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Davis v. Labs

United States District Court, D. New Mexico

December 20, 2016

LYNN DAVIS, Plaintiff,
v.
USA NUTRA LABS, a Georgia Company, and GROUPON, INC., a Delaware Corporation, Defendants.

          Cassandra R. Malone, et al., Keleher & McLeod, P.A., Attorney for Plaintiff Lynn Davis.

          Justin D. Rodriguez, et al., Atkinson, Thai & Baker, P.C., Attorneys for USA Nutra Labs.

          MEMORANDUM OPINION AND ORDER

          MARTHA VAZQUEZ, UNITED STATES DISTRICT JUDGE.

         THIS MATTER comes before the Court on the Motion of Defendant USA Nutra Labs[1]("USA Nutra") to Dismiss for Lack of Personal Jurisdiction and Memorandum in Support, filed February 12, 2016 [Doc. 22]. On June 17, 2016, Magistrate Judge Steven C. Yarbrough permitted discovery limited to the issue of personal jurisdiction, to be completed within seventy-five days, [Doc. 46]. The parties subsequently submitted supplemental briefs incorporating evidence obtained during discovery. [Docs. 56, 60, 61, 63, 64, 68, 72]. The Court, having considered the motion, briefs, relevant law, and being otherwise fully informed, finds that the motion is well taken and will be granted.

         BACKGROUND

         The relevant allegations in this matter are as follows. Plaintiff Lynn Davis ("Plaintiff) is a resident of Bernalillo County, New Mexico. [Doc. 1 ¶ 1]. In December 2013, Plaintiff received email advertisements from Defendant Groupon promoting Garcinia Cambogia "as a safe and natural weight loss and fat-burning product containing hydroxycitric acid (HCA)." Id. ¶ 7. Plaintiff placed an order with Groupon, over the internet, for three bottles of Garcinia Cambogia, which was a three-month supply. Id. ¶ 9. Plaintiff began taking Garcinia Cambogia in late January or early February 2014, and followed the instructions on the label of the bottle. Id. ¶ 11. In March, Plaintiff began to feel ill and stopped taking the Garcinia Cambogia capsules. Id. ¶ 12. She was hospitalized and a blood test and biopsy revealed that Plaintiff "had nearly no liver function." Id. ¶ 18, Having been in allegedly good health months before, Plaintiff was in need of a liver transplant. Id. While waiting for a transplant at the Mayo Clinic Hospital in Phoenix, Arizona, the Clinic "examined all medications and supplements that Plaintiff had taken and determined that the Garcinia Cambogia . . . was the probable cause of her acute liver failure." Id. ¶ 20. Plaintiff received a liver transplant on June 24, 2014, and remains under medical care. Id. ¶ 21 and 23.

         Plaintiffs Complaint, filed December 8, 2015, [Doc. 1], named USA Nutra as a defendant because the bottles of Garcinia Cambogia that she purchased from Groupon bore a label indicating that the product may have been manufactured by USA Nutra. [Docs. 1 ¶ 26; 22 at 2]. The Complaint alleges that "[t]he Garcinia Cambogia capsules were unreasonably dangerous, defective in design and manufacture and the proximate cause of Plaintiffs severe injuries and damages." [Docs 1. ¶ 30; 34 at 3]. USA Nutra is incorporated and has its principle place of business in Georgia. [Docs. 1 ¶ 1; 22 at 3]. USA Nutra asserts, and Plaintiff does not dispute, that it is not registered to do business in New Mexico. It has no registered agent, "bank accounts, officers, stores, employees, agents or property in New Mexico, and [it] does not use the services of any manufacturer in New Mexico." [Doc. 22 at 3]. "As for USA Nutra's advertising and sales efforts, USA Nutra has never sent corporate representatives or agents to New Mexico to solicit business; it has never attended a trade show in New Mexico; and it does not direct any advertising towards the citizens of New Mexico, to include its websites." Id. at 3. USA Nutra further asserts that it does not "specifically direct" its website towards citizens of New Mexico, and USA Nutra has only made three sales to customers in New Mexico, totaling $175.83 and representing approximately 0.193% of USA Nutra's gross sales from 2010 to 2014. Id. at 3-4.

         In its motion to dismiss, filed on February 12, 2016, [Doc. 22], USA Nutra states that it "did not manufacture the Garcinia Cambogia product in question, but rather had the product manufactured for it by another entity outside of New Mexico." [Doc. 22 at 2-3]. USA Nutra nevertheless acknowledges that "it was in the supply chain of the Garcinia Cambogia product." Id. at 3 n.2.

