Antitrust Law Daily Wrap Up, ADVERTISING—1st Cir.: Website did not provide sufficient contacts for Massachusetts suit against Arizona firm, (Jan 29, 2016)

By Cheryl Beise, J.D.

An Arizona plumbing service—accused of unfair competition and infringing the “Rooter Man” trademark—did not have sufficient contacts with Massachusetts, based on its operation of a passive website, to be subject to personal jurisdiction, the U.S. Court of Appeals in Boston had decided. The district court’s dismissal for lack of jurisdiction was affirmed (A Corp. v. All American Plumbing, Inc., January 27, 2016, Thompson, O.).

Massachusetts-based plumbing company and franchisor A Corp. owns federal registrations for the marks "Rooter Man,” and "A Rooter Man to the Rescue," registered in connection with "cleaning and repairing septic systems and clearing clogged pipes and drains.”

In 2014, A Corp. filed suit in the federal district court in Boston against All American Plumbing, Inc., a family-run plumbing business located in Mesa, Arizona. A Corp. alleged that All American was improperly using A Corp.'s Rooter Man mark, or a confusingly similar mark, to advertise its plumbing business on its website, “allamericanplumbingandrooter.com.” A Corp. asserted claims for trademark infringement, false designation of origin, trademark dilution, interference with contractual relation, unfair competition, and unjust enrichment.

The district dismissed A Corp.’s suit for lack of personal jurisdiction. A Corp. appealed. Other than operation of its website, All American had no contacts with Massachusetts. A Corp. described All American’s website as "interactive" and continuously "accessible in Massachusetts." All American explained that it is only licensed to provide plumbing services in Arizona and that its website, although nationally accessible, solicited plumbing business solely in Arizona.

Due Process. The First Circuit concluded that the due process clause of the Fifth Amendment to the U.S. Constitution precluded the exercise of specific personal jurisdiction over All American in this case. To establish specific personal jurisdiction over an out-of-state defendant, a plaintiff must establish (1) relatedness—that the claim directly arises out of, or relates to, the defendant's forum activities; (2) purposeful availment —that the defendant purposeful availed himself of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's law; and (3) reasonableness—that the exercise of jurisdiction is reasonable.

Relatedness. A Corp. argued that the relatedness prong was satisfied because All American’s use of A Corp.'s trademark, or a confusingly similar mark, on its website caused injury to A Corp. in Massachusetts.

However, A Corp. actually alleged an out-of-state injury that might eventually be felt by A Corp. in Massachusetts, the court observed. A Corp. claimed that All American's unauthorized use of the Rooter Man marks interfered with A Corp.'s franchise agreement with its Arizona franchisee, confusing its customers and prospective franchisees as to the possible relationship between the two companies. “This type of indirect effect of out-of-state injury caused by out-of-state conduct is insufficient to fulfill the relatedness prong,” the court said.

The court concluded that there was an insufficient nexus between A Corp.'s claims and All American's only forum-related contact, its website.

Purposeful availment. All American’s website also failed to satisfy the purposeful availment prong. This prong of the due process inquiry considers whether the defendant's conduct connects him to the forum in a meaningful way, the court noted. Although All American’s website was accessible in Massachusetts, it never mentioned Massachusetts and afforded no mechanism for Massachusetts residents to order any goods or services. The website offered no genuine “interactive” features, but functioned “more like a digital billboard, passively advertising the business and offering an email address, fax and phone number,” the court observed. In addition, All American's advertised services were available only in Arizona.

Because A Corp. failed to satisfy the first two prongs of the due process inquiry, its argument for specific jurisdiction failed. The court did not need to consider the reasonableness prong. The district court’s dismissal was affirmed.

The case is No. 15-1509.

Attorneys: Juan Liu (Jenny J. Liu Law Office) for A Corp. d/b/a Rooter Man. Albert A. Denapoli (Tarlow Breed Hart & Rodgers PC) for All American Plumbing, Inc.

Companies: A Corp. d/b/a Rooter Man; All American Plumbing, Inc.

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