Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04039/USCOURTS-cand-3_05-cv-04039-1/pdf.json

Parties Involved:
Nextrade Holdings, Inc.
Defendant
Protrade Sports, Inc.
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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Docket No. 8, Filed November 28, 2006.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PROTRADE SPORTS, INC.,

 Plaintiff,

 v.

 NEXTRADE HOLDINGS, INC.,

Defendant. /

No. C05-04039 MJJ

ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS

INTRODUCTION

Before the Court is NexTrade Holdings Inc.’s (“Defendant”, “Nextrade”) Motion to Dismiss

or in the Alternative, Transfer.1

 The motion is opposed by Protrade Sports Inc. (“Plaintiff”,

“Protrade”). For the following reasons, the Court GRANTS Defendant’s Motion to Dismiss for

Lack of Personal Jurisdiction.

FACTUAL BACKGROUND

 Defendant Nextrade is a Florida corporation with its principal place of business in

Clearwater Florida. Nextrade develops technology for electronic securities markets. Nextrade

owns the federally registered trademark “Pro-Trade”(the “Pro-trade Mark”). Plaintiff Protrade is a

Delaware corporation which operates an online stock market dealing in virtual shares of professional

athletes in the fantasy-sports industry.

On October 6, 2005, Plaintiff filed the instant action seeking a declaratory judgment of nonCase 3:05-cv-04039-MJJ Document 40 Filed 02/02/06 Page 1 of 6
United States District Court

For the Northern District of California

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infringement of the Pro-Trade mark.

A week after the instant action was filed, Nextrade filed a similar action in the United States

District Court for the Middle District of Florida (the “Florida Action”). Like this case, the primary

issue in the Florida action is Protrade’s alleged infringement of Nextrade’s Pro-trade Mark. The

Florida court recently stayed the Florida Action pending the outcome of the instant action.

On November 28, 2005, Defendant filed the instant motion to dismiss for lack of personal

jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2). 

LEGAL STANDARD

When a defendant moves to dismiss a complaint for lack of personal jurisdiction pursuant to

Federal Rule of Civil Procedure 12(b)(6), the plaintiff bears the burden of demonstrating that

jurisdiction exists. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). If

the Court rules on the motion based on written materials without an evidentiary hearing, “the

plaintiff need only make a prima facie showing of jurisdictional facts.” Id. In such cases, the Court

examines whether the plaintiff’s pleadings and affidavits make a prima facie showing of personal

jurisdiction. Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 128 (9th Cir. 1995). “Although the

plaintiff cannot ‘simply rest on the bare allegations of its complaint,’ uncontroverted allegations in

the complaint must be taken as true.” Schwarzenegger, 374 F.3d at 800 (internal citations omitted). 

The Court resolves conflicts between parties over statements in the affidavits in the plaintiff’s favor. 

AT&T, 94 F.3d at 588. 

A district court sitting in diversity has personal jurisdiction to the extent provided by the law

of the forum state. Data Disc., Inc. v. Sys. Tech. Assocs, 557 F.2d 1280, 1286 (9th Cir. 1977). 

California’s jurisdictional statute is co-extensive with federal due process requirements; therefore,

jurisdictional inquiries under state law and federal due process standards collapse into one, and the

Court considers only whether the exercise of jurisdiction over Defendant comports with due process. 

Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). 

Specifically, to satisfy constitutional due process, the non-resident defendant “must have at least

‘minimum contacts’ with the relevant forum such that the exercise of jurisdiction ‘does not offend

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For the Northern District of California

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traditional notions of fair play and substantial justice.’” Schwarzenegger, 374 F.3d at 801 (quoting

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

ANALYSIS

Depending on a defendant’s contacts with California, a court may exercise either general or

specific jurisdiction over him. Since it is not clear from Plaintiff’s papers whether Plaintiff is

asserting that the Court has general or specific jurisdiction over Defendant, the Court will analyze

Plaintiff’s jurisdictional allegations under each standard.

1. General Jurisdiction

General jurisdiction exists where the defendant’s contacts with the forum state are so

substantial or continuous and systematic that jurisdiction exists even if the cause of action is

unrelated to those contacts. Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d 1082, 1086

(9th Cir. 2000). The standard for establishing general jurisdiction is “fairly high.” Id. Particularly,

the defendant’s contacts must approximate physical presence in the forum state. Schwarzenegger,

374 F.3d at 801. In evaluating the extent of a defendant’s contacts, the Court considers whether the

defendant mails, solicits, or engages in business, designates an agent for service of process, holds a

license, or is incorporated in the forum state. Bancroft & Masters, Inc., 223 F.3d at 1086.

Defendant is a Florida corporation with its principal place of business in Florida. According

to the sworn declaration of Nextrade CEO John Schaible, Nextrade owns no property in California,

maintains no inventory, offices, agents, employees, vendors or suppliers in California. (Schaible

Decl., ¶ 3-5). Nextrade is not registered to conduct business in California. Although Plaintiff has

the burden of establishing general jurisdiction, Plaintiff has asserted little to this effect, save

allegations that Defendant has an accessible website and that Defendant “promotes and sells its

products nationwide.” (Opposition at 4). Given the paucity of Plaintiff’s contentions concerning

substantial activity between Nextrade and California, it is clear that Plaintiff’s allegations fall well

short of demonstrating the “‘continuous and systematic’ contacts that the Supreme Court and [the

Ninth Circuit] have held to constitute sufficient ‘presence’ to warrant general jurisdiction.”

