Summary
holding that personal jurisdiction did not exist over defendant who sold infringing product via website when defendant had only two website sales, one of which was to the forum but orchestrated by plaintiff
Summary of this case from Kendall Hunt Publ'g Co. v. The Learning Tree Publ'g Corp.Opinion
Case No. 4:19-cv-00119-SMR-SBJ
2020-03-17
REGENEXX, LLC, Plaintiff, v. REGENEX HEALTH LLC, Regenex Health Labs LLC, and Marshall Stein, Defendants.
Michael A. Dee, Brown Winick Law Firm, Des Moines, IA, for Plaintiff. Peter C. Riley, Tom Riley Law Firm PLC, Cedar Rapids, IA, Karen Bryant Tripp, Pro Hac Vice, Karen B. Tripp, Attorney at Law, Houston, TX, for Defendants.
Michael A. Dee, Brown Winick Law Firm, Des Moines, IA, for Plaintiff.
Peter C. Riley, Tom Riley Law Firm PLC, Cedar Rapids, IA, Karen Bryant Tripp, Pro Hac Vice, Karen B. Tripp, Attorney at Law, Houston, TX, for Defendants.
ORDER ON MOTIONS
STEPHANIE M. ROSE, JUDGE
Before the Court in this trademark infringement suit are several motions: (1) a Motion to Dismiss for lack of personal jurisdiction filed by Defendants Regenex Health LLC ("RH"), Regenex Health Labs LLC ("RH Labs") and Marshall Stein, [ECF No. 13]; (2) a Motion to Transfer by Plaintiff Regenexx LLC ("Regenexx"), [ECF No. 19]; and (3) Defendants' Motion for Sanctions under Rule 11 of the Federal Rules of Civil Procedure, [ECF No. 24]. The motions are fully submitted and ready for decision. The Court finds the issues can be resolved without oral argument. See LR 7(c). For the reasons stated herein, Defendants' Motion to Dismiss is GRANTED; Plaintiff's Motion to Transfer is DENIED, and Defendants' Motion for Sanctions is DENIED.
The relevant factual background is drawn from the Complaint, exhibits attached thereto, and materials Defendants submitted in support of their Motion to Dismiss. Plaintiff ultimately bears the burden to "make a prima facie showing of personal jurisdiction over the challenging defendant," and this showing "must be tested, not by the pleadings alone, but by affidavits and exhibits supporting or opposing the motion." Fastpath, Inc. v. Arbela Techs. Corp. , 760 F.3d 816, 820 (8th Cir. 2014) (citation omitted).
Plaintiff is a Delaware limited liability company with its principal place of business in Des Moines, Iowa. [ECF No. 1 ¶ 1]. It is a "well-known provider of medical services, scientific research services, and nutritional supplements." Id. ¶ 11. There are more than sixty Regenexx clinic locations worldwide "with highly specialized physicians trained in a variety of different medical procedures." Id. ¶ 12. Plaintiff owns U.S. Trademark Reg. No. 4619744 for the mark REGENEXX in connection with: (1) dietary and nutritional supplements ; (2) medical and scientific research in the field of stem cell therapy ; and (3) medical clinics, consultations, and services—including medical services utilizing stem cell therapy procedures. Id. ¶ 14. The REGENEXX registration is valid, subsisting, and in full force and effect, id. ¶ 15; and it is used "extensively in instate commerce" by Plaintiff "and/or its affiliates, licensees, predecessors, and successors," id. ¶ 18. Plaintiff also owns "substantial common law rights in the REGENEXX mark." Id. ¶ 16.
RH is a Texas LLC that was organized to operate a men's urologic health clinic founded in 2017 called "Regenex Health." [ECF No. 14 ¶ 3]. RH Labs is also a Texas LLC, organized "for handling sales of nutritional supplements, primarily designed for men with erectile dysfunction and/or low testosterone, but also for men looking to enhance their overall general health." Id. ¶ 4. RH and RH Labs each has its principal place of business in Houston, Texas. [ECF No. 1 ¶¶ 2–3]. Stein is a board-certified urologist and urologic surgeon who is licensed to practice medicine in the State of Texas only. [ECF No. 14 ¶¶ 2, 5]. Stein organized RH and RH Labs and serves as their managing director. Id. ¶¶ 3–4.
