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TrueNorth Companies, L.C. v. TruNorth Warranty Plans of North America, LLC

United States District Court, N.D. Iowa, Cedar Rapids Division

November 5, 2019

TRUENORTH COMPANIES, L.C., et al., Plaintiffs,
v.
TRUNORTH WARRANTY PLANS OF NORTH AMERICA, LLC, et al. Defendants.

          MEMORANDUM OPINION AND ORDER

          LEONARD T. STRAND, CHIEF JUDGE

         I. INTRODUCTION

         This matter is before me on the following motions: (1) a motion (Doc. No. 271) to dismiss for lack of personal jurisdiction by defendant TruNorth Global Corp. (TN Global); (2) an appeal (Doc. No. 274) by defendant TruNorth Warranty Plans of North America, LLC (TN Warranty) of an order (Doc. No. 250) by Chief United States Magistrate Judge Kelly K.E. Mahoney granting in part plaintiffs' motion to make an untimely jury demand on Count VI and (3) a motion (Doc. No. 295) for reconsideration/clarification of my order (Doc. No. 266) granting in part and denying in part TN Warranty's motion for summary judgment. TN Global has filed a brief (Doc. No. 272) in support of its motion to dismiss for lack of personal jurisdiction, plaintiffs TrueNorth Companies, L.C. and TrueNorth Principals, L.C. (together, TrueNorth) have filed a resistance (Doc. No. 281) and TN Global has filed a reply (Doc. No. 308). With regard to TN Warranty's appeal (Doc. No. 274) on Judge Mahoney's order, TrueNorth has filed a resistance (Doc. No. 277), TN Warranty has filed a reply (Doc. No. 298) and TrueNorth has filed a sur-reply (Doc. No. 301). Finally, with regard to the motion (Doc. No. 295) for reconsideration/clarification of my summary judgment order, TrueNorth has filed a resistance (Doc. No. 296) and TN Warranty has filed a reply (Doc. No. 300).

         Also pending is a motion (Doc. No. 255) in limine by TrueNorth, motion (Doc. No. 263) in limine by TN Warranty, and a motion (Doc. No. 309) to exclude testimony at trial or alternatively compel a deposition, both of which will be addressed by separate order.

         II. PROCEDURAL BACKGROUND

         The background of this case has been summarized in numerous orders that I find unnecessary to repeat here. See Doc. Nos. 40, 135, 250, 266.

         On May 3, 2019, Chief United States Magistrate Judge Kelly K.E. Mahoney allowed TrueNorth to file a third amended complaint adding TN Global Corp. as a party defendant.[1] See Doc. No. 240.

         On June 10, 2019, I entered an order on TN Warranty's motion for summary judgment, finding the following claims should go to trial:

• Count I - Trademark Infringement under 15 U.S.C. § 1114
• Count II - Trademark Infringement under 15 U.S.C. § 1125
• Count III - False Designation of Origin under 15 U.S.C. § 1125
• Count VI - Unfair Competition under 15 U.S.C. § 1125 and common law[2]

Doc. No. 266. Trial is scheduled for January 13, 2020.[3] See Doc. No. 299.

         III. DISCUSSION

         A. Motion to Dismiss for Lack of Personal Jurisdiction

         TN Global moves to dismiss the claims against it pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. TN Global notes that it was formed on September 26, 2018, [4] and was not in existence during much of the relevant time period. Its only officer is Kirk Eskridge. It contends it does not have any presence in Iowa and does not do business with any used commercial truck retailers or any other business in Iowa. See Doc. No. 272 at 2. It states it does not have any employees, has never had any in-person contacts with anyone in Iowa and is a wholly separate entity from TN Warranty. Id. It also represents it does not have any ownership in TN Warranty.[5] Id.

         TrueNorth alleges that TN Global sent “an email blast . . . on February 19, 2019 to individuals and entities in Iowa, including to Joe Hoovestol of Lone Mountain Trucking, in Carter Lake, Iowa.” See Doc. No. 132-1 at ¶ 6. The email received by Hoovestol states:

Hi, just a reminder you're receiving this email because you have expressed an interest in TruNorth. Don't forget to add TruNorth@TruNorthWarranty.com to your address book so we'll be sure to land in your inbox!

