United States District Court, S.D. New York
April 6, 2005.
DENNIS F. GROSS, M.D. d/b/a M.D. SKINCARE, Plaintiff,
BARE ESCENTUALS, INC., and BIOCEUTIX, INC., Defendant.
The opinion of the court was delivered by: ROBERT CARTER, Senior District Judge
Plaintiff Dennis F. Gross M.D. d/b/a M.D. Skincare has a single
business location in New York (Gross Decla. ¶¶ 3, 8). M.D.
Skincare is in the business of formulating, selling and marketing
a wide variety of skin care products. (Gross Decla., ¶¶ 1-2).
Defendant Bioceutix, formerly known as MDF Acquisition
Corporation, is a Deleware corporation with its principal place
of business in California. (Blodgett Aff. ¶ 21). Bioceutix
operates an Internet website which provides information about
it's products and through which its products may be purchased.
Bioceutix also markets its products through limited solicitation
of spas and salons and at Bare Escentuals retail stores.
(Blodgett Aff. ¶ 22). Co-Defendant Bare Escentuals, formerly
known as Dolphin Acquisition Corporation, is a California
corporation with its principal place of business in California.
Bare Escentuals is in the business of selling its goods at its
own retail stores, to an Illinois wholesaler, and on the QVC
cable network. (Blodgett Aff. ¶¶ 6-10). Jurisdiction is properly
based on the diversity of the parties.
In March 2003, Bioceutix learned that Plaintiff, a competitor
in the skin care business, was using two marks, M.D. SKINCARE AND
M.D. SKIN CARE (the alleged "Infringing Designations"), for
products identical to those offered by Bioceutix under the M.D.
Family of Marks. On March 17, 2003, Bioceutix sent a "cease and
desist" letter to M.D. Skincare alleging infringement of its M.D.
Family of Marks in violation of federal law and the laws of the
State of California. Defendant demanded that plaintiff cease
using the designation "M.D." in connection with the sale of skin
care products. On April 8, 2003, plaintiff responded by denying
infringement and declined to cease use of the "M.D." designation
in connection with skin care products. Plaintiff also alluded to
an "accommodation" that had been reached with Bioceutix's
predecessor with regard to the M.D. FORMULATIONS mark. On April
24, 2003, counsel for Bioceutix again contacted Plaintiff's
counsel and requested evidence of the "accommodation" and renewed
its demand that all use of the "M.D." designation as part of
plaintiff's trade name, for its line of cosmetics or in any other
manner associated with its business be terminated. On May 1,
2003, without responding to Bioceutix's April 24, 2003 letter,
Plaintiff filed this action seeking a declaration of
unenforceability and non-infringement of the trademark M.D.
FORMULATIONS owned by Bare Escentuals, Inc. and Bioceutix Inc. On
July 1, 2003, Bioceutix initiated an action for, inter alia,
trademark infringement against Plaintiff in the Northern District
of California. That action has since been dismissed applying the
The defendants in this case submitted multiple motions for the
court to consider. Defendants filed a motion to dismiss for a
lack of personal jurisdiction, a motion to dismiss Bare
Escentuals for misjoinder, a motion to dismiss or transfer for
improper venue, and a motion to stay declaratory relief action.
The latter two motions have been rendered moot by the dismissal
of the Northern District of California action. The court will
therefore address the remaining motions in turn starting with the
Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
In order to survive a Fed.R.Civ.P. 12(b)(2) motion to
dismiss for lack of personal jurisdiction, the plaintiff must
make a prima facie showing "through affidavits or other evidence
that the defendant's conduct was sufficient for the court to
exercise personal jurisdiction." Hardy v. Ford Motor Car, 20 F.
Supp.2d 339, 341 (D. Conn. 1998) (quoting Ensign-Bickford v. ICI Explosive USA, Inc.,
817 F. Supp. 1018, 1025 (D. Conn. 1993)). The court must construe all
facts in the light most favorable to the plaintiff, and resolve
all doubts in plaintiff's favor. CutCo Indus. Inc. v. Naughton,
806 F.2d 361, 365 (2d Cir. 1986); Fort Knox Music, Inc. v.
Baptiste, 139 F. Supp.2d 505, 508 (S.D.N.Y. 2001). Allegations
made in a plaintiff's complaint are to be "taken as true" but
only "to the extent they are uncontroverted" by the defendant's
affidavits. Electronic Realty Assoc., L.P. v. Paramount Pictures
Corp., 935 F. Supp. 1172, 1175 (D. Kan. 1996). Personal
jurisdiction in a diversity case is determined by the law of the
state in which the district court sits. Arrowsmith v. United
Press Int'l, 320 F.2d 219, 222-225 (2d Cir. 1963). The inquiry
into whether a New York federal court has personal jurisdiction
is two-fold. "First, the acts of the non-domiciliary defendant
must be within the scope of New York's long-arm statutes. Second,
personal jurisdiction must comport with the Due Process Clause of
the Fifth and Fourteenth Amendments." 5-Star Management, Inc. v.
