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Lavera Skin Care North America, Inc. v. Laverana GmbH & Co. KG

United States District Court, W.D. Washington, Seattle Division

December 19, 2014

LAVERA SKIN CARE NORTH AMERICA, INC., a Washington corporation; and VICTOR TANG, and individual, Plaintiffs,
v.
LAVERANA GMBH & CO. KG, a German limited partnership, Defendant

For Lavera Skin Care North America, Inc., A Washington corporation, Victor Tang, an individual, Plaintiffs: Guy Paul Michelson, CORR CRONIN MICHELSON BAUMGARDNER & PREECE, Seann C Colgan, LEAD ATTORNEYS, SEATTLE, WA.

For Laverana GMBH & Co. KG, a German limited partnership, Defendant: James Hyeoun Ju Moon, LEAD ATTORNEY, PRO HAC VICE, LATHAM & WATKINS (L.A.), LOS ANGELES, CA; Melanie Marilyn Blunschi, LEAD ATTORNEY, PRO HAC VICE, LATHAM & WATKINS (SF), SAN FRANCISCO, CA; Molly A Terwilliger, SUMMIT LAW GROUP, SEATTLE, WA.

ORDER ON DEFENDANT'S MOTION TO DISMISS

RICARDO S. MARTINEZ, UNITED STATES DISTRICT JUDGE.

This matter comes before the Court upon Motion to Dismiss by Defendant Laverana GmbH & Co. KG (" Laverana"). Dkt. # 14. Defendant seeks dismissal of the Complaint brought by Plaintiffs Lavera Skin Care North America, Inc. (" LSC") and Victor Tang on the grounds of lack of personal jurisdiction and forum non conveniens . Having considered the parties' moving papers, supporting exhibits, and oral arguments on this matter, and for the reasons provided herein, the Court grants Defendant's Motion in part and dismisses this action for forum non conveniens .

BACKGROUND

Plaintiffs LSC and Victor Tang filed this suit against Defendant Laverana on December 26, 2013 under this Court's diversity jurisdiction. Dkt. # 1 (" Compl."). The action arises out of alleged breaches of the distribution agreement between the Germany natural cosmetics company, Laverana, and its exclusive North American distributor, the Washington corporation LSC. Plaintiffs' Complaint states claims against Laverana for breach of contract, breach of covenants of good faith and fair dealing, breach of fiduciary duty, breach of warranty, and declaratory relief that Plaintiffs have a valid continuing right to use the domain name " lavera.com." See id..

Defendant Laverana is a German limited partnership in the business of developing, producing, and selling natural cosmetics from its principal place of business in Germany. Laverana was founded by its still ultimate sole shareholder and German citizen and resident Thomas Haase in the 1990s. See Dkt. # 16-1 (Haase Decl.), ¶ 1. In 1999, Ulrike Jacob and her then husband, Andreas Dewor, aspiring to reach what they believed to be an untapped market for natural cosmetics in the U.S. and Canada, became Laverana's first international distribution partners. The initial distribution agreement was executed by Dewors and Haase, although the North American distribution was affected through Jacob's then Californian company, Ars Vivendi. Dkt. # 19 (Jacob Decl., ¶ ¶ 3-5). Following her divorce from Dewor, Jacob founded LSC in 2006 as a Washington corporation to take over distribution from Ars Vivendi. Jacob remains LSC's sole shareholder and a Washington resident, although she also possesses German citizenship and speaks fluent German. Id. at ¶ 7, Haase Decl. at ¶ 13.

The parties to this litigation entered into the operative 2008 Distribution Agreement (the " Agreement"), covering the years 2009 through 2015, which forms the basis for LSC's claims. See Haase Decl. at Ex. 2 (" Agreement"), § 1(f). The Agreement was drafted in German and English but provides that only " the German version shall be binding." Id. at § 15. The English-language version of the Agreement provides that " German law shall be applicable except for the conflict of laws provisions and the provisions of the Private International Law" and that the " place of jurisdiction shall be Hanover, Germany." Id. at § 13.

