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General Nutrition v. Natrol

April 30, 2012

GENERAL NUTRITION CORPORATION D/B/A NUTRA MANUFACTURING, PLAINTIFF,
v.
NATROL, INC., DEFENDANT.



The opinion of the court was delivered by: McVerry, J.

MEMORANDUM OPINION AND ORDER OF COURT

On December 29, 2011, the Court ordered the parties to show cause as to why this matter should not be dismissed for lack of personal jurisdiction (Document No. 5). In response, Defendant Natrol, Inc. ("Natrol") filed a MEMORANDUM IN SUPPORT OF LACK OF JURISDICTION (Document No. 6) and General Nutrition Corporation ("GNC") filed PLAINTIFF'S BRIEF IN OPPOSITION TO DEFENDANT'S PERSONAL JURISDICTION DEFENSE (Document No. 7). The parties thereafter filed reply memoranda (Document Nos. 10 and 11). Upon review of the applicable law and the filings in this case, the Court finds that it may exercise personal jurisdiction over Natrol.

Factual and Procedural Background

This case arises out a contract dispute between the parties. GNC is a Pennsylvania corporation with its principal place of business in Pittsburgh, Pennsylvania. Compl. ¶ 1. Natrol is a Delaware corporation with its principal place of business in Chatsworth, California. Compl. ¶ 3. On or about February 28, 2011, the parties entered into an agreement whereby Natrol agreed to purchase from GNC its requirement of certain dietary supplements, nutraceuticals, and food products, which it had formerly manufactured itself (the "Supply Agreement"). Compl. ¶ 6. The Supply Agreement was executed in Pittsburgh, Pennsylvania by David Berg, GNC's Chief Operating Officer, and Manmohan Patel, Natrol's Chief Executive Officer. Compl. ¶¶ 7-8.

The gravamen of GNC's Complaint is that Natrol breached the Supply Agreement by (1) continuing to produce the products covered by the Supply Agreement and (2) failed to purchase from GNC any of the products it had agreed to purchase. Compl. ¶ 19. GNC alleges that it advised Natrol of its alleged breach and that Natrol responded by denying that the Supply Agreement had ever been finalized. Compl. ¶ 21-23.

GNC originally filed this lawsuit in the Court of Common Pleas of Allegheny County on November 8, 2011, seeking a declaratory judgment that the Supply Agreement is valid and enforceable and asserting claims for breach of contract and promissory estoppel/detrimental reliance. On December 9, 2011, Natrol filed a timely notice of removal to this Court (Document No. 1). Thereafter, Natrol filed an Answer (Document No. 4), in which it avers that this Court cannot exercise personal jurisdiction over it.

Upon consideration of Natrol's Answer and Affirmative Defenses, the Court ordered each party to brief the issue of the Court's personal jurisdiction over Natrol (Document No. 5). In response, Natrol argues that personal jurisdiction is lacking because (1) it does not have systematic and continuous contacts with Pennsylvania; (2) it did not purposefully contact Pennsylvania, or otherwise create a substantial connection with Pennsylvania, so as to give the Court specific jurisdiction over this matter; and (3) there is no significant state interest in adjudicating the dispute in Pennsylvania and doing so would be unconstitutionally burdensome to Natrol. For its part, GNC contends that the Court can exercise both general and specific jurisdiction over Natrol and that doing so would not offend traditional notions of fair play and substantial justice.

Legal Analysis

Once a jurisdictional defense is raised, the plaintiff bears the burden of proving, through affidavits or other competent evidence, sufficient contacts with the forum state to establish personal jurisdiction. IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 257 (3d Cir. 1998). Rather than relying on the general averments in the pleadings, the plaintiff must establish those contacts with reasonable particularity. Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992); Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996). Furthermore, "[t]he Court must accept the plaintiff's allegations as true and construe disputed facts in his favor." Stillwagon v. Innsbrook Golf & Marina, LLC, 2012 WL 501685, at *2 (W.D. Pa. Feb. 12, 2012).

Under Fed. R. Civ. P. 4(e), a federal district court may assert personal jurisdiction over a non-resident defendant in accordance with the law of the state in which it sits. Eurofins Pharma Holdings v. BioAlliance Pharma S.A., 623 F.2d 147, 155 (3d Cir. 2010). Pennsylvania's long-arm statute provides that a court may exercise personal jurisdiction over non-residents "to the fullest extent allowed under the Constitution of the United States." 42 Pa. Cons. Stat. § 5322(b). Therefore, the court must consider "the relationship among the defendant, the forum, and the litigation" in order to determine if personal jurisdiction exists under the precepts of the Due Process Clause of the United States Constitution. IMO Indus., 155 F.3d at 259 (citing Shaffer v. Heitner, 433 U.S. 186 (1977)).

Due process requires that the defendant have "minimum contacts" in the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The Supreme Court has explained that "minimum contacts must have a basis in 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).

Personal jurisdiction may be exercised under two distinct theories. See Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). General jurisdiction is based upon the defendant's "continuous and systematic" contacts with the forum and exists even if the plaintiff's claim arises from the defendant's non-forum related activities. Id.; see also Vetrotex Certainteed Corp. v. Consol. Fiberglass Products Co., 75 F.3d 147, 151 n.3 (3d Cir. 1996). Specific jurisdiction, however, exists only "when the claim arises from or relates to conduct purposely directed at the forum state." See Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 300 (3d Cir. 2008). In examining whether specific jurisdiction exists: a court generally applies two standards, the first mandatory and the second discretionary . . .

First, a court must determine whether the defendant had the minimum contacts with the forum necessary for the defendant to have reasonably anticipate[d] being haled into court there . . . .

Second, assuming minimum contacts have been established, a court may inquire whether the assertion of personal jurisdiction would comport with fair play and substantial justice. Although the latter standard need only be applied at [the] court's discretion, . . . [the Court of Appeals for the Third ...


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