SAYLOR, District Judge.
This is a trademark infringement action brought by plaintiffs Sun Life Assurance Company of Canada ("SLACC") and its American affiliate (Sun Life Assurance Company of Canada (U.S.)) ("SLACCUS") against a New Jersey bank holding company, Sun Bancorp, Inc. ("SBI"), and its affiliate, Sun Financial Services ("SFS"). SLACC and its affiliate own and use trademarks containing the term "Sun" in connection with financial and insurance services, and contend that defendants' use of the mark "Sun Financial Services" infringes on their trademark rights. SLACC also opposes SBI's application to trademark "Sun Wealth Management."
SLACC filed this action on November 14, 2011. SBI and SFS have moved to dismiss the complaint for lack of personal jurisdiction, pursuant to Fed.R.Civ.P.
The facts are stated as alleged in the amended complaint and as included in subsequent filings to the extent that they are uncontested.
Plaintiff SLACC is a Canadian corporation with a principal place of business in Toronto, Ontario. (Am. Compl. ¶ 1). SLACC has been licensed to do business in Massachusetts since 1926, and regularly conducts business in Massachusetts. (Am. Compl. ¶ 1). Plaintiff SLACC-US is a Delaware corporation with a principal place of business in Wellesley Hills, Massachusetts. (Am. Compl. ¶ 2).
Defendants are New Jersey corporations with principal places of business in Vineland, New Jersey. (Am. Compl. ¶ 3). SBI is a bank holding company, whose principal subsidiary is Sun National Bank. SFS is a limited liability company owned by Sun National Bank. (See Pl. Opp. 3). Sun National Bank has 65 locations in New Jersey and two offices in Pennsylvania; it has no offices in Massachusetts. (Def. Mot. 5). Neither SBI nor SFS are registered to do business in Massachusetts. (Def. Mot. 5).
SLACC maintains an insurance group sales office in Massachusetts. (Am. Compl. ¶ 11). SLACC-US employs more than 1500 people at its headquarters in Massachusetts. (Am. Compl. ¶ 11). Together with their affiliates, they have continuously used trademarks containing the term "Sun" in connection with financial and insurance services in the United States for more than 100 years. (Am. Compl. ¶ 10). Plaintiffs own the following United States trademarks in connection with financial services: "Sun Life"; "Sun Life Financial"; "Sun Life Financial Masters"; "Sun Income Riser"; "Sun Capital"; "Sun Accumulator"; "Sunadvisor"; "Sun Capital Advisers LLC"; "Sun Universal Protector"; "Sun Survivorship UL"; and "Sunexcel." (Am. Compl. ¶¶ 15-16). According to the complaint, each of these marks is widely recognized by the general consuming public in the United States as a designation of the source of SLACC services. (Am. Compl. ¶ 19).
SBI and SFS offer financial services throughout the United States, including Massachusetts, under the trade names "Sun National Bank" and "Sun Bancorp." (Am. Compl. ¶ 23). SBI and SFS use the internet to promote sales of services under the marks "Sun National Bank," "Sun Financial Services," and "Sun Home Loans," through the website https://www.sunnbnj.com/home/personal, which is available to consumers throughout the United States, including consumers in Massachusetts. (Am. Compl. ¶ 24). Sun National Bank, rather than SBI or SFS, owns and operates the website. (See Pl. Opp. 3; Def. Rep. 1-2). The only specific reference to Massachusetts on the website occurs within a drop-down menu of all fifty states on a customer information form. (See Pl. Opp. 8-9).
SBI and SFS have a contractual relationship with Computershare Investor Services, LLC ("Computershare"), which acts as a transfer agent. (Id. at 4). Computershare has an office in Massachusetts. (Id.).
SBI filed a federal trademark application for the mark "Sun Wealth Management" on February 5, 2009, in connection with the following services: "`promotion of financial and insurance services of others in areas of life, health, disability, long-term care, property and casualty and business and income protection insurance; business
On November 14, 2011, plaintiffs filed this action alleging claims against SBI and SFS for (1) trademark infringement in violation of 15 U.S.C. § 1114 et seq.; (2) false designation of origin and unfair competition arising under the Lanham Act, 15 U.S.C. § 1125(a); (3) federal dilution arising under 15 U.S.C. § 1125(c); and (4) violation of trademark rights under the common law. (Compl. ¶ 4).
