Yeti Coolers, Llc v. Polar Pad Llc et al

MOTION to Dismiss for Lack of Jurisdiction Pursuant to Rule 12

W.D. Tex.September 2, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION YETI COOLERS, LLC, Plaintiff, v. POLAR PAD LLC, et al., Defendants. § § § § § § § § § Case No. A-16-CA-00677-RP DEFENDANT POLAR PAD, LLC’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION PURSUANT TO RULE 12(b)(2) COMES NOW, Defendant Polar Pad, LLC (“Polar Pad”), and pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, respectfully moves this Court for an order dismissing Polar Pad from this action for lack of personal jurisdiction because Polar Pad does not have sufficient minimum contacts with and has not purposefully availed itself to the State of Texas. In addition, this Court’s exercise of personal jurisdiction over Polar Pad would not comport with traditional notions of fair play and substantial justice. In support of this motion, Polar Pad respectfully shows the Court as follows: I. INTRODUCTION Plaintiff YETI Coolers, LLC (“YETI”) instituted this action against Polar Pad and Veterinary Internet Company, LLC (“VetInternetCo”), asserting YETI’s trade dress rights in and to certain insulated drinkware products known as the “YETI 30 oz. Rambler Tumbler” and “YETI 20 oz. Rambler Tumbler” (the “YETI Tumblers”). (Doc. 1 at pp. 3-6). YETI complains that Polar Pad and VetInternetCo have infringed YETI’s trade dress rights by selling competing insulated drinkware products known as “Polar Drifters.” (Id. at pp. 6-11). Plaintiff maintains that this Court has personal Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 1 of 10 2 jurisdiction over Polar Pad because it “advertised, promoted, offered for sale, sold, and distributed… infringing products to customers and potential customers” by “reach[ing] into Texas, including this District,” through various websites. (Id. at pp. 2-3). Contrary to YETI’s assertions, however, Polar Pad does not now and has not ever sold Polar Drifters, or any other insulated drinkware products, in Texas or anywhere else. Nor does it have any substantial, continuous, and systematic contacts with this forum. As such, Polar Pad does not have sufficient minimum contacts to subject it to personal jurisdiction in Texas and any exercise of personal jurisdiction over Polar Pad by a Texas court would offend traditional notions of fair play and substantial justice. Accordingly, Polar Pad is entitled to be dismissed from this action pursuant to Fed. R. Civ. P. 12(b)(2). II. LEGAL STANDARD When a non-resident defendant such as Polar Pad moves to dismiss for lack of personal jurisdiction, “the plaintiff rather than the movant has the burden of proof.” Wyatt v. Kaplan, 686 F.2d 275, 280 (5th Cir. 1982); accord Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994); Sefton v. Jew, 201 F. Supp. 2d 730, 738 (W.D. Tex. 2001). Federal courts in Texas may exercise personal jurisdiction over a non-resident defendant to the same extent as allowed by the Texas state courts. See, e.g., Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 716 (5th Cir. 1999).1 “It is well known that ‘[t]he Texas Long Arm Statute is coextensive with the confines of due process.” Hanson Pipe & Prods., Inc. v. 1 Where a claim is based upon a federal statute providing for nationwide service of process, the relevant due process inquiry focuses on the defendant’s contacts with the United States. See Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822, 826 (5th Cir. 1996). However, in this case, YETI’s only federal statutory claims arise out of the Lanham Act. “The Lanham Act does not authorize nationwide service of process.” Tempur-Pedic Int’l, Inc. v. Go Satellite Inc., 758 F. Supp. 2d 366, 371 (N.D. Tex. 2010) (Fitzwater, J.). Consequently, this Court’s personal jurisdiction is coterminous with that of the general jurisdiction of the state in which it sits. See Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413, 418 (5th Cir. 2001). Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 2 of 10 3 Bridge Techs., LLC, 351 F. Supp. 2d 603, 609 (E.D. Tex. 2004) (quoting Religious Tech. Ctr. v. Liebreich, 339 F.3d 369, 373 (5th Cir. 2003)). The existence of personal jurisdiction thus turns on long-standing federal due process principles. “The due process clause requires that a court exercise personal jurisdiction over a nonresident defendant only if the defendant has ‘certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.’” Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (alterations in original) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). a. The required minimum contacts must exist. “There are two categories of personal jurisdiction: specific jurisdiction and general jurisdiction.” Locke v. Ethicon Inc., 58 F. Supp. 3d 757, 761 (S.D. Tex. 2014), appeal dismissed (Apr. 16, 2015) (citing Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923-24 (2011)). General personal jurisdiction arises from a party’s contacts with the forum state that are unrelated to the litigation. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.9 (1984). A court may have general jurisdiction over a non-resident defendant where the defendant’s business contacts with the forum state are “continuous and systematic.” Int’l Energy Ventures Mgmt., L.L.C., 818 F.3d at 212 n.83 (citing McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009)). However, exercise of general jurisdiction over a defendant foreign corporation only is appropriate where its “affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” Daimler, 134 S. Ct. at 761 (alteration in original) (quoting Goodyear, 564 U.S. at 919). The Fifth Circuit has recognized that “for a corporation, ‘the place of incorporation and principal place of business’ are where it is ‘at home’ and are thus paradigm bases for Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 3 of 10 4 jurisdiction.” Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014) (quoting Daimler, 134 S. Ct. at 760). “It is . . . incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”2 Id. (emphasis added) (citations omitted). Indeed, “[i]t is the exceptional case that ‘a corporation’s operations in a forum other than its formal place of incorporation or principal place of business [are] so substantial and of such a nature as to render the corporation at home in that State.’” Locke, 58 F. Supp. 3d at 762 (alteration in original) (quoting Daimler, 134 S. Ct. at 761 n.19). If, as is the case here, a non-resident defendant is not “at home” in the forum state, a court may exercise personal jurisdiction only if it has specific personal jurisdiction over the non- resident defendant. Specific jurisdiction “focuses on ‘the relationship among the defendant, the forum, and the litigation.’” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)). The Fifth Circuit has refined the specific jurisdiction analysis to a three-part test: (1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff’s cause of action arises out of or results from the defendant’s forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable. Monkton, 768 F.3d at 432-33 (quoting Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006)). A plaintiff must demonstrate the first two prongs before a defendant must 2 “The continuous and systematic contacts test for general jurisdiction ‘is a difficult one to meet, requiring extensive contacts between a defendant and a forum.’” Paolino v. Argyll Equities, L.L.C., 401 F. Supp. 2d 712, 720 (W.D. Tex. 2005) (emphasis added) (quoting Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413, 419 (5th Cir. 2001)). The Fifth Circuit has long required that a foreign business defendant “must have a business presence in Texas. . . . It is not enough that a corporation do business with Texas.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 611 (5th Cir. 2008) (emphasis in original) (citing Access Telecom, Inc., 197 F.3d at 717). Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 4 of 10 5 address the third. Id. A defendant’s “suit-related conduct must create a substantial connection with the forum state, and ‘the relationship must arise out of contacts that the defendant himself creates with the forum State’... with the ‘minimum contacts analysis look[ing] to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.’” Associated Energy Grp., LLC v. Air Cargo Germany GMBH, 24 F. Supp. 3d 602, 608 (S.D. Tex. 2014) (alteration in original) (quoting Walden, 134 S. Ct. at 1121-22). Unless a defendant purposefully avails itself of the benefits and protections of Texas law through sufficient minimum contacts with Texas that are related to the cause of action, no specific personal jurisdiction exists. Monkton, 768 F.3d at 434. b. The exercise of jurisdiction must not offend traditional notions of fair play and substantial justice. “The due process clause requires that a court exercise personal jurisdiction over a nonresident defendant only if the defendant has ‘certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.’” Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (alteration in original) (quoting Int’l Shoe, 326 U.S. at 316). There are typically five elements to an analysis of whether the exertion of personal jurisdiction complies with traditional notions of fair play and substantial justice: (1) the burden on the defendant, (2) the interests of the forum state, (3) the plaintiff’s interest in convenient and effective relief, (4) the interstate judicial system’s interest in efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies. Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421 (5th Cir. 1993). Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 5 of 10 6 III. ARGUMENT Polar Pad’s contacts with Texas are insufficient to constitutionally subject it to personal jurisdiction in Texas. The attached declaration of Polar Pad’s owner, Richard Esneault, establishes that Polar Pad is not “at home” in Texas to subject it to general jurisdiction here. (See Declaration of Richard Esneault at Appendix (“App.”) pp. 1-4). Likewise, the Esneault Declaration establishes that Polar Pad has never advertised, promoted, offered for sale, sold, or distributed the accused Polar Drifters in Texas, or anywhere else, such that any exercise of personal jurisdiction over Polar Pad would violate due process and offend traditional notions of fair play and substantial justice. a. Polar Pad does not have sufficient minimum contacts with Texas. Polar Pad is an Alabama limited liability company with its principal place of business in Alabama. (App. at p. 1). It was formed in June of 2015 in Marshall County, Alabama. (Id.). Polar Pad is, and always has been, owned and operated by Mr. Esneault, who is an Alabama resident. (Id.). Polar Pad’s registered office is located in Union Grove, Alabama. (Id.). All of Polar Pad’s assets are located in Alabama. (Id. at 2). All of Polar Pad’s day-to-day operations are conducted from its office in Alabama. (Id.). Polar Pad does not own, operate or control www.polardrifter.com, any Facebook page advertising or selling Polar Drifters, or any Amazon pages advertising or selling Polar Drifters. (Id.). In particular, Polar Pad is not the owner of any of the Amazon accounts with listings identified in YETI’s complaint, and has no control over any Amazon listing offering the Polar Drifter. (Id. at 2-3; Doc. 1 at pp. 8-9). To the extent Polar Pad may be erroneously identified in any online listing offering a Polar Drifter (or any drinkware) for sale, Polar Pad Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 6 of 10 7 never authorized the same, and is unaware as to how such mistaken identification occurred. (App. at p. 3). Polar Pad is a separate and distinct entity from VetInternetCo. (Id.). Polar Pad is neither a subsidiary nor parent of VetInternetCo. (Id.). Polar Pad does not control VetInternetCo or its sales of Polar Drifters. (Id.). In addition, sales or activities by VetInternetCo do not constitute sales or activities by Polar Pad. (Id.). Polar Pad does not receive any revenues or pay any expenses related to VetInternetCo’s sales of Polar Drifters. (Id.). Polar Pad has no personnel or assets in Texas. (Id. at p. 2). Polar Pad has never had a regular place of business in Texas, owned, rented, or maintained personal or real property in Texas, maintained a physical address or post office box in Texas, maintained a Texas-based telephone number, or maintained or controlled any Texas-based bank accounts. (Id.). Polar Pad has never used a Texas-based supplier or vendor, or manufactured any products in Texas. (Id.). Polar Pad has never sought the privilege of conducting business in Texas or paid any taxes in Texas. (Id.). The company also has never designated nor been required to designate an agent for service of process in Texas. (Id.). Polar Pad has never been a party to a lawsuit in Texas before, nor has it ever consented to suit in Texas courts. (Id.). Polar Pad has never sold any Polar Drifters, or any other types of drinkware, in Texas or anywhere else. (Id.). In light of these facts, YETI cannot meet its burden to show that Polar Pad has sufficient minimum contacts with the State of Texas for this Court to constitutionally exert personal jurisdiction over Polar Pad. Put simply, Polar Pad is not “at home” in Texas, and clearly does not have the continuous, systematic, and substantial contacts with Texas necessary for a Texas court to exercise general jurisdiction. Moreover, because Polar Pad has never sold any of the accused Polar Drifters in Texas, or anywhere else, YETI’s claims are not related to nor do they Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 