Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

C.S.B. Commodities, Inc. v. Urban Trend Ltd.

January 7, 2009

C.S.B. COMMODITIES, INC., A NEW YORK CORPORATION, PLAINTIFF,
v.
URBAN TREND (HK) LTD., A FOREIGN HON. ROBERT M. DOW, JR. CORPORATION, AND ROBERT KUSHNER, INDIVIDUALLY DEFENDANTS.



The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff C.S.B. Commodities, Inc. ("CSB") filed a three count first amended complaint against Urban Trend (HK) Ltd. ("Urban Trend") and Robert Kushner ("Kushner") (collectively "Defendants") alleging: I - Federal Unfair Competition under 15 U.S.C. § 1125(a); II -- Unfair Competition under Illinois common law; and III -- Unfair Competition under 815 ILCS § 510. This matter is now before the Court on Defendants' renewed motion to dismiss Plaintiff's complaint for lack of personal jurisdiction [30] pursuant to Federal Rules of Civil Procedure 12(b)(2) and Defendant Kushner's renewed motion to dismiss for failure to state a claim [27] pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, the Court grants the motion to dismiss for lack of personal jurisdiction as to Defendant Urban Trend, denies the motion to dismiss for lack of personal jurisdiction as to Defendant Kushner [30] and denies Defendant Kushner's motion to dismiss for failure to state a claim [27].

I. Background

CSB is a New York Corporation having a principal place of business in New York. Pl. Amend. Compl. at ¶ 1. Urban Trend is a Hong Kong corporation, having a principal place of business in Hong Kong. Id. at ¶ 2. Kushner is a resident of Hong Kong. Id. at ¶ 3.

CSB is in the business of selling housewares and household goods. Pl. Amend. Compl. at ¶ 8. In August of 2005, CSB began selling a new product, specifically a knife holder that incorporates the configuration of a stylized figure which Plaintiff terms a "Human Figure Design." Id. at ¶ 9. This knife holder featuring the Human Figure Design is sold under the trademark "The Ex" in the United States and under the trademark "Voodoo" elsewhere throughout the world. Id. Although the "Ex/Voodoo" is manufactured in a range of colors, it is most popular and well-known in red. Id. From its initial introduction, the "Ex/Voodoo" was popular in the marketplace and garnered a great deal of press coverage and attention through word-of-mouth. Id. at ¶ 12. CSB has promoted the "Ex/Voodoo" knife holder and the Human Figure Design in advertisements and through other marketing channels. Id. As a result, CSB asserts that the Human Figure Design has acquired secondary meaning. Id. CSB owns the trademark rights associated with the Human Figure Design. Id. at ¶ 11.

Urban Trend is in the business of selling novelty items. Pl. Amend. Compl. at ¶ 14. Kushner has responsibility for selecting the products that Urban Trend manufactures and/or markets. Id. at ¶ 15. Kushner also stands to benefit personally from the decisions to manufacture and/or market any particular product. Id. After CSB began advertising and selling the "Ex/Voodoo," Urban Trend, without authorization from CSB, began marketing, selling, and using in interstate commerce a knife holder called the "Throwzini". Id. at ¶ 16. The "Throwzini" has been shown in advertisements in the same red color that is utilized by CSB in its most popular version of the "Ex/Voodoo" knife holder. Id. CSB alleges that the "Throwzini": (i) utilizes a design that is confusingly similar to the Human Figure Design; and (ii) misappropriates the distinctive trade dress and product configuration of the "Ex/Voodoo" knife holder. Id.

CSB alleges that Defendants knew of the "Ex/Voodoo" knife holder, the Human Figure Design, and the popularity of the "Ex/Voodoo" at the time that they began to develop the "Throwzini" knife holder. Pl. Amend. Compl. at ¶ 17. CSB further alleges that the selection and shape of the "Throwzini" knife holder was made with the knowledge that the chosen shape was confusingly similar to the "Ex/Voodoo" knife holder and the Human Figure Design. Id. at ¶ 18. The choice also was made to select the shape of the "Throwzini" in the most popular color of the "Ex/Voodoo" with the intention of trading on the good will and product recognition that CSB has developed in the "Ex/Voodoo" knife holder and the Human Figure Design. Id. at ¶ 19.

