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LLC v. Versa Marketing, Inc.

United States District Court, M.D. Tennessee, Nashville Division

March 7, 2017

DAN'S GOURMET SPOT, LLC, Plaintiff,
v.
VERSA MARKETING, INC., Defendant.

          Newbern Magistrate Judge

          MEMORANDUM

          KEVIN H. SHARP UNITED STATES DISTRICT JUDGE

         Plaintiff Dan's Gourmet Spot, LLC (“Dan's Gourmet”) brings claims against Defendant Versa Marketing, Inc., (“Versa”) for breach of contract, fraud and misrepresentation, breach of warranty, fraudulent inducement, and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. §§ 47-18-104(b)(5) and (7). (Docket No. 1-2).

         Defendant Versa has filed a Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, for Transfer under 28 U.S.C. § 1404. (Docket No. 7). Plaintiff Dan's Gourmet has filed a Response in Opposition (Docket No. 11), to which Defendant Versa has replied (Docket No. 18). For the reasons stated below, the Court will deny Defendant Versa's Motion.

         BACKGROUND

         The following factual allegations come from the Complaint (Docket No. 1-2), the parties' filings (Docket Nos. 8 & 11), and related declarations (Docket Nos. 9 & 12):

         CEO Daniel Stephenson formed Dan's Gourmet out of his Nashville, Tennessee kitchen in 2012 in order to produce and sell gourmet macaroni and cheese dishes. Dan's Gourmet established its local and national business through its “Mac Pacs”-prepackaged containers of macaroni and cheese that promised “all-natural, hassle-free, gourmet flavor” to “comfort[] foodies conveniently.” (Docket No. 1-2 at 2, ¶ 9; Docket No. 11 at 2). Dan's Gourmet expanded from Nashville into national supermarket chains by partnering with its first co-packer, which used hot-kettle-based cooking methods and real cheeses to replicate the Mac Pacs on a larger scale. By 2014, Mac Pacs were available in Whole Foods, Kroger, Central Market, Food City, King Kullen, Ingles, Roche Brothers, Sprouts, Kings, Shop-Rite, and Stop and Shop.

         In August 2014, Dan's Gourmet initiated contact with and entered into negotiations with Versa, through its CEO Al Goularte, to replace its first co-packer. Versa is a California corporation whose principal place of business is in Fresno, California. It has no property or employees in Tennessee, and neither maintains documents nor advertises in Tennessee.

         The negotiations between Versa and Dan's Gourmet included direct communications from Versa to Dan's Gourmet in Tennessee by phone and email. According to Dan's Gourmet, Versa indicated that it would use high quality ingredients and a cold-binding process to replicate the gourmet flavors of Dan's Gourmet's products. When Versa suggested replacing real cheese with dehydrated cheese products, Dan's Gourmet rejected the proposal.

         Versa delivered product samples to Dan's Gourmet in Nashville, Tennessee for inspection and comments, presenting them as representative samples of what Versa would produce. After entering into a co-packing contract with Dan's Gourmet, Versa sent more communications, including invoices, to Dan's Gourmet in Tennessee. The manufacturing of the Mac Pacs Versa produced occurred in Harlington, Texas.

         Once the Mac Pacs Versa produced reached the market, Dan's Gourmet began receiving complaints in Tennessee from previously loyal customers indicating their disappointment with their purchases. According to customer complaints, their purchases were “totally different, ” “not creamy but sort of curdled-looking, ” “inedible, ” and had “a glue-like consistency.” (Docket No. 1-2 at 5, ¶ 25; Docket No. 11 at 3). Dan's Gourmet concluded that Versa, contrary to its promises about ingredients and production processes it would use, replaced real cheese with dehydrated products when it produced the Mac Pacs. Dan's Gourmet asserts that Versa refused to disclose the recipes it used to produce the Mac Pacs.

         In addition to complaining, customers indicated that they would no longer purchase Mac Pacs. After same-store sales dropped by sixty-five percent and Dan's Gourmet lost accounts, Dan's Gourmet filed suit in state court and Versa removed the action to this Court.

         LEGAL STANDARD

         Plaintiff bears the burden of establishing that personal jurisdiction exists over the defendant. Youn v. Track, Inc., 324 F.3d 409, 417 (6th Cir. 2003). “‘[I]n the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleading but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.'” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 449 (6th Cir. 2012) (citing Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). Where, as here, the Court rules on a Rule 12(b)(2) motion to dismiss based only on the parties' written submissions without conducting an evidentiary hearing, the plaintiff's “burden consists of ‘a prima facie showing that personal jurisdiction exists.'” Schneider v. Hardesty, 669 F.3d 693, 697 (6th Cir. 2012) (citing Serras v. First Tennessee Bank Nat. Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989)). “Under these circumstances, this court will not consider facts proffered by the defendant that conflict with those offered by the plaintiff . . . and will construe the facts in the light most favorable to the nonmoving party. . . ...


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