7 of 10 8 arise from Polar Pad’s contacts with Texas. Accordingly, there is no basis for this Court to exercise specific jurisdiction over Polar Pad. b. Subjecting Polar Pad to jurisdiction in Texas would offend traditional notions of fair play and substantial justice. Because YETI cannot establish “minimum contacts,” the Court’s analysis need not go further. Nevertheless, invoking personal jurisdiction over Polar Pad also would be completely unfair, as the company is a stranger to this forum. Due process requires not only that Polar Pad have sufficient minimum contacts with Texas, which it does not, but also requires this Court to determine that subjecting Polar Pad to personal jurisdiction in Texas would not offend traditional notions of fair play and substantial justice. Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016). Given that Polar Pad has absolutely no presence in Texas, each of the five fairness factors (see supra at p. 5) demonstrates that subjecting Polar Pad to personal jurisdiction in Texas would be unfair and unreasonable. Polar Pad, an Alabama company just over one year old having never sold any of the accused Polar Drifters in Texas or anywhere else, would face substantial burdens defending this case in Texas. Plaintiff cannot demonstrate any interest of the State of Texas that is furthered by requiring this case to be litigated in Texas. Even though there is no reason for Plaintiff to pursue this litigation as to Polar Pad, litigating this case in another forum, such as Alabama, would in no way bar or diminish Plaintiff’s interest in obtaining relief. Moreover, the evidence shows that there is no alternate forum where this action would be appropriate as to Polar Pad because it never sold any of the accused Polar Drifters anywhere, thus Plaintiff cannot demonstrate that subjecting Polar Pad to jurisdiction in Texas would further the interstate judicial system’s ability to efficiently resolve controversies. Finally, for the same reasons, there is no other, proper jurisdiction against which of the interests of Texas may be balanced. Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 8 of 10 9 As shown above, the State of Texas has no apparent nexus with, or interest in, YETI’s claims against Polar Pad. Additionally, Polar Pad’s complete absence from and lack of activity in Texas, and the basic unfairness of requiring Polar Pad to defend itself in Texas weighs heavily in favor of Polar Pad’s dismissal from this action. Because this Court’s exertion of personal jurisdiction over Polar Pad would offend traditional notions of fair play and substantial justice, this Court should dismiss Polar Pad for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. IV. C O N C L U S I O N For the foregoing reasons, Polar Pad, LLC respectfully requests that it be dismissed from this action for lack of personal jurisdiction, awarded its costs in defending this action, and awarded such other and further relief that this Court deems proper. Respectfully submitted this the 2nd day of September, 2016. Respectfully submitted, /s/ John Andrew Hutton John Andrew Hutton State Bar No. 24012878 FARRIS & HUTTON, PC 1515 S. Capital of Texas Hwy, Suite 204 Austin, Texas 78746 (512) 646-2631 (512) 646-2633 [Fax] E-mail: ahutton@farrishutton.com ATTORNEY FOR DEFENDANT POLAR PAD, LLC Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 9 of 10 10 CERTIFICATE OF SERVICE I hereby certify that the foregoing document was filed electronically on the 2nd day of September, 2016, and is available for viewing and downloading from the CM/ECF system. Notice of Electronic Case Filing has been sent automatically to all parties listed below in the Service List in effect on the date of electronic filing, which constitutes service of same, and satisfies the requirements of Fed. R. Civ. P. 5(b)(2)(D). Joseph J. Berghammer Sean J. Jungels BANNER & WITCOFF, LTD. Ten South Wacker Drive #3000 Chicago, IL 60606 Kevin J. Meek BAKER BOTTS, LLP 98 San Jacinto Blvd., Suite 1500 Austin, TX 78701 Attorneys for Plaintiff David P. Boyce Lisa M. Doering Wright & Greenhill, P.C. 900 Congress Ave., Suite 500 Austin, TX 78701 Attorneys for Defendant Veterinary Internet Company, LLC d/b/a VetInternetCo /s/ John Andrew Hutton Case 1:16-cv-00677-RP Document 12 Filed 09/02/16 Page 10 of 10 Case 1:16-cv-00677-RP Document 12-1 Filed 09/02/16 Page 1 of 4 Case 1:16-cv-00677-RP Document 12-1 Filed 09/02/16 Page 2 of 4 Case 1:16-cv-00677-RP Document 12-1 Filed 09/02/16 Page 3 of 4 Case 1:16-cv-00677-RP Document 12-1 Filed 09/02/16 Page 4 of 4