Corker v. Costco Wholesale Corp.

585 F.Supp.3d 1284

Bruce CORKER, d/b/a Rancho Aloha, et al., Plaintiffs,

v.COSTCO WHOLESALE CORPORATION, et al., Defendants.

Case No. C19-0290RSL

United States District Court, W.D. Washington, at Seattle.

Signed February 14, 2022

Andrew Kaufman, Pro Hac Vice, Lieff Cabraser Heimann & Bernstein, LLP, Nashville, TN, Daniel E. Seltz, Pro Hac Vice, Jason Louis Lichtman, Pro Hac Vice, Lieff Cabraser Heimann & Bernstein, New York, NY, Michael W. Sobol, Pro Hac Vice, Lieff Cabraser Heimann & Bernstein, San Francisco, CA, Nathan Paine, Andrew W. Durland, Daniel T. Hagen, Joshua Howard, Mark A. Bailey, Karr Tuttle Campbell, Paul Richard Brown, Fox Rothschild LLP, Peter Montine, Rocke Law Group PLLC, Seattle, WA, for Plaintiffs Bruce Corker, Colehour Bondera, Melanie Bondera, Robert Smith, Cecelia Smith.

Daniel T. Hagen, Joshua Howard, Mark A. Bailey, Peter Montine, Nathan Paine, Karr Tuttle Campbell, Paul Richard Brown, Fox Rothschild LLP, Seattle, WA, for Plaintiff Smithfarms, LLC.

Aaron Schaer, Laura Marquez-Garrett, Tiffany Scott Connors, Erin M. Wilson, Lane Powell PC, Seattle, WA, for Defendant Hawaiian Isles Kona Coffee Ltd. LLC.

Bradley P. Thoreson, John B. Crosetto, Buchalter PC, Seattle, WA, for Defendant Mulvadi Corporation.

Jacob Harper, Pro Hac Vice, Davis Wright Tremaine, Los Angeles, CA, Aaron Sanders Ross, Ambika Kumar, Benjamin J. Robbins, Jaime Drozd Allen, Rose McCarty, Sarah Cox, Stephen M. Rummage, Davis Wright Tremaine, Seattle, WA, for Defendants The Kroger Co., Albertsons Companies Inc., Safeway Inc.

Kelly George LaPorte, Pro Hac Vice, Nathaniel Dang, Pro Hac Vice, Cades Schutte LLP, Honolulu, HI, Owen Richard Mooney, Daniel Rahn Bentson, Bullivant Houser Bailey, Seattle, WA, for Defendant MNS Ltd.

Brian Janura, Erin C. Kolter, J. Michael Keyes, Dorsey & Whitney, Seattle, WA, for Defendant Sprouts Farmers Market Inc.

Gregory M. Hatton, Pro Hac Vice, Hatton Petrie & Stackler APC, Aliso Viejo, CA, Michael G. Atkins, Atkins Intellectual Property PLLC, Pamela Marie Andrews, Andrews Skinner, Seattle, WA, for Defendant L&K Coffee Co. LLC.

Gregory M. Hatton, Pro Hac Vice, Hatton Petrie & Stackler APC, Aliso Viejo, CA, Michael G. Atkins, Atkins Intellectual Property PLLC, Seattle, WA, for Defendant Kevin Kihnke.

ORDER DENYING KEVIN KIHNKE'S MOTION TO DISMISS (DKT. # 488)

Robert S. Lasnik, United States District Judge

This matter comes before the Court on defendant Kevin Kihnke's motion to dismiss. Dkt. # 488. The named plaintiffs grow Kona coffee in the Kona District of the Big Island of Hawaii and allege that various distributors, wholesalers, and retailers of coffee products sell ordinary commodity coffee labeled as "Kona" coffee, to the detriment of those who grow actual Kona coffee. Among these defendants is Kevin Kihnke, the president and sole owner of L&K Coffee Co. (which is also named as a defendant in the present action). Dkt. # 488 at 7. On November 18, 2020, plaintiffs moved to amend their complaint to add Kihnke as a defendant after reviewing L&K's Rule 30(b)(6) deposition testimony, which led plaintiffs to believe "Kihnke was personally liable for L&K's Lanham Act violations because he ‘authorized and directed’ them." Dkt. # 508 (quoting POM Wonderful LLC v. Purely Juice, Inc. , 362 F. App'x 577, 581 (9th Cir. 2009) ); see also Dkt. # 348. The Court granted plaintiffs’ motion on January 4, 2021. See Dkt. # 379. Kihnke contends that he should be dismissed from this action because the Court lacks personal jurisdiction over him. Dkt. # 488 at 7-14. Kihnke also contends that he should be dismissed for improper venue. Id. at 15-16. If the Court finds personal jurisdiction exists, Kihnke contends that "the scope of the personal jurisdiction ... must be limited to the claims with a connection to the forum state." Dkt. # 512 at 16.