See Doc. No. 190-1 at 1. Based on this language, TrueNorth contends the email was likely sent to TN Warranty's other contacts in Iowa, including its admitted 45 “authorized dealers” in Iowa. Doc. No. 281 at 3 (citing Doc. No. 207 at 135-36). It notes that the email included TN Global's logo, advertised that TN Global provides “capital, ” “acquisitions” and “risk management” services and also included TN Warranty's logo, identifying it as the “leader in asset coverage.” Doc. No. 281 at 3 (citing Doc. No. 190-1 at 3).

         TrueNorth contends Eskridge's representation that TN Global is a “wholly separate company” from TN Warranty is not credible. It notes that TN Global's website highlights TN Warranty as one of “Our Services.” Id. (citing Doc. No. 190-1 at 7). It also notes that the only contact information on TN Global's website is TN Warranty's address, as well as the same phone number, direct phone number and fax number displayed on TN Warranty's website. Id. (citing Doc. No. 190-1 at 8). It states that on TN Warranty's website (trunorthwarranty.com), a March 28, 2019, news release states “TruNorth Global™” is “the leader in medium and heavy-duty truck protection.” See Doc. No. 281-2 at 1. TrueNorth points out TN Warranty made this same claim, as to itself, in a news release dated February 20, 2019. See Doc. No. 281-3 at 1. TrueNorth alleges that this evidence is contrary to Eskridge's implication that TN Global has done little, if any, domestic business and was formed only to “eventually hold foreign intellectual property rights.” Doc. No. 281 at 4 (citing Doc. No. 272-1 at ¶ 5-6).

         TrueNorth also cites a June 5, 2019, news release stating “MyTruckWarranty.com, powered by TrüNorth™, is the latest addition to the TrüNorth Global™ family of products and services.” Id. (citing Doc. No. 281-4). TrueNorth argues this news release indicates that TN Warranty and TN Global consider themselves interchangeable and that TN Global is a continuation of TN Warranty. Id. (citing Doc. No. 281-4 at 4 (“At TrüNorth Global™, our commitment to our dealer partners and warranty customers has always driven everything we do from industry-leading product and service innovations to first-in-marketing technology solutions, including the industry's only mobile app for iOS and Android Devices.”)). TrueNorth argues the statements in the news release refute Eskridge's claim that TN Global does not do business with any used commercial truck retailers or any other business in Iowa and does not have any retailers in Iowa. Id. It contends TN Global's “dealer partners” is referring to TN Warranty's authorized retailers, including the 45 retailers in Iowa.

         In order to properly allege personal jurisdiction, “a plaintiff ‘must state sufficient facts in the complaint to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.'” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)), cert. denied, 543 U.S. 1147 (2005) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir. 1974)). In resisting a Rule 12(b)(2) motion, the plaintiff has the burden of proving facts supporting such jurisdiction. Wells Dairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir.), cert. denied, 562 U.S. 962 (2010). The court may consider the allegations of the complaint along with any affidavits and exhibits submitted by the parties. Id. The plaintiff's burden, in the absence of an evidentiary hearing, is to make a “minimal” prima facie showing of personal jurisdiction. K-V Pharm. Co. v. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011). The court “must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff has made the requisite showing.” Id.

         “Where a federal court's subject matter jurisdiction over a case arises from the existence of a federal question, the court may exercise personal jurisdiction over a defendant if the plaintiff has properly served the defendant with process under the forum state's long-arm statute and if the defendant has sufficient contacts with the forum state to satisfy procedural due process.” Enter. Rent-A-Car Co. v. U-Haul Int'l, Inc., 327 F.Supp.2d 1032, 1036 (E.D. Mo. 2004) (citing Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104-05 (1987)); see also Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1389 n.2 (8th Cir. 1991). Here, Iowa's long-arm statute provides that if a foreign entity or a nonresident person commits a tort, in whole or in part, against an Iowa resident, then “such acts shall be deemed to be doing business in Iowa” and service of process is authorized on that entity or person. Iowa Code § 617.3.

         In general, due process requires that a nonresident defendant have at least “certain minimum contacts” with the forum state to support the exercise of personal jurisdiction. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Those contacts must be sufficient that requiring the defendant to litigate in the forum state would not “offend traditional notions of fair play and substantial justice.” Id. at 316 (internal quotation marks and citation omitted). They “must come about by an action of the defendant purposefully directed toward the forum State.” Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112 (1987) (internal citations omitted).

