United States District Court, D. Colorado
OTTER PRODUCTS, LLC, and TREEFROG DEVELOPMENTS, INC., Plaintiff,
PHONE REHAB, LLC, MOSHE ATON, ALEX DEEB, and JOHN DOES 1-10, Defendants.
RECOMMENDATION OF UNITED STATES MAGISTRATE
MICHAEL E. HEGARTY, UNITED STATES MAGISTRATE JUDGE.
the Court is Defendants’ Motion to Dismiss [ECF 37].
Pursuant to 28 U.S.C. § 636(b)(1)(A) and D.C. COLO.
L.Civ.R. 72.1(c), the motion has been referred to this Court
for a report and recommendation.
their Complaint, Plaintiffs allege Defendants’ sale of
Otterbox and LifeProof products through the website,
www.Amazon.com, (1) violates the Lanham Act, 15 U.S.C. §
1114 and 15 U.S.C. § 1125, regarding trademark
infringement; (2) violates 15 U.S.C. § 1125(a)(1)(A)
regarding unfair competition; (3) violates 15 U.S.C. §
1125(a)(1)(B) regarding false advertising; (4) violates 15
U.S.C. § 1125(c) regarding trademark dilution; (5)
constitutes common law trademark infringement; (6) is a
deceptive trade practice in violation of Colo. Rev. Stat.
§ 6-1-105; and (7) tortiously interferes with
Plaintiffs’ contract and business relations.
See Am. Compl., ECF 34. On April 11, 2019,
Defendants filed the present motion to dismiss for the
Court’s lack of personal jurisdiction and for the
Plaintiffs’ failure to state a claim. The Court heard
argument on September 19, 2019 and, for the reasons that
follow, respectfully recommends that the Honorable Raymond P.
Moore deny Defendants’ motion.
Statement of Facts
following are relevant factual allegations (as opposed to
legal conclusions, bare assertions, or merely conclusory
allegations) made by Plaintiffs in their Amended Complaint,
which are taken as true for analysis under Fed.R.Civ.P.
12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009).
manufacture and sell cases and accessories for electronic
devices. Am. Compl. ¶ 21, ECF 34. Plaintiffs’
brand names and logos are recognized by consumers, and their
names are associated with high quality, reliable, and durable
products. Id. ¶¶ 29-30. Plaintiffs sell
their products exclusively through their own website and
through a network of authorized distributors and resellers.
Id. ¶ 22. For the purpose of protecting their
respective brands, Plaintiffs have registered trademarks with
the United States Patent and Trademark Office
(“PTO”). Id. ¶¶ 23-24. Through
their extensive quality control processes, Plaintiffs ensure
the safety and satisfaction of customers and maintain the
integrity of their positive business reputation. Id.
¶ 22. However, the explosion of internet retail sales
has made it difficult for Plaintiffs to monitor the
unauthorized sale of their products through online markets,
such as www.Amazon.com. Id. ¶¶ 33-35.
Accordingly, Plaintiffs audit their authorized online sellers
to ensure they conform to Plaintiffs’ strict quality
control requirements. Id. ¶ 108. For example,
to be considered an authorized seller, the genuine products
sold are required to have a limited warranty. Id.
¶ 112. Plaintiffs assert that their quality controls and
the existence of a warranty are material for consumer
satisfaction. Id. ¶¶ 107 and 117.
sell Plaintiffs’ products through their online
marketplace on www.Amazon.com. Id. ¶ 125.
Defendants are not authorized sellers, and the products they
sell are not subject to Plaintiffs’ quality control
system and do not come with a warranty. Id. ¶
128. However, through Amazon.com, Defendants advertise the
products they are selling as “new.” Id.
¶ 189. “New” products on Amazon.com are
required to come with the “original
manufacturer’s warranty.” Id.
¶¶ 50-69 and 132-152.
of Plaintiffs’ products have submitted numerous
negative reviews on www.Amazon.com, and Plaintiffs attribute
at least some of the negative reviews to Defendants’
sales. Id. ¶¶ 131-152. These
negative reviews have caused damage to Plaintiffs’
reputation and sales. Id. Plaintiffs sent multiple
cease and desist letters informing Defendants that their
conduct was harming the Plaintiffs in Colorado. Id.
