CENTER FOR COMMUNITY SELF-HELP v. SELF FINANCIAL, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

Center for Community Self-Help, )

)

Plaintiff, )

)

v. ) 1:21cv862

)

Self-Financial, Inc., )

)

Defendant. )

)

)

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge.

Plaintiff Center for Community Self-Help initiated this action against Defendant Self

Financial, Inc. alleging trademark infringement under 15 U.S.C. § 1114, false designation of

origin under 15 U.S.C. § 1125(a), trademark infringement and unfair competition under North

Carolina common law, and unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1.

(ECF No. 1 ¶¶ 46–87.) Before the Court is Defendant’s Motion to Dismiss for lack of

personal jurisdiction and improper venue under Federal Rules of Civil Procedure 12(b)(2) and

(3), or in the alternative for transfer of venue pursuant to 28 U.S.C. §§ 1404(a) or 1406(a).

(ECF No. 15.) For the reasons that follow, the Court will deny Defendant’s motion.

I. BACKGROUND

According to the Complaint, Plaintiff is a North Carolina corporation with its principal

place of business in Durham, North Carolina. (ECF No. 1 ¶ 1.) Plaintiff is an umbrella

organization for a group of affiliated organizations that provide “financing, technical support,

and its affiliates have used a “SELF-HELP” mark in connection with their business and

services. (Id. ¶ 12.)

Defendant is a Delaware corporation with a principal place of business in Austin,

Texas. (Id. ¶ 2.) Defendant is in the business “of providing loans to individuals who need

assistance in establishing credit history and accessing mainstream financial products.”

(Id. ¶ 31.) In 2019, Defendant began using a “SELF” mark in connection with its services,

including on its website, www.self.inc. (Id. ¶¶ 32–34.)

Plaintiff alleges that Defendant’s “SELF” mark is confusingly similar to Plaintiff’s

“SELF-HELP” mark, (id. ¶ 36), and has caused actual confusion among consumers, (id. ¶ 52).

Plaintiff also alleges that since Defendant began using the “SELF” mark, thousands of

consumers attempting to contact Defendant have called Plaintiff’s customer support center in

error, and that the volume of these calls has disrupted Plaintiff’s business. (Id. ¶ 41.)

Therefore, Plaintiff initiated this action.

Turning to Defendant’s motion, the Court will address Defendant’s arguments for

dismissal under Rule 12(b)(2) and (3) first, and then will address the question of transfer.

II. PERSONAL JURISDICTION AND VENUE

A. Standards of Review

1. Rule 12(b)(2)

A challenge to personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil

Procedure is a question of law, and the plaintiff bears the ultimate burden of proving

jurisdiction. See Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016); Carefirst of Md., Inc. v.

Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). The plaintiff’s burden of proof

“varies according to the [procedural] posture of [the] case and the evidence that has been

Where the court decides a pretrial personal jurisdiction question without conducting

an evidentiary hearing—“reviewing only the parties’ motion papers, affidavits attached to the

motion, supporting legal memoranda, and the allegations in the complaint”—a plaintiff “need

only make a prima facie showing of personal jurisdiction” to withstand a jurisdictional

challenge. Id. “[A] plaintiff makes a prima facie showing of personal jurisdiction by presenting

facts that, if true, would support jurisdiction over the defendant.” Universal Leather, LLC v.

Koro AR, S.A., 773 F.3d 553, 561 (4th Cir. 2014) (citing Mattel, Inc. v. Greiner & Hausser GmbH,

354 F.3d 857, 862 (9th Cir. 2003)). The court “must construe all relevant pleading allegations

in the light most favorable to the plaintiff, assume credibility, and draw the most favorable

inferences for the existence of jurisdiction.” Id. at 558 (quoting Combs v. Bakker, 886 F.2d 673,

676 (4th Cir. 1989)).

2. Rule 12(b)(3)

“When an objection to venue has been raised under Rule 12(b)(3), the burden lies with

the plaintiff to establish that venue is proper in the judicial district in which the plaintiff has

brought the action.” Plant Genetic Sys. v. Ciba Seeds, 933 F. Supp. 519, 526 (M.D.N.C. 1996)

(citing Bartholomew v. Va. Chiropractors Ass’n, 612 F.2d 812, 817 (4th Cir. 1979)). A plaintiff is

only obliged to make a prima facie showing of proper venue in order to survive a motion to

dismiss under Rule 12(b)(3). Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 365–66 (4th Cir.

2012) (citing Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004)). In determining whether

such a showing has been made, the Court must “view the facts in the light most favorable to

the plaintiff.” Id.

B. Personal Jurisdiction

“The Due Process Clause of the Fourteenth Amendment constrains a state’s authority

283 (2014) (citation omitted). A federal district court can exercise personal jurisdiction over a

nonresident defendant only if “(1) such jurisdiction is authorized by the long-arm statute of

the state in which the district court sits; and (2) application of the relevant long-arm statute is

consistent with the Due Process Clause of the Fourteenth Amendment.” Universal Leather,

773 F.3d at 558. North Carolina’s long-arm statute “permits the exercise of personal

jurisdiction . . . to the outer limits allowable under federal due process.” Id.; Dillon v. Numismatic

Funding Corp., 231 S.E.2d 629, 630 (N.C. 1977) (holding that, by enacting North Carolina’s

long arm statute, the North Carolina General Assembly “intended to make available to the

North Carolina courts the full jurisdictional powers permissible under federal due process”).

