Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-01773/USCOURTS-azd-2_13-cv-01773-0/pdf.json

Parties Involved:
Jason Edward Hammonds
Defendant
Smith Enterprise Incorporated
Plaintiff

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Smith Enterprise Incorporated,

Plaintiff, 

v. 

Jason Edward Hammonds, 

Defendant. 

No. CV-13-01773-PHX-GMS

ORDER 

 Pending before the Court are Defendant Jason Hammonds’ Motion to Dismiss 

(Doc. 16) and Motion for Sanctions (Doc. 24). For the following reasons, Defendant’s 

Motion to Dismiss is granted and Defendant’s Motion for Sanctions is denied 

BACKGROUND 

 This case arises from a statement made by Defendant on an internet message 

board. Plaintiff Smith Enterprise Incorporated (“SEI”) is an Arizona corporation that 

manufactures firearms and related accessories. (Doc. 1 ¶ 2.) In addition to other products, 

SEI manufactures M14 receivers, the part of an M14 rifle that houses its operating parts. 

(Id. ¶ 9.) SEI manufactures its M14 receivers using a lengthy process that involves 

carving the receiver out of a solid block of steel. (Id. 13–16.) SEI does not sell its M14 

receivers to end users, but instead uses a distributer, Crocs Gunshop, to manage consumer 

sales. (Id. ¶ 19.) Given the apparently high demand for the M14 receivers and the 

extended manufacturing process, Crocs Gunshop requires customers to put down a 

deposit to buy one of the receivers. (Id. ¶ 20.) Crocs Gunshop collects this deposit and 

holds it until the customer’s receiver is shipped from SEI. SEI does not receive any part 

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of this deposit, and only receives payment from Crocs Gunshop once the receiver has 

shipped. (Id. ¶ 21.) 

 Defendant Jason Hammonds is a resident of Georgia and works as a medical 

school professor. (Doc. 16–1.) At some point prior to May 2013, Hammonds placed an 

order for five SEI M14 receivers from Crocs Gunshop. (Doc. 16–2 at 2.) On or about 

May 29, 2013, a Crocs Gunshop customer posted a comment on an online message board 

known as the “M14 Forum” regarding his SEI M14 receiver order. (Doc. 1 ¶ 22.) The 

customer asked for information about when he might receive the receiver that he had 

ordered. (Id.) This comment began a thread in which a number of other customers 

discussed their orders and some expressed frustration at the length of time it was taking 

for them to receive the items. (Id. 23–25.) In the course of this message board thread, 

Hammonds posted the following: 

I heard from a reliable source that they are experiencing heat 

treatment issues in their receivers. Reports of receiver threads 

cracking upon barrel installation, stuff like that. I can’t 

imagine it’s been this long getting the tooling in order. 

Feeding us BS. At this point I believe you have every right to 

demand a full refund. Crocs has offered such to others that 

have been waiting. Feel free to use this info to your every 

advantage. 

(Doc. 1-1 at 3.) 

 An SEI employee saw this post and replied: “Unless your source is one of us, then 

it’s wrong. None of that is true.” (Id. at 4.) Shortly after, Hammonds responded: “Good to 

know, I guess. Then where are the receivers????? Current explanation does not seem to 

add up.” (Id.) 

 SEI President Ron Smith then called Hammonds and told him that the statement 

he made on the message board was false and that SEI would “not hesitate to file a lawsuit 

to protect its reputation and goodwill” if Hammonds did not retract his statement. (Id. ¶ 

32.) SEI claims that Hammonds refused to retract his statement, but did return to the M14 

Forum to post: 

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I had what I have found to be a reliable source tell me some 

reasoning behind the delay in SEI M14 receiver deliveries. It 

was merely conjecture as the source was secondary in nature, 

but has proven over time to me to be quite accurate in 

hindsight. Pretty good source of info. Anyway, it seemed 

logical as we had seen no product. We had gotten nothing 

from SEI except excuses for 6 months. Poor Croc. I feel for 

him. Caught in the middle. Anyway, it was time to nudge 

them and force an explanation. 

(Doc. 1-1 at 13.) 

 

 Hammonds further posted that: 

We don’t know exactly. We are all guessing and listening to 

folks that we respect come up with likely reasoning. I was 

told they may have been experiencing heat treatment issues 

and that is the reason why we have not seen any product. The 

source of info was merely brainstorming reasoning behind 

such a delay in the current environment. Just the normal 

rumor mill when you don’t get an honest answer. 

(Doc. 1-1 at 8.) 