SBI and SFS have moved to dismiss the action for lack of personal jurisdiction and lack of venue pursuant to Fed.R.Civ.P. 12(b)(2) and (3). On April 11, plaintiffs filed an amended complaint. On April 25, defendants moved a second time to dismiss the action pursuant to Fed.R.Civ.P. 12(b)(2) and (3).
The exercise of personal jurisdiction over a defendant must be both authorized by statute and consistent with the due process requirements of the United States Constitution. Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 712 (1st Cir.1996); Intech, Inc. v. Triple "C" Marine Salvage, Inc., 444 Mass. 122, 125, 826 N.E.2d 194 (2005); Good Hope Indus., Inc. v. Ryder Scott, Co., 378 Mass. 1, 5-6, 389 N.E.2d 76 (1979). Furthermore,
United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir.2001) (citations and quotations omitted).
The plaintiff bears the burden of showing that the court has personal jurisdiction over the defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir.2002). A district court faced with a motion to dismiss under Rule 12(b)(2) may choose among several methods for determining whether the plaintiff has met its burden: the "prima facie" standard, the "preponderance-of-the-evidence" standard, or the "likelihood" standard. Id. at 50-51, 51 n. 5; Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-47 (1st Cir. 1995); Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-78 (1st Cir.1992).
Where, as here, a district court considers a motion to dismiss for lack of personal jurisdiction without first holding an evidentiary hearing, the prima facie standard governs its determination. Swiss American,
The Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A, § 3, states in relevant part:
Mass. Gen. Laws ch. 223A, § 3.
As noted, the principal activities of defendants in Massachusetts consist of (1) the operation of a website open to Massachusetts residents (and residents of the other 49 states) and (2) the presence of a transfer agent. The Supreme Judicial Court addressed personal jurisdiction in the context of internet-based activities in Roberts v. Legendary Marine Sales, holding that neither subsection (a) nor subsection (d) of the long-arm statute extends jurisdiction over an out-of-state defendant who has engaged in a single transaction via the internet with a Massachusetts resident. 447 Mass. 860, 863, 857 N.E.2d 1089 (2006).
As to subsection (a), the Roberts court held that the sale of a single boat by a dealership to a buyer in Massachusetts did not amount to "transacting any business in this Commonwealth," because the deal "was an isolated [transaction] lacking a
These principles also preclude application of subsection (a) in this case. Defendants do not specifically target Massachusetts residents as prospective banking clients. In fact, the only alleged mention of Massachusetts by defendants is the inclusion of the Commonwealth as one of fifty options in a drop-down menu on a website. (Pl. Opp. 8-9). Even if the website activities can be fairly attributed to defendants,
As to subsection (d), the court in Legendary Marine held that a single boat sale was not sufficient to establish that a defendant engaged in a "persistent course of conduct" of doing business in the Commonwealth or that it derived "substantial revenue" in the state. Legendary Marine Sales, 447 Mass. at 865, 857 N.E.2d 1089. Plaintiffs here appear to concede that defendants have not engaged in a "persistent course of conduct," nor have they earned "substantial revenue" from Massachusetts. (See Pl. Opp. 17). Indeed, plaintiffs premise
The core principle of Legendary Marine is that even a website that facilitates an interstate transaction with a Massachusetts resident is insufficient to establish jurisdiction, if the transaction is not the result of purposeful solicitation of business in Massachusetts and if business with Massachusetts residents is an unusual event from the perspective of the defendants. Both of these conditions are present in this case. Defendants are located in New Jersey, and all of the 67 offices and branches of the defendant bank are in either New Jersey or Pennsylvania. Whatever revenue they have earned from Massachusetts residents is likely minimal; at any rate, plaintiffs have not provided any evidence, or even a suggestion, that it is non-negligible. Thus, plaintiffs have not met their burden, under subsection (d), of showing that defendants either engaged in a "persistent course of conduct" related to business in Massachusetts or that they derived "substantial revenue" from customers who reside in Massachusetts.
Contrary to plaintiffs' contention, the actions of defendants' transfer agent do not subject them to jurisdiction under subsection (d).
Thus, because neither of the applicable requirements of ch. 223A, § 3 have been satisfied, jurisdiction cannot be asserted
Because there are insufficient contacts between defendants and the forum state to justify finding personal jurisdiction under the Massachusetts long-arm statute, further constitutional inquiry is unnecessary. However, because several courts in the First Circuit have analyzed personal jurisdiction in cases involving transactions over the internet as questions of due process, this Court will briefly explain why it would reach the same result under that rubric.
