Source: http://ct.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180301_0000246.DCT.htm/qx
Timestamp: 2019-04-20 08:49:44+00:00

Document:
CK PRODUCTS LLC and CENTRAL INVESTMENT LLC, Defendant.
Plaintiff, Confectionery Arts International, LLC ("CAI") filed this action against Defendants CKP Products LLC ("CKP") and Central Investment LLC ("CI") on December 9, 2016 alleging trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114(a) (Count One), unfair competition, false designation of origin and false or misleading representation of fact in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count Two), unfair competition and misappropriation in violation of Connecticut common law (Count Three) and unfair competition and trade practices under the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a (Count Four). Defendants now move to dismiss the Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction over both CKP and CI and Fed.R.Civ.P. 12(b)(3) because this Court is not an appropriate venue for Plaintiffs lawsuit under 28 U.S.C. § 1391. (Def.'s Mem. Supp. Mot. to Dismiss ("Def.'s Mot. to Dismiss") [Doc. # 28] at 1.) For the reasons that follow, Defendants' Motion is granted insofar as it seeks dismissal of CI, but denied in all other respects.
CI is a privately-held, Cincinnati-based limited liability company that manages a portfolio of investments, including directing private equity investments, for the business of its members. (See Ex. 1 (Martin Decl.) to Def.'s Mot. to Dismiss [Doc. # 29] ¶ 3.) CI maintains an office in Cincinnati, Ohio and has no offices, corporate assets, or employees in Connecticut. (Id. ¶ 5). CKP is a manufacturer and wholesale distributor in the candy making, cake decorating, and commercial baking industries. (Id. ¶ 8). CKP maintains an office, production, and distribution facility in Fort Wayne, Indiana. (Id. ¶ 9). CKP has no offices, corporate assets, or employees in Connecticut. (Id. ¶ 11).
As a wholesale distributor, CKP does not directly deal with any end customer and sells to resellers that, prior to purchasing any CKP products, must demonstrate that they are businesses. (Id. ¶ ¶ 33-35). Typically, the businesses that purchase products from CKP resell them to individual customers or use the products as part of a larger bakery process. (Id. ¶ 37). However, CKP does not control the advertising or sales activity of any of its reseller customers. (Id. ¶¶ 37, 41). CKP does not track the resale of its products by any resellers, including those on e-commerce sites like Amazon and eBay. (Id. ¶ 37).
CKP maintains a website that allows a user to locate a potential retail reseller of its product. (Martin Decl. ¶ 38). However, this search function does not identify whether a given retailer carries any particular item, let alone the disco dust product at issue in this lawsuit. (Id.). CKP does not track any sales from those retail resellers and does not have its own storefronts. (Id. ¶ 37). Once a customer registers with CKP, orders can be placed in one of three ways. First, the customer can fax an order request to CKP's office in Indiana. (Id. ¶ 36a). Second, the customer can call the Indiana office and speak to a sales representative directly. (Id. ¶ 36b). Finally, the customer can place an order through CKP's website. (Id. ¶ 36c). CKP manages its website in Indiana and, to the extent that orders are received through its website, CKP processes those orders at the Indiana office. (Id. ¶ 30).
In 2005, Defendant CKP was acquired by Defendant CI, an Ohio limited liability company. (Am. Compl. ¶ 19.) At that point, while maintaining its facility in Indiana, Defendant CKP also became an Ohio limited liability company (Id. ¶ 4). CKP and CI are separate and distinct limited liability companies. (Martin Decl. ¶ 14). While CI owns equity in CKP, CKP has its own, separate employees that manage CKP's business. (Id. ¶ 15). Although CKP's General Manager reports to management at CI periodically, CI is not involved, in anyway, with the day-to-day manufacturing and sale processes of CKP. (Id. ¶ 16).
In July 2015, Defendant CKP received a trademark cease and desist letter from a German corporation, SE Tylose GmbH & Co. KG about Tylose Powder. (Martin Decl. ¶ 20.) At that point, Plaintiff was contacted by Patrick Kenney, whose email signature identified himself as the "Purchasing Manager" for CI. (Czerczak Aff. ¶¶ 15, 17-21; Ex. B (Email Exchange) to PL's Opp'n [Doc. # 33-2]; Martin Aff. ¶¶ 20-27.).
