Opinion
Civil Action No. 3: 03-CV-1351-B.
November 17, 2004
MEMORANDUM ORDER
Before the Court is the Motion of Defendants Fogo E Brasa, L.L.C., d/b/a Fogo E Brasa Brazilian Steakhouse, and Fogo E Brasa/Churrascaria Do Sul, L.L.C. (collectively, "Fogo E Brasa"), to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), and in the alternative, to dismiss for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). For the reasons explained below, the Court GRANTS Fogo E Brasa's motion to dismiss for lack of personal jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
This is a case alleging trademark infringement, dilution and unfair competition. Plaintiff Fogo de Chao Churrascaria (Holdings), L.L.P. ("Fogo de Chao"), a Texas limited liability partnership (Compl. ¶ 2), operates numerous Brazilian steakhouses across the United States. The two Fogo E Brasa companies are Arizona corporations operating a Brazilian steakhouse in Pheonix, Arizona. ( Id. ¶ 3). A. Fogo De Chao is Formed.
Fogo de Chao began operations in the United States in 1997 as a Brazilian steakhouse, or churrascaria. ( Id. ¶ 8, 11). Fogo de Chao has widespread operations, with restaurants located in Dallas and Houston, Texas, Atlanta, Georgia, Chicago, Illinois, and Brazil. ( Id. ¶ 8). As part of its expansion process, Fogo de Chao researched Arizona as a possible locale for a new restaurant. ( Id. ¶ 9).
There are three restaurant locations in Brazil. Additionally, at the time these pleadings were filed, the company had plans to open a location in Beverly Hills, California and another in Brazil by the end of 2003. (Compl. ¶ 8).
Fogo de Chao's restaurants all have the same format, offering fixed-price, all-you-can-eat cuts of meat served table-side by servers from skewers, a large salad bar, and various Brazilian side dishes. ( Id. ¶ 10). Each patron receives a disk upon being seated and uses the disk, which is colored red on one side (indicating the patron doesn't need more food at the moment) and green on the other (indicating the patron would like servers to come by and offer more meat). ( Id.). According to Fogo de Chao, its restaurant is "frequently and commonly referred to as simply "Fogo" by consumers and guests," and sometimes by reviewers as well. ( Id. ¶ 12).
Fogo de Chao contends that its advertisements, which it places in magazines, including American Airline's in-flight magazine, Delta Airline's in-flight magazine, and Southwest Airline's in-flight magazine, are primarily colored red, black and white. ( Id. ¶¶ 13-15).
Fogo de Chao owns U.S. Trademark Registration Nos. 2,170,468 and 2,170,469 (FOGO DE CHAO and Design) for restaurant services in International Class 42, No. 2,204,333 (FOGO DE CHAO (stylized)) for clothing, and contends that it used these marks "to identify its goods and services in the United States as early as August 15, 1997," and to operate its Brazilian steakhouses. ( Id. ¶ 21-22).
B. Fogo de Chao Discovers Fogo E Brasa.
Fogo de Chao alleges that it recently discovered that Defendant Fogo E Brasa was operating its steakhouse as "an authentic churrascaria," using a fixed-price, all-you-can-eat format, with servers slicing the meat from skewers table-side, just as it is done at Fogo de Chao. ( Id. ¶ 21-24). Furthermore, Fogo de Chao alleges that the Defendant uses the identical red/green disk system and similar Brazilian side dishes and salad bar. ( Id. ¶ 24).
In addition to its similar operations and atmosphere, Fogo de Chao alleges that Fogo E Brasa advertises in America West's in-flight magazine and that America West services numerous cities with Fogo de Chao restaurants, including Dallas, Atlanta, Chicago, and Los Angeles, where there was a new restaurant planned to open in 2003. ( Id. ¶ 25). Fogo de Chao further contends that Fogo E Brasa uses the same colors — red, white and black — in its logo and advertisements, and that many customers and some reviews also refer to the Defendant as simply "Fogo." ( Id. ¶ 27).
Defendant Fogo E Brasa adamantly denies the Plaintiff's allegations, and also points out that there are two other Brazilian steakhouses, Texas de Brazil in Addison, Texas and Boi Na Braza in Grapevine, Texas which "feature nearly identical menus and which advertise in the same in-flight magazines in which Plaintiff advertises." (Reply at 1).
C. Fogo de Chao Requests that Fogo E Brasa Cease and Desist from its Allegedly "Infringing and Diluting Conduct. "
On April 17, 2002, Fogo de Chao sent Fogo E Brasa a letter requesting that it cease "its infringing and diluting conduct." ( Id. ¶ 31; Exh. A). In the letter, Fogo de Chao requested "immediate assurances" from Fogo de Brasa that it would cease its "infringing and diluting conduct." ( Id.). Fogo de Chao sent a second similar letter on May 6, 2002. (Comp. ¶ 32; Exh. B). Two days later, Fogo de Brasa allegedly responded that there was "absolutely no possibility of consumer confusion." (Comp. ¶ 32).
