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Music City Metals Co., Inc. v. Cai

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

October 17, 2017

MUSIC CITY METALS CO., INC. Plaintiff,
v.
JINGCHANG CAI et al. Defendants.

          MEMORANDUM

          ALETA A. TRAUGER, UNITED STATES DISTRICT JUDGE

         Pending before the court are three Motions to Dismiss. HiPacking, Inc., Hyco International Trading Company LP, Jia Ning Liu, Jolyn Junyao Liu, and Shenzhen Hai Pai International Warehousing Services Limited (“Hyco Defendants”) have filed a Motion to Dismiss Count III of Plaintiff's Complaint (Docket No. 87), to which Music City M s Co., Inc., (“MCM”) has filed a Response (Docket No. 101), and the Hyco Defendants have filed a Reply (Docket No. 110). Oceanside BBQ Parts Factory Inc., Baldev Sandhu, and Sukhwinder Bedi (“Oceanside Defendants”) have filed a Motion to Dismiss (Docket No. 95), to which MCM has filed a Response (Docket No. 106). Xing Chao, Dongguan Haishengxin Hardware Co. Ltd., Family Mart Co., Ltd., Yuzhen Fu, Liao Houbin, Wen Kun, Xiaomei Li, Real Value International Trading Ltd., Xing Xianhong, and Xing Xiusheng (“Miscellaneous Defendants”) have filed a Motion to Dismiss (Docket No. 113), to which MCM has filed a Response (Docket No. 119). For the reasons discussed below, the Hyco Defendants' Motion will be denied, and the Oceanside and Miscellaneous Defendants' Motions will be granted in part and denied in part. MCM's claims for copyright infringement based solely on the defendants' use of its product model numbers will be dismissed as to all defendants.

         I. BACKGROUND AND PROCEDURAL HISTORY[1]

         MCM is a Nashville-based manufacturer and wholesaler of replacement parts for gas grills. (Docket No. 1 ¶¶ 1, 5.) Because MCM is not the manufacturer of the grills with which its parts are used, its continued success depends on market research to identify parts that are likely to need replacing in popular grill models and its development of replacement parts that will meet those needs. (Id. ¶ 7.) MCM's business is not limited to replicating grill manufacturers' original parts, because MCM seeks to provide parts that are usable in more than one model of grill. Accordingly, MCM may develop a part with the necessary features to fulfill that part's designated purpose in multiple different grill models, despite differing structurally and superficially from the part it is replacing in some or all of those grills. (Id. ¶¶ 9-10.) Once MCM has developed a grill part that it wishes to make available for sale, it assigns that part a unique model number. MCM maintains that its system of model numbers is well known throughout the industry and identified, in the minds of the relevant buying public, with MCM itself. (Id. ¶ 8.)

         In light of the wide array of parts offered by MCM and the particularity of the needs of each consumer, MCM compiles and publishes a product catalog that includes original photographs and/or illustrations of the parts alongside model numbers and “fitment data” identifying the models of grill with which the particular parts can be used. (Id. ¶ 11.) MCM's catalog is available both in print form and as an electronic database made available to licensed MCM distributors. (Id. ¶ 12.) MCM has obtained three federal copyright registrations for versions of its catalogs. (Id. ¶ 14; see Docket Nos. 1-4, -6, -8.) MCM has not identified any additional copyright registrations that are specific to any of the individual subsidiary elements of those catalogs, such as a copyright registration of any particular photograph or a copyright registration of MCM's fitment data alone.

         Although MCM clearly prides itself on the ingenuity and functionality of its parts, it does not, at least in this case, claim any rights to patent protection for any of those parts. Because MCM cannot rely on patents to prevent its competitors from producing and selling functionally similar, or even identical, parts, MCM must instead rely on the accumulated goodwill and reputation from its many years in the industry to maintain its market position. To that end, MCM has obtained federal trademark registrations for the marks MCM and MUSIC CITY M S (“MCM Marks”), each for use with “distributorship services in the field of gas grill parts; namely, valves, control knobs, heat indicators, ignitor components, lid handles, accessories, rotisserie housings, regulators, hoses, grill plumbing, natural gas grill posts, warming racks, gaslight parts and supplies, hot plates, burners and venturis, cooking grids, and rock grates/heat plates.” (Docket Nos. 1-2, 1-3.) MCM has not identified any trademark registrations for its use of the MCM Marks with any good or service other than “distributorship services” for the enumerated products. (See Docket No. 1 ¶¶ 15-20.)