The two-prong test, therefore, “merges into [a] single question,” allowing the court to proceed

directly to the constitutional analysis. Universal Leather, 773 F.3d at 558–59.

Under the Due Process Clause of the Fourteenth Amendment, two paths permit a

court to exercise personal jurisdiction over a nonresident defendant. Id. at 559. One path is

general jurisdiction, “which permits a court to assert jurisdiction over a defendant based on a

forum connection unrelated to the underlying suit.” Walden, 571 U.S. at 283 n.6. The other

path is specific jurisdiction, which “depends on an ‘affiliatio[n] between the forum and the

underlying controversy.’” Id. (alteration in original) (quoting Goodyear Dunlop Tires Operations,

S.A. v. Brown, 564 U.S. 915, 919 (2011)).

Here, the parties present arguments regarding both general and specific jurisdiction.

(ECF Nos. 16 at 9–16; 21 at 10–22; 25 at 3–9.) For each type of jurisdiction, the parties’

arguments focus on Defendant’s interactions with North Carolina and North Carolina

residents carried out via a website and mobile phone application operated by Defendant. (ECF

Nos. 16 at 9–16; 21 at 10–22; 25 at 3–9.) The Court will first address general jurisdiction and

then specific jurisdiction. Ultimately, the Court finds that although it lacks general jurisdiction,

Plaintiff has established a prima facie case of specific jurisdiction over Defendant.

1. General Jurisdiction

“A court may assert general jurisdiction over foreign (sister-state or foreign-country)

corporations to hear any and all claims against them when their affiliations with the State are

so ‘continuous and systematic’ as to render them essentially at home in the forum State.”

Goodyear Dunlop, 564 U.S. at 919. A corporation’s “place of incorporation and principal place

of business” are the “paradigm” bases for general jurisdiction. Daimler A.G. v. Bauman, 571

U.S. 117, 137 (2014). Only in an “exceptional case” will a corporation’s operations render it

“at home” in a state other than its place of incorporation or principal place of business. Id.

571 U.S. at 139 n.19. In such an “exceptional” case, the corporation would have contacts with

a state “comparable to a domestic enterprise in that State.” Est. of Thompson v. Mission Essential

Pers., LLC, No. 11-CV-547, 2014 WL 4745947, at *2 (M.D.N.C. Sept. 23, 2014) (quoting

Daimler, 571 U.S. at 758 n.11). Additionally, in the Internet context, general jurisdiction over

a defendant cannot be predicated on “numerous and repeated electronic connections with

persons [in a state]” without “something more,” as “such transmissions do not add up to the

quality of contacts necessary for a State to have jurisdiction over the person for all purposes.”

ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 715 (4th Cir. 2002).

Here, Defendant is a Delaware corporation and has its principal place of business in

Texas, (ECF No. 1 ¶ 2), so it is not paradigmatically at home in North Carolina. Nevertheless,

Plaintiff contends that general jurisdiction exists because “nearly one million individuals in

North Carolina have accessed Defendant’s website,” and Defendant has “approximately

90,000 ongoing customer relationships with North Carolina residents.” (ECF No. 21 at 10-

11.) However, these numbers represent only numerous and repeated electronic connections

with persons in North Carolina. They do not demonstrate that Defendant conducts any

activities in North Carolina that are domestic in nature. Accordingly, the Court finds that it

lacks general jurisdiction over Defendant.

2. Specific Jurisdiction

Specific jurisdiction requires “that the relevant conduct have such a connection with

the forum state that it is fair for the defendant to defend itself in that state.” CFA Inst. v. Inst.

of Chartered Fin. Analysts of India, 551 F.3d 285, 292 n.15 (4th Cir. 2009). A court may exercise

specific jurisdiction when “the defendant has purposefully directed [its] activities at residents

of the forum and the litigation results from alleged injuries that arise out of or relate to those

activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotations and

citation omitted).

The Fourth Circuit employs a three-prong test to determine whether the exercise of

specific jurisdiction is appropriate: “(1) the extent to which the defendant purposefully availed

itself of the privilege of conducting activities in the forum state; (2) whether the plaintiff’s

claims [arose] out of those activities; and (3) whether the exercise of personal jurisdiction is

constitutionally reasonable.” Universal Leather, 773 F.3d at 559 (quoting Tire Eng’g & Distrib.,

LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 302 (4th Cir. 2012)).

The Court will address each prong of this test in turn.

a. Purposeful Availment

The Fourth Circuit has held that purposeful availment can be satisfied in the Internet

context where a defendant “(1) directs electronic activity into the State, (2) with the manifested

intent of engaging in business or other interactions within the State, [if] (3) that activity creates,

in a person within the State, a potential cause of action cognizable in the State’s courts.” ALS

Scan, 293 F.3d at 714.

The Fourth Circuit’s ALS Scan test is based on a model for measuring electronic

engagement set out in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D.

Pa. 1997). ALS Scan, 293 F.3d at 713. Under the Zippo model, “the likelihood that personal

jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality

of commercial activity that an entity conducts over the Internet.” 952 F. Supp. at 1124.

According to Zippo, the nature and quality of commercial activity on the Internet can be

measured using a “sliding scale” of website interactivity. Id. At one end of the scale, a

“passive” site that “does little more than make information available” will not support

jurisdiction. Id. In contrast, if a defendant “clearly does business over the Internet” by

“enter[ing] into contracts with residents of a foreign jurisdiction that involve the knowing and

repeated transmission of computer files,” then “personal jurisdiction is proper.” Id.

