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Kitchen Cafe, LLC v. Wolfgang Puck Licensing LLC

United States District Court, D. Colorado

March 23, 2017

THE KITCHEN CAFÉ, LLC, Plaintiff,
v.
WOLFGANG PUCK LICENSING LLC, Defendant.

          ORDER

          Michael E. Hegarty United States Magistrate Judge

         Before the Court is Plaintiff's Motion for Jurisdictional Discovery [filed February 3, 2017; ECF No. 26]. The matter is fully briefed and the Court finds that oral argument, not requested by the parties, will not assist in its consideration of the motion. For the reasons that follow, Plaintiff's motion is granted in part and denied in part.

         I. Background

         Plaintiff (The Kitchen Café or “TKC”) initiated this action on November 18, 2016, asserting claims of trademark infringement under federal and state law against Defendant (Wolfgang Puck Licensing LLC or “WPL”). Compl., ECF No. 1. On January 6, 2017, WPL responded by filing a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction or, in the alternative pursuant to 28 U.S.C. § 1631 to improper venue. Mot., ECF No. 12. With respect to personal jurisdiction, WPL argues TKC has failed to allege sufficient facts demonstrating that WPL is subject to personal jurisdiction in Colorado. In particular, WPL contends it “does no business in Colorado, . . . has no relevant jurisdictional contacts with Colorado . . ., ” and “none of the allegedly infringing acts have occurred in Colorado.” Id. 1.

         With its response to the Motion to Dismiss, TKC filed the present motion asking the Court to permit limited discovery regarding certain jurisdictional issues raised in WPL's motion to dismiss. Specifically, WPL seeks dismissal contending the Court lacks personal jurisdiction over it because the only connection it has with Colorado is as follows, which is insufficient to demonstrate personal jurisdiction:

The only restaurant operating in Colorado using any of WPL's marks is the WOLFGANG PUCK EXPRESS restaurant at the Denver International Airport in Denver, Colorado (“WOLFGANG PUCK EXPRESS at DIA”). (Kaplan Decl. ¶ 25; Essa Decl. ¶ 24.) There are a number of WOLFGANG PUCK EXPRESS branded restaurants in various locations in the United States, but they are generally owned and operated by franchisees which have no direct relationship to WPL. (Essa Decl. ¶ 28.) WPL does not own, operate, directly license or directly control the WOLFGANG PUCK EXPRESS at DIA. (Kaplan Decl. ¶ 25; Essa Decl. ¶ 24-25.)
WPL has licensed the WOLFGANG PUCK EXPRESS mark to Wolfgang Puck Worldwide, Inc. (“Worldwide”) for use with the various restaurants and related services. (Essa Decl. ¶ 23.) Worldwide has sub-licensed the WOLFGANG PUCK EXPRESS mark to Wolfgang Puck Express Licensing, LLC. (“Express”). (Id.) Typically, Express enters into franchise agreements with other entities which own and operate the individual WOLFGANG PUCK EXPRESS branded restaurants. (Id.) The WOLFGANG PUCK EXPRESS at DIA is owned and operated by F&B Concessions, LLC pursuant to a franchise agreement with Express. (Essa Decl. ¶ 24-25.) Neither Worldwide, nor Express own or operate the WOLFGANG PUCK EXPRESS at DIA. (Id.) The entity immediately responsible for quality control pertaining to the WOLFGANG PUCK EXPRESS at DIA is Express. (Essa Decl. ¶ 28.)
* * * *
The existence of the WOLFGANG PUCK EXPRESS at DIA is not sufficient to establish general jurisdiction. WPL has no direct tie to the restaurant. It does not own, operate, directly control, support or conduct business visits to the restaurant. While the franchise uses marks which are ultimately owned by WPL, the marks have been licensed and sub-licensed through two separate corporate entities before reaching the franchisee. WPL does not exercise direct quality control and monitoring of the WOLFGANG PUCK EXPRESS at DIA. Instead, those duties lie with Express, which is party to the contract with the franchisee.

         Motion to Dismiss, ECF No. 12 at 5-6, 12. In light of this argument, TKC “seeks to (1) serve written interrogatories and requests for documents on the three entities discussed in Defendant's Motion, namely Defendant, Wolfgang Puck Worldwide, Inc. and Wolfgang Puck Express Licensing, LLC and (2) depose the two declarants upon whose testimony Defendant relies in its Motion.” Mot. ¶ 3, ECF No. 26.

         WPL counters that TKC cannot base its jurisdictional argument on a single meeting between the companies' principals, which occurred in Los Angeles; TKC seeks discovery of non-parties to this case in contravention of Fed.R.Civ.P. 26(b)(1); and, under the “first to file” rule, the discovery “will be futile because Worldwide and Express have already sued TKC in a different forum, the Northern District of Illinois, seeking a declaration that they are not violating TKC's alleged trademark rights or unfairly competing with TKC” (Resp. 4). Alternatively, WPL argues that any discovery permitted should be limited in scope only to its contacts with Colorado and in measure only to one two-hour Rule 30(b)(6) deposition and six total written discovery requests.

         TKC replies that “WPL cannot proffer limited information on its licensing structure to shield it from personal jurisdiction while, at the same time, preventing The Kitchen from ‘looking behind' that licensing structure. WPL has made its licensing structure squarely relevant to the jurisdictional question by relying on it in its Motion to Dismiss.” Reply 2. Further, TKC asserts that on the same day WPL filed its opposition to the present motion, Worldwide and Express filed a declaratory judgment action in the Northern District of Illinois against TKC seeking an order that they do not infringe TKC's trademark rights and alleging that if the action here is dismissed, “WPL will voluntarily submit to jurisdiction in this District”; TKC contends that such action demonstrates the “tight” relationship of the three entities and “only confirm[s] the need for jurisdictional discovery here.” Id. at 3. TKC also points out that the Illinois action demonstrates WPL's request to transfer venue to Nevada or California is inconsistent with its contention that it would be “burdensome and unfair” to litigate in Colorado. Id. at 4. TKC seeks an order permitting discovery of the relationships of the Puck entities to each other, their activities in Colorado, and the circumstances surrounding “WPL's choice to adopt THE KITCHEN for its own use”; to accomplish this discovery, TKC asks for Rule 30(b)(6) depositions of WPL's declarants, each lasting a full day; a total of thirty written discovery requests; and a confirmation that the discovery “will not count against its fact discovery limits.” Id. at 12-13.

         II. Discussion

         In the Tenth Circuit, either party should be allowed discovery regarding factual issues raised in a motion to dismiss for lack of jurisdiction. Sizova v. Nat'l Inst. of Standards & Tech., 282 F.3d 1320, 1326 (10th Cir. 2002). It is an abuse of discretion to refuse such discovery “where pertinent facts bearing on the question of jurisdiction are controverted” or “where a more satisfactory ...


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