Due process requires that a defendant over whom a Massachusetts court will exercise jurisdiction has maintained "minimum contacts" with the state "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Plaintiffs assert that the Court has both general and specific jurisdiction over defendants. The Court disagrees with both assertions.
It is well-established that the Due Process Clause imposes three requirements on the exercise of jurisdiction over out-of-state defendants. Harlow v. Children's Hosp., 432 F.3d 50, 57 (1st Cir.2005). "First, the defendant must have sufficient `minimum contacts' with the [Commonwealth]. For specific jurisdiction, the plaintiff's claim must be related to the defendant's contacts. For general jurisdiction, in which the cause of action may be unrelated to the defendant's contacts, the defendant must have continuous and systematic contacts with the state. Second, for either type of jurisdiction, the defendant's contacts with the state must be purposeful. And third, the exercise of jurisdiction must be reasonable under the circumstances." Id. at 57.
In cases involving interactions through a website that is operated from outside the forum state but that residents in that state can access, the focus of this analysis has been on the "purposeful availment" requirement. See, e.g., Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 35-36 (1st Cir. 2010); Sportschannel New England Ltd. P'ship v. Fancaster, Inc., 2010 WL 3895177, *13-20 (D.Mass. Oct. 1, 2010); BroadVoice, Inc. v. TP Innovations LLC, 733 F.Supp.2d 219, 224-27 (D.Mass.2010); Back Bay Farm, LLC v. Collucio, 230 F.Supp.2d 176, 185 n. 10 (D.Mass.2002). This Court shares the concern articulated in most of these cases that without some limiting principle with regard to purposeful availment, the simple fact that virtually every business now has a website would "eviscerate" the limits on personal jurisdiction over out-of-state defendants. Cossaboon v. Maine Medical Center, 600 F.3d 25, 35 (1st Cir.2010).
In Cossaboon, the First Circuit addressed the question of whether an interactive website, located outside the forum state and directed at residents of every state, may on its own fulfill the requirement of purposeful availment. Id. at 35-36. The court held that something "more" is required to support the exercise of personal jurisdiction based on website activity, and "focused on the extent to which the defendant has actually and purposefully conducted commercial or other transactions with forum state residents through its website." Id. at 35. In finding that it lacked personal jurisdiction over the defendant, the court found it instructive that the defendant's website was available to anyone with internet access, did not target forum state residents in particular, and any advertising on it was no more likely to solicit business in the forum state than
Here, the website describing defendants' services is also available to anyone with internet access, does not target Massachusetts' residents in general, and contains generic advertising that is no more likely to solicit customers in Massachusetts than anywhere else. Though the website perhaps offers more commercial services than that of the defendants in Cossaboon, its primary purpose is still to promote and facilitate the services offered at New Jersey bank locations. For these reasons, the Court finds that defendants have not purposely availed themselves of Massachusetts.
Plaintiffs contend that in trademark infringement cases the injury occurs where the trademark owner is located, and that fact should constitute the "something more" required to show purposeful availment in the website activity context. For support for this proposition, plaintiffs rely on Venture Tape Corp. v. McGills Glass Warehouse, 292 F.Supp.2d 230, 232 (D.Mass.2003). Judge Lasker, writing before the First Circuit had taken up the issue, indeed found that, coupled with a nationally available interactive website, "the fact that the target of the alleged trademark infringement was a Massachusetts company" was enough to support personal jurisdiction. Id. at 233. Judge Lasker's reasoning was based on an analogy between the situs of trademark infringement and the Supreme Court's holding in Calder finding jurisdiction proper in a defamation suit in the state where plaintiff lived and worked. See id.; see also Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984).
That analogy, however, was misguided for three reasons. First, Calder was a defamation case, and the Supreme Court has not yet extended its reasoning to trademark infringement cases. Secondly, Calder requires not only that the effects be felt in the forum state, but also that the defendant's intentional conduct be "calculated to cause injury [there]." Calder, 465 U.S. at 791, 104 S.Ct. 1482. In a trademark infringement case, particularly one such as this involving an established national brand offering services in 49 states, the use of the offending trademark is presumably calculated to hurt plaintiff's business in the state where it is used by the defendant. The location of the trademark holder's headquarters is irrelevant with respect to the customers who are confused or deceived by the infringement, and therefore arguably is not the real situs of the tort. Finally, if the reasoning of Calder did support this expansive view of jurisdiction in internet trademark infringement cases, there would be a substantial risk that defendants would be dragged into court in foreign jurisdictions with which they had little to no actual contact simply because a trademark holder happened to reside there. Accordingly, the Court finds that the reasoning of Venture Tape should not control, particularly when viewed in light of the subsequent First Circuit decision in Cossaboon.