In opposing a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is proper. Mavrix Photo, Inc. v. Brand Techs., Inc. , 647 F.3d 1218, 1223 (9th Cir. 2011). Where, as here, the defendant's motion is based on written materials, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Id. The plaintiff cannot simply "rest on the bare allegations of its complaint" if an allegation is challenged by the defendant, but uncontroverted allegations in the complaint must be taken as true. Id. (quoting Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800 (9th Cir. 2004) ). Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor. AT&T v. Compagnie Bruxelles Lambert , 94 F.3d 586, 588 (9th Cir. 1996).

Similarly, the plaintiff bears the burden of showing that venue is proper. eBay, Inc. v. Digital Point Sols. , 608 F. Supp. 2d 1156, 1161 (N.D. Cal. 2009) (citing Piedmont Label Co. v. Sun Garden Packing Co. , 598 F.2d 491, 496 (9th Cir. 1979) ). When considering a motion to dismiss for improper venue, "the allegations in the complaint need not be accepted as true, and the court may consider evidence outside the pleadings." Id. ; see also Argueta v. Banco Mexicano, S.A. , 87 F.3d 320, 324 (9th Cir. 1996). However, "the trial court must draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party." Murphy v. Schneider Nat'l, Inc. , 362 F.3d 1133, 1138 (9th Cir. 2004).

A. Personal Jurisdiction

Where, as here, no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the district court sits. Mavrix Photo , 647 F.3d at 1223 (citing Fed. R. Civ. P. 4(k)(1)(A) ). Washington's long-arm statute, RCW 4.28.185, permits the exercise of jurisdiction to the full extent of the Due Process Clause of the United States Constitution. See Easter v. Am. W. Fin. , 381 F.3d 948, 960 (9th Cir. 2004). For a court to exercise personal jurisdiction over a nonresident defendant consistent with due process, the defendant must have "certain minimum contacts" with the relevant forum, "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks and citation omitted).

There are two recognized bases for exercising personal jurisdiction over a non-resident defendant: "general jurisdiction" and "specific jurisdiction." Bristol-Myers Squibb Co. v. Superior Court , ––– U.S. ––––, 137 S. Ct. 1773, 1779-80, 198 L.Ed.2d 395 (2017). Here, plaintiffs argue the Court has specific jurisdiction, which "arises when a defendant's specific contacts with the forum give rise to the claim in question." Allstar Mktg. Grp., LLC v. Your Store Online, LLC , 666 F. Supp. 2d 1109, 1118 (C.D. Cal. 2009) (citing Helicopteros Nacionales de Colombia S.A. v. Hall , 466 U.S. 408, 414-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) ; Doe v. Am. Nat'l Red Cross , 112 F.3d 1048, 1050-51 (9th Cir. 1997) ); Dkt. # 508 at 7.

The Ninth Circuit utilizes a three-prong test for determining whether due process allows for the exercise of specific jurisdiction: "(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable." Mavrix Photo , 647 F.3d at 1227-28. Plaintiffs bear the burden of proving the first two prongs. Id. If they do so, the burden shifts to the defendant to "set forth a ‘compelling case’ that the exercise of jurisdiction would not be reasonable." Id. (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 476-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ).

Kihnke argues that even if the Court's exercise of personal jurisdiction over L&K is proper,¹ the corporation's contacts with Washington cannot be imputed to Kihnke and his alleged contacts with Washington, on behalf of himself and/or L&K, do not constitute purposeful direction at the forum.

1. Forum Contacts of a Corporate Officer/Director

"[U]nder the fiduciary shield doctrine, a person's mere association with a corporation that causes injury in the forum state is not sufficient in itself to permit that forum to assert jurisdiction over the person." Davis v. Metro Prods., Inc. , 885 F.2d 515, 520 (9th Cir. 1989). However, courts can exercise personal jurisdiction over a corporate officer where a plaintiff demonstrates that the officer is personally liable for wrongdoing in the forum or if the corporation is the alter ego of the individual officer. Id. at 520-21. A "corporate officer or director is, in general, personally liable for all torts which he authorizes or directs or in which he participates, notwithstanding that he acted as an agent of the corporation and not on his own behalf." Comm. for Idaho's High Desert, Inc. v. Yost , 92 F.3d 814, 823 (9th Cir. 1996). Thus, "a corporate officer's contact on behalf of a corporation is sufficient to subject the officer to personal jurisdiction where the officer ‘is a primary participant in the alleged wrongdoing or had control of, and direct participation in the alleged activities.’ " Allstar , 666 F. Supp. 2d at 1120 ; see also Facebook, Inc. v. Power Ventures, Inc. , 844 F.3d 1058, 1069 (9th Cir. 2016) ("[T]he actions of a corporate entity can be imputed to an individual officer who is the ‘guiding spirit behind the wrongful conduct, or the central figure in the challenged corporate activity.’ ").

Here, the wrongdoing plaintiffs allege is the selling of ordinary commodity coffee labeled as "Kona" coffee to the detriment of those...