         This “‘purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,' ‘fortuitous,' or ‘attenuated' contacts, ” or due to “the ‘unilateral activity of another party or a third person.'” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations omitted). If the defendant made the deliberate choice to “engage[] in significant activities within a State, ” or to create “‘continuing obligations' between himself and residents of the forum, ” then “it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.” Id. at 475-76 (citations omitted). Thus:

By requiring that individuals have “fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign, ” the Due Process Clause “gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit[.]”

Id. at 472-73 (citations omitted).

         The Eighth Circuit Court of Appeals applies a five-factor test to determine whether a defendant's contacts with the forum state are sufficient to establish personal jurisdiction. Myers v. Casino Queen, Inc., 689 F.3d 904, 911 (8th Cir. 2012). Those factors are: (1) the nature and quality of the contacts with the forum state; (2) the quantity of those contacts; (3) the relationship of those contacts with the cause of action; (4) the forum state's interest in providing a forum for its residents; and (5) the convenience or inconvenience to the parties. Id. (citing Precision Const. Co. v. J.A. Slattery Co., Inc., 765 F.2d 114, 118 (8th Cir. 1985)). The first three factors are considered to be of primary importance. Precision Const.Co., 765 F.2d at 118.

         Personal jurisdiction can be either general or specific. General jurisdiction arises when a nonresident maintains “continuous and systematic” contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). Under those circumstances, jurisdiction over the nonresident is appropriate even when the claims at issue do not arise out of or relate to its activities in the forum state. Id. at 414-15. Specific jurisdiction arises “when the defendant purposely directs its activities at the forum state and the litigation ‘result[s] from injuries ... relating to [the defendant's] activities [in the forum state.]'” Myers, 689 F.3d at 912-13 (quoting Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008)). Specific jurisdiction “requires a relationship between the forum, the cause of action, and the defendant. Id. at 912 (citing Helicopteros Nacionales de Colombia, 466 U.S. at 414). The third factor of the five-factor test “distinguishes between specific and general jurisdiction.” Id. at 911 (citing Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010)).

         The Eighth Circuit has rejected the so-called “proximate cause” test for specific jurisdiction, under which the exercise of jurisdiction is appropriate only if the defendant's contacts with the forum was the legal cause of the plaintiff's injuries. Id. at 912-13. Instead, the third factor is satisfied so long as (a) the defendant purposely directed its activities at the forum state and (b) the litigation results from injuries relating to the defendant's activities in the forum state. Id. (citation and quotation omitted).

         TrueNorth argues there is specific personal jurisdiction over TN Global because it markets specifically into Iowa and claims a “dealer partnership” with 45 Iowa entities (by claiming TN Warranty's dealer partners as its own). Doc. No. 281 at 5. TrueNorth notes that three retailers and 13 locations in Iowa was enough to confer personal jurisdiction over TN Warranty. See Doc. No. 40 at 16. It argues that sending marketing materials using the allegedly infringing mark and specifically advertising “risk management” services to 45 Iowa “dealer partners” should be enough to satisfy personal jurisdiction over TN Global. Id. at 6. TrueNorth also relies on TN Global's press release referencing its “dealer partners” in support of this argument.

         In addition, TrueNorth invokes the alter ego or single enterprise doctrine to argue that TN Warranty's contacts with Iowa should be imputed to TN Global. Id. at 7. It notes they are both controlled and owned by Eskridge, promote the same services, claim to have the same dealer partners and appear to be interchangeable as they hold themselves out to the public. Id. at 10. It also notes that Judge Mahoney allowed TrueNorth to add TN Global as a defendant in a Third Amended Complaint stating: “Eskridge may have had a good reason for creating TN Global, but given the temporal proximity (two days) between TrueNorth's motion for a preliminary injunction and Eskridge creating TN Global, TrueNorth understandably wants to ensure that Eskridge cannot avoid the effects of any injunctive relief simply by acting through TN Global instead of TN Warranty.” See Doc. No. 240 at 9-10. TrueNorth also argues that TN Global's lack of adequate capitalization allows me to consider it the alter ego of TN Warranty. Finally, TrueNorth argues it is entitled to jurisdictional discovery, including whether the same February 2019 email was sent to other Iowa entities, the identity of the individuals who developed TN Global's website, sent its email blasts and wrote its news releases and the identification of TN Global's “dealer partners” referenced in its press release. Id. at 14.

