July 8, 2013

Southern District of Indiana Dismisses Wine & Canvas' Suit for Lack of Personal Jurisdiction

Indianapolis, Indiana -- The Southern District of Indiana denied a motion by Wine & Canvas Development, LLC for default judgment and instead dismissed claims against Rachael Roberts and all defendants for lack of personal jurisdiction.  The suit alleged that Rachael Roberts, Avraham Levi, and Las Vegas Bungee, Inc. d/b/a Design & Wine of Las Vegas, Nevada, infringed Wine & Canvas' trademark, Registration No. 4,185,017, which has been registered with the U.S. Trademark Office.

Wine&CanvasLogo.JPGWine & Canvas Development, LLC ("Wine & Canvas"), filed this action in Indiana state court alleging that defendants Rachel Roberts, Avraham Levi, and Las Vegas Bungee, Inc., d/b/a Design and Wine ("Design and Wine") (collectively, the "defendants") violated the Lanham Act by infringing on Wine & Canvas' trademark through the use of the Design & Wine Las Vegas website.  Roberts unilaterally removed the action to federal court in November 2012.

Wine & Canvas moved for default judgment January 16, 2013, after defendants failed to respond to its complaint. Two days later, Roberts moved to dismiss for lack of personal jurisdiction.   Roberts attested that she is married to Levi, that they are the sole owners of Design and Wine, that they have one store, that it is located in Las Vegas and that they have never done business in Indiana. She further attested that they have never contacted a business in Indiana, have never offered or sold any franchises in Indiana, have no bank accounts in Indiana, have no employees in Indiana, have no affiliates in Indiana, have not sold any services or gift certificates in Indiana and have never purposefully targeted any residents of Indiana.

In response to Roberts' motion, Wine & Canvas moved to strike her affidavit.  It argued that her affidavit was insufficient because she had not attested to her personal knowledge or her competence.  It also claimed that Roberts' earlier removal of the case to federal court prevented her from claiming a lack of personal jurisdiction.  Finally, it argued that her motions were filed only on her own behalf, and not also on behalf of the other two defendants. 

The court was not persuaded by Wine & Canvas' arguments.  It held that Roberts' affidavit was sufficient, because, as a corporate officer of Design and Wine, she was presumed to have personal knowledge of the acts of that business.  It next held that Roberts' earlier motion to remove the case to federal court did not prevent her from successfully arguing a lack of personal jurisdiction.  Finally, although Roberts filed her motion on her own behalf, not on behalf of the other two defendants, the motion challenged the court's personal jurisdiction and contains common attestations regarding the defendants' business activities. The court decided sua sponte to raise the issue of personal jurisdiction regarding the non-moving defendants and held that it lacked such jurisdiction.  The court dismissed the matter without prejudice.

 Practice Tip #1: While all defendants typically must consent to removal under 28 U.S.C. ยง 1441, failure to do so is a procedural defect that must be raised (here, by Wine & Canvas) within thirty days.  Wine & Canvas did not object to Roberts' unilateral removal and, hence, the issue was waived.

Practice Tip #2: Courts have held that the mere existence of nationally accessible websites is a poor foundation on which to base personal jurisdiction.  Here, a holding that accepted Wine & Canvas' argument would result in personal jurisdiction in Internet-related cases in every forum in the country.  That, in turn, would go against the grain of the Supreme Court's jurisprudence which has stressed that, although technological advances may alter the analysis of personal jurisdiction, those advances may not eviscerate the constitutional limits on a state's power to exercise jurisdiction over nonresident defendants.

 

This case was assigned to The Honorable Judge Jane E. Magnus-Stinson
Southern District of Indiana, and assigned Case No. 1:12-cv-01752-JMS-TAB.

2013-3-15-Opinion-1752-w-Legend.pdf