United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
A. FITZWATER SENIOR JUDGE.
action for trademark infringement and related claims,
defendant Wolfson Berg Limited (“Wolfson Berg”)
moves to dismiss the claims asserted against it by plaintiff
Shippitsa Limited (“Shippitsa”) for lack of
personal jurisdiction, improper venue, and failure to state a
claim on which relief can be granted. For the reasons that
follow, the court concludes that it can exercise personal
jurisdiction over Wolfson Berg, that venue is proper in this
district, and that Shippitsa has failed to state a claim as
to some, but not all, of its causes of action. Accordingly,
the court grants in part and denies in part Wolfson
Berg's motion, and grants Shippitsa leave to replead.
to Shippitsa's complaint, it manufactures a dietary
supplement called Phen375, which it sells through its website
at the domain name phen375.com. Shippitsa is organized under
the laws of the United Kingdom (“UK”), is
registered in Scotland, and maintains its headquarters in
Scotland. It owns the U.S. registered trademark for the
standard characters “PHEN375.” Compl. ¶ 10.
advertises Phen375 online via an “affiliate marketing
network system.” Id. ¶ 16. An affiliate
marketing network is comprised of three types of entities:
advertisers, who sell products or services; affiliates, who
operate websites that attract visitors with their content
(such as product reviews); and an affiliate marketing network
company, which acts as an intermediary between the
advertisers and the affiliates. Affiliates, through the
websites they operate, provide information about the
advertisers' products. They also provide “affiliate
links” that take users to the advertisers' own
websites. P. Resp. App. 047-48. When a user clicks on an
affiliate link and then buys a product from the advertiser,
the affiliate receives a commission on the sale. The
affiliate marketing network company tracks visitors and
coordinates commission payments among companies within the
Shippitsa contracted with now-dismissed defendant MoreNiche
Limited (“MoreNiche”) to join MoreNiche's
affiliate marketing network as an advertiser. Shippitsa
advertised its Phen375 product through MoreNiche's
network until March 2018, when the contract between the two
companies expired. According to Shippitsa, after the contract
expired, certain affiliate websites continued to display
information about Phen375. Instead of linking to Shippitsa's
phen375.com website, however, they instead linked visitors to
a webpage-mixi.mn-operated by MoreNiche. The mixi.mn webpage
consists only of the following visible lines of text:
“Phen375 is no longer available via this link, we will
be redirecting you to an alternative in 5 seconds. If you do
not want us to do that click here.” Compl. ¶ 25.
If a visitor waits five seconds, mixi.mn automatically
“redirect[s]” the visitor, id. ¶
26-that is, mixi.mn causes the visitor's web browser to
connect automatically to another website, see P.
Resp. App. 003.
time Shippitsa filed the instant lawsuit, mixi.mn was sending
users to either of two websites operated by Wolfson Berg:
phenq.com and ph375.com. Wolfson Berg is a company organized
under the laws of Cyprus and is headquartered
there. Through Wolfson Berg's websites, it
sells dietary pills called PhenQ and Ph.375. Like Phen375,
PhenQ and Ph.375 are marketed as weight loss supplements.
Shippitsa identifies a number of similarities between Wolfson
Berg's websites and Shippitsa's own phen375.com
website: “the home pages on the ph375.com and phenq.com
websites both include a picture of a bottle of the product,
blue sans serif text on a white background, and clickable
‘Ingredients,' ‘How it Works,'
‘Testimonials,' ‘FAQ,' and ‘ORDER
NOW' links[.]” Compl. ¶ 22. Shippitsa alleges
that Wolfson Berg uses “a color scheme, package, trade
dress, and promotional and advertising materials” in
connection with PhenQ and Ph.375 that are confusingly similar
to those that Shippitsa uses for Phen375. Id.
sued Wolfson Berg, MoreNiche, and MoreNiche's founder
Andrew Jon Slack (“Slack”),  asserting
federal-law claims for trademark infringement, false
designation of origin, trademark dilution, cybersquatting,
and violations of the Racketeer Influenced and Corrupt
Organizations Act (“RICO”). Shippitsa also brings
Texas-law claims for tortious interference with a prospective
contractual relationship, trademark dilution, and unfair
competition. Wolfson Berg, MoreNiche, and Slack each filed a
motion to dismiss on the grounds of lack of personal
jurisdiction, improper venue, and failure to state a claim on
which relief can be granted. MoreNiche and Slack also filed a
joint motion for Fed.R.Civ.P. 11 sanctions against Shippitsa.