Rogers, 940 F. Supp. 512, 516 (E.D.N.Y. 1996). Because the
"jurisdictional reach" provided by New York's long-arm statues is
"narrower than the maximum permissible under the Due Process
clause[,]" this court need only consider the second step in the
event the first step is satisfied.
Two components of the long arm are applicable here N.Y.C.P.L.R.
§ 301's requirement that a defendant be `doing business' in the
state and N.Y.C.P.L.R. § 302(a)(1)'s requirement that a defendant
`transact business' in the state. Fort Knox Music Inc. v.
Baptiste, 139 F. Supp.2d 505, 506 (S.D.N.Y. 2001).
Since however, the plaintiff has not responded to the
defendant's contention that jurisdiction is not conferred based
on N.Y.C.P.L.R. § 302(a)(1) `transacting business' prong thereby resting their objection to the motion solely on the
"doing business" component of the long arm statute, the court
will limit its analysis to that portion of the statute.
Personal jurisdiction may be established under N.Y.C.P.L.R. §
301 when a defendant is "engaged in such a continuous course of
`doing business' [in New York] as to warrant a finding of its
`presence' in [New York]." Landoil Res. Corp. v. Alexander &
Alexander Serv., Inc., 918 F.2d 1039, 1043 (2d Cir. 1990)
(quoting McGowan v. Smith, 52 N.Y.2d 305, 310 (1982)). The test
for "doing business" is "a simple pragmatic one." Bryant v.
Finnish Nat'l Airline, 15 N.Y.S.2d 625 (1965). This pragmatic
test "focuses upon factors including: existence of an office in
New York; the solicitation of business in the state; the presence
of bank accounts and other property in the state; and the
presence of employees of the foreign defendant in the state."
Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d
Cir. 1985) (citations omitted). Jurisdictional determinations are
"necessarily fact sensitive because each case is dependent upon
its own particular circumstances." See Stark Carpet Corp v.
M-Geough Robinson, Inc., 481 F.Supp 499, 504 (S.D.N.Y. 1980)
(citing Manchester Modes, Inc. v. Lilli Ann Corp.,
306 F. Supp. 622, 624 (S.D.N.Y. 1969)). The Court must therefore analyze a
defendant's connections to the forum state "not for the sake of
contact-counting, but rather for whether such contacts show a
continuous, permanent and substantial activity in New York."
Weinstein, Korn & Miller, New York Civil Practice, para. 301.16,
Plaintiff argues that jurisdiction is proper under Section 301
because defendants sell their products to spas within the
judicial district to consumers (Maldonado Decla., Exs. 1-4). Plaintiffs also site the upcoming opening of a retail
store in New York City as the basis for establishing personal
jurisdiction (Maldonado Decla., Ex. 3). Another supporting factor
offered by the plaintiff is the defendants' continuous and
systematic solicitation of business in New York through trade
publications, the Internet and through an employee who visits New
York to drum up business. Finally, plaintiffs claim that the
defendants "continuously and systematically ship goods into New
York and that defendants cannot escape jurisdiction by hiding
behind a third party wholesaler, who ships the goods into New
York on their behalf.
The above-mentioned factors are attributed to the defendants,
without distinction between Bare Escentuals and Bioceutix. The
court will determine if these factors are sufficient to
constitute "doing business" as contemplated in N.Y.C.P.L.R. § 301
with regard to each defendant individually.
1. Defendant Bare Escentuals.
Bare Escentuals, formerly known as Dolphin Acquisition
Corporation, is a California corporation with its principal place
of business in California. Bare Escentuals, like Bioceutix, is
wholly owned by MD Beauty although both are wholly separate
Bare Escentuals has no offices, property, employees or agents
in the State of New York. Further, Bare Escentuals has undertaken
no advertising targeting the State of New York. (Blodgett Aff. at
The plaintiff claims that this court has personal jurisdiction
over Bare Escentuals because their products are sold by spas
within the judicial district. (Opp. At pp. 12-14). In actuality,
Bare Escentuals sells its products through its retail stores,
none of which are located in New York. (Blodgett Aff. at ¶¶ 6 & 8 and Exhibit A
thereto). Plaintiff has provided no evidence that Bare
Escentuals' products are sold by spas in New York. Instead,
plaintiff has provided a list of spas in the Southern District of
New York that carry M.D. Formulations, a product line owned by
Bioceutix, not Bare Escentuals. (Exhibits 1-4 to the Maldonado
Decl.; Blodgett Aff. at ¶¶ 14 & 18).