RH has an informational website related to men's health. Id. ¶ 24. There are no items to be purchased from the website, but visitors to the website can "make an inquiry" and "book a consultation" through a site-linked email. Id. Stein responds to these inquiries, but he only provides medical advice to persons residing in or otherwise representing themselves as being present in Texas. Id. At the time the lawsuit was filed, neither RH nor Stein "had ever received any inquiries or consultation requests from anyone in Iowa." Id. Stein, on his own and through RH, offers telemedicine visits and consultations to his patients, but never to any individual in Iowa. Id. ¶ 27.
RH Labs has its own website, which provides visitors with information related to men's health and sells nutritional supplements related to the same. Id. ¶ 25. Supplements purchased from the RH Labs website can be shipped anywhere in the United States—including to Iowa. Id. As of the date this lawsuit was filed, only two orders had been placed through the site. Id. One order was shipped to Iowa, but it was placed by Plaintiff's representative in the state. Id. ; [ECF No. 1 ¶ 27].
The websites of both RH and RH Labs are on the internet and, in that sense, can be accessed anywhere. [ECF No. 14 ¶ 26]. But there is nothing on the websites to suggest they target individuals in Iowa (or, for that matter, any particular place). See [ECF Nos. 1-2 to 1-5] (containing printed images of the websites for RH and RH Labs). On the other hand, RH's website does not contain a disclaimer or other language explaining that the services offered are only available to individuals in Texas. See [ECF No. 1-2 to 1-4].
Aside from these websites and the single sale from RH Labs to Plaintiff's representative, Defendants do not have any contacts with the State of Iowa. In an effort to prove this negative, Stein submitted a declaration disclaiming seemingly every conceivable connection Defendants might have with the State. See [ECF No. 14 ¶¶ 5–23]. Suffice it to say Defendants have no physical presence in Iowa, have never been registered to do business here, have never conducted business here (on their own or through agents), have never directed advertising here, and (in the case of Stein) have never been to Iowa or contacted anyone here for anything unrelated to this litigation. See id.
In 2017, Stein sought to register the mark REGENEX HEALTH with the United States Patent and Trademark Office ("USPTO"). Id. ¶ 31. Although the Trademark Examiner found no other trademarks with which Stein's mark would likely cause marketplace confusion, Plaintiff opposed the registration. Id. Stein abandoned the application. Id. However, in 2018 he filed a new application with the USPTO to register stylized font-type or logo-type REGENEX HEALTH and REGENEX HEALTH LABS trademarks. Id. ¶ 32. Again, the Trademark Examiner found no other trademarks with which these marks would likely cause marketplace confusion, and again Plaintiff challenged the application. Id. The subsequent opposition proceeding before the Trademark Trial and Appeal Board was still ongoing at the time this lawsuit was filed. Id. ¶ 33.
Plaintiff commenced this action in April 2019. [ECF No. 1]. In its five-count Complaint, Plaintiff asserts claims against Defendants for: (1) federal trademark infringement under 15 U.S.C. § 1114 ; (2) common law trademark infringement; (3) false designation of origin and unfair competition in violation of 15 U.S.C. § 1125(a) ; (4) common law unfair competition; and (5) violating the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d). Id. at 10–14. Defendants filed a pre-answer Motion to Dismiss under Rule 12(b)(2) for want of personal jurisdiction. [ECF No. 13]. Plaintiff resists the motion, but also asks the Court to transfer this case to the Southern District of Texas pursuant to 28 U.S.C. § 1631. [ECF No. 19]. While these motions were pending, Defendants filed a Motion for Sanctions under Rule 11. [ECF No. 24].