In 2016, decorative disco dust product sales in Connecticut by CKP- including any sale of DISCO GLITTER - amounted to only 0.6% of the total disco dust product sales nationwide. (Martin Decl. ¶ 43). As of March 31, 2017, CKPS's DISCO GLITTER disco dust product line sales in Connecticut accounted for 1% of total product's sales to CKP's direct customers. (Id. ¶ 44). Over the past three years and first three months of 2017, CKP's total revenue from sales of all products into Connecticut is less than 2.5% of total revenue nationwide. (Id. ¶ 45).
"'On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant.'" Quinn v. Fishkin, 117 F.Supp.3d 134, 138 (D. Conn. 2015) (quoting Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84F.3d 560, 566-67 (2d Cir. 1996)). In order to survive such a motion, the "plaintiff must make a prima facie showing that jurisdiction exists." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013) (internal quotation marks omitted). "In evaluating whether the requisite showing has been made, [courts] construe the pleadings and any supporting materials in the light most favorable to the plaintiff." Id.
"To determine personal jurisdiction over a non-domiciliary in a case involving a federal question, the Court must engage in a two-step analysis." Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). First, the Court applies "the forum state's long-arm statute." Id. "If the long-arm statute permits personal jurisdiction, the second step is to analyze whether personal jurisdiction comports with the Due Process Clause of the United States Constitution." Id. at 164.
[A] court may exercise personal jurisdiction over any nonresident individual, . . . who in person or through an agent: (1) Transacts any business within the state ... [or] (3) commits a tortious act outside the state causing injury to person or property within the state ... if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.
Conn. Gen. Stat. § 52-59b.
"[U]nder § 52-59b (a)(1), a court possesses personal jurisdiction over a nonresident individual with respect to a cause of action arising from any business transacted in this state by that individual." Ryan v. Cerullo, 282 Conn. 109, 118 (2007). The Connecticut Supreme Court has interpreted the phrase "transacts any business within the state" to include "a single purposeful business transaction." Zartolas v. Nisenfeld, 440 A.2d 179, 181 (Conn. 1981); see also; Avant Capital Partners, LLC v. Strathmore Dev. Co. Michigan, LLC, No. 3:12-CV-1194 (VLB), 2013 WL 5435083, at *3 (D. Conn. Sept. 30, 2013). In determining whether a business transaction qualifies as purposeful, courts do not apply a rigid formula but rather balance "public policy, common sense, and the chronology and geography of the relevant factors." Harris v. Wells, 832 F.Supp. 31, 34 (D. Conn. 1993) (quoting Zartolas, 440 A.2d at 182). Courts are instructed to examine the "nature and quality, rather than the amount of Connecticut contacts to determine whether there was purposeful activity." Avant Capital Partners, LLC, 2013 WL 5435083, at *3.
Defendants argue that Plaintiff cannot establish the Court's personal jurisdiction over CKP for "transacting business" in Connecticut because less than 0.6% of its decorative glitter disco dust product sales and only 2.5% of its overall sales of all products over the past three and a quarter years occurred in Connecticut. (Def.'s Mot. to Dismiss at 12.) However, Defendants completely ignore Zartolas's "single purposeful business transaction" standard, and at oral argument counsel conceded that under this standard the long arm statute reaches CKP's conduct. Thus, because Plaintiff has established personal jurisdiction over CKP under the long-arm statute, the Court will determine (infra) whether personal jurisdiction over CKP also comports with the Due Process Clause of the Constitution. See Chloe, 616 F.3d at 163.
Plaintiff relies on the incident involving Patrick Kenney, Purchasing Manager for Defendant CI, in which he contacted Plaintiff about a trademark cease and desist letter that CKP had received from SE Tylose GmbH & Co. KG regarding Plaintiffs Tylose Powder product, and his subsequent negotiation with Plaintiff via telephone and email regarding the return to Plaintiffs facility in New Britain, Connecticut of 8, 293 bottles of Tylose Powder product that Defendant CKP had purchased. (Czerczak Aff. ¶¶ 15-18; Martin Decl. ¶¶ 20-23.) CKP thereafter elected to cease purchasing the Tylose Powder from CAI and CAI issued a credit memo for the returned product, which could only be used to purchase other products from CAI. (Czerczak Aff. ¶¶ 17-19; Martin Decl. ¶ 27.) Defendant CKP compensated Defendant CI for the work Mr. Kenney did for CKP. (Martin Decl. ¶¶ 23, 26, 28).

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