United States District Court, E.D. Pennsylvania
OPINION DEFENDANT SMITH'S MOTION TO DISMISS, ECF
NO. 6 - DENIED DEFENDANTS SMITH AND ALLIANCE'S MOTION TO
DISMISS, ECF NO. 14 - GRANTED
F. LEESON, JR. UNITED STATES DISTRICT JUDGE
Shift4 Payments, LLC (“Shift4”) brings this
action pursuant to 15 U.S.C. § 1051 et seq.
(“Lanham Act”) and the statutory and common laws
of the Commonwealth of Pennsylvania. Shift4 alleges that
Defendant Alliance Consultant Group (“Alliance”),
through its Chief Executive Officer Defendant Eric Smith,
posted false and duplicative advertisements on the same
websites as Shift4, harassed sales representatives with
disruptive “robo-calls, ” and published
defamatory and disparaging false statements about Shift4 and
its business practices.
has moved to dismiss the Complaint, as it relates to him, for
lack of personal jurisdiction. Also, Smith and Alliance have
jointly moved to compel arbitration on all claims. For the
reasons set forth below, Smith's motion to dismiss for
lack of personal jurisdiction is denied, but Defendants'
motion to compel arbitration is granted.
Complaint alleges the following facts. Shift4, which was
formerly known as Harbortouch Payments, is a limited
liability company organized and existing under the laws of
the State of Delaware and has a principal place of business
in Allentown, Pennsylvania. See Compl. ¶ 5, ECF
No. 1. Alliance, which at all times was and still is operated
by Smith, is a business entity organized and existing under
the laws of the State of Florida and has a principal place of
business in Kissimmee, Florida. See Id. at ¶ 6.
and Alliance entered into a contract in October 2015 for
Alliance to become an independent sales office
(“ISO”) of Shift4. See Compl.
¶¶ 29, 61, 76. Smith signed this ISO Agreement on
behalf of Alliance. See Agreement 11, Defs.'
Mot. Dismiss, Ex. A, ECF No. 14. The ISO Agreement was due
for renewal in October 2017, but a lack of active merchant
accounts caused it to be automatically terminated effective
October 17, 2017. See Compl. ¶ 60.
and after the contract term, Smith unlawfully duplicated
Shift4 advertisements on various websites. Specifically, in
or about April 2016, David Iava, the owner of a Shift4 ISO,
noticed that within hours of posting an advertisement to
certain websites, a seemingly duplicate advertisement would
appear above his original advertisement. See id. at
¶ 33. While the text of the duplicate advertisement was
nearly identical, the phone number in the duplicate
advertisement was slightly different than his company's.
See id. at ¶ 34. Iava called the phone number
in the duplicate advertisement and spoke to Smith, who
admitted that he was responsible for the duplicate
advertisements. See id. at ¶ 35. Over the
course of that initial phone call and two subsequent phone
calls, Smith made defamatory comments about Shift4's
chief executive officer. See id. at ¶ 36.
Shortly after Iava's last communication with Smith, his
company began receiving harassing robo-calls that caused the
phone to ring approximately every 30 seconds, with nothing
but static on the other end of the line. See id. at
¶ 39. Smith's duplicative advertisements also
continued. In or about April 2017, Iava obtained a copyright
registration for one of his Shift4 advertisements prior to
posting it. See id. at 45. Nevertheless, that
advertisement was also duplicated by Smith to redirect users
to Alliance. See id.
engaged in similar conduct in relation to another Shift4 ISO,
Harbortouch Screen. See id. at ¶¶ 49-60.
In or about November 2018, Iava discovered a website with the
domain name “Harbortouch.sucks, ” which would
redirect to “Harbortouch.pk.” See id. at
¶ 75. Public domain name registration information
revealed that Harbortouch.sucks was created in or about
November 2017, shortly after Shift4's termination of its
ISO agreement with Alliance. See id. at ¶ 76.
The Harbortouch.pk website posted a number of false and
defamatory statements relating to Shift4, their agents, their
ISOs, and their business practices. See id. at
in or about October 2018, Smith, for the benefit of Alliance,
began using “ghost” robo-calls that caused
ISO's to believe they were receiving calls from Shift4,
but with only static on the other end of the line. See
id. at ¶ 71. This caused ISO's to contact
Shift4 to complain about the disruptive calls, thus
interfering with Shift4's own operations. See
id. at ¶ 72.