         MCM claims to have dealt, at least in recent years, with persistent efforts by competitors to trade improperly on MCM's goodwill in order to further their own sales in the gas grill replacement parts market, in particular through the Amazon and eBay e-commerce platforms. In order to combat this allegedly unlawful marketing by its competitors, MCM has initiated and received injunctive relief in a number of actions in this court, namely Civil Case Nos. 3:14-cv-00834, 3:12-cv-01107, and 3:15-cv-00067. (Docket No. 1 ¶¶ 24-32.) As a result of the relief granted to MCM in these prior cases, Amazon froze the accounts of certain allegedly infringing sellers and destroyed or disposed of certain remaining inventory in Amazon's possession. (Id. ¶¶ 40, 45.) MCM maintains that, despite the relief it received in the prior cases, a number of individuals and entities continue to work in concert or affiliation with the prior defendants to unlawfully market replacement grill parts in manners that infringe upon MCM's rights. (Id. ¶¶ 37-106.) Among the parties that MCM has identified with this ongoing unlawful marketing are the Hyco Defendants (id. ¶¶ 107-38), Oceanside Defendants (id. ¶¶ 213-31), and Miscellaneous Defendants (id. ¶¶ 139-45, 150-80). MCM alleges that the various defendants improperly marketed their competitor parts with the MCM Marks, MCM's model numbers, and copyright-protected materials from its catalogs. (Id. ¶¶ 268-77.)

         On April 27, 2017, MCM filed its Verified Complaint against over sixty named defendants as well as John and Jane Does. (Id.) Counts I, II, and III plead, respectively, trademark infringement, unfair competition, and counterfeiting under the Lanham Act against all defendants. (Id. ¶¶ 283-300.) Count IV pleads a claim under Tennessee law of unfair competition against all defendants. (Id. ¶¶ 301-03.) Count V is a breach of contract claim limited to four defendants who are not movants in any of the instant motions. (Id. ¶¶ 304-08.) Count VI pleads a claim for copyright infringement. (Id. ¶¶ 309-17.) Counts VII and VIII are claims under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) against all defendants. (Id. ¶¶ 318-32.) Count IX pleads a claim for false advertising under the Lanham Act against select defendants. (Id. ¶¶ 333-41.) Count X is a claim under the Tennessee Consumer Protection Act related, in particular, to some defendants' use of the phrase “FDA Approved.” (Id. ¶¶ 342-46.) Although some of the named defendants have yet to appear, the Hyco, Oceanside, and Miscellaneous Defendants have all obtained counsel and entered Notices of Appearance. (Docket Nos. 34, 41, 112.) Their respective Motions to Dismiss followed. (Docket Nos. 87, 95, 113.)

         II. LEGAL STANDARD

         In considering a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), a court has three options. It may (1) rule on the motion on the basis of the affidavits and materials submitted by the parties, (2) permit discovery in aid of the motion, or (3) conduct an evidentiary hearing on the merits of the motion. See Dean v. Motel 6 Operating L.P., 134 F.3d 1269, 1272 (6th Cir. 1998). It is in the court's discretion, based on the circumstances of the case, which path to choose. Id. In any proceeding, however, the party asserting jurisdiction has the burden of proof. See Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002). “Additionally, in the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.” Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991).

         When a court rules on a motion to dismiss for lack of personal jurisdiction based upon the affidavits or other preliminary materials, the party asserting jurisdiction need only make a prima facie showing of jurisdiction to defeat the motion. Theunissen, 935 F.2d at 1458. In examining whether the party asserting jurisdiction has made this prima facie showing, the court is to construe the facts presented in the light most favorable to that party, and the court does not weigh or consider the conflicting facts presented by the other side. Bird, 289 F.3d at 871; see also Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 360-61 (6th Cir. 2008) (referring to the plaintiff's burden in this context as “relatively slight”).

         Under Fed.R.Civ.P. 12(b)(3), a defendant may move to dismiss a case for improper venue. On such a motion, it is the plaintiff's burden to show that venue is proper. Gone to the Beach, LLC v. Choicepoint Servs., 434 F.Supp.2d 534, 537-38 (W.D. Tenn. 2006). If the district court finds that the case is “in the wrong division or district” the court “shall dismiss” the case, or, “if it be in the interest of justice, ” the court may transfer the case “to any district or division in which it could have been brought.” 28 U.S.C. § 1406(a).

