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Standard Process, Inc. v. Kdealz Ltd. Co.

United States District Court, W.D. Wisconsin

June 20, 2018

STANDARD PROCESS, INC., Plaintiff,
v.
KDEALZ LTD. CO. and JOHN DOES 1-100, Defendants.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         Plaintiff Standard Process, Inc., manufactures nutritional supplements and sells them exclusively through authorized resellers. It has filed suit against defendant KDealz Ltd. Co. for trademark infringement and related claims. It alleges that KDealz is selling Standard Process products online without authorization. KDealz has moved to dismiss the suit for lack of personal jurisdiction. Dkt. 9. Because Standard Process has made a prima facie showing of specific personal jurisdiction and because the exercise of jurisdiction does not offend due process, the court will deny KDealz's motion. The court will deny Standard Process's motion for leave to file a surreply, Dkt. 19, as moot.

         BACKGROUND

         The court draws the following facts from the parties' evidentiary submissions and the allegations in Standard Process's amended complaint. Dkt. 8.

         Standard Process is a Wisconsin corporation with a principal place of business in Wisconsin. It makes nutritional supplements, which it sells “exclusively through a network of authorized resellers.” Id. ¶ 7.

         KDealz is a limited liability company owned by Robert Cady. Cady runs KDealz from his home in Kentucky. KDealz operates a “storefront” on Amazon.com called “Organic Melodies.” Dkt. 15, ¶ 7. Through this storefront, KDealz sells nutritional supplements manufactured by Standard Process, even though it is not an authorized reseller. Here's how.

         KDealz buys Standard Process products from third-party resellers outside of Wisconsin. It then ships the Standard Process products to Amazon fulfillment centers for storage. At least one of the fulfillment centers is located in Wisconsin. When a customer orders a Standard Process product through the Organic Melodies storefront on Amazon's website, Amazon packs and ships the product to the customer. Some of those customers live in Wisconsin, and therefore, Amazon ships some Standard Process products to Wisconsin. Amazon collects payment from KDealz's customers, subtracts its fees, and then remits the remainder to KDealz every two weeks.

         On October 9, 2017, counsel for Standard Process sent KDealz a letter asking it to stop selling Standard Process products. KDealz refused. On November 16, counsel for Standard Process sent KDealz a second cease-and-desist letter. KDealz ignored it and continued to sell Standard Process products.

         On December 4, Standard Process filed this suit against KDealz, accusing KDealz of trademark infringement, false advertising, unfair competition, trademark dilution, deceptive trade practices, and tortious interference with contract and business relations. The court has subject matter jurisdiction over the federal-law claims under 28 U.S.C. § 1331. It may assert supplemental jurisdiction over the state-law claims under 28 U.S.C. § 1367.

         ANALYSIS

         KDealz moves to dismiss the case for lack of personal jurisdiction. At this point in the case, Standard Process need only make a prima facie showing of personal jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Thus, the court accepts Standard Process's well-pleaded factual allegations as true and considers the supporting evidence adduced by the parties, resolving any factual disputes in Standard Process's favor. Id.

         To make a prima facie showing of personal jurisdiction, Standard Process must demonstrate that KDealz falls within Wisconsin's long-arm statute, Wis.Stat. § 801.05, which has been interpreted to confer “jurisdiction ‘to the fullest extent allowed under the due process clause.'” Felland v. Clifton, 682 F.3d 665, 678 (7th Cir. 2012) (quoting Daniel J. Hartwig Assocs., Inc. v. Kanner, 913 F.2d 1213, 1217 (7th Cir. 1990)). If Standard Process makes this showing, the court turns to the constitutional inquiry. “Compliance with the statute presumes that due process is met, ” but KDealz, as the objecting defendant, has opportunity to rebut that presumption. Kopke v. A. Hartrodt S.R.L., 2001 WI 99, ¶ 22, 245 Wis.2d 396, 629 N.W.2d 662.

         A. Wisconsin's long-arm statute

         Standard Process contends that this court has personal jurisdiction over defendants under section 801.05(4)(b), which allows for specific jurisdiction when a plaintiff suffers an injury within Wisconsin arising out of a defendant's out-of-state act or omission-if the defendant's “products, materials or things processed, serviced or manufactured” were consumed in Wisconsin in the ordinary course of trade. “Process” is construed broadly and includes “purchasing and selling goods in the ordinary course of ...


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