CSB alleges that Kushner made the decision to manufacture and/or market the "Throwzini". Id. at ¶ 20. In so doing, he sought to trade on the goodwill established by CSB in the "Ex/Voodoo" knife holder. Id. at ¶ 21. Kushner also is alleged to have personally directed others at Urban Trend to manufacture or have manufactured the "Throwzini" knife holder and to market the "Throwzini" in this District and elsewhere. Id. at ¶ 22. Kushner has been personally present in this District to offer the "Throwzini" knife holder for sale. Id. at ¶ 23. Defendants have begun marketing and promoting the "Throwzini" in the United States and have promised customers to deliver the "Throwzini" knife holders shortly. Id. at ¶ 25. Finally, CSB alleges that Kushner stands to gain personally from sales of the "Throwzini." Id. at ¶ 24.

In CSB's response to Defendants' motion to dismiss for lack of personal jurisdiction, CSB stated that not only had Kushner been personally present in this District to offer the "Throwzini" for sale, but he had in fact been served with the summons and complaint for this case. In early March of 2008, CSB learned that Urban Trend was scheduled to appear at a trade show in Chicago and would offer for sale the "Throwzini" knife holder. Pl. Resp. at 2; Declaration of Robert Schmeizer at ¶ 9.*fn1 CSB went to the trade show and learned that Kushner and Urban Trend were present and were offering the "Throwzini" for sale. Pl. Resp. at 3; Schmeizer Decl. at ¶ 11. CSB filed the initial complaint in this matter and served Kushner on the trade show floor with the summons and complaint. Pl. Resp. at 3; Schmeizer Decl. at ¶ 12.

II. Motion to Dismiss for Lack of Personal Jurisdiction

Kushner's motion to dismiss for lack of personal jurisdiction must be considered first.

See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-102 (1998). If the court finds it lacks personal jurisdiction over Kushner, it will become unnecessary to consider his motion to dismiss for failure to state a claim upon which relief can be granted.

Deleted: ironmen

A. Legal Standard on Motion to Dismiss for Lack of Personal Jurisdiction

An action against a party over whom the Court lacks personal jurisdiction must be dismissed. Fed. R. Civ. P. 12(b)(2). A complaint need not include facts alleging personal jurisdiction. Steel Warehouse of Wisconsin, Inc., v. Leach, 154 F.3d 712, 715 (7th Cir. 1998). If defendants move to dismiss for lack of personal jurisdiction, plaintiff has the burden of establishing a prima facie case where, as here, there are no facts in dispute and thus no need to convene an evidentiary hearing. See id.; Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). The Seventh Circuit has cautioned that "once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the only plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Purdue Research Found..338 F.3d at 783. The Court resolves factual disputes in the pleadings and affidavits in favor of the party asserting jurisdiction, but takes as true those facts contained in defendant's affidavits that remain unrefuted by the plaintiff. Jamik, Inc. v. Days Inn of Mount Laurel, 74 F. Supp. 2d 818, 821 (N.D. Ill. 1999).

The allegations pertinent to personal jurisdiction are, as follows: (i) Defendants, prior to the filing of the Complaint, offered, in person, to sell the products described below in this district; (ii) Defendants own and operate a website accessible in this district; (iii) Defendants have offered for sale goods under the mark at issue in this district through the website and in person; (iv) Defendants have thereby committed the acts of infringement and unfair competition complained of in this district; (v) Kushner, president of and present on behalf of Urban Trend, was served with a copy of the complaint and summons while present within this district; (vi) Kushner was the individual at Urban Trend who made the decision to go forward with the manufacture and/or marketing of the Throwzini; and (vii) Kushner stands to gain personally from the sale of the Throwzini knife holder.

B. Discussion

In federal question cases, personal jurisdiction analysis has both a constitutional and statutory element. The court must determine that: (1) haling the defendant into court accords with the Due Process Clause of the Fifth Amendment; and (2) that defendant is amenable to service of process from the court. Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F. Supp. 1316, 1318 (N.D. Ill. 1996) (citing United States v. De Ortiz, 910 F.2d 376, 381-82 (7th Cir. 1990); Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987)). Due process in federal question cases requires that each party have sufficient contacts with the United States as a whole rather than any particular state. See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 551 (7th Cir. 2001). "The due process clause protects persons from being haled into a court unless they have 'minimum contacts with the sovereign that established that court. The jurisdiction whose power federal courts exercise is the United States of America, not the State of Illinois." Id. Defendants usually have sufficient contacts with the nation as a whole, and therefore "most federal question cases * * * proceed to the amenability of service inquiry." Am. Farm Bureau Fed'n v. Alabama Farm Bureau Fed'n, 2005 WL 1667802, *2 (N.D. Ill. July 12, 2005) (citing Boston Chicken v. Market Bar-B-Que, Inc., 922 F. Supp. 96, 97 (N.D. Ill. 1996)). However, that is not the case here, because neither Defendant is a citizen of, nor incorporated in, the United States and the allegations are limited to contacts with one state, Illinois.

