (E.D. Pa. 2018) (holding the knowledge a company's agent is imputable to the company if the knowledge is directly related to part of the agent's principle duties).

The second type of intentional contact with the forum is Defendant's sale of...