A Long Arm to South America?
Automobili Lamborghini S.P.A. v Lamborghini Latino America USA

400 F.Supp.3d 471 (E.D. Va. 2019)

Facts

Jorge Antonio Fernandez Garcia, who lived in South America, told Anthony Crudup (defendants), who lived in the United States, that he had 99-year worldwide licensing agreements to manufacture and sell â€œlifestyleâ€ merchandise (cigars, t-shirts) with the Lamborghini trademark. The two formed a partnership to sell the merchandise via the website they created together, www.lamborghinigrupo.com. In addition, Garcia directed what merchandise would be offered and how it would appear on the website in exchange for 12% of the profits from sales in the United States. The Lamborghini company (plaintiffs) filed suit against the two for trademark infringement because there was no 99-year agreement. Garcia has moved to dismiss the case because he cannot be forced to come to the United States to defend a lawsuit.

Judicial Opinion

ELLIS, T.S., Judge

It is well-settled that exercising jurisdiction over a defendant is consistent with due process as long as the defendant has sufficient â€œminimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.â€ Intâ€™l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The Fourth Circuit has held that â€œa single act by a defendant can be sufficient to satisfy the necessary â€˜quality and natureâ€™ of such minimal contacts, although â€˜casualâ€™ or â€˜isolatedâ€™ contacts are insufficient to trigger such an obligation.â€ Of particular relevance here, the Fourth Circuit has held that a defendantâ€™s Internet activity can serve as a basis for exercising specific personal jurisdiction if the defendant â€œ(1) directs electronic activity into the [forum], (2) with the manifested intent of engaging in business or other interactions within the [forum], and (3) that activity creates, in a person within the [forum], a potential cause of action cognizable in the [forum]â€™s courts.â€ ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002).

Garcia was the one who held the alleged licensing rights, Garcia had to approve all business decisions relating to the marketing and sale of Lamborghini-marked merchandise on the www.lamborghinigrupo.com website. The two men also agreed on a plan for allocating profits made from selling Lamborghini merchandise in the United States, with 12% of the profits to go to Garcia. Through the www.lamborghinigrupo.com website, Garcia and Crudup made two confirmed sales of Lamborghini-marked cigars into the United States in Virginia and Florida.

These facts demonstrate that Garcia has sufficient contacts with the United States as a whole such that the exercise of personal jurisdiction would comport with the limits of due process under the ALS Scan test. First, the facts show that Garcia â€œdirect[ed] electronic activity into the [United States],â€ in satisfaction of the first ALS Scan element. It is undisputed that the www.lamborghinigrupo.com website specifically targeted the United States market; indeed, the only confirmed sales made by Garcia and Crudup through the website were to purchasers in the United States. And importantly, the evidence persuasively demonstrates that Garcia personally marketed and sold products into the United States through the website. In fact, as Crudup testified, Garcia had the final say with respect to all decisions concerning the marketing and sale of products on the website, as he was the holder of the purported licensing rights. The above facts also show that Garcia was to receive 12% of the profits from selling Lamborghini-merchandise into the United States through the website. This evidence makes clear that Garcia personally directed electronic activity into the United States through his participation in marketing and selling Lamborghini-marked products through the www.lamborghinigrupo.com website, undertaken in concert with Crudup.

Garcia argues that his participation in the operation of the website was too limited to connect him to the marketing and sale of products into the United States taking place on the website. In support, Garcia cites Hard Candy, LLC v. Hard Candy Fitness, LLC, 106 F. Supp. 3d 1231 (S.D. Fla. 2015), in which the district court ruled that two parent companiesâ€™ approval rights over a subsidiary company were insufficient to support the exercise of personal jurisdiction under the Florida long-arm statute over the parent companies by imputing the subsidiaryâ€™s forum contacts under agency principles. That case is inapposite because here it is unnecessary to impute Crudupâ€™s contacts to Garcia under agency principles. Garcia personally and substantially participated in marketing and selling products into the United States through the website; thus, it is clear that Garcia himself targeted the United States through his electronic activity, as is required under the first element of the ALS Scan test.

Garcia makes much of the fact that the two products sold by Garcia and Crudup through the website were purchased by private investigators hired by plaintiffs, but this in no way impacts the minimum contacts analysis. â€œ[T]he fact that the purchaser [of the infringing product] happened to be an investigator in plaintiffsâ€™ employ does not go to the question whether [the defendant] purposefully availed itself of the privilege of doing business in [the forum].â€

It is hereby ordered that defendantâ€™s motion to dismiss for lack of personal jurisdiction is denied.

Case Questions

1. List the activities that Garcia engaged in with regard to the United States.
2. How much contact with the United States is necessary to allow a U.S. federal court to take jurisdiction over an out-of-the-county defendant?
3. Explain why Garcia raises the issue of who bought the goods from the website.

A Long Arm to South America? Automobili Lamborghini S.P.A. v Lambo...