Although Zippo emphasized website interactivity, the Fourth Circuit has cautioned that

when a court applies the ALS Scan test, while “[t]he interactivity of a website” as measured on

the Zippo scale is a “jurisdictionally relevant fact,” the court should not “attach too much

significance on the mere fact of interactivity” at the expense of “losing sight of the key issue

in a specific jurisdiction case—whether ‘the defendant has purposefully directed [its] activities at

residents of the forum.’” Fidrych v. Marriott Int’l, Inc., 952 F.3d 124, 141–42 (4th Cir. 2020)

(quoting Burger King, 471 U.S. at 472). Thus, while a high degree of website interactivity is

probative of personal jurisdiction, it is not dispositive. See UMG Recordings, Inv. v. Kurbanov,

963 F.3d 344, 353 (4th Cir. 2020) (“Whether the [w]ebsites are highly interactive or semi-

interactive . . . is not determinative. . . .”).

Here, each party addresses the first two ALS Scan prongs (direction and intent)

simultaneously based on (1) the level of interactivity of Defendant’s online presence, (2) the

number of visitors that Defendant’s website receives from North Carolina, and (3) the amount

of business that Defendant does in North Carolina. (See ECF Nos. 16 at 11–15; 21 at 11–18;

25 at 5–6.) With respect to the third ALS Scan prong (creation of a cause of action), the parties

dispute how to associate alleged online trademark infringement with any one specific state.

(ECF Nos. 16 at 16; 21 at 18–19; 25 at 8.)

The Court will begin its ALS Scan analysis by addressing the first two prongs of the

test together. See Young v. New Haven Advocate, 315 F.3d 256, 263 (4th Cir. 2002) (noting that

under the circumstances, “the ALS Scan test work[ed] more smoothly when parts one and two

of the test [were] considered together”). In addressing these prongs, the Court will start by

assessing the interactivity of Defendant’s website. This assessment of interactivity will allow

the Court to gauge how the Defendant generally uses electronic activity in its business and for

what purpose. Then, to measure the extent to which Defendant purposefully directs that

electronic activity at North Carolina, the Court will analyze the quantity and quality of

Defendant’s online interactions with North Carolinians specifically. The resolution of these

two inquiries will demonstrate whether Defendant directs electronic activity into North

Carolina with the manifested intent of engaging in business or other interactions within North

Carolina.

Regarding interactivity, Defendant argues that its online presence is only “semi-

interactive” and thus falls in the middle of the Zippo scale. (ECF No. 16 at 12.) Plaintiff

contends that Defendant’s website and mobile app are “highly interactive,” and specific

jurisdiction therefore exists pursuant to Zippo. (ECF No. 21 at 5, 14.) To support this

characterization, Plaintiff has submitted screenshots of Defendant’s website and mobile phone

app, as well as a declaration describing how one navigates through the website and app, and

some of the features pictured in the screenshots. (See ECF Nos. 23; 23-1 through 23-13).

Based on a review of the screenshots of the Defendant’s website and app—which the

Court will treat as a single “website”—the Court finds that Plaintiff has made a prima facie

showing that Defendant’s online platform is highly interactive on the Zippo scale.

The screenshots show that Defendant allows potential customers to sign up for an

account with Defendant online, and then to apply for a loan online. (See ECF Nos. 23-13 at

2–9 (showing pictures of signup process); 23-5 at 2 (“Many customers are able to join . . . in

less than five minutes . . . . Basically, you’ll sign up, select your loan terms, enter your payment

information and answer some security questions to verify your identity.”).) As depicted in

Plaintiff’s screenshots, the instructions on Defendant’s website do not mention any method

of signing up with Defendant offline. (See ECF Nos. 23-1; 23-4; 23-5; 23-11 at 5–6; 23-13.)

Once a customer has a loan from Defendant, the customer makes monthly payments. (ECF

No. 23-12 at 2.) Again, this is done online—Defendant’s payment instructions only address

online payments through an account portal and explicitly state that Defendant does not accept

forms of payment such as checks, money order, cashier’s checks, “or similar method[s].” (Id.)

When a customer pays off a loan from Defendant, Defendant encourages customers to take

out another loan from Defendant, a transaction which will presumably also take place online.

(ECF No. 23-4 at 2 (“[B]e sure to continue building credit either through another Self loan or

other credit-building option.”).)

The features of Defendant’s website described above all support that Defendant forms

contracts with consumers via repeated online exchanges and thus “clearly does business over

the Internet.” Zippo, 952 F. Supp. at 1124. Indeed, Defendant’s apparent lack of offline

methods of business supports that Defendant primarily does business over the Internet.

Accordingly, the materials Plaintiff has submitted make a prima facie showing that

Defendant’s website demonstrates a manifested intent of engaging in online business.

However, the ALS Scan test will not be satisfied unless this business-oriented electronic

activity is directed at North Carolina. The Court therefore now turns to the volume of traffic

and business that Defendant’s online operations receive from North Carolina specifically.

According to a declaration submitted by Defendant, “[a]s of year-end 2021, [its website]

was visited over 18 million times,” and “[a]pproximately 5% of those visits were from

consumers in North Carolina.” (ECF No. 17 ¶ 19.) Also “[a]s of year end 2021, [Defendant]

had almost 2 million customers nationwide, with less than 4.5% of those customers from

North Carolina,” and “approximately 4.5% of [Defendant’s] revenue was attributable to North

Carolina consumers.” (Id. ¶¶ 20–21.)