II. ANALYSIS
A. Personal Jurisdiction
1. General principles
Defendants move to dismiss this action under Rule 12(b)(2) for lack of personal jurisdiction. "When personal jurisdiction is challenged by a defendant, the plaintiff bears the burden to show that jurisdiction exists." Fastpath, Inc. v. Arbela Techs. Corp. , 760 F.3d 816, 820 (8th Cir. 2014). To survive a motion to dismiss for lack of personal jurisdiction, "a plaintiff must make a prima facie showing of personal jurisdiction over the challenging defendant." Id. "A plaintiff's prima facie showing ‘must be tested, not by the pleadings alone, but by affidavits and exhibits supporting or opposing the motion.’ " Id. (citation omitted). Where, as here, no evidentiary hearing is held on the motion to dismiss, the Court "must view the evidence in a light most favorable to the plaintiff and resolve factual conflicts in the plaintiff's favor." Id. A federal court can only exercise jurisdiction over a nonresident defendant if: (1) the facts presented satisfy the requirements of the forum state's long-arm statute; and (2) the exercise of personal jurisdiction over the defendant does not violate due process. Digi-Tel Holdings, Inc. v. Proteq Telecomms. (PTE), Ltd. , 89 F.3d 519, 522 (8th Cir. 1996). Iowa's long-arm statute "expands Iowa's jurisdictional reach to the widest due process parameters allowed by the United States Constitution." Hammond v. Fla. Asset Fin. Corp. , 695 N.W.2d 1, 5 (Iowa 2005) ; see Iowa R. Civ. P. 1.306. Thus, "[the Court's] inquiry is limited to whether the exercise of personal jurisdiction comports with due process." Fastpath , 760 F.3d at 820 (citation omitted).
Plaintiff argues it is entitled to jurisdictional discovery to determine whether piercing the corporate veil or agency theories will allow Plaintiff to obtain personal jurisdiction over Stein and RH. [ECF No. 20 at 5]. As discussed below, the Court will assume each Defendants' contacts with Iowa can be imputed to all Defendants. Thus, jurisdictional discovery on that issue is unnecessary. Plaintiff also argues it is entitled to jurisdictional discovery to "test the veracity of Defendants' averments in the Stein Declaration." Id. However, such a "basis for seeking discovery is mere speculation," and does not warrant jurisdictional discovery. Neb. Mach. Co. v. Erickson Prods., Inc. , No. 8:14CV91, 2014 WL 6980258, at *6 (D. Neb. Dec. 8, 2014). A plaintiff is not entitled to jurisdictional discovery when he or she "fail[s] to rebut the defendants' assertions against jurisdiction and offer[s] only conclusory allegations to support [its] claim that personal jurisdiction" exists. Greenbelt Res. Corp. v. Redwood Consultants, LLC , 627 F. Supp. 2d 1018, 1028 (D. Minn. 2008) (citing Dever v. Hentzen Coatings, Inc. , 380 F.3d 1070, 1074 n.1 (8th Cir. 2004) ); see also Foreign Candy Co. v. Tropical Paradise, Inc. , 950 F. Supp. 2d 1017, 1036 (N.D. Iowa 2013) (denying jurisdictional discovery where the plaintiff failed to rebut the defendant's affidavit denying various allegations related to personal jurisdiction, noting that the plaintiff did not provide "any documentary evidence that provides any inference of additional contacts that [the defendant] might have with [the forum state]"). Plaintiff has offered no evidence to rebut the assertions in Stein's declaration, and its request to "test the veracity" of the statements therein amounts to no more than a fishing expedition. Plaintiff is not entitled to jurisdictional discovery.
The Due Process Clause permits the exercise of two types of personal jurisdiction: general and specific. A court exercising general personal jurisdiction may hear " ‘any and all claims against’ a defendant if its ‘affiliations with the State are so continuous and systematic as to render [it] essentially at home in the forum State.’ " Creative Calling Sols., Inc. v. LF Beauty Ltd. , 799 F.3d 975, 979 (8th Cir. 2015) (alteration in original) (quoting Daimler AG v. Bauman , 571 U.S. 117, 127, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) ). By contrast, specific jurisdiction "is proper when a defendant has certain contacts with the forum State and the cause of action arises out of those contacts." Id. at 979–980.
Either theory of personal jurisdiction involves analyzing Defendants' contacts with Iowa. "Minimum contacts must exist either at the time the cause of action arose, the time the suit was filed, or within a reasonable period of time immediately prior to the filing of the lawsuit." Pecoraro v. Sky Ranch for Boys, Inc. , 340 F.3d 558, 562 (8th Cir. 2003). Before going further, it bears repeating that Defendants have only two contacts with Iowa. First, RH runs a website that can be accessed nationwide and from which any user can request an online consultation with a physician. However, no one in Iowa has requested or received such a consultation. Second, RH Labs runs a commercial website that can be accessed nationwide and from which users can order goods that are shipped to any address they choose. RH Labs's only sale in Iowa was to Plaintiff's representative. For simplicity's sake, the Court will assume each of these contacts can be imputed to all Defendants.