         TN Global argues that aside from a single email, TrueNorth has offered only speculation and conjecture in support of personal jurisdiction. Doc. No. 308 at 2. It contends this is insufficient to rebut Eskridge's sworn declaration stating that TN Global is related to TN Warranty only as a holding company for foreign intellectual property rights and that the two are separate entities for purposes of personal jurisdiction. Id. TN Global adds that the fact that Eskridge is a common owner is not enough to support application of the alter ego doctrine. TN Global argues that even if it sent an email to 45 Iowa residents, those emails are insufficient to establish personal jurisdiction absent any other contacts. Id. at 4. Finally, TN Global argues that jurisdictional discovery is unwarranted because TrueNorth has not submitted an affidavit describing what facts are sought and how they are to be obtained, how the facts are reasonably expected to raise a genuine issue of material fact and what efforts TrueNorth has made to obtain them. Id. at 6. It contends that one email (or even 45 emails) is insufficient to establish personal jurisdiction, which is the only evidence TrueNorth has offered without resorting to speculation.

         I agree with TN Global that TrueNorth's evidence concerning TN Global's contacts with Iowa is weak. TN Global does not, on its own, have sufficient minimum contacts with Iowa, such that exercising personal jurisdiction over it would comport with due process. With regard to the first two factors - nature and quality of the contacts and quantity of the contacts - TrueNorth has established that Eskridge recently formed another “TruNorth” company and that that company has sent an email to at least one TN Warranty customer, and potentially 45 Iowa dealers. While that contact is related to this cause of action, that factor, on its own, is insufficient to establish personal jurisdiction. Unlike TN Warranty, there is no evidence that TN Global has actually done any business in Iowa, including any business with TN Warranty's Iowa dealers. For instance, there is no evidence that TN Warranty's dealers are selling anything other than warranties that could be attributed to TN Global. At most, TrueNorth has shown that TN Global sent an email to TN Warranty's Iowa dealers. This is insufficient to establish personal jurisdiction.[6]

         TrueNorth's better argument is that personal jurisdiction over TN Global is appropriate because it and TN Warranty are one and the same. However, this argument also falls short of establishing personal jurisdiction. “Personal jurisdiction can be properly asserted over a corporation if another is acting as its alter ego, even if that alter ego is another corporation.” Epps v. Stewart Information Servs. Corp., 327 F.3d 642, 649 (8th Cir. 2003). An entity is the alter ego of another if (1) the other entity influences and governs the subject entity; (2) a unity of interest and ownership exists such that the two entities cannot be separated and (3) giving effect to the fictional separation between the two entities would sanction a fraud or promote injustice. See HOK Sport, Inc. v. FC Des Moines, L.C., 495 F.3d 927, 935 (8th Cir. 2007) (applying Iowa law).[7] Determining whether a wholly owned subsidiary is the alter ego of a parent corporation “is contingent on the ability of the plaintiffs to pierce the corporate veil.” Epps, 327 F.3d at 649. Under Iowa law, “[a] court may disregard a corporate structure by piercing the corporate veil only under circumstances ‘where the corporation is a mere shell, serving no legitimate business purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice.'” In re Marriage of Ballstaedt, 606 N.W.2d 345, 349 (Iowa 2000) (quoting C. Mac Chambers Co. v. Iowa Tae Kwon Do Acad., Inc., 412 N.W.2d 593, 597-98 (Iowa 1987)). In determining whether the corporate veil should be pierced, the court should consider whether: “(1) the corporation is undercapitalized, (2) without separate books, (3) its finances are not kept separate from individual finances, individual obligations are paid by the corporation, (4) the corporation is used to promote fraud or illegality, (5) corporate formalities are not followed or (6) the corporation is merely a sham.” Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt., Inc., 519 F.2d 634, 638 (8th Cir. 1975).

         Applying those factors, TrueNorth alleges that TN Global is undercapitalized, but has provided no proof and mistakenly puts the burden on TN Global. Id. at 13 (“Eskridge's Declaration provides no evidence that TN Global was adequately capitalized when it was formed, or soon thereafter.”). See Epps, 327 F.3d at 647 (“The party seeking to establish the court's in personam jurisdiction carries the burden of proof, and the burden does not shift to the party challenging jurisdiction.”). Eskridge states: “As TN Global was only recently formed, TN Global continues to be capitalized and will eventually hold ...


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