Defendant describes its statistics showing it has only “limited and sporadic” and “de

minimis” contacts with North Carolina consumers. (ECF No. 16 at 12–13.) Plaintiff, however,

characterizes the same numbers differently. (ECF No. 21 at 17–18.) Plaintiff calculates that

4.5% of 2 million customers is 90,000, and that it is this latter number—90,000 customers—

that the Court should focus on, rather than 4.5%. (Id.) Plaintiff has also attempted to calculate

what 4.5% of Defendant’s revenue is; Plaintiff estimates it may be somewhere between

$450,000 and $1,900,000. (Id.) In Plaintiff’s view, these are large numbers that support a

finding that the first two ALS Scan prongs are satisfied. (Id. at 18.) Defendant responds to

Plaintiff’s calculations by contending that “courts consistently consider and rely upon the

percentages of a party’s business in a particular forum, not the total numbers that those

percentages represent.” (ECF No. 25 at 5–6.) However, Defendant has not cited any Fourth

Circuit case for this proposition. (Id.)

This Court declines to look only at percentages. In the Internet context, courts do not

“consistently” consider percentages rather than total numbers. For example, in Zippo, the

court recited in the background section of its opinion that “[a]pproximately two percent

(3,000) of [the defendant’s] subscribers [were] Pennsylvania residents.” 952 F. Supp. at 1121.

However, when the Zippo court analyzed the facts of the case, it focused on the number 3,000

rather than on the 2% figure. Id. at 1126 (“[Defendant] has contracted with approximately

3,000 individuals . . . .”). Likewise, in UMG Recordings, a recent Fourth Circuit case applying

the ALS Scan test, the Fourth Circuit followed this same pattern. 963 F.3d at 349, 353. In

UMG Recordings, the Fourth Circuit initially recited facts including that one international

website received 500,000 visitors from Virginia (representing about 2% of all visitors to that

website from the United States), and another website received 95,000 visitors from Virginia

(also representing about 2% of the website’s United States-based traffic). Id. at 349. When

the court later analyzed these figures, it stated that there were “plentiful” contacts with Virginia

because the websites together had received “more than half a million unique visitors” from

Virginia during the relevant time period. Id. at 353. Thus, there is no rule that a court must

focus on percentages. See Rice v. PetEdge, Inc., 975 F. Supp. 2d 1364, 1371 (N.D. Ga. 2013)

(“Defendant’s argument would essentially turn the purposeful availment inquiry into a

question of sales percentages, introducing the kind of mechanistic determinations into the

jurisdictional inquiry that the Supreme Court [has] warned against . . . .” (citing Int’l Shoe Co. v.

Washington, 326 U.S. 310, 319 (1945))).

That said, in this case both the total numbers and percentages support that Defendant

directs its electronic activity into North Carolina.

First, 90,000 North Carolina customers is a large enough number to infer that

Defendant, which operates principally online, purposefully directed electronic activity at

North Carolina. See Savvy Rest, Inc. v. Sleeping Organic, LLC, No. 18-CV-30, 2019 WL 1435838,

at *5 (W.D. Va. Mar. 29, 2019) (finding that defendant’s use of a website to sell “over 80

mattresses to residents of Virginia and generate more than $200,000” in gross sales was

purposeful availment of the privilege of conducting business in Virginia and collecting similar

cases); see also Thousand Oaks Barrel Co. v. Deep S. Barrels LLC, 241 F. Supp. 3d 708, 716 & n.6

(E.D. Va. 2017) (collecting cases where “courts have persuasively concluded that personal

jurisdiction exists . . . where the defendant has a national interactive e-commerce website that

generates a small amount of e-commerce sales in the forum state”). The alternative—that

Defendant achieved 90,000 North Carolina customers without directing electronic activity into

North Carolina—is implausible.

As for percentages, while 4.5% is only a single-digit percentage, Defendant’s website

states that Defendant provides services “in all 50 states.” (ECF No. 23-2 at 6.) If Defendant’s

business were equally distributed across all 50 states, it would have only 2% of its business in

every state. With that in mind, 4.5% appears to be a large share of business, and this in turn

also supports that Defendant directed its online activity into North Carolina to build business

in this state.1 See Market Am. v. Optihealth Prods., Inc., 07-CV-855, 2008 WL 5069802, at *7

1 The Court has not accounted for North Carolina’s share of the total United States population in this

analysis. It is possible to use percentages to make a number of contacts seem large or small by

selectively applying adjustments. This is a reason to avoid relying exclusively on them. The Court also

notes that percentages may be misleading in a specific jurisdiction analysis because as one state’s

(M.D.N.C. Nov. 21, 2008) (explaining that North Carolina’s 3% share of defendant’s sales

weighed in favor of finding purposeful availment because the defendant made sales in all fifty

states and worldwide, making North Carolina one of defendant’s “better customers”), report

and recommendation adopted, 07-CV-855, 2009 WL 10715396 (M.D.N.C. Jan. 6, 2009); see also

UMG Recordings, 963 F.3d at 349, 353 (noting that Virginia’s 2% share of domestic visitors to

websites made it rank 11th among states in terms of visitors, and that this supported personal

jurisdiction in Virginia); Thousand Oaks Barrel Co., 241 F. Supp. 3d at 717 (noting that “[c]aselaw

persuasively contradicts [the] argument” that having only a small percentage of total sales

going to a state defeats purposeful availment).