2. General jurisdiction
The Court begins by determining whether it may exercise general jurisdiction over Defendants. As noted above, to be subject to general jurisdiction, a defendant's contacts with the forum state must be "so continuous and systematic as to render [it] essentially at home in the forum State." Creative Calling Sols. , 799 F.3d at 979 (alteration in original) (citation omitted). "For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile ...." Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 924, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). For a corporation, the " ‘paradigm’ forums ... are the corporation's place of incorporation and its principal place of business." BNSF Ry. Co. v. Tyrrell , ––– U.S. ––––, 137 S. Ct. 1549, 1558, 198 L.Ed.2d 36 (2017) (citations omitted). Here, the only contacts Defendants have with Iowa that could be seen as "continuous and systematic" are the websites of RH and RH Labs, which can be accessed by Iowans and, as discussed more below, have varying degrees of interactivity. Nevertheless, the websites do not render Defendants "at home" in Iowa. As the Supreme Court has explained in the context of corporate business activity, "[a] corporation that operates in many places can scarcely be deemed at home in all of them." BNSF , 137 S. Ct. at 1559. (alteration in original) (citation omitted). That reasoning is apt here. Although Defendants conduct business through their websites, there is no indication they are more "at home" in Iowa than they are anywhere else their websites can be accessed. See Shine Bros. Corp. v. Am. Intern. Grp., Inc. , 108 F. Supp. 3d 651, 668 (N.D. Iowa 2015) ("As courts have noted, it is now common for businesses of all types to have an internet website, typically with interactive capability through which customers can communicate with the business and order products. If general jurisdiction were to be predicated on these types of contacts alone, most businesses would be subject to personal jurisdiction in every forum." (quoting VGM Fin. Servs. v. Singh , 708 F. Supp. 2d 822, 839 n.9 (N.D. Iowa 2010) )). Defendants have no contacts with Iowa beyond this internet presence and related commercial activity. Thus, the Court does not have general jurisdiction over them.
Defendants' single internet sale to an Iowa customer lacks the pervasiveness to bestow general jurisdiction.
3. Specific jurisdiction
Turning to specific jurisdiction, "[d]ue process requires that a non-resident have minimum contacts with the forum state such that the maintenance of the lawsuit does not offend traditional notions of fair play and substantial justice." Fastpath , 760 F.3d at 820 (citations omitted). "Sufficient minimum contacts requires some act by which the defendant ‘purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’ " Id. at 821 (citation omitted). "A defendant's contacts with the forum state must be sufficient so that a non-resident defendant should reasonably anticipate being haled into court there." Id. at 820–21 (citations omitted).
Courts within the Eighth Circuit weigh five factors when assessing minimum contacts: "(1) the nature and quality of contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) convenience of the parties." Whaley v. Esebag , 946 F.3d 447, 452 (8th Cir. 2020) (citation omitted). The first three factors are of "primary importance," and the third factor "speaks to the particular question of specific jurisdiction." Id. (citation omitted). The fourth and fifth factors "carry less weight and are not dispositive." Id. (citation omitted). This is because "all states always have an interest in providing a forum for residents and litigation between residents of different states will always cause inconvenience to one or both parties." Maharishi Foundation USA, Inc. v. Love , No. 4:16-cv-00052, 2017 WL 11296335, at *6 (S.D. Iowa Feb. 21, 2017).
Additionally, when the cause of action involves a tortious act, as in the case of trademark infringement, Dakota Indus., Inc. v. Dakota Sportswear, Inc. , 946 F.2d 1384, 1388 (8th Cir. 1991), a plaintiff can also obtain specific jurisdiction over a nonresident defendant by "employing the Calder effects test," Johnson v. Arden , 614 F.3d 785, 796 (8th Cir. 2010) (citing Calder v. Jones , 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) ). This test requires a plaintiff to make a "prima facie showing that the defendant's acts (1) were intentional, (2) were uniquely or expressly aimed at the forum state, and (3) caused harm, the brunt of which was suffered—and which the defendant knew was likely to be suffered—[in the forum state]." Id. (alteration in original) (citation omitted). Still, the defendant's relationship with the forum "must arise out of contacts that the ‘defendant himself’ created with the forum state." Whaley , 946 F.3d at 451 (quoting Walden v. Fiore , 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ). Also, a court must examine the defendant's "contacts and conduct with the forum itself , not the defendant's contacts with persons who reside there." Id. (citing Walden , 571 U.S. at 285, 134 S.Ct. 1115 ).
