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Inc. v. Hoffman

United States District Court, W.D. New York

September 5, 2017

SIT N' STAY PET SERVICES, INC., Plaintiff,
v.
CARRIE HOFFMAN D/B/A KELSEY'S SIT AND STAY D/B/A KELSEY'S SIT, PLAY, & STAY, Defendant.

          DECISION AND ORDER

          Lawrence J. Vilardo, United States District Judge

         The plaintiff, Sit N' Stay Pet Services, Inc. (“Sit N' Stay”), has sued Carrie Hoffman doing business as Kelsey's Sit and Stay and Kelsey's Sit, Play, & Stay. Based on the similarity of the three business names, Sit N' Stay has alleged that Kelsey's Sit and Stay and Kelsey's Sit, Play, & Stay engaged in unfair competition and false designation of origin in violation of the Lanham Act (the “Act”), 15 U.S.C. Section 1125(a); trademark infringement and unfair competition in violation of New York common law; and deceptive trade practices in violation of New York General Business Law Section 349. Before this Court is Magistrate Judge Jeremiah J. McCarthy's Report and Recommendation on the defendant's motion to dismiss for lack of subject-matter jurisdiction and the plaintiff's request for Rule 11 sanctions. For the following reasons, this Court adopts Judge McCarthy's recommendation and denies both the motion to dismiss and the request for Rule 11 sanctions.

         BACKGROUND[1]

         Kim Sauer, the owner and operator of Sit N' Stay, has sold pet-sitting and dog-training services since at least June 4, 2002, under the name “Sit N' Stay Pet Services.” Docket Item 1 ¶¶ 12, 28. Sauer has maintained a website advertising her services since at least May 30, 2003, at the domain name www.sitnstaypetservices.com, with other domain names directed to this website. Id. ¶ 34, 34.1-.4. She incorporated Sit N' Stay Pet Services, Inc., on July 3, 2008. Id. ¶¶ 11, 28, 39.

         According to the complaint, defendant Hoffman has been advertising and selling pet-sitting services under the name “Kelsey's Sit and Stay” since January 1, 2015. Id. ¶ 52. In December 2016, Hoffman began doing business also as “Kelsey's Sit, Play, & Stay, ” and at the time the complaint was filed she did business under both names. Id. ¶ 55. She has advertised and sold services at the domain name www.facebook.com/KelseysSitandStay since April 17, 2015; at www.KelseysSitandStay.com since January 1, 2016; and at www.facebook.com/KelseysSitPlayandStay since sometime after December 5, 2016. Id. ¶ 53-55.

         PROCEDURAL HISTORY

         In lieu of answering the complaint, Hoffman moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Docket Item 6. The case was referred to Judge McCarthy on March 1, 2017. Docket Item 7. The plaintiff then filed a memorandum opposing the motion to dismiss, which included a request for sanctions under Federal Rule of Civil Procedure 11. Docket Item 9. On April 17, 2017, Judge McCarthy issued his Report and Recommendation, in which he recommended that both the defendant's motion to dismiss and the plaintiff's request for Rule 11 sanctions should be denied. Docket Item 12. The defendant objected, and, after the objection was fully briefed, this Court heard oral argument on June 16, 2017. Docket Items 13, 15-17.

         DISCUSSION

         I. REVIEW OF REPORT AND RECOMMENDATION

         This Court “must determine de novo any part of the magistrate judge's disposition that has been properly objected to” and “may accept, reject, or modify the recommended disposition.” Fed.R.Civ.P. 72(b)(3); see 28 U.S.C. § 636(b)(1).

         II. PROCEDURAL PRINCIPLES FOR FEDERAL-QUESTION JURISDICTION

         Hoffman has moved to dismiss the complaint for lack of federal-question jurisdiction. She argues that Sit N' Stay has not met its burden of establishing jurisdiction because it has failed to plead claims that arise out of federal law or raise a substantial federal question. Docket Item 6-1 at 12.

         District courts have jurisdiction to hear all cases “arising under the Constitution, laws or treaties of the United States.” 28 U.S.C. § 1331. A suit arises under the federal law that creates the cause of action only if the complaint, on its face, pleads such a cause of action. Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152 (1908); American Well Works Co. v. Layne Bowler Co., 241 U.S. 257, 260 (1916). Therefore, “[a] plaintiff properly invokes § 1331 jurisdiction when she pleads a colorable claim ‘arising under' the Federal Constitution or laws.” Arbaugh v. Y & H Corp., 546 U.S. 500, 501 (2006) (citation omitted).

         A party may bring a motion challenging the federal court's subject-matter jurisdiction at any time. Fed.R.Civ.P. 12(h)(3). Following such a motion, “[a] case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed.R.Civ.P. 12(b)(1)).

         “The party asserting federal jurisdiction bears the burden of proving that the case is properly in federal court.” Gilman v. BHS Sec., Inc., 104 F.3d 1418, 1421 (2d Cir. 1997) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). Once a plaintiff asserts a federal question, however, the plaintiff need only show that she has alleged a non-frivolous claim under federal law to establish subject-matter jurisdiction. Shapiro v. McManus, __ U.S. __, 136 S.Ct. 450, 455 (2015) (citing Bell v. Hood, 327 U.S. 678, 682-83 (1946)). “Absent such frivolity, ‘the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction.'” Id. at 456 (quoting Bell, 327 U.S. at 682).[2] Thus, there is a “very low threshold required to support federal-question jurisdiction.” Gallego v. Northland Group Inc., 814 F.3d 123, 128 (2d Cir. 2016).

         “When the Rule 12(b)(1) motion is facial, i.e., based solely on the allegations of the complaint . . . the plaintiff has no evidentiary burden.” Carter v. HealthPort Techs., LLC, 822 F.3d 47, 57 (2d Cir. 2016). Under those circumstances, a court draws all facts from the complaint, “which [it] assume[s] to be true unless contradicted by more specific allegations or documentary evidence.” Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011). A defendant is permitted, however, “to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the [p]leading.” Carter, 822 F.3d at 57.

         III. FEDERAL-QUESTION JURISDICTION ...


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