In sum, there is evidence that Defendant operates a highly interactive website, and that

Defendant conducts a large volume of business in North Carolina via this website. These

points together support finding that the first two ALS Scan prongs—that a defendant

“direct[ed] electronic activity” into a state with the “manifested intent of engaging in business

or other interactions” within that state—are satisfied. 293 F.3d at 714. Accordingly, the Court

finds that Plaintiff has successfully made the required prima facie showing for the first two

ALS Scan prongs.2

2 Defendant has also argued that its website does not direct electronic activity at North Carolina

because it is “directed at a national audience. (ECF No. 16 at 12.) What Defendant means by “directed

at a national audience” is that its website “does not contain content specifically directed at North

Carolina” and is “accessible and downloadable by consumers around the country.” (Id.) However, a

website’s high degree of national accessibility (i.e., the degree to which anyone in the country can

access and experience a website in the same way as a person anywhere else in the country) has no

obvious inverse relationship to the degree to which the website operator directs electronic activity into

a state. If a website contained features available only to North Carolinians, that would support that

the website was directed at North Carolina, but the lack of such features does not necessarily support

that the website is not directed at North Carolina. Cf. Rice, 975 F. Supp. 3d at 1371 (“[T]he fact that a

website does not target the forum state might reinforce an overall lack of sufficient contacts to support

purposeful availment. But it is not a dispositive factor.” (internal citation omitted)); Thousand Oaks

The Court now turns to the third ALS Scan prong—whether Defendant’s electronic

activity directed at North Carolina with the intent of engaging in business in North Carolina

also creates in a person within North Carolina a potential cause of action cognizable in North

Carolina’s courts. See ALS Scan, 292 F.3d at 714. As mentioned previously, the parties’ dispute

regarding this prong centers on how to associate online trademark infringement with a specific

forum. Defendant claims that its alleged acts occur in Texas where its employees, documents,

and infrastructure are located, and thus no cause of action arises in North Carolina. (ECF No.

16 at 16.) Plaintiff claims that its injury consists of consumers being confused by an infringing

trademark and this confusion is occurring where the consumers are located; as there are

allegedly confused consumers across the country, including North Carolina, Plaintiff argues

that a cause of action arises in North Carolina. (ECF No. 21 at 18–19.)

In online trademark infringement cases, courts have often found that “by using [a]

[p]laintiff’s trademark to capture potential customers” from a state, a defendant creates a cause

of action in that state. Market Am., 2008 WL 5069802, at *7.3 Notably, in Carefirst of Maryland,

an online trademark infringement case, although the Fourth Circuit found that the Chicago-

based defendant’s activities did not satisfy the first two ALS Scan prongs, the court

nevertheless commented that “a substantial portion of the injuries that [the plaintiff] alleged

were suffered in [Maryland]” since many of the plaintiff’s customers resided in Maryland. 334

F.3d at 401. Moreover, Zippo was an online trademark infringement case as well, and the Zippo

3 See also Savvy Rest, 2019 WL 1435838, at *6 (finding that a claim arose out of online forum-related

activities because the claim was “based . . . on false or misleading representations on the website that

[defendant] use[d] to sell mattresses in Virginia and compete with the plaintiff”); Cole-Tuve, Inc. v. Am.

Mach. Tools Corp., 342 F. Supp. 2d 362, 368 (D. Md. 2004) (finding third ALS Scan prong satisfied in

online trademark infringement case, and drawing comparison between defendant’s alleged online

actions and physically going into Maryland and installing misleading road signs); Graduate Mgmt.

court “conclude[d] that the cause of action ar[ose] out of [the defendant’s] forum-related

conduct,” 952 F. Supp. at 1127, because “a cause of action for trademark infringement occurs

where the passing off occurs,” id. (quoting Cottman Transmission Sys. Inc. v. Martino, 36 F.3d 291,

294 (3d Cir. 1994)).

Under this authority, the Court finds that Plaintiff has made a prima facie showing that

the third ALS Scan prong is satisfied. As this means that Plaintiff has made a prima facie

showing for all three ALS Scan prongs, the Court finds that Plaintiff has carried its burden

with respect to the purposeful availment prong of the overarching Fourth Circuit specific

personal jurisdiction test. The Court therefore turns to the next prong of that overarching

test: whether Plaintiff’s claims arose out of Defendant’s purposeful availment.

b. Arising Out of Activities Directed at the State

The second prong of the Fourth Circuit’s specific personal jurisdiction test “concerns

to what extent [a defendant’s] contacts with [the forum state] form the basis of the suit.” UMG

Recordings, 963 F.3d at 354. “The analysis here is generally not complicated. Where activity in

the forum state is the genesis of [the] dispute, this prong is easily satisfied.” Id. (quoting Tire

Eng’g, 682 F.3d at 303).

As just discussed, Plaintiff has made a prima facie showing that Defendant directed

electronic activity into North Carolina for the purpose of engaging in business in North

Carolina, and this electronic activity created causes of action in North Carolina. Importantly,

those causes of action created by Defendant’s directed electronic activity are the same causes

of action that Plaintiff here has sued on. There is no dispute that Defendant uses the allegedly

infringing “SELF” mark on its website. (ECF No. 16 at 11.) Thus, Defendant’s alleged

purposeful availment forms the basis of the suit presently before this Court, and the Court

finds that Plaintiff has carried its burden for the second prong of the specific jurisdiction test.

c. Constitutional Reasonableness

The third prong of the Fourth Circuit’s specific personal jurisdiction test asks whether

“the exercise of personal jurisdiction [is] constitutionally reasonable,” and requires a Court to

consider factors “includ[ing]: (1) the burden of the defendant of litigating in the forum; (2) the

interest of the forum state in adjudicating the dispute; (3) the plaintiff’s interest in obtaining

convenient and effective relief; (4) the shared interest of the states in obtaining efficient

resolution of disputes; and (5) the interests of the states in furthering substantive social

policies.” Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273, 279 (4th Cir. 2009).

