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Federation of State Massage Therapy Boards v. Mendez Master Training Center, Inc.

United States District Court, S.D. Texas, Houston Division

January 24, 2018




         Pending before the Court in this intellectual property dispute are two motions to dismiss. The first motion is Defendants MMTC Texas, Inc.'s (“MMTC Texas) and Tesla Shen Mendez's (“T. Mendez”) Motion to Dismiss and Supporting Authorities (the “12(b)(6) Motion”) [Doc. # 13], wherein MMTC and T. Mendez argue that all claims alleged in Plaintiff Federation of State Massage Therapy Boards' Complaint [Doc. # 1] should be dismissed for failure to state a claim pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure. The second motion is Defendants Jorge Mendez's (“J. Mendez”) and Mendez Master Training Center, Inc.'s (“MMTC”) Motion to Dismiss and Brief in Support (the “Jurisdiction Motion, ” and, together with the 12(b)(6) Motion, the “Dismissal Motions”) [Doc. # 14]. In the Jurisdiction Motion, Defendants J. Mendez and MMTC contend that the Court lacks personal jurisdiction over them and, as a result, all claims in the Complaint against them should be dismissed.[1] Plaintiff filed timely responses to the Dismissal Motions, to which Defendants filed a single reply. See Plaintiff's Opposition to Defendants MMTC Texas's and T. Mendez's Motion to Dismiss (the “12(b)(6) Response”) [Doc. # 15]; Plaintiff's Opposition to Defendants J. Mendez's and MMTC's Motion to Dismiss (the “Jurisdiction Response”) [Doc. # 16]; and Defendants' Response to Plaintiff's Opposition to Motion to Dismiss, with Supporting Authorities [Doc. # 17]. The Dismissal Motions are now ripe for decision. Having considered the parties' briefing, the applicable legal authorities, and all appropriate matters of record, the Court concludes that the Dismissal Motions should be denied, but that Plaintiff must file and amended complaint.

         I. BACKGROUND

         Plaintiff develops and administers the national licensing examination that assesses competence in massage and bodywork in the United States and its territories, known as the Massage & Bodywork Licensing Exam (“MBLEx”). According to Plaintiff, its MBLEx questions are protected by U.S. copyright law and are registered with the U.S. Copyright office. MBLEx results are used by licensing agencies throughout the United State, including in Texas, when evaluating applicants for licensure. These jurisdictions require applicants to obtain a passing result on the MBLEx to obtain a license to practice massage and bodywork.

         The group of Defendants in this case is comprised of two corporate entities and several individuals.[2] The corporate Defendants are MMTC and MMTC Texas. MMTC is a California corporation with its principal place of business in Torrance, California. MMTC Texas is a Texas corporation with its principal place of business in Houston, Texas. Plaintiff alleges in the Complaint that MMTC has “business operations in Texas” at the same address as MMTC Texas. Individual Defendants T. Mendez and J. Mendez are residents of Texas and California, respectively, and are each alleged to be the “owner and operator” of both MMTC and MMTC Texas.

         The core of Plaintiff's Complaint is that Defendants T. Mendez and J Mendez, through their businesses MMTC and MMTC Texas and with the assistance of the other named Defendants, have impermissibly obtained and reproduced MBLEx questions, including the answers thereto, and sold them to prospective MBLEx takers. As a result, Plaintiff argues that Defendants have undermined the integrity of the MBLEx itself and the massage and bodyworks licensing processes that rely on it. Plaintiff contends further than Defendants' publication of its confidential MBLEx questions has forced it to retire hundreds of questions from use in the examination and incur significant costs to develop new, uncompromised exam material.

         II. ANALYSIS

         A. Personal Jurisdiction

         As a threshold issue, Defendants MMTC and J. Mendez have moved to dismiss the Complaint in its entirety on the grounds that they are not subject to personal jurisdiction in Texas. The Court addresses Defendants' jurisdictional arguments in turn.

         1. Legal Standard for Personal Jurisdiction

         Plaintiff has the burden of establishing that this Court has personal jurisdiction over each Defendant. See Int'l Energy Ventures Mgmt., LLC v. United Energy Group, Ltd., 800 F.3d 143, 151 (5th Cir. 2015). On a motion to dismiss, a plaintiff is required to present only a prima facie case for personal jurisdiction. Walk Haydel & Assoc., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008). Where, as here, the Court did not conduct a full evidentiary hearing, the Court will consider the evidence presented by the parties “to help it resolve the jurisdictional issue, ” but will “construe all disputed facts in Plaintiff's favor and consider them along with the undisputed facts.” Id.

