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Sunny Days Entertainment LLC v. Traxxas L.P.

United States District Court, D. South Carolina, Greenville Division

March 25, 2019

Sunny Days Entertainment, LLC, Plaintiff,
TRAXXAS, L.P., Defendant.


          Donald C. Coggins, Jr. United States District Judge.

         This matter comes before the Court on Defendant's Motion to Dismiss for Lack of Personal Jurisdiction and Insufficient Service of Process.[1] ECF No. 14. Plaintiff filed a Response in Opposition, ECF No. 19, and Defendant filed a Reply, ECF No. 20. Therefore, the Motion is ripe for review.

         I. Procedural and Factual History

         Plaintiff is a South Carolina corporation with its principal place of business in Simpsonville, South Carolina. Plaintiff "makes and sells role play toys (for children to imitate real life occupations) as well as toy bows and arrows, toy guns, toy trucks, and toy vehicles." ECF No. 8 at 2. Plaintiff "began selling toys in commerce under the MAXX ACTION trademark at least as early as April 1, 2014, and on September 6, 2017, Plaintiff filed a trademark application with the USPTO to register MAXX ACTION for 'Role play toys in the nature of playsets for children to imitate real life occupation; Toys, namely, toy bows and arrows, toy guns, toy trucks, toy vehicles,' Application Serial No. 87598578." Id. at 3. Plaintiff's toys generally retail for approximately $4.99 to $19.99 and are sold through "mass market" outlets such as Target, Walmart, and other large stores. Id. at 5- 6.

         Defendant is a Texas limited partnership with its principal place of business in McKinney, Texas. "Defendant makes and sells radio-controlled model vehicles and related parts and motors." Id. at 2. Defendant's vehicles retail for approximately $149.99 to $949.99 and are sold online and through specialized hobby shops. Id. at 5-6. Defendant claims ownership to a variety of trademark registrations containing the phrase "MAXX" such as "E-MAXX," "MINI MAXX," and other related phrases. Id. The original "MAXX" trademark was issued on January 2, 2007, with other trademarks containing permutations of that phrase being issued since that time up to and including December 27, 2016. Id. at 2-3.

         On December 4, 2017, Defendant sent Plaintiff a cease-and-desist letter, "in which Defendant asserts that it uses its Registered Marks to identify, advertise, and promote its radio-controlled model vehicles, as well as related goods, and that [Plaintiff] is violating trademark rights of [Defendant] by using the mark MAXX ACTION in connection with its offering of role play toys . . . and further that resulting consumer confusion caused by the use of MAXX ACTION will unfairly give the goods of [Plaintiff] a ready acceptance in the marketplace that is undeserved." Id. at 3 (internal quotations omitted). Defendant demanded that Plaintiff cease using and abandon the MAXX ACTION trademark. Id. at 8. This cease-and-desist letter was also sent to six vendors who sell Plaintiff's products. Id. at 9.

         Thereafter, Plaintiff filed a Complaint, which was subsequently amended prior to service, which alleges three causes of action. ECF Nos. 1, 8. First, Plaintiff seeks a declaration that its MAXX ACTION trademark does not violate any laws or the rights of Defendant to its Registered Marks. Id. at 10. Second, Plaintiff requests a declaration "that, when considering Defendant's Registered Marks, no likelihood of confusion would occur by the continued use of, and the subsequent federal registration of, Plaintiff's MAXX ACTION trademark, which application is pending before the USPTO." Id. at 11. Finally, Plaintiff alleged a cause of action for tortious interference with contractual relationships, seeking damages based on Defendant's transmission of the cease-and-desist letter to Plaintiff's vendors. Id. at 11-12.

         Plaintiff's Amended Complaint includes the following allegation about personal jurisdiction:

Court has personal jurisdiction over Defendant because Defendant engages in business in the State of South Carolina and has sufficient contacts in the State of South Carolina to subject it to in personam jurisdiction. Particularly, Defendant sells its products online and through various dealer stores, and Defendant makes its products available to customers all over the United States, including the State of South Carolina. Further, on information and belief, Defendant sells its products in South Carolina.

ECF No. 8 at 2. In response to Plaintiff's Amended Complaint, Defendant entered a special appearance for the limited purpose of contesting the Court's personal jurisdiction and filed a Motion to Dismiss. The parties have fully briefed Defendant's Motion, and it is ripe for the Court's review.

         II. Legal Standard

         When a defendant challenges the Court's personal jurisdiction under Rule 12(b)(2), the plaintiff has the burden of proving that jurisdiction exists by a preponderance of the evidence. In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). "If the existence of jurisdiction turns on disputed factual questions[, ] the court may resolve the challenge on the basis of a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). However, when "a district court rules on a Rule 12(b)(2) motion without conducting an evidentiary hearing or without deferring ruling pending receipt at trial of evidence relevant to the jurisdictional issue, but rather relies on the complaint and affidavits alone, 'the burden on the plaintiff is simply to make a prima facie showing of sufficient jurisdictional basis in order to survive the jurisdictional challenge.'" In re Celotex Corp., 124 F.3d at 628 (quoting Combs, 886 F.2d at 676). "In deciding whether the plaintiff has made the requisite showing, the court must take all disputed facts and reasonable inferences in favor of the plaintiff." Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citing Mylan Labs, Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993)). Additionally, "'[i]n reviewing the record before it, a court may consider pleadings, affidavits, and other evidentiary materials without converting the motion to dismiss to a motion for summary judgment.'" Magic Toyota, Inc. v. Se. Toyota Distribs., Inc., 784 F.Supp. 306 (D.S.C. 1992) (quoting VDI Techs. v. Price, 781 F.Supp. 85, 87 (D.N.H. 1991)).

         A federal court may exercise personal jurisdiction over a defendant in the manner provided by state law. Fed.R.Civ.P. 4(k)(1)(A). Thus, "for a district court to validly assert personal jurisdiction over a non-resident defendant, two conditions must be satisfied. First, the exercise of jurisdiction must be authorized by the long-arm statute of the forum state, and, second, the exercise of personal jurisdiction must also comport with Fourteenth Amendment due process requirements." Christian Sci. Bd. of Dirs. of FirstChurch of Christ, ...

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