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Schwarzenegger, 374 F.3d at 801. 

2. Specific Jurisdiction

Having concluded that the Court does not have general jurisdiction over Defendant, the

Court next examines Plaintiff’s allegations through the analytical lens of specific jurisdiction. “A

court exercises specific jurisdiction where the cause of action arises out of or has a substantial

connection to the defendant’s contacts with the forum.” Glencore Grain Rotterdam B.V., 284 F.3d

at 1123. The Court applies a three-part test when assessing specific jurisdiction: 

(1) The 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. 

Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987); Bancroft & Masters, Inc., 223 F.3d at 1086 (9th

Cir. 2000). The plaintiff bears the burden of satisfying the first two prongs of the test. 

Schwarzenegger, 374 F.3d at 802. If the plaintiff fails under either prong, the Court must find that

personal jurisdiction does not exist in the forum state. Id. If the plaintiff satisfies both prongs, the

burden shifts to the defendant to “present a compelling case” demonstrating that the exercise of

jurisdiction would be unreasonable. Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 276-

78 (1985)).

Plaintiff, therefore, has the burden of showing that Defendant purposefully conducted, within

the forum state of California, activities that involved the Pro-Trade mark. In support of this position,

Plaintiff alleges that Defendant has an “interactive website, which directly promotes its products in

California and allows California residents to download its Pro-Trade software.” (Opposition at 6). 

Citing Zippo Mfg. Co. v. Zippo DOT Com, 952 F. Supp. 1119, 1120-1121 (D. Pa. 1997) and similar

cases, Plaintiff argues that personal jurisdiction exists because Defendant’s website is “designed to

solicit customers in the forum.” Plaintiff’s reliance on Zippo is misplaced. Unlike Zippo, Plaintiff

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Plaintiff has requested leave to conduct discovery on the issue of personal jurisdiction. Given that Plaintiff has

failed to establish any indication that Defendant might be subject to the personal jurisdiction of this Court, the Court finds

that discovery would create undue burden and cost for Defendant and would result in a waste of judicial resources. A

plaintiff is not entitled to discovery without making a “colorable” showing of personal jurisdiction. Central States, Southeast

& Southwest Areas Pension Fund v. Reimer Express World Corp., (7th Cir. 2000) 230 F3d 934, 946. Since Plaintiff has not

done so here, the Court denies Plaintiff’s request to conduct discovery on the issue of personal jurisdiction.

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has provided the Court with only bare allegations of commercial activity in the forum state.2 These

contentions are contradicted by evidence from Nextrade that it does not conduct business in

California, has received no requests from California residents to download its Pro-Trade software,

does not target California residents with its website, and does not send direct mailings or unsolicited

emails into California. Id. (Schaible, Supp. Decl. at ¶¶ 8, 11, 13). Plaintiff has established little more

than the fact that Nextrade has a website which is viewable from within California. The mere fact

that a defendant has a website which is accessible by residents in the forum state, without more, is

insufficient to establish the necessary minimum contacts for specific personal jurisdiction. See,

Schwarzenegger, 374 F.3d at 801-802. 

Next, Plaintiff contends that Nextrade has distributed its products in California and that the

Court has personal jurisdiction on this basis. However, nothing before the Court suggests that this is

the case. To the contrary, Nextrade has declared that it does not have any dealers, distributors, or

sales representatives in California, and has never received a request to download a trial version of its

product from a California resident. (Schaible, Supp. Decl. at ¶¶ 6,8). Accordingly, the Court finds

that it does not have personal jurisdiction over Nextrade on this basis.

Finally, Plaintiff argues that even if Defendant has not sold products to California residents,

other factors justify the existence of personal jurisdiction. Plaintiff asserts that Defendant has a

“wholly owned subsidiary” in California called NexTrade, Inc., to which Defendant has “almost

certainly licensed” its products. (Opposition at 8). Again, the record before the Court contradicts

Plaintiff’s allegations. It is clear from the evidence that the California corporation that Plaintiff

asserts is Nextrade’s “wholly owned subsidiary” is an unrelated corporation in an unrelated industry

with a similar name. (Schaible, Supp. Decl. at ¶ 5). 

Plaintiff has failed to meet its burden in creating a prima-facie showing that Defendant has

purposely availed himself of the forum state of California. Plaintiff’s allegations of contacts

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between Nextrade and California are unsupported by the evidence. Accordingly, the Court cannot

exercise personal jurisdiction over defendant and must dismiss this action.

// // //

// // //

// // //

CONCLUSION

For the foregoing reasons, the Court GRANTS Defendant’s motion to dismiss for lack of

personal jurisdiction. The clerk is directed to terminate any pending matters and to close the file. 

IT IS SO ORDERED.

Dated: February 1 , 2006 

MARTIN J. JENKINS

UNITED STATES DISTRICT JUDGE

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