Here, neither party has presented an argument specific to this part of the Fourth

Circuit’s specific personal jurisdiction test. Instead, Plaintiff and Defendant treat this factor

as satisfied or unsatisfied, respectively, based entirely on the factors previously discussed. (See

ECF Nos. 16 at 10–16; 21 at 19.)

In the Fourth Circuit’s most recent case applying ALS Scan, the court discussed ALS

Scan within its treatment of the purposeful availment prong of its overarching specific personal

jurisdiction test. UMG Recordings, 963 F.3d at 352–54. After finding the purposeful availment

prong satisfied, the Fourth Circuit then addressed the “arising out of” prong, and then

constitutional reasonableness. Id. at 354–55. Since the district court below had not analyzed

reasonableness in the first instance, the Fourth Circuit remanded the case with instructions

that the district court address it. Id. at 355. This Court, therefore, will analyze constitutional

reasonableness separately from the issues already addressed. The Court turns now to the five

constitutional reasonableness factors set out in Consulting Engineers.

For the first factor, the Court considers whether Defendant, which is based in Texas,

is overly burdened by being haled into court in North Carolina. The Fourth Circuit case CFA

Institute is instructive on this factor. See 551 F.3d at 296. In that case, the Fourth Circuit held

that a defendant based in India was not overly burdened by having to defend itself in Virginia

because it “ha[d] been able to secure counsel to represent its interests, and its litigation burden

[was] thus no more substantial than that encountered by other entities that [chose] to transact

business in Virginia.” Id. Here, Texas is closer to North Carolina than India is to Virginia,

and Defendant has retained counsel with a business address in North Carolina. Accordingly,

this factor weighs in favor of a finding of reasonableness.

The Court next addresses the second factor, the interest of North Carolina in

adjudicating this dispute. CFA Institute is instructive for this factor as well. See id. at 297.

There, the plaintiff was a Virginia entity that had filed suit under the federal Lanham Act as

well as Virginia law. Id. The Fourth Circuit held that “Virginia [had] a valid interest in the

resolution of the grievances of its citizens and businesses, particularly when they potentially

involve issues of Virginia law.” Id. Here, Plaintiff is a North Carolina entity, (ECF No. 1 ¶ 1),

and it has brought claims including a claim under the Lanham Act, (id. ¶¶ 58–68), and claims

under North Carolina state law, (id. ¶¶ 69–87). Thus, North Carolina has an interest in

adjudicating this dispute, and the second factor therefore also weighs in favor of a finding of

reasonableness.

Regarding the third factor, the plaintiff’s interest in obtaining convenient and effective

relief, this factor also weighs in favor of a finding of reasonableness because Plaintiff has

brought this action in its home state. Lillie v. Guerra, 559 F. Supp. 3d 464, 475 (M.D.N.C.

2021) (finding third factor supported reasonableness because all plaintiffs were residents of

North Carolina or had their principal place of business in North Carolina).

Finally, the fourth and fifth factors, that is, the shared interest of the states in obtaining

efficient resolution of disputes and the interests of the states in furthering substantive social

policies, do not weigh either for or against reasonableness. For the fourth factor, since Plaintiff

is based in North Carolina while Defendant is based in Texas, neither state is obviously a more

or less efficient forum overall as compared to the other for this litigation. As for the fifth

factor, this case does not appear to implicate any specific substantive social policy that might

differ between North Carolina and Texas.

Thus, several of the Consulting Engineers factors weigh decidedly in favor of

reasonableness in this case, and no factor weighs against it. Accordingly, the Court finds that

the exercise of personal jurisdiction over Defendant is prima facie constitutionally reasonable.

Since the Court has previously found that Plaintiff carried its burden of showing that the

claims in this case arose out of Defendant’s purposeful availment of the privilege of doing

business in North Carolina, the Court concludes that at this stage of the proceedings Plaintiff

has established a prima facie showing that this Court has specific personal jurisdiction over

Defendant for this case. The Court will therefore deny Defendant’s motion to dismiss under

Federal Rule of Civil Procedure 12(b)(2).

C. Venue

The Court now turns to Defendant’s arguments for dismissal of this action pursuant

to Federal Rule of Civil Procedure 12(b)(3) for improper venue. (ECF No. 16 at 17–20.)

Under the general venue statute, venue is proper in any judicial district “in which a

substantial part of the events or omissions giving rise to the claim occurred, or a substantial

part of property that is the subject of the action is situated.” 28 U.S.C. § 1391(b)(2); see Savvy

Rest, 2019 WL 1435838, at *7 (“The Lanham Act has no special venue provision and thus the

general venue statute is applicable.” (quoting Woodke v. Dahm, 70 F.3d 983, 985 (8th Cir.

1995))). “[I]n determining whether events or omissions are sufficiently substantial to support

venue . . . , a court should not focus only on those matters that are in dispute or that directly

led to the filing of the action.” Mitrano, 377 F.3d at 405. “Rather, it should review ‘the entire

sequence of events underlying the claim.’” Id. (quoting Uffner v. La Reunion Francaise, S.A., 244

F.3d 38, 42 (1st Cir. 2001))).

