San Diego Cnty. Credit Union v. Citizens Equity First Credit Union

325 F.Supp.3d 1088

SAN DIEGO COUNTY CREDIT UNION, Plaintiff,

v.CITIZENS EQUITY FIRST CREDIT UNION, Defendant.

Case No.: 18cv967-GPC(RBB)

United States District Court, S.D. California.

Signed July 31, 2018

Jesse A. Salen, Lisa M. Martens, Martin Bader, Stephen S. Korniczky, Sheppard Mullin Richter & Hampton LLP, San Diego, CA, for Plaintiff.

Emma Leigh Baratta, Pro Hac Vice, James Wilson Dabney, Pro Hac Vice, Hughes Hubbard & Reed LLP, New York, NY, Steven J. Cologne, Higgs Fletcher and Mack, San Diego, CA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DIMISS FOR LACK OF PERSONAL JURISDICTION

[Dkt. No. 29.]

Hon. Gonzalo P. Curiel, United States District Judge

Before the Court is Defendant's motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). (Dkt. No. 29.) Plaintiff filed an opposition on July 13, 2018. (Dkt. No. 32.) Defendant filed a reply on July 27, 2018. (Dkt. No. 38.) Based on the reasoning below, the Court DENIES Defendant's motion to dismiss.

Background

On May 16, 2018, Plaintiff San Diego County Credit Union ("SDCCU") filed a complaint against Defendant Citizens Equity First Credit Union ("CEFCU") for declaratory judgment of non-infringement and invalidity of trademarks and related claims. (Dkt. No. 1, Compl.) SDCCU and CEFCU are both large credit unions. (Id. ¶ 2.) SDCCU's customers are primarily located in Southern California while CEFCU's customers are primarily located in Peoria, Illinois and northern California. (Id. )

CEFCU is a credit union organized and existing under Illinois law and has its principal place of business in Peoria, Illinois. (Dkt. No. 29-4, Schneider Decl. ¶ 2.) CEFCU's chief officers and senior vice presidents are based in Illinois. (Dkt. No. 37, Flexor Decl. ¶ 2.) In 2008 or 2009, CEFCU bought California-based Valley Credit Union which had three branches. (Dkt. No. 29-3, Dabney Decl., Ex. 16, Flexor Depo. at 29:9-11; Dkt. No. 37, Flexor Decl. ¶ 6.) It re-branded the three Valley Credit Union branches under CEFCU and added two additional California branches in 2016 and 2017. (Dkt. No. 29-3, Dabney Decl., Ex. 16, Flexor Depo. at 33:13-17; Dkt. No. 32-13, Salen Decl., Ex. 11; Dkt. No. 32-14, Salen Decl., Ex. 12.) On January 14, 2013, CEFCU registered an agent for service of process in California. (Dkt. No. 32-7, Salen Decl., Ex. 5.) As of March 31, 2018, CEFCU has 812 employees in Illinois and 77 in California. (Dkt. No. 37, Flexor Decl. ¶ 3.) It maintains twenty-two branch locations in Illinois and has five branches in northern California. (Id. ¶¶ 4, 6.) It has members in all fifty states. (Id. ¶ 7.) As of March 31, 2018, CEFCU's California members account for about 7.18% of CEFCU's total deposits and 7.46% of CEFCU's total loans. (Id. ¶ 11.) About 9.31% of CEFCU members have California addresses. (Id. ¶¶ 8, 10.)

SDCCU owns over 40 federally registered trademarks in connection with its credit union services, including U.S. Trademark Registration No. 4,560,596 for "IT'S NOT BIG BANK BANKING. IT'S BETTER" (the "SDCCU Mark") issued on July 1, 2014. (Dkt. No. 1, Compl. ¶ 25.) CEFCU owns U.S. Trademark Registration No. 3,952,993 for "CEFCU. NOT A BANK. BETTER" (the "CEFCU Mark") issued on May 3, 2011. (Id. ¶ 33.) Several third-party credit unions use the following trademarks, "NOT A BANK—BETTER!", "BETTER THAN A BANK", AND "IT'S NOT A BANK" ("Third Party marks"). (Id. ¶ 3.)

After a CEFCU employee saw a billboard in San Diego, CA of the SDCCU Mark used to market credit union services, CEFCU filed a petition for cancellation of the SDCCU Mark with the U.S. Patent and Trademark Office's ("USPTO") Trademark Trial and Appeal Board ("TTAB") claiming the SDCCU Mark is likely to cause confusion or to cause mistake or to deceive consumers when viewing CEFCU's Mark. (Id. ¶ 5.)