The court granted MoreNiche and Slack's motions to
dismiss for lack of personal jurisdiction and denied their
motion for Rule 11 sanctions. See Shippitsa Ltd. v.
Slack (Shippitsa I), 2019 WL 277613, at *10
(N.D. Tex. Jan. 22, 2019) (Fitzwater, J.). But the court
deferred deciding Wolfson Berg's motion to dismiss, and
instead ordered limited discovery and supplemental briefing
on the question of personal jurisdiction.
discovery is now complete, and the parties have submitted
their supplemental briefing. Wolfson Berg's motion to
dismiss is ripe for decision.
court first considers Wolfson Berg's motion to dismiss
under Rule 12(b)(2) for lack of personal jurisdiction.
a nonresident defendant presents a motion to dismiss for lack
of personal jurisdiction, the plaintiff bears the burden of
establishing the district court's jurisdiction over the
nonresident.” Stuart v. Spademan, 772 F.2d
1185, 1192 (5th Cir. 1985) (citing Thompson v. Chrysler
Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985);
D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg,
Inc., 754 F.2d 542, 545 (5th Cir. 1985)). The
determination whether a federal district court has in
personam jurisdiction over a nonresident defendant is
bipartite. The court first decides whether the long-arm
statute of the state in which it sits confers personal
jurisdiction over the defendant. If it does, the court then
resolves whether the exercise of jurisdiction is consistent
with due process under the United States Constitution.
See Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th
Cir. 1999). Because the Texas long-arm statute extends to the
limits of due process, the court need only consider whether
exercising jurisdiction over the defendant would be
consistent with the Due Process Clause of the Fourteenth
Amendment. See id.; Alpine View Co. v. Atlas
Copco AB, 205 F.3d 208, 214 (5th Cir. 2000).
The Due Process Clause of the Fourteenth Amendment permits
the exercise of personal jurisdiction over a nonresident
defendant when (1) that defendant has purposefully availed
itself of the benefits and protections of the forum state by
establishing “minimum contacts” with the forum
state; and (2) the exercise of jurisdiction over that
defendant does not offend “traditional notions of fair
play and substantial justice.” To comport with due
process, the defendant's conduct in connection with the
forum state must be such that it “should reasonably
anticipate being haled into court” in the forum state.
Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.
1999) (footnotes omitted) (first quoting Int'l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945); then
quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)). To determine whether
exercising jurisdiction would satisfy traditional notions of
fair play and substantial justice, the court examines (1) the
defendant's burden, (2) the forum state's interests,
(3) the plaintiff's interests in convenient and effective
relief, (4) the judicial system's interest in efficient
resolution of controversies, and (5) the states' shared
interest in fundamental social policies. Ruston Gas
Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421 (5th
defendant's contacts with the forum may support either
specific or general jurisdiction over the defendant.
Mink, 190 F.3d at 336. “For the court properly
to assert specific personal jurisdiction, the defendant must
have ‘purposefully directed' his activities at
residents of the forum, and the litigation must result from
alleged injuries that ‘arise out of or relate to'
the defendant's activities directed at the forum.”
Archer & White, Inc. v. Tishler, 2003 WL
22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.)
(quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 472 (1985)). “General jurisdiction exists
when a defendant's contacts with the forum state are
unrelated to the cause of action but are ‘continuous
and systematic.'” Id. (quoting
Mink, 190 F.3d at 336). “[A] court may assert
jurisdiction over a foreign corporation ‘to hear any
and all claims against [it]' only when the
corporation's affiliations with the State in which suit
is brought are so constant and pervasive ‘as to render
[it] essentially at home in the forum State.'”