The United States Court of Appeals for the Eighth Circuit construes the Calder effects test narrowly, holding that "absent additional contacts, mere effects in the forum state are insufficient to confer personal jurisdiction." Johnson , 614 F.3d. at 797. And, in any event, the Calder test does not replace the broader five-part test for personal jurisdiction. Instead, " Calder requires the consideration of additional factors when an intentional tort is alleged." Dakota Indus. , 946 F.2d at 1391. Ultimately, a court "must look at all of the factors in the aggregate and examine the totality of the circumstances in making a personal-jurisdiction determination." Johnson , 614 F.3d at 794.
But there is another layer to this veritable nesting doll of tests and factors yet to be unpacked. Defendants' contacts with this forum are based on commercial activity conducted over the internet. When assessing such contacts, courts within the Eighth Circuit apply the test articulated in Zippo Manufacturing Co. v. Zippo Dot Com, Inc. , 952 F. Supp. 1119 (W.D. Pa. 1997). See Johnson , 614 F.3d at 796. The Zippo test employs a " ‘sliding scale’ to measure the likelihood of personal jurisdiction." Id. (citation omitted).
At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.
Zippo , 952 F. Supp. at 1124.
Here, there are two websites at issue. RH's website provides general information to visitors about RH's services. This aspect is merely informational and, even if accessed by Iowa residents, would not confer the Court with personal jurisdiction over Defendants. Fraserside IP L.L.C. v. Youngtek Sols. Ltd. , No. C11-3005-MWB, 2012 WL 2906462, *6 (N.D. Iowa July 16, 2012). There is, however, an interactive element to RH's website. Visitors may complete a form on the RH website to request a consultation with a physician. After the request is submitted, a representative from RH responds to the submission in due course to arrange an online consultation. Defendants assert this feature is only available to Texas residents, as Stein is only licensed in Texas and can only perform telemedicine with individuals located within the state.
Courts typically find this type of internet arrangement—where a visitor to a website can enter his or her information in order to be contacted later about goods or services—falls at the passive end of Zippo 's sliding scale and does not confer specific jurisdiction. See Anderson v. Corey , 8:18CV553, 2019 WL 430866, at *3 (D. Neb. Feb. 4, 2019) (finding a website did not confer personal jurisdiction on the defendant where it was "largely passive," provided information to users, and its only interactive aspect was that "[i]t allow[ed] users to email messages to [the defendant's] office to request more information or a virtual consultation"); Davis v. Villa Servs. , No. 8:14CV137, 2015 WL 4402662, at *7 (D. Neb. July 17, 2015) ("[A] website's capacity to receive a message from a viewer does not make the website more than passive. Courts have held that a website is still considered passive and insufficient to confer jurisdiction where, as here, the only purported exchange of information available on the website is a direct link allowing a user to contact the seller and does not allow for any part of a transaction to occur online." (alteration in original) (citation omitted)); Foreign Candy Co., Inc. v. Tropical Paradise, Inc. , 950 F. Supp. 2d 1017, 1031 (N.D. Iowa 2013) (finding a website to be passive and incapable of conferring specific jurisdiction because it did not allow a website visitor to "enter into a contract or to make a purchase," and visitors could only "leave contact information (a one-way transfer of information, not an exchange)").
This approach is consistent with the broader principle that a defendant does not "purposeful[ly] avail[ ]" him-or herself of the privilege of conducting business in a forum through the "unilateral activity of another party or a third person." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citations omitted). Viewed through this lens, a visitor to a defendant's webpage is a third party whose unilateral act is completing an online request for further information. The defendant could be viewed as having contact with the forum by receiving the request, or even inviting it, but specific jurisdiction is inappropriate until the defendant makes more direct contact with the forum by responding to the inquiry in some manner. Here, no Iowan has completed the form on RH's website, let alone received a response or consultation. Without at least that latter contact, the accessibility of RH's website and its passive interactivity is insufficient to confer specific jurisdiction in this matter.