There remains the issue of the transfer agent. Because it is undisputed that the transfer agent's services are unrelated to the trademark matter before the Court, jurisdiction over defendants based upon its actions would have to be general rather than specific. General jurisdiction requires a showing of "continuous and systematic contacts with the state." Harlow, 432 F.3d at 57. For the reasons articulated
In addition, the Court finds that even if defendants had sufficient minimum contacts and purposely availed themselves of Massachusetts, it would be unreasonable for the Court to exercise jurisdiction. In making the reasonableness determination, the court must examine the five "gestalt" factors: (1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies. See, e.g., Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 150 (1st Cir.1995).
Here, the balance of those factors suggests that the exercise of jurisdiction by this Court would be unreasonable. The first factor somewhat favors a New Jersey forum; the choice of Massachusetts as a forum imposes a burden on the defendants, albeit slight. The second factor weighs in favor of the choice of New Jersey. Although Massachusetts has an interest in protecting the trademarks of its companies, so does New Jersey, and while plaintiffs have a wide-reaching national and international presence, defendants do not. This lawsuit raises no novel issues the resolution of which would impact upon or alter Massachusetts law. Nor would the consequences of a decision adverse to SLACC-US directly impact any Massachusetts resident. The third factor, the plaintiff's interest in convenient and effective relief, slightly weighs in favor of Massachusetts. As noted, plaintiffs have a national and international presence, and New Jersey is not a grossly inconvenient forum. The fourth factor weighs in favor of New Jersey; to the extent plaintiffs are requesting any injunctive relief preventing further infringement, that court is much better situated to monitor and enforce a judgment against New Jersey defendants. As for the last factor, both New Jersey and Massachusetts share the same substantive concerns for the protection of trademark rights.
In sum, the because the website featuring defendants' services is not directed at Massachusetts any more than it is at the nation at large, and because plaintiffs have not alleged that defendants have a non-trivial amount of customers or revenue from Massachusetts, the Court does not have personal jurisdiction over defendants either under the Massachusetts long-arm statute or the Due Process Clause.
It is well-established that "a diligent plaintiff who sues an out-of-state corporation and who makes out a colorable case for the existence of in personam jurisdiction may well be entitled to a modicum of jurisdictional discovery if the corporation interposes a jurisdictional defense." United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 625 (1st Cir.Mass.2001) (citing Sunview Condominium Ass'n v. Flexel Int'l, Ltd., 116 F.3d 962, 964 (1st Cir.1997)) (emphasis added). In determining whether plaintiffs have diligently made out a "colorable case" of personal jurisdiction, the Court must determine if they have "present[ed] facts to the court which show why jurisdiction would be found if discovery were permitted." Swiss Am. Bank, Ltd., 274 F.3d 610, 625.
In support of their requests for discovery, plaintiffs rely on two contentions of fact, neither of which is compelling. The first contention is that discovery will uncover a small amount of revenue that defendants earned from Massachusetts. (See Pl. Opp. 17). Plaintiffs apparently concede that defendants' course of conduct in Massachusetts has not been "persistent" and has not generated "substantial" revenue. (See Pl. Opp. 17). However, as the above analysis suggests, to demonstrate personal jurisdiction in this case, plaintiffs would be required to prove more than just a few anomalous transactions by defendants in Massachusetts. The second contention is that discovery will reveal the extent of the defendants' contacts with Computershare, its third-party transfer agent. However, plaintiffs have not alleged that these contacts will be based entirely, or even mostly, in Massachusetts or that they will be sufficient to meet the jurisdictional requirements. Accordingly, this Court is not convinced that a fishing expedition into the facts of this third-party relationship is likely to yield any significant new jurisdictional facts. Accordingly, because the proposed discovery is not likely to change the Court's determination that it lacks personal jurisdiction over the defendants, plaintiff's request for jurisdictional discovery will be denied.
Because the Court finds that it lacks personal jurisdiction over the defendants, it need not reach the issue of whether venue is proper. For practical purposes, however, it should be noted that in the Court's view venue was most likely improper as well.
For all the foregoing reasons, defendants' motion to dismiss for lack of personal jurisdiction is GRANTED.