To argue why venue is not proper, Defendant reiterates one of its earlier personal

jurisdiction arguments. As before, Defendant stresses that only 4.5% of its online business

originates in North Carolina. (See ECF No. 16 at 19.) Defendant equates this to only 4.5%

of the events giving rise to Plaintiff’s claims occurring in North Carolina, and Defendant

argues that this 4.5% is de minimis. (Id.) Defendant also highlights, again, that its operations

are based in Texas, and adds that it has only two employees in North Carolina, both of whom

work remotely. (Id. at 18–19.) In response, Plaintiff refers the Court to its corresponding

personal jurisdiction counter-arguments. (ECF No. 21 at 22–24.)

Defendant’s argument, which was not persuasive in the context of jurisdiction, is also

not persuasive in the context of venue.

“In trademark infringement actions, the actionable wrong takes place both where

infringing labels are affixed to the goods and where confusion of purchasers is likely to occur.”

Make Up For Ever, S.A. v. SOHO Forever, LLC, 198 F.R.D. 56, 61 (S.D.N.Y. 2000); see also Savvy

Rest, 2019 WL 1435838, at *8 (“[A]ppellate courts have held that a ‘substantial part’ of the

events giving rise to [trademark infringement] claims occurs in any district where consumers

are likely to be confused by the accused infringement, ‘whether that occurs in one district or

in many.’” (quoting Cottman, 36 F.3d at 295)). “Confusion of customers occurs where the

passing off occurs, that is, ‘where the deceived customer buys the defendant’s product in the

belief that he is buying the plaintiffs.’” Kaia Foods, Inc. v. Bellafiore, 70 F. Supp. 3d 1178, 1184

(N.D. Cal. 2014) (quoting Sykes Lab’y, Inc. v. Kalvin, 610 F. Supp. 849, 860 n.8 (C.D. Cal. 1985)).

Thus, venue may be proper where a defendant operates a website and makes “relatively

modest sales” in a district, or where a defendant conducts “advertising activities that are aimed

at [a] district, even if there is no evidence that actual sales of the allegedly infringing product

have occurred.” Id.; see also 6 McCarthy on Trademarks and Unfair Competition § 32:64 (5th

ed.) (“[A]ny place where there are sales or advertising of the accused goods or services . . . is

a place where the events giving rise to trademark infringement occur: any such place is a proper

site of venue.”).

Here, Plaintiff has made a prima facie showing that Defendant advertises in North

Carolina, that Defendant makes sales in North Carolina, and even that there are actual

confused consumers in North Carolina. Regarding advertising, Plaintiff has submitted a

declaration of a North Carolina resident who states that while watching television in North

Carolina he has personally seen advertisements for Defendant’s services that use Defendant’s

allegedly infringing mark. (ECF No. 22 ¶ 15.) Regarding sales, Defendant concedes that it

has tens of thousands of North Carolina customers. (ECF Nos. 17 ¶ 20; 25 at 5–6.) Finally,

regarding actual confused customers, Plaintiff claims that it has analyzed the phone numbers

of callers who contacted Plaintiff while attempting to reach Defendant, and its analysis shows

that some of these callers are calling from North Carolina phones. (ECF Nos. 21 at 18; 22

¶ 13.) Taking these facts in the light most favorable to Plaintiff, Aggarao, 675 F.3d at 366, the

Court finds that Plaintiff has carried its burden to resist dismissal for improper venue by

making a prima facie showing that it is likely that there is consumer confusion in North

Carolina, cf. Savvy Rest, 2019 WL 1435838, at *8 (finding venue was proper based on online

sale and subsequent physical delivery of fifty mattresses to Virginia residents over prior five

years).

The Court notes that Defendant’s brief cites over half a dozen cases that appear to

stand for a contrary proposition—that venue will not lie unless a high proportion of a

defendant’s sales occur in a district. (ECF No. 16 at 19–20). However, all but one of these

cases were decided prior to 1990. (Id.) Before 1990, 28 U.S.C. § 1391 did not include the

provision that venue is proper in “a judicial district in which a substantial part of the events or

omissions giving rise to the claim occurred”; Congress added this language in the Judicial

Improvements Act of 1990, Pub. L. No. 101-650, § 311(1), 104 Stat. 5089, 5114. Mitrano, 377

F.3d at 405 (discussing history of § 1391 and the 1990 amendments). The pre-1990 version

of § 1391 “encouraged an approach that a claim could generally arise in only one venue.”

Cottmann, 36 F.3d at 294. In contrast, the 1990 amendments made it “possible for venue to

be proper in more than one judicial district.” Mitrano, 377 F.3d at 405. Accordingly,

Defendant’s pre-1990 cases are not useful here. As for the single post-1990 case that

Defendant cites, the Court has reviewed this case and has found that it does not support

Defendant’s position, as the court’s analysis in that case does not address the percentage of

sales that the defendant had in the proposed district. See Ultrasonic Power Corp. v. Cleaning Techs.

Grp., No. 17 C 50308, 2018 WL 11197101 (N.D. Ill. June 19, 2018) (cited by ECF No. 16 at

19).

Accordingly, the Court will deny Defendant’s motion to dismiss under Federal Rule of

Civil Procedure 12(b)(3).

III. TRANSFER

Finally, the Court turns to Defendant’s contention that, if venue is proper under 28 U.S.C.

§ 1391(b)(2), this Court should nevertheless transfer this case to the Western District of Texas

pursuant to 28 U.S.C. § 1404(a).4 (ECF No. 16 at 21–24.)