Complaint asserts thirteen counts: (1) a claim pursuant to
the Lanham Act for federal trademark and service mark
infringement; (2) a claim pursuant to § 43(a) of the
Lanham Act for unfair competition; (3) a claim pursuant to
§ 43(a) of the Lanham Act for false advertising; (4) a
claim pursuant to 15 U.S.C. § 1125(d)
(“Anticybersquatting Consumer Protection Act”);
(5) a claim pursuant to Pennsylvania common law for trademark
infringement; (6) a claim pursuant to Pennsylvania common law
for product disparagement/trade libel; (7) a claim pursuant
to Pennsylvania common law for defamation; (8) a claim
pursuant to Pennsylvania common law for tortious interference
with contract; (9) a claim pursuant to Pennsylvania common
law for tortious interference with prospective business
relationships; (10) a claim pursuant to 73 P.S. §
201-9.2 for unfair competition; (11) a claim pursuant to
Pennsylvania common law for injurious falsehood; (12) a claim
pursuant to Pennsylvania common law for unjust enrichment;
and (13) a claim for injunctive relief.
STANDARDS OF REVIEW
Personal Jurisdiction - Rule 12(b)(2)
reviewing a motion to dismiss for lack of personal
jurisdiction under Federal Rule of Civil Procedure 12(b)(2),
this Court must accept the plaintiff's allegations as
true and resolve disputed facts in favor of the plaintiff.
Pinker v. Rocher Holdings Ltd., 292 F.3d 361, 368
(3d Cir. 2002). However, once a defendant has raised a
jurisdictional defense, the plaintiff must “prove by
affidavits or other competent evidence that jurisdiction is
proper.” See Metcalfe v. Renaissance Marine,
Inc., 566 F.3d 324, 330 (3d Cir. 2009). If an
evidentiary hearing is not held, a plaintiff “need only
establish a prima facie case of personal jurisdiction.”
Id. A plaintiff meets this burden by
“establishing with reasonable particularity sufficient
contacts between the defendant and the forum state.”
Provident Nat. Bank v. California Fed. Sav. & Loan
Assoc., 819 F.2d 434 (3d. Cir 1987).
Motion to Compel Arbitration
deciding a motion to compel arbitration, a district may
either employ the motion to dismiss standard under Federal
Rule of Civil Procedure 12(b)(6) or the motion for summary
judgment standard under Federal Rule of Civil Procedure 56.
MacDonald v. Unisys Corp., 951 F.Supp.2d 729, 732
(E.D. Pa. 2013). When it is apparent from the face of a
complaint and documents relied upon in the complaint that
certain of a party's claims are subject to an enforceable
arbitration clause, a motion to compel arbitration should be
considered under Rule 12(b)(6). Id. (quoting
Guidotti v. Legal Helpers Debt Resolution L.L.C.,
716 F.3d 764, 776 (3d Cir. 2013)). If a court decides to hold
discovery on the topic of arbitrability then, “after
limited discovery, the court may entertain a renewed motion
to compel arbitration, this time judging the motion under a
summary judgement standard.” See Guidotti, 716
F.3d at 776.
Motion to Dismiss - Rule 12(b)(6)
rendering a decision on a motion to dismiss under Rule
12(b)(6), this Court must “accept all factual
allegations as true [and] construe the complaint in the light
most favorable to the plaintiff.” Phillips v. Cnty.
of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting
Pinker, 292 F.3d at 374 n.7) (internal quotation
marks omitted). Only if “the ‘[f]actual
allegations . . . raise a right to relief above the
speculative level'” has the plaintiff stated a
plausible claim. Id. at 234 (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 540, 555 (2007)). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). However, “the tenet that a court must accept as
true all of the allegations contained in a complaint is
inapplicable to legal conclusions.” Id.
(explaining that determining “whether a complaint
states a plausible claim for relief . . . [is] a
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense”). The
defendant bears the burden of demonstrating that a plaintiff
has failed to state a claim upon which relief can be granted.
See Hedges v. United States, 404 F.3d 744, 750 (3d
Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor,
Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).
determining whether arbitration should be compelled, the
Court first considers whether it has personal jurisdiction
over Smith. See Control Screening LLC v. Tech.
Application & Prod. Co., 687 F.3d 163, 171
(3d Cir. 2012) (affirming the district court's finding of
personal jurisdiction then turning to the district
court's decision to compel arbitration and affirming).
Courts may evaluate personal jurisdiction under two tests:
(1) the traditional minimum contacts test,  and (2) the
Caldereffects test. Both tests are discussed
Shift4 has alleged sufficient minimum contacts by Smith to
subject him to personal jurisdiction in this Court.
Third Circuit Court of Appeals applies a three-step test in
determining whether specific jurisdiction exists. See
O'Connor, 496 F.3d at 317. The test is as follows:
(1) the defendant must have “‘purposefully
directed [its] activities' at the forum., ”
id. (quoting Burger King Corp., 471 U.S. at
472); (2) “the litigation must ‘arise out of or
relate to' at least one if those activities, ”
id. (quoting Helicopteros Nacionales de Colombia
S.A., 466 U.S. at 414); and (3) “if the prior two
requirements are met, a court may consider whether the
exercise of jurisdiction otherwise ‘comport[s] with
‘fair play and substantial justice, '”
id. (quoting Burger King, 471 U.S. at 476).
Smith “purposefully directed” his ...