Daimler AG v. Bauman, 571 U.S. 117, 122 (2014)
(first brackets added) (quoting Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).
Shippitsa argues that this court has specific personal
jurisdiction over Wolfson Berg.
district court usually resolves the jurisdictional issue
without conducting a hearing.” Ham v. La Cienega
Music Co., 4 F.3d 413, 415 (5th Cir. 1993) (footnote
When a court rules on a motion to dismiss for lack of
personal jurisdiction without holding an evidentiary hearing,
it must accept as true the uncontroverted allegations in the
complaint and resolve in favor of the plaintiff any factual
conflicts posed by the affidavits. Therefore, in a no-hearing
situation, a plaintiff satisfies his burden by presenting a
prima facie case for personal jurisdiction.
Latshaw, 167 F.3d at 211 (footnotes omitted).
“This liberal standard, however, does not require the
court to credit conclusory allegations, even if they remain
uncontradicted.” Panda Brandywine Corp. v. Potomac
Elec. Power Co., 2000 WL 35615925, at *2 (N.D. Tex.
Sept. 15, 2000) (Fitzwater, J.) (citing Felch v.
Transportes Lar-Mex SA DE CV, 92 F.3d 320, 326 n.16 (5th
Cir. 1996)), aff'd, 253 F.3d 865, 869 (5th Cir.
2001) (per curiam) (affirming, inter alia, this
conclusion). Nor is the court limited to considering the
facts pleaded in the complaint. See Walk Haydel &
Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235,
241 (5th Cir. 2008). Rather, “the district court may
receive any combination of the recognized methods of
discovery, including affidavits, interrogatories, and
depositions to assist it in the jurisdictional
analysis.” Tendeka, Inc. v. Glover, 2014 WL
978308, at *3 (S.D. Tex. Mar. 12, 2014) (Rosenthal, J.)
(internal quotation marks omitted).
argues that Wolfson Berg has minimum contacts with this forum
on two different grounds: that Wolfson Berg has sold its
PhenQ and Ph.375 products to Texas residents, and that
Wolfson Berg has operated interactive websites through which
it sold these products to Texas residents. Because the latter
ground is sufficient to support this court's exercise of
personal jurisdiction, it will focus its analysis on that
specific jurisdiction is based on online interactions via an
Internet website, the Fifth Circuit is guided by the sliding
scale adopted in Zippo Manufacturing Co. v. Zippo Dot
Com, Inc., 952 F.Supp. 1119, 1124 (W.D. Pa. 1997).
See Am. Eyewear, Inc. v. Peeper's Sunglasses &
Accessories, Inc., 106 F.Supp.2d 895, 900-01 & n.10
(N.D. Tex. 2000) (Fitzwater, J.) (citing Mink, 190
F.3d at 336) (interpreting Zippo). Zippo
requires the court to assess the level of interactivity of
the defendant's website. It prescribes different outcomes
to the personal jurisdiction question depending on which of
following three categories the website falls into: (1) where
a website is nothing more than a passive advertisement, the
court must decline to exercise personal jurisdiction; (2)
where a website facilitates contractual relationships and the
knowing and repeated transmission of computer files over the
internet, personal jurisdiction is proper; and (3) where a
website falls somewhere in between, “the exercise of
jurisdiction is determined by the level of interactivity and
commercial nature of the exchange of information that occurs
on the [w]ebsite.” Mink, 190 F.3d at 336
(quoting Zippo, 952 F.Supp. at 1124). While
interactivity is a significant factor in determining
purposeful conduct when personal jurisdiction is based on
Internet contacts, “internet-based jurisdictional
claims must continue to be evaluated on a case-by-case basis,
focusing on the nature and quality of online and offline
contacts to demonstrate the requisite purposeful conduct that
establishes personal jurisdiction.” Pervasive
Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d
214, 227 (5th Cir. 2012).
and ph375.com fall at least within the middle category of
Zippo. Wolfson Berg admits that its websites
permitted users to submit orders online, to chat with sales
agents, and to track pending orders. This evidence is
sufficient to “establish that the [w]ebsite[s] [did]
more than passively exist for advertising purposes.”