Assuming the defendant is exposed to the jurisdiction of the United States, the question becomes whether the federal court has been authorized to exert the full power of the nation. ISI Int'l, Inc., 256 F.3d at 552. To answer this question the court looks to the applicable federal statute; in this case, the Lanham Act. See Omni Capital Int'l, 484 U.S. at 104. The Lanham Act does not permit nationwide service of process and thus Rule 4(k)(1)(D) is unavailable. See, e.g., ISI Int'l, Inc., 256 F.3d at 551. When the federal statute does not provide for nationwide (or worldwide) service, the statutory basis for jurisdiction is generally provided by Rule 4(k)(1)(A) which ties jurisdiction to the forum state's long-arm statute. See Janmark v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997); see also Digisound-Wie, Inc., Bestar Techs., Inc., 2008 WL 2096505 (N.D. Ill. May 16, 2008).

In limited circumstances, there is a third option which may provide the statutory basis of jurisdiction. Rule 4(k)(2) "functions as a sort of federal long-arm statute." United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 36 (1st Cir. 1999). The rule provides:

If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.

Fed. R. Civ. P. 4(k)(2). Although Rule 4(k)(2) is not mentioned by either party, this Court may consider whether the rule applies in the circumstances of this case. See ISI Int'l, Inc. 256 F.3d at 551-552 ("although the parties did not alert the district judge to Rule 4(k)(2), and [plaintiff] did not rely on that rule in its appellate brief, it is best to excuse the forfeiture. Federal courts are entitled to apply the right body of law, whether the parties name it or not.").

On the facts presently before the Court, Rule 4(k)(2) does not appear to provide a statutory basis for jurisdiction in this case. It was enacted to cover situations where a defendant has "ample contacts with the nation as a whole, but whose contacts are so scattered among states that none of them would have jurisdiction." ISI Int'l, Inc. 256 F.3d at 551 (citing Omni Capital Int'l, 484 U.S. at 111). In this case, Defendants' only alleged contacts are with Illinois. Therefore, if those contacts are insufficient to meet the due process standard under the Fourteenth Amendment, Rule 4(k)(1)(A), and the Illinois long-arm statute, Defendants would not have the contacts necessary to make jurisdiction "consistent with the Constitution and laws of the United States."

The question to be asked of Kushner and Urban Trend thus simplifies to whether they are amenable to service by an Illinois court, and if so, whether jurisdiction would be consistent with the federal Constitution. See Cent. States, SE and SW Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934 (7th Cir. 2000).*fn2

1. Service on Kushner While He Was Present in the Forum

Plaintiff argues that pursuant to Burnham v. Superior Court of California, County of Marin, 495 U.S. 604 (1990), personal service of process on Kushner while he was present in the district is sufficient to assert personal jurisdiction over him.*fn3 While present in Illinois, Kushner clearly was amenable to service of process. "A court may exercise jurisdiction in any action arising within or without this State against any person who is a natural person present within this State when served." 735 ILCS 5/2-209(b)(1). Kushner is a natural person served with process within Illinois and thus jurisdiction is proper under the Illinois long-arm statute. The only issue as to Kushner is whether in-forum service is sufficient to allay due process concerns.*fn4

In addressing the due process issue, the Court first turns to Burnham. In that case, the defendant, a resident of New Jersey, was served with a summons in a divorce action while he was physically present in California for business purposes and to visit his children who lived with his ex-wife. The defendant challenged the jurisdiction of the California state courts on the ground that he lacked minimum contacts with that state. The Supreme Court unanimously agreed, under the facts of that case, that jurisdiction based on personal service of process on an individual while physically present in the state is constitutional.

On its face, Burnham would appear to foreclose any argument that Kushner might have that defending this lawsuit in this court would violate his due process. However, Defendants note that the Court's decision in Burnham lacked a majority opinion and argue that minimum contacts analysis is still required to test due process. The dispute within the Court in Burnham arose over the justification for upholding the constitutionality of transitory jurisdiction. Justice Scalia ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.