 In a letter dated August 2, 2013, SEI’s counsel again informed Hammonds that his 

statement was false. (Doc. 1 at ¶ 48.) The letter stated that SEI would waive its damages 

if Hammonds would cease making false statements and post an apology and retraction on 

the M14 Forum. (Id.) When Hammonds refused to do so, stating his statements were 

merely opinion, SEI filed the present suit. (Id. at ¶ 49.) SEI alleges one count of product 

disparagement under the Lanham Act, 15 U.S.C. § 1125(e), and one count of product 

disparagement under Arizona common law. (Id. ¶¶ 52–76.) Hammonds now moves to 

dismiss the action on various grounds, including that Plaintiff has not established 

personal jurisdiction. (Doc. 16.) Further, Hammonds moves for sanctions against SEI and 

its counsel pursuant to Federal Rule of Civil Procedure 11. (Doc. 24.) 

/ / / 

/ / / 

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ANALYSIS 

I. PERSONAL JURISDICTION 

 A. Legal Standard 

 “The party seeking to invoke the court’s jurisdiction bears the burden of 

establishing that jurisdiction exists.” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) 

(citing Data Disc, Inc. v. Systems Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977)); 

Cubbage v. Merchent, 744 F.2d 665, 667 (9th Cir. 1984). “When a defendant moves to 

dismiss for lack of personal jurisdiction, the plaintiff is ‘obligated to come forward with 

facts, by affidavit or otherwise, supporting personal jurisdiction.’” Id. (quoting Amba 

Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). “The mere 

allegations of a complaint, when contradicted by affidavits, are not enough to confer 

personal jurisdiction over a nonresident defendant.” Chem Lab Products, Inc. v. 

Stepanek, 554 F.2d 371, 372 (9th Cir. 1977) (citing Taylor v. Portland Paramount Corp., 

383 F.2d 634, 639 (9th Cir. 1967)); Data Disc, 557 F.2d at 1284 (citing Taylor, 383 F.2d 

at 639). 

To establish a prima facie case of personal jurisdiction, the plaintiff has the burden 

of showing that: (1) the forum state’s long-arm statute confers jurisdiction over the 

nonresident defendant; and (2) the exercise of jurisdiction comports with principles of 

due process. Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 

1995). Arizona’s long-arm statute confers jurisdiction to the maximum extent allowed by 

the Due Process Clause of the United States Constitution. Ariz. R. Civ. P. 4.2(a); Doe v. 

Am. Nat’l Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997). Due process requires a 

nonresident defendant to have “certain minimum contacts with [the forum] such that the 

maintenance of the suit does not offend traditional notions of fair play and substantial 

justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal citation 

omitted). There are two types of personal jurisdiction, general and specific. Burger King 

Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 5 (1985). 

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 To establish general personal jurisdiction, “minimum contacts exist where a 

defendant has ‘substantial’ or ‘continuous and systematic’ contacts with the forum state, 

even if the case is unrelated to those contacts. Tuazon v. R.J. Reynolds Tobacco Co., 433 

F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales de Colombia, S.A. v. 

Hall, 466 U.S. 408, 415 (1984)) 

Specific jurisdiction is analyzed under a three-pronged test: 

(1) [t]he non-resident defendant must purposefully direct his 

activities or consummate some transaction with the forum or 

resident thereof; or perform some act by which he 

purposefully avails himself of the privilege of conducting 

activities in the forum, thereby invoking the benefits and 

protections of its laws; (2) the claim must be one which arises 

out of or relates to the defendant’s forum-related activities; 

and (3) the exercise of jurisdiction must comport with fair 

play and substantial justice, i.e. it must be reasonable. 

 

Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1227–28 (9th Cir. 2011). 

 B. Application

 Here, Plaintiff does not allege that Hammonds had the kind of substantial or 

systematic and continuous contacts with Arizona to establish general personal 

jurisdiction. Hammonds is a Georgia resident who has never visited Arizona and who has 

no business with Arizona outside of this matter. (Doc. 16-1.) Plaintiff alleges that 

Hammonds has done business with SEI in Arizona, but does not seem to suggest that this 

business goes beyond ordering the SEI receivers from Crocs Gunshop at issue in this 

case. Thus, Plaintiff does not establish general personal jurisdiction. 

 To establish specific personal jurisdiction, Plaintiff must first demonstrate that 

Hammonds purposefully directed his activity at Arizona. Purposeful direction is 

evaluated using the Supreme Court’s three-part Calder effects test. Yahoo! Inc. v. La 

Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (en 

banc) (internal quotation marks omitted). Under this test, “the defendant allegedly must 

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have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing 

harm that the defendant knows is likely to be suffered in the forum state.” Id. 