Plaintiffs allege that by early 2010, LSC was selling nearly $5 million of Laverana's products annually in as many as 4, 000 stores in the U.S. and Canada. Compl., ¶ 6, Jacob Decl., ¶ 8. Plaintiffs contend that their relationship with Laverana began to sour at this point, with Laverana failing to deliver products on time, to provide sufficient products to meet demand, and to respond to LSC's product orders, in addition to delivering defective products unfit for sale. Compl., ¶ 10. Additionally, Plaintiffs assert that Laverana for the first time refused to provide goods for sale in Canada in dual-language packaging, significantly impacting Canadian distribution, and refused to comply with new regulatory requirements for sale in the U.S. and Canada. Id. at ¶ 11.

Following an unsuccessful attempt at mediating their grievances in Germany, Laverana sent LSC a letter on March 27, 2013 stating that it was terminating the 2008 Distribution Agreements because LSC failed to perform under the contract. Dkt. # 16 (Haase Decl.) at Ex. 4; Compl. at ¶ 13. On December 4, 2013, Laverana commenced an administrative proceeding against LSC and Jacob's current spouse, Victor Tang, before the World Intellectual Property Organization (" WIPO"), alleging that Plaintiffs were improperly using the domain name " lavera.com" in violation of Laverana's trademark rights. Compl. at ¶ 14. The WIPO administrative panel dismissed Laverana's complaint on January 25, 2014, finding no evidence of bad faith use and noting that Laverana's claims largely depend on this Court's determination of the instant dispute. See Dkt. # 20 (" Tang Decl.) at Ex. 3. Plaintiffs allege that Tang had purchased the domain name from a third party in 2006, since which time he has licensed use of the domain name to LSC. Id. at ¶ 15. In addition to their contractual claims in the instant action, Plaintiffs seek declaratory judgment that Tang and LSC's use of the word " lavera" in LSC's internet address does not violate Laverana's trademark rights. Compl. at ¶ 14.

In support of Plaintiffs' jurisdictional allegations, Jacob attests that not all products were delivered by Laverana " ex works, " according to which the seller is deemed to have delivered at the point that it places the goods at the disposal of the buyer at the seller's premises. Rather, Jacob attests that in 2009 and 2010, Laverana made shipments using a " documents against payments" method, meaning that goods were not released until they reached the Canadian or U.S. border. Jacob Decl. at ¶ 6. As to goods delivered " ex works", Jacob asserts that Laverana itself packaged the goods and had them shipped to LSC in the U.S. and Canada. Id. Jacob also attests that Laverana executives or managers attended trade shows in the U.S. and Canada to meet with LSC at least once per year from 2000 to 2012 and that Ms. Francke toured LSC's Kirkland facilities in 2008. Id. at ¶ 24. She also asserts that although the 2008 Agreement was executed in Germany, it was negotiated via email between the parties in Germany and Washington, and that it provided Laverana with significant control over marketing and distribution channels. Id. at ¶ ¶ 25, 27.

MOTIONS TO STRIKE

Plaintiffs move to strike portions of the declaration of Defendant's expert Dr. Bjö rn-Axel Dissars (Dkt. # 15) (Dissars Decl.), filed in support of Defendant's motion to dismiss. Dkt. # 18-1. Plaintiffs contend that the expert testimony should be disregarded because: (1) Dissars is an interested party and his testimony includes conclusions of law; (2) Dissars attached mediation correspondence, which is improper under FRE 408; and (3) Dissars relies upon inadmissible hearsay evidence.

As an initial matter, Defendant correctly points out that Plaintiffs' motion to strike is procedurally improper. LCR 7(g) requires that a motion to strike be included in a responsive brief rather than, as here, presented in a separate motion. On this ground alone, the Court may decline to consider the motion. See Khadera v. ABM Industries, Inc., 2011 WL 7064235, *6 n. 9 ...


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