¶¶ 192-198. Plaintiffs’ attempts to resolve
this matter prior to filing this suit were unsuccessful.
Findings of Fact
Court held an evidentiary hearing on Defendants’
request for dismissal based on the Court’s purported
lack of personal jurisdiction. See Cudd Pressure Control,
Inc. v. Cornelius, 79 F.3d 1156 (10th Cir. 1996)
(“We … review findings of fact made after an
evidentiary hearing for clear error.”) (citing Fed.
Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170,
173 (10th Cir. 1992)). The Court finds the following facts
based on the hearing and evidence presented.
Defendants made 267 sales of 341 of the Plaintiffs’
products in the State of Colorado between May 2018 and May
2019. Pl. Ex. 1, ECF 57-1.
Defendants made 1011 sales of 1226 products in the State of
Colorado between May 2018 and May 2019. Pl. Ex. 2, ECF 57-2.
Defendants represented that the number of sales of their
products in Colorado totaled less than 2% of their sales
nationwide during the same period. See Pl. Ex. 3,
Defendants purchased Plaintiffs’ products primarily
from a wholesaler, Reagan Wireless. See Def. Exs.
B-J, ECF 57-4 through 57-12.
Dismissal Pursuant to Fed.R.Civ.P. 12(b)(2)
to resolve cases on the merits requires ... authority over
the parties (personal jurisdiction), so that the
court’s decision will bind them.” Gadlin v.
Sybron Int’l Corp., 222 F.3d 797, 799 (10th Cir.
2000) (quoting Ruhrgas AG v. Marathon Oil Co., 526
U.S. 574, 577 (1999)). “[W]hen the court’s
jurisdiction is contested, the plaintiff has the burden of
proving jurisdiction exists.” Wenz v. Memery
Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). When
“personal jurisdiction is assessed in an evidentiary
hearing . ., the plaintiff generally must establish, by a
preponderance of the evidence, that personal jurisdiction
exists.” Dudnikov v. Chalk & Vermilion Fine
Arts, Inc., 514 F.3d 1063, 1070 n.4 (10th Cir. 2008)
Dismissal Pursuant to Fed.R.Civ.P. 12(b)(6)
purpose of a motion to dismiss under Fed.R.Civ.P. 12(b)(6) is
to test the sufficiency of the plaintiff’s complaint.
Sutton v. Utah State Sch. For the Deaf & Blind,
173 F.3d 1226, 1236 (10th Cir. 2008). “To survive a
motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Plausibility, in the context of a motion to dismiss,
means that the plaintiff pled facts which allow “the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
Twombly requires a two-prong analysis. First, a court
must identify “the allegations in the complaint that
are not entitled to the assumption of truth, ” that is,
those allegations which are legal conclusions, bare
assertions, or merely conclusory. Id. at 679.
Second, the Court must consider the factual allegations
“to determine if they plausibly suggest an entitlement
to relief.” Id. at 681. If the allegations
state a plausible claim for relief, such claim survives the
motion to dismiss. Id. at 680.
refers “to the scope of the allegations in a complaint:
if they are so general that they encompass a wide swath of
conduct, much of it innocent, then the plaintiffs have not
nudged their claims across the line from conceivable to
plausible.” S.E.C. v. Shields, 744 F.3d 633,
640 (10th Cir. 2014) (quoting Khalik v. United Air
Lines, 671 F.3d 1188, 1191 (10th Cir. 2012)). “The
nature and specificity of the allegations required to state a
plausible claim will vary based on context.” Safe
Streets All. v. Hickenlooper, 859 F.3d 865, 878 (10th
Cir. 2017) (quoting Kan. Penn Gaming, LLC v.
Collins, 656 F.3d 1210, 1215 (10th Cir. 2011)). Thus,
while the Rule 12(b)(6) standard does not require that a
plaintiff establish a prima facie case in a complaint, the
elements of each alleged cause of action may help to
determine whether the plaintiff has set forth a plausible
claim. Khalik, 671 F.3d at 1191.