D. Fogo de Chao Files a Lawsuit Against Fogo E Brasa.
Subsequently, Fogo de Chao filed the instant lawsuit on June 17, 2003, bringing claims against Fogo E Brasa for trademark infringement under the Lanham Act ( Id. ¶¶ 34-39), false advertising and unfair competition under the Lanham Act ( Id. ¶¶ 40-45), trademark dilution under the Lanham Act ( Id. ¶¶ 46-50), unfair competition under Texas State law ( Id. ¶¶ 51-55), trademark dilution under Texas State law ( Id. ¶¶ 56-60).
E. Fogo E Brasa Moves to Dismiss.
In response to the lawsuit filed against it, Fogo E Brasa filed a motion to dismiss the case for lack of personal jurisdiction, or, in the alternative, for improper venue, on October 10, 2003 ("Motion"). Fogo E Brasa alleges that the Court cannot exercise personal jurisdiction over the two Fogo E Brasa companies, because both are Arizona corporations who do not do business in Texas, because there are insufficient contacts with the state of Texas and it would offend traditional notions of fair play and substantial justice to allow the Plaintiff to pursue its lawsuit against them here. ( Id. ¶ 1).
II. ANALYSIS
A. Legal Standard.
The plaintiff bears the burden of proof to show that a nonresident defendant is subject to the Court's jurisdiction. Gundle Lining Constr. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 204 (5th Cir. 1996) (citations omitted). Two preconditions must be met: (1) the nonresident must be amenable to service of process under Texas's long-arm statute; and (2) the assertion of jurisdiction over the nonresident must comport with the Due Process Clause of the Constitution. Jones v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992). Because Texas's long-arm statute has been held to co-extend with the limits of due process, the Court need only determine whether jurisdiction over Fogo E Brasa is constitutionally permissible. Id. at 1067-68 (citing Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990)). To meet the federal constitutional test of due process, two elements must be satisfied: (1) the defendant must have purposefully availed itself of the benefits and protections of the forum state by establishing "minimum contacts" with that state such that it should reasonably anticipate being haled into court there; and (2) the exercise of jurisdiction over the defendant must not offend traditional notions of fair play and substantial justice. Jones, 954 F.2d at 1068.
"The Court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985).
The "minimum contacts" test can be met by contacts giving rise to either general or personal jurisdiction. Gundle, 85 F.3d at 205. Specific jurisdiction exists when the nonresident defendant's contacts with the forum state arise from, or are directly related to, the cause of action. Id. (citation omitted). "General personal jurisdiction is found when the nonresident defendant's contacts with the forum state, even if unrelated to the cause of action, are continuous, systematic, and substantial." Marathon Oil Co. v. Ruhrgas, 182 F.3d 291, 295 (5th Cir. 1999) (citation omitted). In either context, the Court considers the totality of the circumstances in conducting the minimum contacts analysis; no single factor is determinative. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). The analysis ultimately reduces to whether the nonresident defendant purposefully availed itself of the privilege of conducting business in this state, thereby invoking the benefits and protections of Texas law. Id. at 1191. B. General Jurisdiction.
Fogo de Chao contends that the Court has general jurisdiction over Fogo E Brasa because of Fogo E Brasa's "continuous and systematic marketing campaign throughout Texas." (Resp. at 10). The Plaintiff contends that Fogo E Brasa's advertisements "in eleven monthly issues" ( Id. at 11, Exh. D) of America West's in-flight magazine has the "purpose of reaching prospective customers who are traveling to Pheonix, Arizona from other destinations ( Id. at 10, Exh. D H), and that five of the cities served by America West are located in Texas, including Houston and Dallas, where Fogo de Chao has restaurant locations. ( Id. at 11, Exh. B). According to Fogo de Chao, America West "notifies all prospective clients that the in-flight magazine is national in scope since the magazine is placed in a pocket on the back of every seat aboard America West airline flights." ( Id.; Exh. D).
Fogo de Chao also points out that Fogo E Brasa advertises in The Arizona Republic, which may be purchased in Dallas, Texas. (Resp. at 12, Exh. H L). Further, Fogo de Chao states that it received emails from customers confused between the two restaurants, but there is no indication from the one email submitted that the customers were from Texas.