The plaintiff also suggests that personal jurisdiction is
conferred over Bare Escentuals because it is hoping to open a
retail store in New York City. (Opp. at 13; Exhibit 6 to the
Maldonado Decl.). Whether or not Bare Escentuals opens a retail
store in New York in the future is irrelevant for purposes of
personal jurisdiction. "To obtain jurisdiction under CPLR 301,
defendant must be `doing business' at the time the action is
brought[.]" The Williams Systems, Ltd. v. Total Freight Systems,
Inc., 27 F. Supp.2d 386, 388 (E.D.N.Y. 1998). See also Puerto
Rico Maritime Shipping Auth. v. Almogy, 510 F. Supp. 873, 878
Plaintiff claims that Bare Escentuals solicits business in New
York continuously and systematically through trade publications,
the Internet and an employee who visits New York to "drum up"
business. (Opp. at 14). In support of this claim, plaintiff has
provided advertisements of M.D. Formulations products in a
national trade publication (Gross Decl. at ¶ 6). However, the
M.D. Formulations business and the M.D. Family of Marks is owned
and marketed by Bioceutix, not Bare Escentuals. (Blodgett Aff. at
¶¶ 14 & 18-20). Bare Escentuals' website, at the time of the
filing of this action, identified retail stores located in
California, Colorado, Pennsylvania, Missouri and Texas not New
York. (Blodgett Aff. at ¶ 8 and Exhibit A thereto). An employee
of Bioceutix, not Bare Escentuals, visited spas and salons in New York for the purpose
of "drumming up" business.
The only shipment of Bare Escentuals' products into New York
resulted from appearances on the QVC home, shopping channel by
Bare Escentuals' President and not from significant solicitation
efforts conducted from within the State of New York. (Blodgett
Aff. at ¶¶ 7 & 10). The mere shipment of products into New York
is insufficient to confer personal jurisdiction. Instead,
substantial solicitation in New York is required for the shipment
of products to New York to confer personal jurisdiction. Beacon
Enter., Inc. v. Menzies, 715 F.2d 757, 763 (2d Cir. 1983). As
described above, Bare Escentuals does not conduct such
solicitation directed toward New York. (Blodgett Aff. at ¶ 6).
Finally, Bare Escentuals provides its products to an
Illinois-based wholesaler who resells the products in the
wholesaler's spas and salons without any input, direction or
guidance from Bare Escentuals. (Blodgett Aff. at ¶ 9).
None of the factors offered by the plaintiff show a continuous,
permanent and substantial activity in New York by Bare Escentuals
sufficient to confer jurisdiction.
2. Defendant Bioceutix
Bioceutix is a Deleware corporation with its principal place of
business in California. (Blodgett Aff. at ¶ 21). Bioceutix is a
wholly owned subsidiary of MD Beauty, Inc. and is a wholly
separate corporate entity from Bare Escentuals. (Id. at ¶ 5).
Bioceutix has no offices, telephone listings, retail stores, or
bank accounts in the state of New York. (Id. at ¶ 21). Bioceutix
does, however, operate an Internet website which provides
information about its products and through which such products
may be purchased. Additionally, an employee of Bioceutix visits spas and salons in New York to
generate interest in Bioceutix's products and for solicitation
purposes. (Id. at. ¶ 22).
It should be noted that the "solicitation of business alone
will not justify a finding of corporate presence in New York with
respect to a foreign manufacturer or purveyor of services."
Laufer v. Ostrow, N.Y.2d at 310; See Frummer v. Hilton Hotels
Int'l, Inc., 19 N.Y.2d at 536; Miller v. Surf Properties,
4 N.Y.2d 475, 480. On the other hand, if the solicitation is
substantial and continuous, and defendant engages in other
activities of substance in the state, then personal jurisdiction
may properly be found to exist. See Beacon Enterprises, Inc.
v. Menzies, 715 F.2d 757, 763 (2d Cir. 1983); Aquascutum of
London, Inc. v. S.S. American Champion, 426 F.2d 205, 211 (2d.
Cir. 1970); Laufer, supra, 55 N.Y.2d at 309-11; D. Siegal, New
York Practice, § 82, at 90-91.
New York courts have held where a defendant has no office,
telephone, bank account, or warehouse in New York nor owns any
property there, that jurisdiction under Section 301 does not lie
where the total amount of sales in New York each year constitutes
4% or $400,000, of total sales. New England Laminates Co. v.
Murphy, 36 N.Y.S.2d 730, 733, 735 (Sup.Ct. 1974); see also
Hennigan v. Taser International, Inc., 2001 U.S. Dist. LEXIS
1857, 00 Civ. 2981 (MBM), 2001 WL 185122, at *2 (S.D.N.Y. Feb.
26, 2001) (finding insufficient contacts under Section 301 where
New York sales comprised 3%, or under $60,000, of total
Bioceutix's sales of goods to entities in New York via sales to
spas and salons and through its Internet website constitute only
3-4 percent of its total product sales under the M.D. Family of
Marks. (Blodgett Aff. at ¶ 25). Bioceutix's solicitation of
business in New York is insufficient to constitute substantial solicitation
and does not provide the basis for personal jurisdiction.
For the aforementioned reasons the defendant's motion to
dismiss for lack of personal jurisdiction is hereby granted. The
court need not reach a decision on the other motions submitted by
IT IS SO ORDERED.
© 1992-2005 VersusLaw Inc.