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The Retail Coach v. r360, LLC

United States District Court, N.D. Mississippi, Aberdeen Division

March 3, 2017




         This matter arises from infringement claims under the Lanham Act. Defendant Xpansion has filed a Motion to Dismiss for Lack of Personal Jurisdiction [20]. Plaintiffs responded, and motioned for jurisdictional discovery [23], [29]. After discovery, Plaintiffs filed their supplemental response to the Motion to Dismiss or Transfer [40], and Defendants replied [41].

         Facts and Procedural History

         Retail Coach alleges that r360, LLC's marks are infringing on their own marks, and therefore filed a Complaint in the Northern District of Mississippi.[1] Initially, the Complaint was filed against Retail360, LLC and r360, LLC. Retail Coach later realized that Retail360, LLC was the mere preformation name for r360, LLC. Therefore, they amended their complaint to replace Retail360, LLC with Xpansion Holdings, the intended related entity. Retail Coach alleges that Xpansion Holdings is equally responsible for the use of the infringing mark because it is essentially the same entity as r360, or an alter ego.

         However, before Retail Coach added Xpansion to the complaint, Xpansion filed its own Complaint against Retail Coach in the Northern District of Alabama for trademark infringement and trademark cancellation, or, in the alternative, a declaration of non-infringement. Upon motion by Retail Coach, that suit was transferred to the Northern District of Mississippi based on the “first filed rule.” Xpansion motioned to dismiss or transfer for lack of personal jurisdiction in both cases, asserting that Mississippi lacks personal jurisdiction. Therefore, as it stands, there are two parallel cases in the Northern District of Mississippi, with similar pending Jurisdictional Motions. The first one, originally filed in Mississippi, is styled as The Retail Coach, LLC v. Xpansion Holdings, LLC and r360, LLC, Civil Action No. 1:16-CV-00032-SA-DAS. The second case, transferred from Alabama is styled as Xpansion Holdings, LLC v. The Retail Coach, Civil Action No. 1:16-CV-00125-SA-DAS.

         Xpansion Holdings, doing business as Decision Data Resources, provides web-based Geospatial Information Systems (“GIS”) software solutions to economic and workforce development and chamber organizations. Though Xpansion has no day to day operations, it solicits customers by using mass emails to encourage participation in webinars. Xpansion's CEO, Charles Branch, is the sole member, manager and owner of Xpansion. Branch, along with Amanda Beshears and Branch's son are the sole members of r360. Unlike Xpansion, who merely runs the website providing access to the software for both r360 and Xpansion customers, r360 uses one database within that software to do marketing analysis, consulting services, and proactive retail recruitment for public sector clients, who are primarily cities or municipalities.

         The two entities share an office space and equipment, and Xpansion has given r360 a substantial “loan” for which payments have never been made. The Retail Coach alleges that this is not a loan, but rather a commingling of funds. Additionally, Xpansion paid for and administered all of r360's start up procedures, including creating the name Retail360, LLC. Xpansion has also provided an unwritten license agreement to r360 to use the r360 mark, and Xpansion does not charge for r360's use of the software or the mark. Finally, the two entities use the same accountant, though they maintain separate banking accounts.

         Xpansion alleges that even if there is personal jurisdiction over r360 in Mississippi, as a separate entity, Xpansion has no physical presence in Mississippi, maintains no office or bank accounts in Mississippi, has no property located in Mississippi, and does not directly solicit business in Mississippi. However, since 2003, Xpansion has maintained a renewable contract with the Mississippi Development Authority (“MDA”) wherein the MDA pays for access to Xpansion's web-based services. Nevertheless, Xpansion insists that there is no personal jurisdiction because the website is maintained in Birmingham Alabama, and it is situated on a computer located in Andover, Massachusetts. Furthermore, Xpansion alleges that it has not used the r360 mark to market or solicit its services in Mississippi or to Mississippi residents.

         Branch, the CEO of both companies, has sent mass emails soliciting business on behalf of r360. The emails contain a copy of the allegedly infringing r360 logo Embedded in the signature line of the email, as well as Xpansion's logo. After sending these emails, Branch was able to develop a relationship between r360 and Blackwater Resources in order to explore providing consulting services for the building of a shopping center in Clinton, Mississippi. In further communications with Blackwater Resources, r360, via Branch, used Xpansion's logo in their signature, as well as their own. However, Branch alleges that r360 and Xpansion are entirely separate entities. He argues that he was acting on behalf of r360 only, and not Xpansion.

         In response to the pleadings regarding the Motion to Dismiss, Retail Coach filed a Motion for Jurisdictional Discovery, which was granted by the Court.


         “The party who seeks to invoke the jurisdiction of the federal court bears the burden of establishing the district court's jurisdiction over the nonresident.” D.J. Investments, Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545-46 (5th Cir. 1985). “The plaintiff need not, however, establish jurisdiction by a preponderance of the evidence; a prima facie showing suffices.” Luv N' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006) (quoting Wyatt v. Kaplan, 686 F.2d 276, 280 (5th Cir. 1982)). When determining whether a prima facie case for jurisdiction exists, “[t]he district court is not obligated to consult only the assertions in the plaintiff's complaint . . . [r]ather, the district court may consider the contents of the record at the time of the motion . . . .” Paz v. Brush Engineered Materials, Inc., 445 F.3d 809, 812 (5th Cir. 2006). In this regard, all “uncontroverted allegations in the plaintiff's complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor.” Gatte v. Dohm, 574 F. App'x 327, 330 (5th Cir. 2014) (quoting D.J. Investments, 754 F.2d at 546).


         “Absent a controlling federal statute regarding service of process, [the district court must] first determine whether the long arm statute of the forum state permits exercise of jurisdiction. [The district court] then determine[s] whether such exercise comports with due process.” Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993) (citing Fed.R.Civ.P. 4(e); Aviles v. Kunkle, 978 F.2d 201 (5th Cir. 1992)). The Lanham Act does not authorize nationwide service of ...

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