Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Confectionery Arts International, LLC v. CK Products LLC

United States District Court, D. Connecticut

March 1, 2018

CONFECTIONARY ARTS INTERNATIONAL, LLC, Plaintiff,
v.
CK PRODUCTS LLC and CENTRAL INVESTMENT LLC, Defendant.

          RULING ON DEFENDANTS' MOTION TO DISMISS

          Janet Bond Arterton, U.S.D.J.

         Plaintiff, Confectionery Arts International, LLC ("CAI") filed this action against Defendants CKP Products LLC ("CKP") and Central Investment LLC ("CI") on December 9, 2016 alleging trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114(a) (Count One), unfair competition, false designation of origin and false or misleading representation of fact in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count Two), unfair competition and misappropriation in violation of Connecticut common law (Count Three) and unfair competition and trade practices under the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a (Count Four). Defendants now move to dismiss the Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction over both CKP and CI and Fed.R.Civ.P. 12(b)(3) because this Court is not an appropriate venue for Plaintiffs lawsuit under 28 U.S.C. § 1391.[1] (Def.'s Mem. Supp. Mot. to Dismiss ("Def.'s Mot. to Dismiss") [Doc. # 28] at 1.) For the reasons that follow, Defendants' Motion is granted insofar as it seeks dismissal of CI, but denied in all other respects.

         I. Facts Alleged and Jurisdictional Facts

         Plaintiff, a registered Connecticut limited liability company, is a private label manufacturer and wholesaler specializing in the manufacture of a broad spectrum of food products for the retail, food service and industrial markets, which includes the cake and confectionery decorating industry in the state of Connecticut. (Czerczak Aff. [Doc. # 32] ¶ 2.) Plaintiff has been using the trademark DISCO DUST* for a product line of decorative food glitter since 1999. (Am. Compl. ¶ 29; Czerczak Aff. ¶ 4; Ex. A (Trademark Registration) to Def.'s Mot. to Dismiss [Doc. #33-1].) On January 24, 2012, Plaintiff officially registered its DISCO DUST® with the United States Patent and Trademark Office, obtaining Reg. No. 4, 089, 733. (Am. Compl. ¶ 30; Ex. A to Def.'s Mot. to Dismiss.)

         CI is a privately-held, Cincinnati-based limited liability company that manages a portfolio of investments, including directing private equity investments, for the business of its members. (See Ex. 1 (Martin Decl.) to Def.'s Mot. to Dismiss [Doc. # 29] ¶ 3.) CI maintains an office in Cincinnati, Ohio and has no offices, corporate assets, or employees in Connecticut. (Id. ¶ 5). CKP is a manufacturer and wholesale distributor in the candy making, cake decorating, and commercial baking industries. (Id. ¶ 8). CKP maintains an office, production, and distribution facility in Fort Wayne, Indiana. (Id. ¶ 9). CKP has no offices, corporate assets, or employees in Connecticut. (Id. ¶ 11).

         As a wholesale distributor, CKP does not directly deal with any end customer and sells to resellers that, prior to purchasing any CKP products, must demonstrate that they are businesses. (Id. ¶ ¶ 33-35). Typically, the businesses that purchase products from CKP resell them to individual customers or use the products as part of a larger bakery process. (Id. ¶ 37). However, CKP does not control the advertising or sales activity of any of its reseller customers. (Id. ¶¶ 37, 41). CKP does not track the resale of its products by any resellers, including those on e-commerce sites like Amazon and eBay. (Id. ¶ 37).

         CKP maintains a website that allows a user to locate a potential retail reseller of its product. (Martin Decl. ¶ 38). However, this search function does not identify whether a given retailer carries any particular item, let alone the disco dust product at issue in this lawsuit. (Id.). CKP does not track any sales from those retail resellers and does not have its own storefronts. (Id. ¶ 37). Once a customer registers with CKP, orders can be placed in one of three ways. First, the customer can fax an order request to CKP's office in Indiana. (Id. ¶ 36a). Second, the customer can call the Indiana office and speak to a sales representative directly. (Id. ¶ 36b). Finally, the customer can place an order through CKP's website. (Id. ¶ 36c). CKP manages its website in Indiana and, to the extent that orders are received through its website, CKP processes those orders at the Indiana office. (Id. ¶ 30).

         In 2005, Defendant CKP was acquired by Defendant CI, an Ohio limited liability company. (Am. Compl. ¶ 19.)[2] At that point, while maintaining its facility in Indiana, Defendant CKP also became an Ohio limited liability company (Id. ¶ 4). CKP and CI are separate and distinct limited liability companies. (Martin Decl. ¶ 14). While CI owns equity in CKP, CKP has its own, separate employees that manage CKP's business. (Id. ¶ 15). Although CKP's General Manager reports to management at CI periodically, CI is not involved, in anyway, with the day-to-day manufacturing and sale processes of CKP. (Id. ¶ 16).