 Under the first prong, it is clear that Hammonds intentionally posted on the M14 

message board. However, under the second prong, it does not appear that Hammonds’ 

posts were expressly aimed at Arizona. The Ninth Circuit has explained that “express 

aiming” occurs when the “defendant is alleged to have engaged in wrongful conduct 

targeted at a plaintiff whom the defendant knows to be a resident of the forum state.” 

Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000). It is 

undisputed that Hammonds knew that SEI is an Arizona corporation, but the Ninth 

Circuit has held that the knowledge of the citizenship of the Plaintiff “goes to the 

foreseeable effect prong of the ‘effects test’ and is not an independent act that can be 

interpreted as being expressly aimed at [the forum].” Pebble Beach Co. v. Caddy, 453 

F.3d 1151, 1158 (9th Cir. 2006). 

 Here, Hammonds made a statement on the message board that SEI was 

experiencing manufacturing problems. This comment was made to fellow customers as 

part of a conversation in which customers expressed frustration to each other over the 

delay in receiving the products they had ordered from SEI. Hammonds made a statement 

suggesting a reason for this delay. After Hammonds was informed this statement was 

false, Hammonds posted that his source had been “merely brainstorming” and that the 

statement was “just the normal rumor mill.” (Doc. 1-1 at 8.) At the time of his statements, 

Hammonds had placed orders and deposits for SEI products and was waiting for those 

products to arrive. Hammonds’ comments themselves do not suggest, and SEI has not 

sufficiently alleged, that Hammonds made his comments in order to harm SEI. Instead, it 

appears that Hammonds was expressing his own frustration over the delay in receiving 

his SEI products. 

 After SEI contacted Hammonds, he wrote a subsequent post admitting the initial 

post was “merely conjecture” and also noting it was “time to nudge [SEI] and force an 

explanation [for the delay].” (Doc. 1-1 at 13.) Here, Hammonds’ statement seems aimed 

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at SEI, but is merely a statement admitting his initial statement was solely based on 

conjecture. Assuming that this statement qualifies as one expressly aimed at SEI in 

Arizona, it nonetheless fails under the third prong of the Calder test as SEI does not 

allege it experienced any harm because of this statement qualifying Hammonds’ earlier 

statement. If anything, this later statement seems to help undo any possible harm caused 

by that earlier statement. Plaintiff therefore fails to establish facts that suggest 

Hammonds purposefully directed his actions at Arizona under Calder. Because Plaintiff 

fails to establish this first prong of the specific personal jurisdiction inquiry, the Court 

need not address the other two prongs, but nevertheless finds that, under the 

circumstances as alleged by SEI, the exercise of Hammonds would not be reasonable, 

and thus finds that SEI has not established personal jurisdiction in this case. 

II. SANCTIONS 

 Defendant moves for sanctions against SEI and its counsel, pursuant to Federal 

Rule of Civil Procedure 11. (Doc. 24.) In relevant part, Rule 11 states that in presenting a 

pleading or other paper to the court, an attorney certifies that “to the best of the person’s 

knowledge, information, and belief formed after an inquiry reasonable under the 

circumstances” the case is not “being presented for any improper purpose,” the claims 

“are warranted by existing law or by a nonfrivolous argument for extending” the law, and 

“the factual conditions have evidentiary support or, if specifically so identified” are likely 

to have such support following discovery. Fed. R. Civ. P. 11(b)(1)–(3). Hammonds 

argues that Plaintiff has used strong-arm tactics and has brought this suit in order to 

intimidate him and that the suit is plainly frivolous because he is not a competitor of SEI. 

 While the Court finds that these arguments are not without merit, and even 

viewing the facts alleged by Plaintiff in the light most favorable to it, this suit appears to 

be an extremely disproportionate response to the actions of the Defendant, they do not 

reach the level necessary to impose the “extraordinary remedy” of Rule 11 sanctions. 

Operating Engineers Pension Trust v. A-C CO., 859 F.2d 1336, 1345 (9th Cir. 1988) 

(noting that sanctions are appropriate in the “rare and exceptional case where the action is 

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clearly frivolous, legally unreasonable or without legal foundation, or brought for an 

improper purpose”). Here, it seems quite clear that Hammonds is not a competitor of SEI 

because he does not manufacture M14 receivers, but it does appear that Hammonds has at 

least occasionally sold M14 rifles that he has assembled from component parts, and thus 

the claims based on the contention that he is a competitor of SEI are not plainly frivolous 

for purposes of Rule 11. Therefore, 

IT IS ORDERED that Defendant’s Motion to Dismiss (Doc. 16) is granted. 

IT IS FURTHER ORDERED that Defendant’s Motion for Sanctions (Doc. 24) 

is denied. 

IT IS FURTHER ORDERED directing the Clerk of Court to terminate this 

action and enter judgment accordingly. 

 Dated this 6th day of March, 2014. 

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