         In her Response, Plaintiff underscores the allegation that "Nutra Labs expected Groupon to advertise, market, distribute and sell the Garcinia Cambogia that it manufactured." [Docs. 1 ¶ 28; 34 at 3]. Pursuant to this and similar allegations, Plaintiff asked that the Court order discovery on the issue of personal jurisdiction. [Doc. 34 at 16-19]. On June 17, 2016, Magistrate Judge Steven C. Yarbrough permitted discovery limited to the issue of personal jurisdiction, to be completed within seventy-five days, [Doc. 46]. Plaintiff issued interrogatories and deposed Bjarte Rene, CEO and President of Private Label Nutraceuticals, LLC, or USA Nutra. See, e.g., Docs. 61-1, 63-1, 64-1, 64-2. The parties' supplemental briefs revealed the following additional information. First, Groupon had three separate sales agreements related to Garcinia Cambogia: an agreement with DC 1 of Coral Gabies LLC ("Coral Gables") "in relation to the sale of Garcinia Cambogia bearing the USA Nutra Labs label, " an agreement with Private Label Nutraceuticals, LLC (i.e. USA Nutra) to sell a product called TrimEtab Tri-Formula by Slimworx (with a label stating that the product contained Garcinia Cambogia), and an agreement with Slimworx in relation to the sale of a product called Garcinia Cambogia (which, the Court presumes, did not bear the USA Nutra Labs label). [Doc. 61 at 1 (citing Doc. 61-1 at 2-3)]. Groupon also stated in its Answers to Plaintiffs First Set of Interrogatories that "in the last five years, Groupon customers in New Mexico have purchased 1, 314 bottles of Garcinia Cambogia, bearing the USA Nutra Labs label corresponding to 432 orders for that product" and that "in the last five years, Groupon customers in New Mexico have purchased 1, 339 bottles of Garcinia Cambogia bearing the USA Nutra Labs label or TrimEtab Tri-Formula by Slimworx, corresponding to a total of 441 orders for those two products." Id., at 2 (citing Doc. 61-1 at 2-3).

         Second, discovery revealed that there was no agreement between USA Nutra and Coral -Gables to resell or distribute Garcinia Cambogia in New Mexico. [Doc. 63 at 3, (citing Doc. 63-1 at 67-71)]. USA Nutra, or Private Label Nutraceuticals, LLC, sold Garcinia Cambogia bearing the USA Nutra Labs label to Coral Gables, who then sold the product to Groupon. [Doc. 64 at 3]. Plaintiff still does not know the identity of the manufacturer of the Garcinia Cambogia product she used. Id. The Court notes that conspicuously absent from all the above is any additional information about the terms of the alleged agreement between USA Nutra and Coral Gables.[2]

         LEGAL STANDARD

         Motions to dismiss brought under Federal Rule of Civil Procedure 12(b)(2) test a plaintiffs theory of personal jurisdiction as well as the facts supporting personal jurisdiction. The Rule 12(b)(2) standard governing a motion to dismiss for lack of personal jurisdiction is well established. When a defendant challenges the court's jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction exists. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (citations omitted). In the preliminary stages of litigation, this burden is "light, " and prior to trial a "plaintiff is only required to establish a prima facie showing of [personal] jurisdiction." Doe v. Natl Med Serv., 974 F.2d 143, 145 (10th Cir. 1992). The plaintiff may make the required prima facie showing by coming forward with facts, via affidavit or other written materials, that would support jurisdiction over the defendant if true. See OMI Holdings v. Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir. 1998). Only the well-pled facts of a plaintiffs complaint, however, as opposed to mere conclusory allegations in pleadings or other materials, must be accepted as true. See Ten Mile Indus. Park v. W. Plains Serv. Corp., n0 F.2d 1518, 1524 (10th Cir. 1987); Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). Moreover, a plaintiffs jurisdictional allegations are not automatically accepted as true when contradicted by affidavit, although if the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiffs favor. See Wenz, 55 F.3d at 1505.

         DISCUSSION

         The Fourteenth Amendment's Due Process Clause requires that a defendant be subject to a court's personal jurisdiction before a judgment can be rendered against it. See World-Wide Volkswagen v. Woodson,444 U.S. 286, 291 (1980). "To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995) (citation omitted). In New Mexico, a federal court has personal jurisdiction over a nonresident defendant only to the extent that the state's long-arm statute permits. See Fid. & Cos. Co. v. Philadelphia Resins. Corp.,766 F.2d 440, 442 (10th Cir. 1985), cert, denied,474 U.S. 1082 (1986). New Mexico's long-arm statute, however, "extends the jurisdictional reach of New Mexico courts as far as constitutionally permissible, " such that jurisdiction is ...


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