         Courts in Texas may exercise personal jurisdiction over a nonresident if “(1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees.” DeJoria v. Maghreb Petroleum Expl., S.A., 804 F.3d 373, 388 (5th Cir. 2015) (citing Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013)). In Texas, the long-arm statute extends to the limits of federal constitutional due process. See Companion Prop. & Cas. Ins. Co. v. Palermo, 723 F.3d 557, 559 (5th Cir. 2013).

         Jurisdiction may be general or specific. Where a defendant has “continuous and systematic general business contacts” with the forum state, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984), the court may exercise “general” jurisdiction over any action brought against that defendant. Id. at 414 n.9. Where contacts are less pervasive, the court may still exercise “specific” jurisdiction “in a suit arising out of or related to the defendant's contacts with the forum.” Id. at 414 n.8. Plaintiff does not assert that the Court has general personal jurisdiction over MMTC or J. Mendez. Therefore, this case presents only the question of specific jurisdiction.

         “Asserting personal jurisdiction comports with due process when (1) the nonresident defendant has minimum contacts with the forum state, and (2) asserting jurisdiction complies with traditional notions of fair play and substantial justice.” DeJoria, 804 F.3d at 388 (citing Moncrief, 414 S.W.3d at 150). A defendant establishes minimum contacts with a state when he purposefully avails himself “of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Id. (citations omitted). “In addition to minimum contacts, due process requires the exercise of personal jurisdiction to comply with traditional notions of fair play and substantial justice.” Id. (quoting Moncrief, 414 S.W.3d at 154).

         2. Personal Jurisdiction over MMTC

         MMTC argues that as a California corporation, it lacks the requisite contacts with Texas to be subject to jurisdiction in this Court. MMTC contends further that to the extent it has any contacts with Texas, those contacts are not sufficiently related to the claims in this lawsuit to warrant the Court's exercise of personal jurisdiction over it. The Court is not persuaded by these assertions.

         In its Complaint, Plaintiff alleges that MMTC has business operations in Texas at the same address as MMTC Texas. Complaint [Doc. # 1], ¶¶ 5-6 at ECF 2. Plaintiff further alleges that MMTC has employees or agents in Texas. See Id. ¶ 7 at ECF 2-3 (alleging that Defendant T. Mendez, a Texas resident, is an “owner, operator, and director” of MMTC); id. ¶ 12 at ECF 3 (alleging that “John Doe” Defendants are agents or employees of MMTC, and that some of those individuals are believed to be residents of Texas). According to the Complaint, Defendant T. Mendez and the “John Doe” Defendants have participated in providing Defendants' purportedly illicit MBLEx-preparation services at a “school” located in Houston, Texas. See Id. ¶ 18 at ECF 5 (“Defendants regularly advertise the sale of MBLEx questions and other fraudulent services, offering to help customers obtain state massage and bodywork licenses in Texas and elsewhere within a mere ten days. Their MBLEx-preparation services are available online and through the mail, as well as in person at their “schools” located in Houston, Texas, and various cities in California.”). There is also an allegation that another agent of MMTC, Defendant Sun, has on at least one occasion attempted to direct a prospective “student” to MMTC's offerings in Texas. See Id. ¶ 53 at ECF 15 (“Defendant Sun told the investigator that Defendants were currently offering live MBLEx preparation classes in Houston and Los Angeles . . . . She also explained that Defendants' classroom building in Houston offers living accommodations for an additional fee.”).

         Although Defendants challenge the veracity of Plaintiff's allegations with respect to MMTC and its agents, Defendants failed to produce any competent evidence in connection with the Jurisdiction Motion that discredits Plaintiff's assertions that MMTC intentionally conducts business in the state of Texas. For example, Plaintiffs have not produced an affidavit from T. Mendez or any another corporate representative of MMTC averring that MMTC has no operations or employees in the state of Texas. Absent such evidence, at this early stage of this case the Court is bound to accept as true the well-pled allegations in Plaintiff's Complaint. Accepting those allegations as true, the Court concludes that Plaintiff has made a prima facie showing that MMTC itself conducts business, including offering MBLEx-preparation services, in the state of Texas and has promoted its Texas-based operations to potential customers. Consequently, Plaintiff ...

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