RH Labs's website, on the other hand, falls at the far end of the Zippo scale in that it is a commercial website whereby Defendants enter into contracts for the sale of goods. RH Labs sells nutritional supplements on its website, commercial activity that can confer specific jurisdiction. But "under Zippo , whether specific personal jurisdiction could be conferred on the basis of an interactive website depends not just on the nature of the website but also on evidence that individuals in the forum state accessed the website in doing business with the defendant." Johnson , 614 F.3d at 797. Absent such evidence, operating a highly interactive, commercial website alone does not confer specific jurisdiction. See id. ("Although [the website] may be characterized as interactive, there is no evidence in the record that [the defendant] engaged in any transaction or exchange of information with a [forum-state] resident via [the website], or that a [forum-state] resident ever accessed the website."). Ultimately, this is not a tall evidentiary hurdle—proof of a single sale into the forum will normally suffice to confer specific jurisdiction. See Imation Corp. v. Sanho Corp. , 2016 WL 4179363, at *3 (D. Minn. Aug. 5, 2016) (finding the court had specific jurisdiction over the defendant where the defendant sent a patent-infringing product to various financial backers, at least one of whom was located in the forum state). Still, like an online request form, any sale into the forum must be such that it signals the defendant purposefully availed him-or herself to the privilege of doing business in the forum and was not merely the result of a unilateral act of a third-party. Burger King , 471 U.S. at 475, 105 S.Ct. 2174. Accordingly, courts have found a single online sale into the forum is insufficient to confer specific jurisdiction when the sale was orchestrated by the plaintiff. Warren v. Cardoza Publ'g Co. , No. 4:16CV572 RLW, 2017 WL 496066, at *5 (E.D. Mo. Feb. 6, 2017) ("Although an internet purchase of goods and delivery of the product to the forum state may establish jurisdiction over the defendant, ‘plaintiffs are not permitted to "manufacture" personal jurisdiction over defendants by orchestrating an in-state web-based purchase of their goods.’ " (quoting Krepps v. Reiner , 588 F. Supp. 2d 471, 479 (S.D.N.Y. 2008) )); cf. WhatRU Holding, LLC v. Bouncing Angels, Inc. , Civil No. 13-2745 (JNE/TNL), 2014 WL 641517, at *3 (D. Minn. Feb. 19, 2014) ("There is no indication that the sale should not count as a relevant forum-directed activity, for example because the plaintiff played a role in making the sale happen to try to manufacture jurisdiction."). Here, RH Labs has made only one sale to Iowa, and it is undisputed that the sale was orchestrated by Plaintiff. [ECF No. 1 ¶ 27]. Although RH Labs's website is commercial in nature, there is no evidence that any other Iowa resident engaged in commercial activity through that website. Therefore, the nature of RH Labs's contacts with Iowa do not counsel the exercise of specific jurisdiction over Defendants.
The court in Imation Corp. went further and found the interactive, commercial nature of the defendant's website was enough on its own to confer specific jurisdiction. Imation Corp. , 2016 WL 4179363, at *3. This, however, seems to conflict squarely with Johnson , where the Eighth Circuit found the interactive nature of a website was not enough to confer specific jurisdiction without evidence that forum residents accessed the website to conduct business with the defendant. See Johnson , 614 F.3d at 797. Given this apparent conflict with binding circuit precedent, the Court declines to follow Imation Corp. as to its holding that the commercial nature of a website is sufficient on its own to confer personal jurisdiction.
Based on the foregoing, the Court finds the nature and quantity of Defendants' contacts with Iowa weigh against finding the Court has personal jurisdiction over Defendants. Turning then to the third due process factor, the Court finds the cause of action is related to these limited contacts—after all, Plaintiff alleges Defendants violated its trademark in the course of Defendants' business, much of which is conducted online. Nevertheless, this relationship does not outweigh the fact that Defendants' contacts with the forum are wholly insubstantial.
The Calder factors do not alter this conclusion. Even if the Court assumes the impact of Defendants' allegedly tortious acts are felt in Iowa (where Plaintiff is headquartered), "absent additional contacts, mere effects in the forum state are insufficient to confer personal jurisdiction." Johnson , 614 F.3d. at 797. For the reasons already discussed above, the requisite additional contacts are indeed "absent." Considering "the totality of the circumstances" and all relevant factors "in the aggregate," id. at 794, the Court finds it does not have personal jurisdiction over Defendants.
B. Transfer of Venue
Having concluded the Court lacks personal jurisdiction over Defendants, the Court next turns to whether the case should be transferred to the Southern District of Texas pursuant to 28 U.S.C. § 1631. That statute provides that if the Court finds a want of jurisdiction, "it shall, if it is in the interest of justice, transfer such action ... to any other such court ... in which the action ... could have been brought at the time it was filed." Plaintiff asks the Court to transfer this case to the United States District Court for the Southern District of Texas. It is undisputed that the Southern District of Texas is a proper venue that can exercise personal jurisdiction over Defendants.