Autoflex Leasing-Dall. I, LLC v. Autoflex LLC, 2017
WL 713667, at *4 (N.D. Tex. Feb. 23, 2017) (Fitzwater, J.).
the middle category of Zippo, Wolfson Berg's
websites can support the exercise of personal jurisdiction
because they were sufficiently interactive and facilitated
the exchange of commercial information. Wolfson Berg's
websites invited users to “ORDER NOW, ” and
offered free shipping to anywhere in the world. Compl.
¶¶ 20-21. The websites also provided a
“Chat” interface that allowed visitors to ask
questions about Wolfson Berg's products. And visitors
could track and follow up on orders that they had already
placed. This court has exercised personal jurisdiction on the
basis of websites with very similar features. See, e.g.,
Tempur-Pedic Int'l, Inc. v. Go Satellite Inc., 758
F.Supp.2d 366, 376 (N.D. Tex. 2010) (Fitzwater, C.J.)
(exercising personal jurisdiction where defendant operated
website through which “residents could ask questions
via live chat, place orders, and continue communicating with
the staff to follow up on shipping and payment”);
Am. Eyewear, 106 F.Supp.2d at 898, 901-02
(concluding that New York-based website had sufficient
contacts to support specific jurisdiction where website
provided online order forms and ways to communicate with
customer service). Wolfson Berg does not contest this
course, merely maintaining interactive websites does not,
without more, establish that Wolfson Berg has the requisite
minimum contacts with Texas. “Under Zippo
personal jurisdiction is based on actual Internet
sales to forum residents, not the mere possibility of
sales.” Springboards to Educ., Inc. v. Families in
Schools, 2017 WL 10434713, at *6 (N.D. Tex. Nov. 15,
2017) (Fitzwater, J.); see also Shippitsa I, 2019 WL
277613, at *5 (collecting cases). The evidence shows that
Wolfson Berg, through its websites, sold its
allegedly-infringing products to 559 consumers in Texas and
172 consumers in the Northern District of Texas between
January 8, 2018 and April 24, 2018. Sales to Texas
constituted 10% of Wolfson Berg's U.S. sales of PhenQ; 3%
of its worldwide sales of PhenQ; 8.18% of its U.S. sales of
Ph.375; and 4.73% of its worldwide sales of Ph.375. These
sales are sufficient to create the requisite minimum
contacts. See, e.g., Tempur-Pedic, 758 F.Supp.2d at
375 (exercising personal jurisdiction on basis of
two admitted online sales to Texas residents);
Am. Eyewear, 106 F.Supp.2d at 898, 901-02
(exercising personal jurisdiction over company on basis of
online sales to Texas, which constituted 0.5% of
defendant's total sales).
Berg could reasonably have anticipated being haled into court
in Texas to answer for its online activities. Wolfson Berg
deliberately offered its PhenQ and Ph.375 products for sale
to consumers all over the world, including consumers in
Texas. Its websites phenq.com and ph375.com included
“English (US)” as a language option and provided
a U.S. telephone number for visitors to call. Compl. ¶
22. Thus Wolfson Berg clearly targeted the U.S. market, which
included Texas. See Tempur-Pedic, 758 F.Supp.2d at
376 (“[Defendant] cannot open itself for business to
every state in the United States and then feign surprise when
it receives an order from a resident of one of the
states.”). Wolfson Berg could have elected not to sell
its products to Texas residents; instead, it sold to hundreds
of Texas residents over the course of just a few months.