The petition for cancellation of the '596 Trademark Registration No. was filed on May 17, 2017 and entitled Citizens Equity First Credit Union v. San Diego County Credit Union, Cancellation No. 92066165. (Dkt. No. 29-3, Dabney Decl., Ex. 1.) On July 3, 2017, SDCCU filed an Answer and Counterclaim in the cancellation proceeding. (Id.; Ex. 3.) On August 7, 2017, CEFCU filed an Answer to the Counterclaim. (Id., Ex. 4.) On August 28, 2017, SDCCU filed an Amended Counterclaim to which CEFCU timely answered on September 11, 2017. (Id., Exs. 5. 6.) A scheduling order was issued and discovery has taken place. (Id., Ex. 7.) On March 23, 2018, CEFCU filed a motion for leave to amend its petition to add an additional ground for cancellation. (Id., Ex. 17.) Then on May 16, 2018, SDCCU filed this action and moved the PTO for a stay of the cancellation proceedings which the PTO granted on June 8, 2018. (Id.; Exs. 1, 23, 24.)

In this action, the complaint alleges that the CEFCU Mark is, in fact, more similar to each of the Third Party Marks than it is to the SDCCU Mark. (Dkt. No. 1, Compl. ¶ 7.) Therefore, if CEFCU believes that the scope of protection for its mark is broad enough to encompass the SDCCU, CEFCU materially misrepresented to the USPTO that the CEFCU Mark was not confusingly similar to any of the Third-Party Marks. (Id. ) On the other hand, if CEFCU believes that its mark was not confusingly similar to any of the Third-Party marks, the CEFCU Mark cannot be broad enough to encompass the SDCCU Mark. (Id. ) In either case, CEFCU's cancellation action and threat of lawsuit are objectively baseless and brought with the subjective intent to harm SDCCU. (Id. ) SDCCU also has a reasonable apprehension that CEFCU will file a lawsuit against SDCCU alleging trademark infringement. (Id. ¶ 47.)

The complaint alleges eight causes of action seeking declaratory judgment of non-infringement and invalidity of trademarks, false or fraudulent trademark registration under 15 U.S.C. § 1120, unfair competition under 15 U.S.C. § 1125, unfair competition under California Business & Professions Code section 17200 et seq. and unfair competition under common law. (Id. ¶¶ 58-109.)

Discussion

A. Legal Standard on Personal Jurisdiction

"When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction." In re Western States Wholesale Natural Gas Antitrust Litig. v. Oneok, Inc., 715 F.3d 716, 741 (9th Cir. 2013). If the motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make "a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Brayton Purcell LLP v. Recordon & Recordon, 575 F.3d 981, 985 (9th Cir. 2009). On a prima facie showing, the court resolves all contested facts in favor of the non-moving party. In re Western States, 715 F.3d at 741 ; AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) (if conflicted facts are contained in the parties' affidavits, the facts must be resolved in favor of the plaintiff for purposes of determining whether a prima facie case of personal jurisdiction has been established.) At the same time, however, the plaintiff cannot establish jurisdiction by alleging bare jurisdictionally-triggering facts without providing some evidence of their existence. Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977).

"Where, as here, no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the court sits." Marvix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (citations omitted). California's long-arm statute is "coextensive with the outer limits of due process under the state and federal constitutions, as those limits have been defined by the United States Supreme Court." Republic Int'l Corp. v. Amco Eng'rs, Inc., 516 F.2d 161, 167 (9th Cir. 1976) (quoting Threlkeld v. Tucker, 496 F.2d 1101, 1103 (9th Cir. 1974) ). As such, the Court need only consider the requirements of due process. Due process requires that nonresident defendants have "minimum contact" with the forum state "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). Personal jurisdiction can be either "general" or "specific." See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).

B. General Personal Jurisdiction over Defendant

Defendant argues the Court does not have general personal jurisdiction over it because its branch offices and members in California are not so substantial to render it at home in California. SDCCU responds that CEFCU's growing and significant contacts since its acquisition and rebranding of Valley Credit Union in California and subsequent aggressive marketing of its brand in California subjects it to general personal jurisdiction by the Court.

"A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). As to corporations, "the place of incorporation and principal place of business are ‘paradig[m] ... bases for general jurisdiction.’ " Daimler AG v. Bauman, 571 U.S. 117, 137, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (citation omitted). Outside of these paradigm bases, only "in an exceptional case" should a court find a corporation's operations in the forum to be "so substantial and of such a nature as to render the corporation at home in that State." Id. at 139 n.19, 134 S.Ct. 746. Exceptional circumstances, as noted in Daimler, do not exist merely whenever "a foreign corporation's in-forum contacts can be said to be in some sense ‘continuous and systematic,’ it is only whether that corporation's ‘affiliations with the State are so...