Shippitsa Ltd. v. Slack, Civil Action No. 3:18-CV-1036-D

SHIPPITSA LIMITED, Plaintiff, v. ANDREW JON SLACK, et al., Defendants.

Civil Action No. 3:18-CV-1036-D

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

July 23, 2019

MEMORANDUM OPINION AND ORDER

In this action for trademark infringement and related claims, defendant Wolfson Berg Limited ("Wolfson Berg") moves to dismiss the claims asserted against it by plaintiff Shippitsa Limited ("Shippitsa") for lack of personal jurisdiction, improper venue, and failure to state a claim on which relief can be granted. For the reasons that follow, the court concludes that it can exercise personal jurisdiction over Wolfson Berg, that venue is proper in this district, and that Shippitsa has failed to state a claim as to some, but not all, of its causes of action. Accordingly, the court grants in part and denies in part Wolfson Berg's motion, and grants Shippitsa leave to replead.

I

According to Shippitsa's complaint, it manufactures a dietary supplement called Phen375, which it sells through its website at the domain name phen375.com. Shippitsa is organized under the laws of the United Kingdom ("UK"), is registered in Scotland, and maintains its headquarters in Scotland. It owns the U.S. registered trademark for the standard characters "PHEN375." Compl. ¶ 10.

Shippitsa advertises Phen375 online via an "affiliate marketing network system." Id. ¶ 16. An affiliate marketing network is comprised of three types of entities: advertisers, who sell products or services; affiliates, who operate websites that attract visitors with their content (such as product reviews); and an affiliate marketing network company, which acts as an intermediary between the advertisers and the affiliates. Affiliates, through the websites they operate, provide information about the advertisers' products. They also provide "affiliate links" that take users to the advertisers' own websites. P. Resp. App. 047-48. When a user clicks on an affiliate link and then buys a product from the advertiser, the affiliate receives a commission on the sale. The affiliate marketing network company tracks visitors and coordinates commission payments among companies within the network.

In 2011 Shippitsa contracted with now-dismissed defendant MoreNiche Limited ("MoreNiche") to join MoreNiche's affiliate marketing network as an advertiser. Shippitsa advertised its Phen375 product through MoreNiche's network until March 2018, when the contract between the two companies expired. According to Shippitsa, after the contract expired, certain affiliate websites continued to display information about Phen375.¹ Instead of linking to Shippitsa's phen375.com website, however, they instead linked visitors to awebpage—mixi.mn—operated by MoreNiche. The mixi.mn webpage consists only of the following visible lines of text: "Phen375 is no longer available via this link, we will be redirecting you to an alternative in 5 seconds. If you do not want us to do that click here." Compl. ¶ 25. If a visitor waits five seconds, mixi.mn automatically "redirect[s]" the visitor, id. ¶ 26—that is, mixi.mn causes the visitor's web browser to connect automatically to another website, see P. Resp. App. 003.

At the time Shippitsa filed the instant lawsuit, mixi.mn was sending users to either of two websites operated by Wolfson Berg: phenq.com and ph375.com.² Wolfson Berg is a company organized under the laws of Cyprus and is headquartered there.³ Through Wolfson Berg's websites, it sells dietary pills called PhenQ and Ph.375.⁴ Like Phen375, PhenQ and Ph.375 are marketed as weight loss supplements. Shippitsa identifies a number of similarities between Wolfson Berg's websites and Shippitsa's own phen375.com website: "the home pages on the ph375.com and phenq.com websites both include a picture of a bottle of the product, blue sans serif text on a white background, and clickable 'Ingredients,' 'Howit Works,' 'Testimonials,' 'FAQ,' and 'ORDER NOW' links[.]" Compl. ¶ 22. Shippitsa alleges that Wolfson Berg uses "a color scheme, package, trade dress, and promotional and advertising materials" in connection with PhenQ and Ph.375 that are confusingly similar to those that Shippitsa uses for Phen375. Id.

Shippitsa sued Wolfson Berg, MoreNiche, and MoreNiche's founder Andrew Jon Slack ("Slack"),⁵ asserting federal-law claims for trademark infringement, false designation of origin, trademark dilution, cybersquatting, and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Shippitsa also brings Texas-law claims for tortious interference with a prospective contractual relationship, trademark dilution, and unfair competition. Wolfson Berg, MoreNiche, and Slack each filed a motion to dismiss on the grounds of lack of personal jurisdiction, improper venue, and failure to state a claim on which relief can be granted. MoreNiche and Slack also filed a joint motion for Fed. R. Civ. P. 11 sanctions against Shippitsa. The court granted MoreNiche and Slack's motions to dismiss for lack of personal jurisdiction and denied their motion for Rule 11 sanctions. See Shippitsa Ltd. v. Slack (Shippitsa I), 2019 WL 277613, at *10 (N.D. Tex. Jan. 22, 2019) (Fitzwater, J.). But the court deferred deciding Wolfson Berg's motion to dismiss, and instead ordered limited discovery and supplemental briefing on the question of personal jurisdiction.

Jurisdictional discovery is now complete, and the parties have submitted their supplemental briefing. Wolfson Berg's motion to dismiss is ripe for decision.

II

The court first considers Wolfson Berg's motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction.

A

"When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985) (citing Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985); D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545 (5th Cir. 1985)). The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite. The court first decides whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant. If it does, the court then resolves whether the exercise of jurisdiction is consistent with due process under the United States Constitution. See Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999). Because the Texas long-arm statute extends to the limits of due process, the court need only consider whether exercising jurisdiction over the defendant would be consistent with the Due Process Clause of the Fourteenth Amendment. See id.; Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 214 (5th Cir. 2000).

The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed itself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." To comport with due process, the defendant's conduct in connection with the forum state must be such that it "should reasonably anticipate being haled into court" in the forum state.

Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (footnotes omitted) (first quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); then quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). To determine whether exercising jurisdiction would satisfy traditional notions of fair play and substantial justice, the court examines (1) the defendant's burden, (2) the forum state's interests, (3) the plaintiff's interests in convenient and effective relief, (4) the judicial system's interest in efficient resolution of controversies, and (5) the states' shared interest in fundamental social policies. Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421 (5th Cir. 1993).

A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. Mink, 190 F.3d at 336. "For the court properly to assert specific personal jurisdiction, the defendant must have 'purposefully directed' his activities at residents of the forum, and the litigation must result from alleged injuries that 'arise out of or relate to' the defendant's activities directed at the forum." Archer & White, Inc. v. Tishler, 2003 WL 22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). "General jurisdiction exists when adefendant's contacts with the forum state are unrelated to the cause of action but are 'continuous and systematic.'" Id. (quoting Mink, 190 F.3d at 336). "[A] court may assert jurisdiction over a foreign corporation 'to hear any and all claims against [it]' only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive 'as to render [it] essentially at home in the forum State.'" Daimler AG v. Bauman, 571 U.S. 117, 122 (2014) (first brackets added) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Shippitsa argues that this court has specific personal jurisdiction over Wolfson Berg.

"The district court usually resolves the jurisdictional issue without conducting a hearing." Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993) (footnote omitted).

When a court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, it must accept as true the uncontroverted allegations in the complaint and resolve in favor of the plaintiff any factual conflicts posed by the affidavits. Therefore, in a no-hearing situation, a plaintiff satisfies his burden by presenting a prima

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