In order to establish the existence of general jurisdiction over Fogo E Brasa, Fogo de Chao must demonstrate that Fogo E Brasa has engaged in activity constituting substantial, systematic and continuous activities in a particular jurisdiction, here the state of Texas. Marathon Oil, 182 F.3d at 295. On the contrary, Fogo E Brasa has stated that it has never operated any restaurant location in Texas, that it does not own or lease property in Texas, conduct any business in Texas, employ anyone living in Texas, or transact any business in Texas. (Motion at 3; Reply at 2-3, Reply App., Exh. A D). The Court thus finds that there is no basis upon which to assert general jurisdiction over Fogo E Brasa. Moreover, there is indistinguishable case law holding that in-flight magazine advertising alone would not meet the minimum contacts requirements. M.G.M. Grand Hotel, Inc. v. Castro, 8 S.W.3d 403, 407, 412 (Tex.App.-Corpus Christi 1999, no pet.); see also U.S.S.E.C. v. Carrillo, 115 F.3d 1540, 1545-46 (11th Cir. 1997) (finding that jurisdictional requirements were met because there were numerous other contacts with the forum state in addition in-flight magazine ads, including bank account, direct mail ads, and the mailing of stock certificates to Texas residents). Thus, the Court finds that there is no general jurisdiction over Fogo E Brasa.
C. Specific Jurisdiction.
Fogo de Chao further argues that specific jurisdiction exists because Fogo E Brasa's "purposeful advertising activities" in Texas satisfy the minimum contacts requirement. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980). Fogo de Chao contends that (1) Fogo E Brasa purposefully availed itself of the facilities of the state of Texas (Resp. at 9-10), and that (2) Fogo de Chao's injury occurred in Texas. ( Id. at 8-10).
1. Fogo E Brasa's Advertising Did Not Constitute Purposeful Availment.
Fogo de Chao argues that Fogo E Brasa's marketing campaign was purposefully directed at the State of Texas, citing the Fifth Circuit's statement in Loumar v. Smith that "[a]advertising in nationally-circulated trade publications may be sufficient to constitute a `purposeful availment' of the facilities of a state in which the publication circulates." 698 F.2d 759, 763-64 (5th Cir. 1983); (Resp. at 10). In making this comment, the Fifth Circuit was analyzing the U.S. Supreme Court's decision in World-Wide Volkswagen. Id. The Plaintiff's reliance upon this citation is misplaced, however, as the Loumer Court went on to say, in the same paragraph, that "[t]he [Supreme] Court did not hold, however, that advertising reasonably calculated to reach the state would, without more, permit assertion of personal jurisdiction over the advertiser." Id. at 764. (emphasis added).
Unlike the plaintiff in Loumar, Fogo de Chao has at least supplied information regarding which periodicals Fogo E Brasa's ads ran in and where in Texas people may have viewed those ads, but, like the plaintiff in Loumar, Fogo de Chao has not given the court any evidence showing the amount of business Fogo E Brasa obtained from the advertisements in Texas, nor is there any evidence that Fogo E Brasa "advertised in telephone directories or in other local publications." Id. at 763-64.
There are no allegations of purposeful availment other than Fogo E Brasa's advertisements in America West's in-flight magazine and in two Arizona-focused publications. In short, the Court finds that Fogo de Chao has failed to show that Fogo E Brasa should have reasonably anticipated being haled into court in Texas given its limited contacts with this state.
2. An Alleged Injury in Texas, Taken Alone, is Not Sufficient to Establish Purposeful Availment.
Fogo de Chao also argues that specific jurisdiction exists because the alleged trademark infringement sounds in tort and thus courts in the State of Texas, where the alleged tort victim resides, may exercise jurisdiction over Fogo E Brasa. The Court does not find the Plaintiff's argument compelling. The Fifth Circuit in Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868-69 (5th Cir. 2001), held that the mere effect of a defendant's allegedly tortious activity "is not a substitute for a nonresident's minimum contacts that demonstrate purposeful availment of the benefits of the forum state." Id. (citations omitted) ("Appellant's allegations, even if true, only relate to the foreseeability of causing injury in Texas, which is not a `sufficient benchmark' for specific jurisdiction."). Thus, the Court finds that it does not have specific jurisdiction over Fogo E Brasa.
D. Traditional Notions of Fair Play and Substantial Justice.
In light of the Court's conclusion that Fogo de Chao has failed to establish that Fogo E Brasa had minimum contacts with the state of Texas, it need not reach the fairness prong of the constitutional test. Nevertheless, the Court finds that subjecting a defendant to the jurisdiction of a forum with which it had no minimum contacts would run afoul of principles of fair play and substantial justice. Woodson v. Copeland Trucking, 2002 WL 245975, at *3 (N.D. Tex. Feb. 15, 2002).
III. CONCLUSION
For the reasons set forth in this order, it is ORDERED that Defendants' Motion to Dismiss is GRANTED.
SO ORDERED.