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. The
complaint must provide “more than labels and
conclusions” or merely “a formulaic recitation of
the elements of a cause of action, ” so that
“courts ‘are not bound to accept as true a legal
conclusion couched as a factual allegation.’”
Twombly, 550 U.S. at 555 (quoting Papasan v.
Allain, 478 U.S. 265, 286 (1986)). “Determining
whether a complaint states a plausible claim for relief will
. . . be a context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Iqbal, 556 U.S. at 679. “[W]here
the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, ” the
complaint has made an allegation, “but it has not shown
that the pleader is entitled to relief.” Id.
(quotation marks and citation omitted).
defendant seeks dismissal for both lack of jurisdiction and
failure to state a claim, courts typically must decide first
the jurisdiction question, since the Rule 12(b)(6) challenge
would be moot if the court lacked personal jurisdiction.
See Manchus v. Conklin, 922 F.Supp. 1501,
1506 (D. Kan. 1996) (citing Moir v. Greater Cleveland
Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir.
Personal Jurisdiction Over the Defendants
Due Process Clause of the Fourteenth Amendment constrains a
State’s authority to bind a nonresident defendant to a
judgment of its courts.” Walden v. Fiore, 571
U.S. 277, 134 (2014). The law of the forum state and
constitutional due process limitations govern personal
jurisdiction in federal court. Intercon, Inc. v. Bell
Atl. Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th
Cir. 2000); see Fed. R. Civ. P. 4(k)(1)(A).
Colorado’s long-arm statute, Colo. Rev. Stat. §
13–1–124, extends jurisdiction to the
Constitution’s full extent. Benton v. Cameco
Corp., 375 F.3d 1070, 1075 (10th Cir. 2004); Mr.
Steak, Inc. v. District Court, 194 Colo. 519, 574 P.2d
95, 96 (1978) (en banc). Thus, the personal jurisdiction
analysis here is a single due process inquiry. See
Benton, 375 F.3d at 1075.
evaluating personal jurisdiction under the due process
clause, the Tenth Circuit conducts a two-step analysis. At
the first step, the court examines “whether the
non-resident defendant has ‘minimum contacts’
with the forum state such ‘that he should reasonably
anticipate being haled into court there.’” TH
Agric. & Nutrition, LLC v. Ace European Grp., Ltd.,
488 F.3d 1282, 1287 (10th Cir. 2007) (citations omitted). If
the defendant has sufficient contacts, the court then asks
whether “exercise of jurisdiction over the defendant
offends ‘traditional notions of fair play and
substantial justice, ’” that is, whether the
exercise of jurisdiction is “reasonable” under
the circumstances of a given case. Id. (citations
omitted). “This analysis is fact specific.”
ClearOne Commc’ns., Inc. v. Bowers, 643 F.3d
735, 763 (10th Cir. 2011) (quoting Emp’rs Mut. Cas.
Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1159 (10th
“minimum contacts” test may be met pursuant to
either of two ways – general jurisdiction or specific
jurisdiction. Plaintiffs in this case have asserted the
Court’s specific personal jurisdiction over the
Defendants. The Supreme Court has articulated the criteria
for establishing specific jurisdiction as follows: “The
inquiry whether a forum State may assert specific
jurisdiction over a nonresident defendant ‘focuses on
the relationship among the defendant, the forum, and the
litigation.’” Walden, 571 U.S. at 283-84
(quoting Keeton v. Hustler Magazine, Inc., 465 U.S.
770, 775 (1984)). The “defendant’s suit-related
conduct must create a substantial connection with the forum
state, ” and “the relationship must arise out of
contacts that the defendant himself creates with the
forum State”... with the “minimum contacts
analysis look[ing] to the defendant’s contacts with the
forum State itself, not the defendant’s contacts with
persons who reside there.” Id. at 284 (citing
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985) and Int’l Shoe Co. v. State of Wa., 326