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Budget Blinds, Inc. v. White

September 17, 2008

BUDGET BLINDS, INC., PLAINTIFF,
v.
VALERIE WHITE, BUDGET BLINDS OF NJ, INC., VAL U BLINDS, INC., DEFENDANTS.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.

OPINION

Defendants move under Rule 60(b)(4) to vacate a default judgment of the District Court for the Central District of California for lack of personal jurisdiction. The Court finds that any connection Defendants had to the State of California was too attenuated to constitute the minimal contact the California court would have needed to constitutionally assert personal jurisdiction over Defendants. Accordingly, the Court GRANTS Defendants' motion to vacate and VACATES the California court's default judgment.

I. FACTS AND PROCEEDINGS*fn1

This case arises out of a trademark dispute and subsequent settlement agreement between Plaintiff, a business incorporated and based in California, and Defendants, who collectively constitute a business incorporated and based in New Jersey.

The trademark dispute arose because Plaintiff and Defendants were using similar names for their businesses. Plaintiff, Budget Blinds, Inc. ("BBI"), is a business incorporated and based in California. Budget Blinds, Inc. v. White, Nos. 06-2610, 06-2733, 2008 WL 2875349, at *1 (3d Cir. July 28, 2008). BBI franchises mobile window covering businesses throughout the United States. Id. Defendant Valerie White operated an unrelated business incorporated and based in New Jersey called "Budget Blinds of NJ, Inc." ("BBNJ").*fn2 Id. BBNJ's business was the design and installation of window blinds. Id. Unlike BBI, BBNJ advertised and operated exclusively in the New Jersey region. Id. In late 2003, BBI wrote to BBNJ claiming that BBI had the exclusive trademark rights to the name "Budget Blinds" and threatening suit. Id.

BBNJ contested BBI's rights to the name "Budget Blinds," and BBI and Defendants BBNJ and White eventually entered into a settlement agreement. Id. Under the agreement, BBNJ and White transferred all interests in the name "Budget Blinds" to BBI in exchange for a cash payment. Id. BBNJ and White accordingly agreed to refrain from using the name "Budget Blinds" and to change BBNJ's operating name from "Budget Blinds of NJ, Inc." to "Val U Blinds, Inc." Id. Most importantly to this litigation, the agreement required White to take steps to attempt to disassociate her business's phone number from the name "Budget Blinds" in the local New Jersey Yellow Pages phone directories, published by Verizon. Id.

While Defendants generally complied with the settlement agreement, they were unable even with reasonable diligence to prevent Verizon from disassociating Defendants' phone number with the name "Budget Blinds" in the Yellow Pages. Id. at *2. White wrote several letters to Verizon requesting this disassociation, but Verizon continued to publish Yellow Pages directories listing "Budget Blinds" next to White's phone number. Id. White and BBI attempted but were unable to reach a resolution to this problem. Id.

In response to Verizon's continued listing of the name "Budget Blinds" next to Defendant' phone number, BBI filed a complaint against White, Val U Blinds, and BBNJ in the District Court for the Central District of California. Id. at *3. BBI asserted two types of claims: (1) claims related to Defendants' alleged trademark infringement and (2) claims related to Defendants' alleged breach of the settlement agreement. Id.

Defendants, in an effort to contest the California court's personal jurisdiction over them, declined to file a response. Id. Accordingly, the district judge, Judge James Selna, entered default judgment against Defendants, which BBI then attempted to enforce by registering it with this Court. Id.

Defendants now move under Federal Rule of Civil Procedure 60(b)(4) to vacate the default judgment.*fn3 Id. Defendants argue that the California court lacked personal jurisdiction over them. Id. Defendants reason that any connection they had with the State of California was too attenuated to constitute the minimum contact required for a California court to assert personal jurisdiction over them. Id.

II. DISCUSSION

The requirements of personal jurisdiction in federal courts-a sine qua non of federal adjudication-derive from two sources. First, a federal court may only assert personal jurisdiction over a litigant to the extent that the state in which that court sits would assert personal jurisdiction over that litigant. Fed. R. Civ. P. 4(k)(1). Second, constitutional due process requirements, as explicated in federal jurisprudence, further delimit the extent to which a federal court may assert personal jurisdiction over a litigant. See Int'l Shoe Co. v. Wash., Office of Unemployment Compensation & Placement, 326 U.S. 310, 316 (1945).

These two analyses merge with respect to whether a federal district court in California has personal jurisdiction over a litigant. Fireman's Fund Ins. Co. v. Nat'l Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). This is because California by statute has expressly extended its assertion of personal jurisdiction to the constitutional maximum and will "exercise personal jurisdiction over a non-resident defendant if . . . that exercise of jurisdiction accords with federal constitutional due process principles." Id. Accordingly, the only question in this motion is whether Judge Selna's assertion of personal jurisdiction over Defendants comported with constitutional requirements of due process.

These constitutional requirements of due process stem from one overarching principle. That principle is that the due process clause does not permit a plaintiff to haul a defendant into a forum to which the defendant has no connection. That is, due process in the personal jurisdiction context requires that the defendant "have certain minimum contacts with [the forum] such that the maintenance of the suit [in that forum] does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe, 326 U.S. at 316 (quoting ...


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