         In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court will “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002). The Federal Rules of Civil Procedure require only that a plaintiff provide “a short and plain statement of the claim that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). The court must determine only whether “the claimant is entitled to offer evidence to support the claims, ” not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         The complaint's allegations, however, “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To establish the “facial plausibility” required to “unlock the doors of discovery, ” the plaintiff cannot rely on “legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action, ” but, instead, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679; Twombly, 550 U.S. at 556.

         III. ANALYSIS

         A. Personal Jurisdiction and Venue for Oceanside Defendants

         The Oceanside Defendants argue that the court lacks personal jurisdiction over them because they have had insufficient contacts with the State of Tennessee to give rise to either general or specific jurisdiction with regard to MCM's claims. MCM responds that, by failing to seasonably raise the alleged jurisdictional defect, the Oceanside Defendants have submitted to the jurisdiction of the court and waived any challenge based on personal jurisdiction. In the alternative, MCM argues that the Oceanside Defendants' operation of interactive e-commerce websites available to Tennesseans is sufficient to confer specific jurisdiction, as is the Oceanside Defendants' trading on the reputation of a Tennessee-based company.

         Because the requirement of personal jurisdiction flows from the Due Process Clause and protects an individual liberty interest, a person who would otherwise be outside the court's reach may submit to jurisdiction by virtue of making an appearance before the court without reserving its right to a jurisdictional challenge. Gerber v. Riordan, 649 F.3d 514, 518 (6th Cir. 2011). In deciding whether a defendant has implicitly waived a personal jurisdiction defense by its appearance, the court must determine whether any of the defendant's appearances and filings constituted “legal submission to the jurisdiction of the court.” Id. at 519. “Only those submissions, appearances and filings that give plaintiff a reasonable expectation that [the defendant] will defend the suit on the merits or must cause the court to go to some effort that would be wasted if personal jurisdiction is later found lacking, result in waiver of a personal jurisdiction defense.” Id. (internal brackets, citation, and quotation omitted). This analysis requires a consideration of all the relevant circumstances. King v. Taylor, 694 F.3d 650, 659 (6th Cir. 2012).

         Counsel for the Oceanside Defendants filed a Notice of Appearance on May 25, 2017, that did not in any way identify itself as attempting to effect only a special appearance or to reserve any rights to raise a challenge to personal jurisdiction. (Docket No. 41.) Typically, “a party waives the right to contest personal jurisdiction by failing to raise the issue when making ... a general appearance.” Gerber, 649 F.3d at 520 (quoting Reynolds v. Int'l Amateur Athletic Fed 'n, 23 F.3d 1110, 1120 (6th Cir. 1994)). Even if that Notice of Appearance had not been enough to confer personal jurisdiction, however, the Oceanside Defendants further cemented their waiver by taking several subsequent steps to participate in the case and contest aspects of MCM's allegations on the merits. On June 9, 2017, the Oceanside Defendants filed a Response contesting MCM's request for a preliminary injunction, in which they raised no jurisdictional objections and advanced substantive arguments that their actions did not violate MCM's rights. (Docket No. 67.) On June 22, 2017, counsel for the Oceanside Defendants appeared before the court and argued against that motion. On July 3, 2017, the Oceanside Defendants joined MCM in filing a Joint Motion for Entry of Modified Temporary Restraining Order (Docket No. 91), which the court granted (Docket No. 92). Only thereafter did the Oceanside Defendants file the instant motion contesting jurisdiction. By filing a general appearance, filing meaningful pleadings, and taking part in a hearing before the court, the Oceanside Defendants affirmatively submitted themselves to the court's personal jurisdiction and waived any right to challenge that jurisdiction via a later-filed motion to dismiss.

         Finally, even if the Oceanside Defendants had not waived personal jurisdiction, their own description of their activities would be sufficient for the court to conclude that such jurisdiction exists.

         Here, the issue of whether this court may exercise personal jurisdiction over the defendants depends on the specific limitations of Tennessee's long-arm statute and the constitutional principles of due process. Bridgeport Music, Inc. v. Still N The Water Publ'g, 327 F.3d 472, 477 (6th Cir. 2003). Tennessee's long-arm statute has been consistently construed to extend to the limits of federal due process, and, therefore, the two inquiries are merged, and the court here need only ...


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