As the language of § 1631 suggests, the Court may only transfer the case if it finds the transfer would be "in the interest of justice." That determination is entrusted to the Court's discretion. Gunn v. U.S. Dep't of Agric. , 118 F.3d 1233, 1240 (8th Cir. 1997). As the Eighth Circuit has explained:
Section 1631 was enacted so that parties confused about which court has subject-matter jurisdiction would not lose an opportunity to present the merits of a claim by filing in the wrong court and then, upon dismissal, having the claim barred by a statute of limitations. Accordingly, we have in the past directed transfer when a plaintiff in good faith filed in the wrong court and the statute of limitations would have run before he could refile properly.
Id. It would be too narrow a reading of Gunn to treat statute-of-limitations concerns as the only factor that may be considered in an interest-of-justice inquiry. Still, it is not uncommon for district courts in this circuit to deny transfers under § 1631 where the plaintiff would not be time-barred from re-filing his or her case in an appropriate venue. See, e.g., Kelly v. Carson , 8:18-CV-532, 2019 WL 3719416, at *1 (D. Neb. Aug. 7, 2019) ; Hunter v. Sioux City Police Dep't , CIV 18-04119, 2018 WL 4853912, at *5 (D.S.D. Oct. 5, 2018) ; Englert v. Beauty Fit, Inc. , No. 4:17-cv-00993-AGF, 2017 WL 5192196, at *4 (E.D. Mo. Nov. 9, 2017).
The parties appear to agree Plaintiff would not be time-barred from re-filing its case in the Southern District of Texas. Notably, Defendants state in their brief resisting transfer that "Plaintiff is not at risk of the running of a statute of limitations bar by having to refile the lawsuit if it chooses," [ECF No. 21 at 11], an assertion Plaintiff did not refute. Also, Plaintiff is clear that it will re-file the case should the Court grant Defendants' Motion to Dismiss. See [ECF No. 19 at 4].
Plaintiff did not file a reply brief.
In advocating for transfer, Plaintiff argues that various factors—such as the ease of access to sources of proof, availability of compulsory process for unwilling witnesses, and the cost of obtaining the attendance of willing witnesses—all favor transfer. Plaintiff relies on Med-Tec, Inc. v. Kostich , 980 F. Supp. 1315, 1332 (N.D. Iowa 1997), for the proposition that such factors are relevant in an interest-of-justice inquiry under § 1631. But the Med-Tec court derived those factors from cases that ultimately relied on Gulf Oil v. Gilbert , 330 U.S. 501, 508–09, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). See Med-Tec , 980 F. Supp. at 1332. And Gulf Oil articulated those factors in the context of a forum non conveniens analysis. See Gulf Oil , 330 U.S. at 507, 67 S.Ct. 839. The Southern District of Texas may be the more convenient forum for litigating this case, but that does not mean the interest of justice requires the Court to transfer it there, especially where there appears to be no impediment to Plaintiff achieving that same outcome on its own. Ultimately, dismissal of this case—rather than its transfer—will not threaten Plaintiff's ability to pursue redress for the wrongs it alleges to have suffered. The Court finds the interest of justice do not warrant transfer of this case. Accordingly, Plaintiff's Motion to Transfer is DENIED, and Defendants' Motion to Dismiss is GRANTED. This case shall be dismissed WITHOUT PREJUDICE.
Plaintiff also argues the interest of justice warrants transfer because the Court would not need to waste judicial resources with jurisdictional discovery. The Court has already concluded that Plaintiff is not entitled to such discovery.
In the alternative, Plaintiff asks the Court to transfer this case to the Southern District of Texas under 28 U.S.C. § 1406(a). However, that statute also only allows the Court to transfer the case if it finds transfer is in the "interest of justice." See 28 U.S.C. § 1406(a). As stated above, the Court does not find transfer of this case to be in the interest of justice.