See Id. (“[H]ad [defendant] wanted to exclude
certain jurisdictions, it was able to refuse to deal with
certain customers or to turn down any orders after checking
customer addresses.”); Zippo, 952 F.Supp. at
1126-27 (“If [defendant] had not wanted to be amenable
to jurisdiction in Pennsylvania, the solution would have been
simple-it could have chosen not to sell its services to
Pennsylvania residents.”). Wolfson Berg thus
purposefully availed itself of the benefits of doing business
in Texas, such that it should reasonably have anticipated
being haled into court there. Cf. Luv N' Care, Ltd.
v. Insta-Mix, Inc., 438 F.3d 465, 470 (5th Cir. 2006)
(“[M]ere foreseeability or awareness [is] a
constitutionally sufficient basis for personal jurisdiction
if the defendant's product made its way into the forum
state while still in the stream of commerce.” (second
alteration in original) (quoting Ruston, 9 F.3d at
419)). On these facts, the court concludes that Shippitsa has
made out a prima facie case that Wolfson Berg has
minimum contacts with Texas.
court is not persuaded by Wolfson Berg's arguments to the
contrary. Wolfson Berg cites four recent Supreme Court cases
in support of its contention that this court lacks personal
jurisdiction: Bristol-Myers Squibb Co. v. Superior
Court, __U.S.__, 137 S.Ct. 1773 (2017); Walden v.
Fiore, 571 U.S. 277 (2014); Daimler, 571 U.S.
117; and Goodyear, 564 U.S. 915. But these cases are
inapposite. Daimler and Goodyear are both
general jurisdiction cases, whereas Shippitsa argues
in the present case that the court has specific
jurisdiction over Wolfson Berg. See Daimler, 571
U.S. at 121; Goodyear, 564 U.S. at 918.
Walden involved a defendant whose only connection to
the forum state was his interaction in a different
state with the plaintiffs, who were residents of the forum
state. See Walden, 571 U.S. at 288-89.
Shippitsa's theory of personal jurisdiction, in contrast,
is based on Wolfson Berg's contacts with Texas, not on
Wolfson Berg's contacts with Shippitsa-indeed, it appears
to be undisputed that Shippitsa has no physical presence in
Texas. Finally, Bristol-Meyers merely reiterated the
requirement that specific jurisdiction be based on an
“affiliation between the forum and the underlying
controversy, principally, [an] activity or an occurrence that
takes place in the forum State.”
Bristol-Meyers, 137 S.Ct. at 1781 (alteration in
original) (quoting Goodyear, 564 U.S. at 919). For
the reasons discussed below, that requirement is satisfied
Berg contends that specific jurisdiction is lacking because
Shippitsa's claims do not arise from Wolfson Berg's
forum-related contacts. The principal case on which Wolfson
Berg relies is Withdrawal-Ease.com v.
Withdrawalaid.com, 2014 WL 12479407 (W.D. Tex. Dec. 18,
2014). In Withdrawal-Ease the plaintiff sued the
defendant for allegedly using the plaintiff's
intellectual property on the defendant's website. See
Id. at *1. The defendant's only connection to the
forum state was a number of online sales to forum residents.
See Id. at *3. The court held that it lacked
specific personal jurisdiction because the plaintiff's
causes of action “have arisen out of or resulted from
the content of Defendants' website, not from the
Defendants' contacts with Texas.” Id. In
contrast, Shippitsa's claims do arise from
Wolfson Berg's forum-related contacts. The evidence and
Shippitsa's allegations, viewed in the light most
favorable to Shippitsa, show that hundreds of Texas residents
accessed Wolfson Berg's allegedly-infringing websites,
viewed allegedly-infringing content, and were thereby induced
to submit orders for Wolfson Berg's allegedly-infringing
products-orders that Wolfson Berg purposefully chose to fill.
Cf. Cottman Transmission Sys., Inc. v. Martino, 36
F.3d 291, 294 (3d Cir. 1994) (“[A] cause of action for
trademark infringement arises where the passing off
occurs.” (quoting Tefal, S.A. v. Prods. Int'l
Co., 529 F.2d 495, 496 n.1 (3d Cir. 1976))). Wolfson
Berg could reasonably have foreseen being haled into a Texas
court on this basis. There is thus a “constitutionally
adequate nexus, ” Withdrawal-Ease, 2014 WL
12479407, at *4 (quoting ITL Int'l, Inc. v.
Constenla, S.A., 669 F.3d 493, 500 (5th Cir. 2012)),
between Shippitsa's claims and Wolfson Berg's
Berg also argues that the present case is distinguishable
from other Zippo cases because Shippitsa-unlike the
typical Zippo plaintiff-is not a resident of the
forum state. But this is a distinction without a difference.
