United States District Court, D. Colorado
OTTER PRODUCTS, LLC, and TREEFROG DEVELOPMENTS, INC., Plaintiffs,
PHONE REHAB, LLC, MOSHE ATON, ALEX DEEB, and JOHN DOES 1-10, individually or as corporate/business entities, Defendants.
Raymond P. Moore Judge
matter is before the Court on the September 27, 2019,
Recommendation of United States Magistrate Judge Michael E.
Hegarty (ECF No. 62) to deny Defendants' Motion to
Dismiss Amended Complaint (ECF No. 37) for lack of personal
jurisdiction and for failure to state a claim. Defendants
have filed an objection to the recommendation (ECF No. 63),
and Plaintiffs have filed a response to the objection (ECF
No. 64). For the reasons below, the Court overrules the
objection, accepts and adopts the recommendation, and denies
the motion to dismiss. The recommendation is incorporated
herein by reference. See 28 U.S.C. §
636(b)(1)(B); Fed.R.Civ.P. 72(b).
to Fed.R.Civ.P. 72(b)(3), this Court reviews de novo any part
of the magistrate judge's recommendation that is properly
objected to. An objection is proper only if it is
sufficiently specific “to focus the district
court's attention on the factual and legal issues that
are truly in dispute.” United States v. One Parcel
of Real Prop., 73 F.3d 1057, 1060 (10th Cir. 1996).
“In the absence of a timely objection, the district may
review a magistrate's report under any standard it deems
appropriate.” Summers v. State of Utah, 927
F.2d 1165, 1167 (10th Cir. 1991).
Civ. P. 12(b)(2) allows a defendant to move to dismiss a
complaint for lack of personal jurisdiction. To defeat such a
motion by establishing specific personal jurisdiction, a
plaintiff must first show that the defendant has
“minimum contacts” with the forum state.
Intercont'l Inc. v. Bell Atl. Internet Sols.,
Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). The
“minimum contacts” standard is met if the
defendant has purposefully directed its activities at
residents of the forum and the litigation results from
alleged injuries that arise out of or relate to those
activities. Id. If the defendant has sufficient
“minimum contacts” with the forum, the Court then
considers whether exercising jurisdiction is consistent with
traditional notions of fair play and substantial justice.
Id. A five-factor test is used to determine whether
the exercise of jurisdiction is reasonable. Id. at
evaluating a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
the Court accepts as true all well-pleaded factual
allegations in the complaint, views those allegations in the
light most favorable to the plaintiff, and draws all
reasonable inferences in the plaintiff's favor.
Brokers' Choice of Am., Inc. v. NBC Universal,
Inc., 757 F.3d 1125, 1136 (10th Cir. 2014); Mink v.
Knox, 613 F.3d 995, 1000 (10th Cir. 2010). The complaint
must allege a “plausible” right to relief.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 n.14
(2007). The Court is “not bound to accept as true a
legal conclusion couched as a factual allegation.”
Id. at 555 (quotation omitted).
manufacture, market, and sell phone cases and other products
under brands that are protected by registered trademarks.
Plaintiffs distribute their products through their website
and through a network of authorized sellers. (ECF No. 34, Am.
Compl. at ¶ 21.) Defendants, who are not authorized
sellers, operate a storefront on the Amazon website known as
“Amazing Gadgets SFL.” (Id. at ¶
3.) Defendant Phone Rehab, LLC buys Plaintiffs' products
from wholesalers and distributors and resells them online.
Defendants Moshe Aton and Alex Deeb are the principals of
Defendant Phone Rehab.
November 2018, Plaintiffs sent Defendants two
cease-and-desist letters, demanding that they stop selling
Plaintiffs' products. Defendants did not respond,
prompting Plaintiff to file this lawsuit. Plaintiffs
complaint asserts seven claims for relief based on trademark
law and other causes of action. Plaintiffs allege, generally,
that Defendants unauthorized sales of their products harm
their brands because the products Defendants sell are not
subject to Plaintiffs' quality control requirements, are
not covered by Plaintiffs' warranty, and have prompted
negative online reviews by customers. (ECF No. 43 at 2-7.)
Defendants concede that Defendant Phone Rehab resells
Plaintiffs products on Amazon; they contend that such conduct
is not actionable under trademark law or otherwise. (ECF No.
37 at 1-2.)
moved to dismiss the complaint for lack of personal
jurisdiction under Fed.R.Civ.P. 12(b)(2) and for failure to
state a claim under Fed.R.Civ.P. 12(b)(6). (ECF No. 37.) The
motion was referred to the magistrate judge. After the motion
was fully briefed, the magistrate judge held a hearing. The
magistrate judge found that Defendants made 267 sales of
Plaintiffs' products in Colorado in a one-year period.
The magistrate judge then issued a report and recommendation
to deny Defendants' motion.
magistrate judge first concluded that the Court had specific
personal jurisdiction over Defendants because they had
sufficient “minimum contacts” with Colorado. The
magistrate judge found that Defendants purposely directed
their activities at Colorado residents through the online
sales identified above. The magistrate judge further found
that Plaintiffs' alleged injuries arose out of those
activities and that because Defendants received
cease-and-desist letters from Plaintiff, Defendants were
aware their conduct was harming Plaintiffs in Colorado.
Moreover, after balancing the relevant factors to determine
whether exercising jurisdiction offend traditional notions of
fair play and substantial justice, the magistrate judge found
that Defendants had failed to present compelling reasons why
requiring them to defend the case in Colorado would render
magistrate judge also rejected Defendants' arguments that
Plaintiffs failed to state a claim with respect to each of
the seven causes of action asserted.
argue that the magistrate judge erred by failing to
“make specific findings regarding each Defendant's
contacts with Colorado” and that no evidence shows
Defendants Aton and Deeb have sold Plaintiffs' products
in Colorado. (ECF No. 63 at 2.) Defendants apparently concede
that there is jurisdiction over Defendant Rehab Phone,
arguing that “since two of the three defendants are not
subject to personal jurisdiction in Colorado, dismissal is
appropriate.” (Id. at 4.) ...