C. Rule 11 Sanctions
Finally, Defendants seek sanctions under Rule 11 related to assertions in the Complaint that: (1) Stein "regularly conducts business" in the Southern District of Iowa, [ECF No. 24-1 at 2] (quoting Compl. ¶ 9); and (2) RH "offers ‘online doctor consultations’ and ‘online video physician consultations and treatments’ which allows it to distribute, sell, or offer to sell its medical services nationwide," id. (quoting Comp. ¶ 24). Defendants contend that because Plaintiff asserts Stein is the physician performing medical services offered by "Regenex Health," these claims are "effectively alleging that [Stein] is practicing medicine in Iowa and nationwide." Id. Defendants argue a simple public-records search would have revealed that Stein does not practice medicine outside of Texas. Separately, Defendants assert Plaintiff should be sanctioned under Rule 11 for asserting a claim with "a clear, insurmountable procedural or jurisdictional defect," namely the Court's lack of personal jurisdiction over Defendants. [ECF No. 24 at 8].
Rule 11 requires that every pleading, written motion, or other paper be signed by an attorney or pro se party. By signing the paper, the signer represents to the court that "to the best of the person's knowledge, information and belief, formed after an inquiry reasonable under the circumstances," that: (1) the paper "is not being presented for any improper purpose"; (2) "the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law"; (3) the factual contentions therein have, or will likely have after further investigation and discovery, evidentiary support; and (4) any denials of factual information are "warranted on the evidence" or "reasonably based on belief or a lack of information." Fed. R. Civ. P. 11(b). A court may impose appropriate sanctions upon determining that Rule 11(b) has been violated. Fed. R. Civ. P. 11(c).
Rule 11 sanctions are appropriate if the "attorney's conduct, ‘viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court.’ " Clark v. United Parcel Serv., Inc. , 460 F.3d 1004, 1009 (8th Cir. 2006) (quoting Perkins v. Spivey , 911 F.2d 22, 36 (8th Cir. 1990) ). " Rule 11 requires that an attorney conduct a reasonable inquiry of the factual and legal basis for a claim before filing. To constitute a reasonable inquiry, the prefiling investigation must uncover a factual basis for the plaintiff's allegations, as well as a legal basis." Coonts v. Potts , 316 F.3d 745, 753 (8th Cir. 2003).
The Court finds no sanctions are warranted for the statements in the Complaint with which Defendants take issue. First, it is clear Plaintiff understands Stein to operate his business through RH and RH Labs, the companies he organized. These companies have online components that can be accessed anywhere, including Iowa. In fact, RH Labs did conduct business in Iowa when it shipped nutritional supplements to Plaintiff's representative in the State. Given the nature of RH Labs as a commercial website that sells goods, Plaintiff's assertion that Stein conducts business in Iowa is not tantamount to saying he practices medicine in the State.
Nor does the Court find sanctionable Plaintiff's assertions concerning RH's practices. It is not clear from RH's website that the services the company offers are geographically limited. Indeed, it is not unreasonable to view the site as offering services to anyone with an internet connection. Any concerns Stein has with potential misunderstandings about where he practices medicine could be relieved by a clear disclaimer on RH's website. For whatever reason, Stein has chosen not to employ such a disclaimer. Further, it is not clear Stein would be prohibited from treating in Texas a patient from another state. He even states in his declaration that he provides medical advice to those "residing in or otherwise representing themselves as being in Texas." [ECF No. 14 ¶ 24]. It would appear someone physically visiting his clinic from out-of-state satisfies the latter criteria.
This brings the Court to the issue of whether Plaintiff should be sanctioned for bringing a case with an obvious jurisdictional defect. The Court does not find that the facts or applicable law of this case were so clear as to manifest the intentional or reckless disregard of the duties Plaintiff's attorneys owe this Court. Accordingly, Defendants' Motion for Sanctions is DENIED.
As the prevailing party on Defendants' Rule 11 motion, Plaintiff asks the Court to award it "the reasonable expenses, including attorney's fees, incurred for the motion." Fed. R. Civ. P. 11(c)(2). The Court may award such expenses "[i]f warranted." Id. The Court finds such an award is not warranted here.
III. CONCLUSION
For the foregoing reasons, Defendants' Motion to Dismiss, [ECF No. 13], is GRANTED; Plaintiff's Motion to Transfer, [ECF No. 19], is DENIED; and Defendants' Motion for Sanctions, [ECF No. 24], is DENIED.
This case is hereby ordered DISMISSED WITHOUT PREJUDICE. The Clerk of Court is DIRECTED to issue judgment in favor of Defendants and close this matter.
IT IS SO ORDERED.