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NINE POINT MESA OF NASHVILLE, INC. v. NINE POINT M

January 4, 1991

NINE POINT MESA OF NASHVILLE, INC., CHARLES T. GREENE, and wife CHERYL GREENE
v.
NINE POINT MESA OF LEXINGTON, INC., NINE POINT MESA OF HILTON HEAD, S.C., INC., LPG, INC., WILLIAM J. BARR, III and THOMAS D. WARREN



The opinion of the court was delivered by: NIXON

 JOHN T. NIXON, UNITED STATES DISTRICT JUDGE

 The Court is in receipt of the Report and Recommendation issued by the Magistrate regarding the defendants' motion to dismiss for lack of venue in the above styled action. No objections have been filed to the Report and Recommendation, but the issue of venue has been briefed extensively by the parties.

 Background

 This dispute arose when the plaintiffs, a corporation which operates two Mexican restaurants in Nashville and its shareholders, alleged that the defendants were misappropriating the name "Nine Point Mesa" and using it to describe their own restaurants. In their complaint the plaintiffs allege trademark infringement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and breach of an agreement executed between Nine Point Mesa of Nashville and Nine Point Mesa of Lexington under Tennessee law.

 Jurisdiction over the Lanham Act claim is, of course, based on the federal question statute, 28 U.S.C. § 1331. This Court's jurisdiction over the state claim is based on diversity of citizenship pursuant to 28 U.S.C. § 1332. The plaintiff, Nine Point Mesa of Nashville, is a Tennessee corporation formed in February, 1988 for the purpose of developing and operating the Nine Point Mesa restaurants. Charles T. Greene and his wife Cheryl Greene are the company's shareholders, and residents of Tennessee. The defendants Nine Point Mesa of Lexington, Nine Point Mesa of Hilton Head, S.C., and LPG, Inc. are all Kentucky Corporations with their principal place of business in Kentucky, with the exception of Nine Point Mesa of Hilton Head, whose principal place of business is in South Carolina. The defendant William T. Barr, III is a resident and citizen of Kentucky, and the defendant Thomas D. Warren is a resident and citizen of Texas.

 The defendants filed a motion to dismiss under Rule 12(b)(3) of the Federal Rules of Civil Procedure, alleging that venue for the Lanham Act claim is improper in the Middle District of Tennessee; the motion stated that either the Lanham Act claim should be dismissed, or the entire action should be filed in another district. The Court referred the case to the Magistrate for consideration of pretrial matters pursuant to 28 U.S.C. § 636. Oral argument was held before the Magistrate on the issue of venue, and the Magistrate then issued the Report and Recommendation which is presently before the Court.

 Conclusions of Law

 1. Venue for The Plaintiff's Claim Under § 43(a) of the Lanham Act

 Section 1391(b) of Title 28, United States Code, provides that where jurisdiction is not based solely on diversity of citizenship, an action may be brought "only in the judicial district where all defendants reside, or where the claim arose." Thus, for venue for the plaintiffs' federal claim to be proper in the Middle District of Tennessee, all defendants must reside in this district or the claim must have arisen here. According to the complaint, the defendants are not all residents of Tennessee, so if venue is proper it must be because the claim arose in the Middle District of Tennessee.

 A claim generally arises where the injury occurs. See generally, 15 Wright, Miller & Cooper, Federal Practice and Procedure, § 3806 (1976). When determining where a trademark infringement claim arose for purposes of establishing venue, the proper inquiry is where the infringing activity occurred. See Tefal., S.A. v. Products International Company, 529 F.2d 495, 496 n. 1 (3rd Cir. 1976). The complaint alleges that the defendants are violating the Lanham Act by operating a restaurant in Hilton Head, South Carolina under the name "Nine Point Mesa." Other documents submitted to the Court by the plaintiff allege that the defendants either operate or plan to operate restaurants which use the name illegally in Mississippi, Georgia, Louisiana, and Ohio. There are no allegations, however, that the defendants are using or planning to use the name "Nine Point Mesa" anywhere within the Middle District of Tennessee. Accordingly, it does not appear to the Court that the claim "arose" in this district. *fn1"

 In analyzing whether the plaintiffs' Lanham Act claim arose in this district, the Magistrate relied on Leroy v. Great Western United Corp., 443 U.S. 173, 99 S. Ct. 2710, 61 L. Ed. 2d 464 (1979), the leading Supreme Court case interpreting the venue statute. In Leroy the Court reluctantly recognized that a claim may sometimes "arise" in more than one district when it stated:

 
In our view, therefore, the broadest interpretation of the language of 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably even more) districts that with approximately equal plausibility -- in terms of the availability of witnesses, the accessibility of other relevant evidence, ...

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