Under 28 U.S.C. § 1404(a), even if venue is proper in a district, a district court may still

transfer “any civil action to any other district or division where it may have been brought or to any

district or division to which all parties have consented” for “the convenience of the parties and

witnesses, [and] in the interest of justice.” “If a defendant files a motion to transfer under [28

U.S.C. § 1404(a)], the Court makes two inquiries: (1) whether the plaintiff’s claims might have been

bought in the court where it is to be transferred; and (2) whether the interests of justice and the

convenience of the parties and witnesses justify transfer to that district.” Trinh v. Int’l Bus. Machs.

Corp., No. 21-CV-105, 2022 WL 879680, at *3 (M.D.N.C. Mar. 2, 2022), report and recommendation

adopted, No. 21-CV-105, 2022 WL 875699 (M.D.N.C. Mar. 24, 2022)). “The phrase ‘where it

might have been brought’ . . . refers to a forum where venue originally would have been proper

for the claim and where a defendant originally would have been subject to personal jurisdiction.”

Id. (quoting Kotsonis v. Superior Motor Express, 539 F. Supp. 642, 645 (M.D.N.C. 1982)). “To assess

the convenience of the parties and witnesses, as well as the interest of justice,” the Court considers

many factors. Id. at *4. Those factors are:

4 Defendant has also argued that this Court should transfer this case pursuant to 28 U.S.C. § 1406(a).

(ECF No. 16 at 20–21.) While both § 1404(a) and § 1406(a) allow a court to transfer a case to another

venue, § 1404(a) applies when a suit is filed in a district court where venue is proper and § 1406(a)

applies when a suit is filed in a district court where venue is not proper. Richard D. Freer, 15 Fed.

(1) the plaintiff's initial choice of forum; (2) relative ease of access to sources of

proof; (3) availability of compulsory process for attendance of unwilling witnesses,

and the cost of obtaining attendance of willing and unwilling witnesses; (4)

possibility of a view of the premises, if appropriate; (5) enforceability of a judgment,

if one is obtained; (6) relative advantage and obstacles to a fair trial; (7) other

practical problems that make a trial easy, expeditious, and inexpensive; (8)

administrative difficulties of court congestion; (9) local interest in having localized

controversies settled at home; (10) appropriateness in having a trial of a diversity

case in a forum that is at home with the state law that must govern the action; and

(11) avoidance of unnecessary problems with conflicts of laws.

Speed Trac Techs., Inc. v. Estes Express Lines, Inc., 567 F. Supp. 2d 799, 802 (M.D.N.C. 2008) (quoting

Plant Genetic Sys., 933 F. Supp. at 527). “The moving party bears the burden of proving that the

balance of these factors weighs in favor of transfer.” Id. at 803 (quoting Sweeney v. Pa. Nat’l Mut.

Cas. Ins. Co., No. 05-CV-931, 2007 WL 496699, at *2 (M.D.N.C. Feb. 27, 2007)). “[T]he analysis

of these factors is qualitative, not merely quantitative.” Id. (quoting Com. Equip. Co. v. Barclay

Furniture Co., 738 F. Supp. 974, 976 (W.D.N.C. 1990)). “A ‘court should refrain from transferring

venue if to do so would simply shift the inconvenience from one party to another.’” Id. (quoting

Tools USA & Equip. Co. v. Champ Frame Straightening Equip., Inc., 841 F. Supp. 719, 721 (M.D.N.C.

1993)).

Here, Defendant argues that transfer is appropriate because Defendant resides in Texas

while Plaintiff “admittedly has physical locations in at least eight different states and conducts

business in even more states and online.” (ECF No. 16 at 23.) According to Defendant, this

means that litigating this case in the North Carolina would require both parties to transport the

relevant documents, information, and witnesses to North Carolina from across the country. (Id.)

In contrast, Defendant proposes that Texas is conveniently “in the middle of the country and,

therefore, in the middle of [Plaintiff’s] California and North Carolina offices,” thus making it a

logistically easier location for this litigation. (Id.) This argument is not persuasive.

As alleged in the Complaint, Plaintiff brought this suit in part because so many people

contact Plaintiff’s customer support call center in error while attempting to contact Defendant

that the confusion disrupts Plaintiff’s ability to serve its own customers. (ECF No. 1 ¶ 41.)

Plaintiff has also submitted evidence that the call center at issue is in Durham, North Carolina,

and that a portion of the confused callers are calling from North Carolina phone numbers. (ECF

No. 22 ¶ 13.) Thus, it is likely that there is a concentration of relevant evidence and witnesses in

North Carolina. Moreover, while Plaintiff has indeed represented that its affiliated organizations

have operations in eight states, Texas is not one of those states. (ECF No. 1 ¶ 11.) Of the parties

in this litigation, only Defendant is in Texas. Defendant seeks solely its own benefit, at the expense

of others. This does not justify transfer. See Tools USA, 841 F. Supp. at 721.

Finally, Defendant also briefly argues that the enforceability of a judgment factor weighs

in in favor of Texas since its property and assets are in Texas. (ECF No. 16 at 24.) However, this

argument is not persuasive because Defendant has not provided any explanation why a judgment

rendered by this Court could not reach Defendant in Texas.

Accordingly, although the Western District of Texas would have personal jurisdiction over

Defendant in Texas, Defendant has not carried its burden of justifying a transfer under 28 U.S.C.

§ 1404(a). The Court will therefore deny Defendant’s motion to transfer.

For the reasons stated herein, the Court enters the following:

ORDER

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss, (ECF No.

15), is DENIED.

This, the 6th day of February 2023.

/s/ Loretta C. Biggs