Select Comfort Corp. v. Kittaneh

Citations: 161 F. Supp. 3d 724; 2014 U.S. Dist. LEXIS 187015; 2014 WL 11498526Docket: Civ. No. 13-1684 (RHK/SER)

Court: District Court, D. Minnesota; February 25, 2014; Federal District Court

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Select Comfort Corporation, a Minnesota company known for its "Sleep Number" adjustable air beds, filed a trademark-infringement lawsuit in 2013 against brothers Firas and Mohd Kittaneh, and their businesses Simply Rest, LLC, and One Mall Group, LLC. The lawsuit alleges that the defendants were selling competing air beds that improperly used Select Comfort's trademarks, leading to consumer confusion. After the defendants failed to respond to the complaint, Select Comfort obtained a default entry from the Clerk of the Court. The Corporate Defendants subsequently sought to set aside the default, while the Kittanehs also moved to dismiss the case citing lack of personal jurisdiction. The court granted the motion to set aside the default but denied the motion to dismiss. Select Comfort's products are marketed nationally and have gained significant recognition, with the trademarks "Select Comfort" and "Sleep Number" being highly regarded in the bedding industry. The Kittanehs, who operate from Arizona, allegedly directed the misleading use of Select Comfort’s trademarks through their website, simplyrest.com, selling air mattresses across all states, including Minnesota. Despite efforts to serve the Kittanehs, they evaded service on multiple occasions, complicating the legal proceedings.

Select Comfort sought permission from the Court for alternative service methods for the Kittanehs, which included mailing, leaving copies with the concierge, and affixing them to the Corporate Defendants’ entrance doors. Magistrate Judge Rau approved this motion on September 13, 2013, allowing service to be completed. Subsequently, the Corporate Defendants filed a motion to set aside the Clerk’s entry of default against them, while the Kittanehs filed a motion to dismiss for lack of personal jurisdiction. Both motions are fully briefed and ready for decision.

Under the Federal Rules of Civil Procedure, a default judgment requires two steps: an entry of default by the Clerk when the defendant fails to respond, followed by a motion for default judgment by the plaintiff. A court can set aside an entry of default under Rule 55(c) for "good cause," which considers factors like the defendant's culpability, the existence of a meritorious defense, and potential prejudice to the plaintiff. The Court is inclined to set aside the default against the Corporate Defendants, noting the preference for resolving cases on the merits and the absence of evidence indicating intentional delay by these defendants.

Regarding the Kittanehs’ motion to dismiss, Select Comfort must establish a prima facie case for personal jurisdiction, providing sufficient facts to reasonably infer that the Kittanehs can be subjected to jurisdiction in Minnesota.

The Kittanehs contest the court's jurisdiction, requiring Select Comfort to substantiate its claims through affidavits and exhibits rather than just pleadings. In the absence of a hearing, the court must view facts favorably for Select Comfort and resolve conflicts in its favor. To demonstrate personal jurisdiction, Select Comfort must satisfy Minnesota’s long-arm statute and ensure compliance with the Due Process Clause, which are effectively merged since the statute extends jurisdiction to its constitutional limits. Due process mandates that the Kittanehs have sufficient "minimum contacts" with Minnesota, ensuring that legal action does not violate fair play and substantial justice. This is assessed by whether they have purposefully engaged in activities within Minnesota that would make them reasonably anticipate litigation there. 

The Eighth Circuit outlines five factors for evaluating this: (1) nature and quality of defendant’s contacts; (2) quantity of contacts; (3) relationship of the claims to those contacts; (4) Minnesota’s interest in the case; and (5) convenience for the parties, with the first three being primary. The Kittanehs assert they lack residency, property, business solicitation, or significant revenue from Minnesota, which Select Comfort does not dispute. Instead, Select Comfort points to the website simplyrest.com, claiming it facilitates interaction and sales in Minnesota. The court will assess personal jurisdiction based on the website's interactivity through the "sliding scale" established in Zippo Manufacturing Co. v. Zippo Dot Com, Inc. An "interactive" website suggests a higher likelihood of jurisdiction, while a "passive" website indicates lesser contacts. The simplyrest.com website is acknowledged as "interactive," supporting Select Comfort’s argument for jurisdiction.

A website allowing purchases and binding contracts was deemed interactive, supporting jurisdiction in Minnesota, where alleged monetary and reputational harm to Select Comfort occurred. Minnesota courts have a vested interest in providing a forum for in-state injuries. While the factors favor jurisdiction, a question remains regarding which defendants are subject to it. Select Comfort inadequately differentiates between defendants’ contacts, referring to simplyrest.com as "Defendants’ website" without individual assessments, contrary to established law. However, the Court finds sufficient allegations to establish a minimal prima facie case of personal jurisdiction over the Kittanehs based on their personal involvement in the infringing conduct, including ownership and control of the website and direct participation in the alleged wrongful actions. The Kittanehs did not deny these allegations in their affidavits, which the Court interprets as tacit acknowledgment of personal involvement. The conclusion includes granting the Motion to Set Aside Entry of Default for Simply Rest and One Mall, while denying the Kittanehs’ Motion to Dismiss for Lack of Jurisdiction. Select Comfort's claims of prejudice are undermined by its failure to seek immediate injunctive relief after the entry of default. The Court distinguishes between specific and general jurisdiction, noting that Select Comfort only argues for specific jurisdiction, which applies under Minnesota’s long-arm statute, necessitating consideration of Minnesota state court interpretations.