         Plaintiff has had a business relationship with Defendant CKP, also a wholesaler in the cake and baked goods decorating industry, and its predecessor company, Country Kitchen, since Plaintiffs first year of operation, 1999. (Czerczak Aff. ¶ 7; Am. Compl. ¶¶ 25, 34.) Defendant CKP, from both its Indiana address and its Georgia address, regularly purchased products from Plaintiff, including Tylose powder and gum paste. (Czerczak Aff. ¶¶ 7, 8.) Defendant CKP regularly resold these products to retailers, using Plaintiffs original labeling, indicating Plaintiff as the source. (Czerczak Aff. ¶¶ 8, 9.) Defendant CKP regularly paid for its purchases from Plaintiff with a CKP company check, labeled with Defendant CI's Ohio business address. (Czerczak Aff. 14.)[3]

         In July 2015, Defendant CKP received a trademark cease and desist letter from a German corporation, SE Tylose GmbH & Co. KG about Tylose Powder. (Martin Decl. 20.) At that point, Plaintiff was contacted by Patrick Kenney, whose email signature identified himself as the "Purchasing Manager" for CI. (Czerczak Aff. ¶¶ 15, 17-21; Ex. B (Email Exchange) to PL's Opp'n [Doc. # 33-2]; Martin Aff. ¶¶ 20-27.).

         In September 2016 Plaintiff discovered that Defendant CKP was selling its own brand of decorative glitter under the name Disco Dust. (Am. Compl., ¶¶ 38-45; Czerczak Aff., 23; Ex. C (Photo of Disco Dust Product) to PL's Opp'n [Doc. # 33-3].) On September 14, 2016, Plaintiff sent a letter to the General Manager of Defendant CKP at its Indiana address informing it of its infringement of Plaintiffs DISCO DUST9 trademark with a copy of the federal registration certificate. (Am. Compl., ¶ 47.) Having received no response, Plaintiff sent a second letter on October 19, 2016. (Id. ¶ 48.)

         On October 25, 2016, Defendant CKP announced on its website, www.ckproducts.com, that "Disco Dust* has a new name! Disco Glitter is the same product - now with a new name!" and noting that "Disco Dust9 is a registered trademark of Confectionary Arts, Inc. [sic]." (Id. ¶ 51; Ex. D to PL's Opp'n [Doc. # 33-4].) Defendant CKP labeled its decorative glitter product with "Disco Glitter/ (comparable to Disco Dust*)/ For Decorative arts & crafts/Disco Dust® is a registered trademark/ of Confectionary Arts, Inc./ www.CKproducts.com." (Ex. E to PL's Opp'n [Doc. #33-5].) In November of 2016, Patrick Kenney of CI contacted Plaintiff by telephone with notification that Defendant CPK's Disco Dust product name had been changed to Disco Glitter. (Czerczak Aff. ¶¶ 28, 29; Am. Compl., ¶¶ 53-54.) In response to Plaintiffs assertion that Disco Glitter was still "too similar to Disco Dust, " Mr. Kenny responded that "[w]e respectfully disagree that the name is too similar to Disco Dust." (Am. Compl. ¶ 55.)[4]

         In 2016, decorative disco dust product sales in Connecticut by CKP- including any sale of DISCO GLITTER - amounted to only 0.6% of the total disco dust product sales nationwide. (Martin Decl. 43). As of March 31, 2017, CKPS's DISCO GLITTER disco dust product line sales in Connecticut accounted for 1% of total product's sales to CKP's direct customers. (Id. ¶ 44). Over the past three years and first three months of 2017, CKP's total revenue from sales of all products into Connecticut is less than 2.5% of total revenue nationwide. (Id. ¶ 45).

         II. Discussion

         A. Personal Jurisdiction

         "'On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant.'" Quinn v. Fishkin, 117 F.Supp.3d 134, 138 (D. Conn. 2015) (quoting Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84F.3d 560, 566-67 (2d Cir. 1996)). In order to survive such a motion, the "plaintiff must make a prima facie showing that jurisdiction exists." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013) (internal quotation marks omitted). "In evaluating whether the requisite showing has been made, [courts] construe the pleadings and any supporting materials in the light most favorable to the plaintiff[]." Id.

         "To determine personal jurisdiction over a non-domiciliary in a case involving a federal question, the Court must engage in a two-step analysis." Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). First, the Court applies "the forum state's long-arm statute." Id. "If the long-arm statute permits personal jurisdiction, the second step is to analyze whether personal jurisdiction comports with the Due Process Clause of the United States Constitution." Id. at 164.