The Supreme Court has never “required a
plaintiff to have ‘minimum contacts' with
the forum State before permitting that State to assert
personal jurisdiction over a nonresident defendant.”
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779
(1984) (emphasis added). The minimum contacts analysis
instead focuses on “the relationship among the
defendant, the forum, and the litigation.”
Walden, 571 U.S. at 284 (emphasis added) (quoting
Keeton, 465 U.S. at 775). So long as there is a
constitutionally-sufficient relationship among these three
factors, the plaintiff's state of residence is
immaterial. See, e.g., Keeton, 465 U.S. at 772,
779-80. The court concludes, for the reasons discussed, that
such a relationship exists in this case.
court next determines whether exercising personal
jurisdiction over Wolfson Berg would comport with traditional
notions of fair play and substantial justice.
Berg must present a “compelling case” that
jurisdiction is unreasonable and incompatible with
“fair play and substantial justice.” Burger
King, 471 U.S. at 477-78. “It is rare to say the
assertion [of jurisdiction] is unfair after minimum contacts
have been shown.” See Wien Air Alaska, Inc. v.
Brandt, 195 F.3d 208, 215 (5th Cir. 1999) (alterations
in original) (citing Akro Corp. v. Luker, 45 F.3d
1541, 1547 (Fed. Cir. 1995)). Wolfson Berg has not made the
required compelling case.
Berg contends that it would suffer a substantial burden if
forced to “defend itself in a forum almost 11, 000
kilometers from its home.” Wolfson Berg Supp. Resp. 15.
The uncontroverted evidence shows that Wolfson Berg is a
Cyprus company whose employees all reside in Cyprus, and that
maintains all of its records in Cyprus. Wolfson Berg asserts
that it would have to incur significant costs to arrange for
witnesses to travel to Texas; that it structures its affairs
in accordance with Cyprus law; and that it would have to
undertake an additional, expensive legal analysis during
discovery to ensure compliance with the European Union's
stringent General Data Protection Regulation. Turning to the
other Burger King factors, Wolfson Berg argues that
Texas has little interest in a case in which no party is a
Texas resident; that the plaintiff and the judicial system
have no interest in the “efficient” resolution of
this controversy in Texas given that no witnesses or evidence
are located in Texas; and that adjudicating this dispute in a
European forum would not undercut any fundamental social
policies. See Burger King, 471 U.S. at 477-78.
court is sympathetic to the difficulties Wolfson Berg, a
foreign entity, will face defending in this forum. It is
unquestionable, however, that Texas has an interest in
resolving the present controversy. “Texas has an
interest in protecting its consumers from consumer confusion
or deception, and plaintiff [is] suing based on harm to
[its] goodwill and false advertising affecting the Texas
market.” Tempur-Pedic, 758 F.Supp.2d at 377.
The remaining Burger King factors-including the
potential burden on Wolfson Berg-do not add up to a
“compelling case, ” Burger King, 471
U.S. at 477, that the exercise of personal jurisdiction would
be unfair. It is not constitutionally unreasonable to require
a company to defend in a state where the company actively
sells its products. See Luv N' Care, 438 F.3d at
474. The court therefore concludes that it can exercise
personal jurisdiction over Wolfson Berg in this matter.
court next considers Wolfson Berg's motion to dismiss for
improper venue. Because Wolfson Berg has challenged venue,
Shippitsa has the burden of sustaining it. See Davis v.
Billick, 2002 WL 1398560, at *7 (N.D. Tex. June 26,
2002) (Fitzwater, J.). “In the absence of an
evidentiary hearing on the matter, courts will allow a
plaintiff to carry the burden by establishing facts, taken as
true, that establish venue.” Laserdynamics Inc. v.
Acer Am. Corp., 209 F.R.D. 388, 390 (S.D. Tex. 2002).
The uncontroverted facts contained in the plaintiff's
complaint are taken as true, and any factual conflicts
demonstrated in the ...