Dental Recycling North America, Inc. v. Stoma Ventures, Inc.

Background

Dental Recycling North America, Inc. sued Stoma Ventures, LLC under the federal Lanham Act for allegedly false advertising and under Missouri common law for unfair competition. The dispute concerned Stoma’s Capt-all product, which is used to remove particulate from dental-office wastewater. Dental Recycling alleged that Stoma inaccurately advertised the product as complying with all relevant environmental regulations and that the statements diverted sales or caused loss of goodwill.

Stoma moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which addresses lack of personal jurisdiction, or alternatively to transfer the case to the Eastern District of Missouri. The court allowed limited discovery about Stoma’s dealings with Henry Schein, Inc. and Darby Dental Supply, LLC, possible Capt-all sales to New York customers, and the revenue from such sales.

Personal Jurisdiction

The court analyzed New York’s long-arm statute, particularly New York Civil Practice Law and Rules § 302(a)(1). That provision can establish specific personal jurisdiction when a defendant transacts business in New York, or contracts anywhere to supply goods or services in New York, and the claim arises from those acts.

The completed discovery showed that Stoma had no written distribution agreements with Schein or Darby; did not ship Capt-all devices to either company in New York for resale; did not itself sell or ship Capt-all devices to New York customers; and did not control where the distributors sold the products. Stoma had made only one reimbursed shipment to Darby at a New York address: one case containing 100 single-use samples. Stoma also told resellers that Capt-all could not be sold in New York.

The court rejected Dental Recycling’s argument that the shipment and a related invoice established a sufficient transaction or contract. It found that the shipment of samples was not a transaction of business in New York, a contract to supply goods there, or sufficiently related to Dental Recycling’s false-advertising claim. The court also concluded that Dental Recycling had not shown the minimum contacts with New York required by constitutional due process, although it did not need to decide that issue after finding no jurisdiction under New York law. The court additionally stated that the facts did not support jurisdiction under New York Civil Practice Law and Rules § 302(a)(3).

Transfer and Disposition

Because it lacked personal jurisdiction, the court considered the parties’ joint request to transfer the case rather than dismiss it. Under 28 U.S.C. § 1406(a), a court may transfer a case when it lacks jurisdiction if transfer is in the interest of justice. The court found that the Eastern District of Missouri would have personal jurisdiction because Stoma is incorporated there and maintains its principal place of business there. Stoma also agreed that personal jurisdiction exists in that district, and Dental Recycling consented to transfer.

The court therefore concluded that it lacked personal jurisdiction over Stoma and granted the motion to transfer the action to the United States District Court for the Eastern District of Missouri. It denied the plaintiff’s request for additional jurisdictional discovery and directed the Clerk of Court to transfer the action.