         1. Connecticut Long-Arm Statute

         Connecticut's long-arm statute applicable to non-resident individuals, Section 52-59(b), has also been held to apply to non-resident LLCs. See Austen v. Catterton Partners V, LP, 729 F.Supp.2d 548, 559 (D. Conn. 2010); see also Matthews v. SBA, Inc., 149 Conn.App. 513, 544- 52, 555-61 (2014). Plaintiff argues the Court has personal jurisdiction over Defendants under the long-arm statute under subsections (1) and (3) of Section 52-59b of the Connecticut General Statutes, which provide that:

[A] court may exercise personal jurisdiction over any nonresident individual, . . . who in person or through an agent: (1) Transacts any business within the state ... [or] (3) commits a tortious act outside the state causing injury to person or property within the state ... if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

Conn. Gen. Stat. § 52-59b.

         a. Transacting Business Within the State Under § 52-59b(1)

         "[U]nder § 52-59b (a)(1), a court possesses personal jurisdiction over a nonresident individual with respect to a cause of action arising from any business transacted in this state by that individual." Ryan v. Cerullo, 282 Conn. 109, 118 (2007). The Connecticut Supreme Court has interpreted the phrase "transacts any business within the state" to include "a single purposeful business transaction." Zartolas v. Nisenfeld, 440 A.2d 179, 181 (Conn. 1981); see also; Avant Capital Partners, LLC v. Strathmore Dev. Co. Michigan, LLC, No. 3:12-CV-1194 (VLB), 2013 WL 5435083, at *3 (D. Conn. Sept. 30, 2013). In determining whether a business transaction qualifies as purposeful, courts do not apply a rigid formula but rather balance "public policy, common sense, and the chronology and geography of the relevant factors." Harris v. Wells, 832 F.Supp. 31, 34 (D. Conn. 1993) (quoting Zartolas, 440 A.2d at 182). Courts are instructed to examine the "nature and quality, rather than the amount of Connecticut contacts to determine whether there was purposeful activity." Avant Capital Partners, LLC, 2013 WL 5435083, at *3.

         1. CKP

         Defendants argue that Plaintiff cannot establish the Court's personal jurisdiction over CKP for "transacting business" in Connecticut because less than 0.6% of its decorative glitter disco dust product sales and only 2.5% of its overall sales of all products over the past three and a quarter years occurred in Connecticut. (Def.'s Mot. to Dismiss at 12.) However, Defendants completely ignore Zartolas's "single purposeful business transaction" standard, and at oral argument counsel conceded that under this standard the long arm statute reaches CKP's conduct. Thus, because Plaintiff has established personal jurisdiction over CKP under the long-arm statute, the Court will determine (infra) whether personal jurisdiction over CKP also comports with the Due Process Clause of the Constitution. See Chloe, 616 F.3d at 163.

         2. CI

         Defendants argue Plaintiff cannot show, under a veil-piercing theory, that CI "controls" CKP such that CKP is a mere "instrument" of CI. Plaintiff asserts that it need not engage in a veil-piercing analysis to determine whether CI meets the "single purposeful business transaction" standard of Zartolas because as part of Defendant CI's management and operation of Defendant CKP's business, Defendant CI, through its agent Patrick Kenney, transacted business within the state constituting at least a "single purposeful transaction." (PL's Opp'n at 10 citing (Czerczak Aff. ¶¶ 15, 17-21; Am. Compl. ¶¶ 18, 19, 20, 24, 40; Martin Decl. ¶¶ 20-28; Ex. B).)[5]

         Plaintiff relies on the incident involving Patrick Kenney, Purchasing Manager for Defendant CI, in which he contacted Plaintiff about a trademark cease and desist letter that CKP had received from SE Tylose GmbH & Co. KG regarding Plaintiffs Tylose Powder product, and his subsequent negotiation with Plaintiff via telephone and email regarding the return to Plaintiffs facility in New Britain, Connecticut of 8, 293 bottles of Tylose Powder product that Defendant CKP had purchased. (Czerczak Aff. ¶¶ 15-18; Martin Decl. ¶¶ 20-23.) CKP thereafter elected to cease purchasing the Tylose Powder from CAI and CAI issued a credit memo for the returned product, which could only be used to purchase other products from CAI. (Czerczak Aff. ¶¶ 17-19; Martin Decl. ¶ 27.) Defendant CKP compensated Defendant CI for the work Mr. Kenney did for CKP. (Martin Decl. ¶¶ 23, 26, 28).

         Even assuming, without deciding, that this may constitute a "single purposeful transaction, " it is entirely unrelated to the instant cause of action and therefore cannot give rise to jurisdiction over the claims relating to the disco dust products. See Ryan, 282 Conn, at 118 ("a court possesses personal jurisdiction over a nonresident individual with respect to a cause of action arising from any business transacted in this state by that individual (emphasis added)); Fischer v. Ulysses Partners, LLC, No. FSTCV156024901, 2016 WL 921677, at *6 (Conn. Super. Ct. Feb. 11, 2016) (examining "whether the [plaintiffs] cause of action arose from the defendants' ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.