Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
4-14-2005
Wellness Publishing v. Barefoot
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-3919
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-3919
WELLNESS PUBLISHING; HOLT M.D. CONSULTING, INC.;
NATURE'S BENEFIT, INC.; STEPHEN HOLT, M.D.,
Appellants
v.
ROBERT R. BAREFOOT; DEONNA ENTERPRISES, INC.; HOPH MARKETING, INC.;
SCOTT MILLER; KEVIN TRUDEAU; STEVEN D. RITCHEY; ALLEN STERN;
DONALD W. BARRETT, JR.; TRAID DIRECT RESPONSE MARKETING, INC.; KING
MEDIA, INC.; DIRECT MARKETING CONCEPTS, INC.; SHOP-AMERICA, INC.;
ADVANCED NUTRITIONAL INNOVATIONS, INC.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW JERSEY
(Dist. Court No. 02-3773 (JAP))
District Court Judge: Honorable Joel A. Pisano
Argued January 18, 2005
Before: ALITO, MCKEE , and SMITH, Circuit Judges.
(Opinion Filed: April 14, 2005)
Counsel for Appellant
Alan L. Zegas (Argued)
Law Offices of Alan L. Zegas
552 Main Street
Chatham, NJ 07928
Keith N. Biebelberg
Biebelberg & Martin
374 Millburn Avenue
Millburn, NJ 07041
Counsel for Appellees
Robert J. Gilson (Argued)
Riker, Danzig, Scherer, Hyland &
Perretti LLP
One Speedwell Avenue
Morristown, NJ 07962
Daniel J. Hurtado (Argued)
Jenner & Block LLP
One IBM Plaza
Chicago, IL 60611
David E. DeLorenzi
Timothy S. Susanin
Gibbons, Del Deo, Dolan,
Griffinger & Vecchione
One Riverfront Plaza
Newark, NJ 07102
OPINION OF THE COURT
PER CURIAM:
Stephen Holt and three companies associated with him, Wellness Publishing, Holt
MD Consulting, Inc. and Nature’s Benefit, Inc. (hereinafter “Holt”), filed an action in the
2
United States District Court for New Jersey against several defendants, alleging breach of
contract, misappropriation of a copyrighted work, violations of the Lanham Act, common
law business torts, and tortious interference with a contract. All of these claims concern
the advertising, sale, and distribution of coral calcium supplements and related
promotional materials. The District Court dismissed the case for lack of personal
jurisdiction. The plaintiffs then settled with defendants Robert Barefoot, Deonna
Enterprises, Hoph Marketing, and Scott Miller, and the plaintiffs took the present appeal
to contest the dismissal of their claims with respect to the remaining defendants. For the
reasons stated below, we reverse the District Court’s order with regard to two groups of
defendants: (1) Kevin Trudeau and Shop America (hereinafter collectively “Shop
America”) and (2) Direct Marketing Concepts, Triad Direct Response Marketing, King
Media, Steven Ritchey, Allen Stern, and Donald Barrett, Jr. (hereinafter collectively
“DMC”). However, we affirm the District Court’s order with regard to Advanced
Nutritional Innovations, Inc. Because we write only for the parties, we proceed directly
to the substance of the jurisdictional issues.
I.
Contrary to the argument of the appellees, we have jurisdiction to consider the
District Court’s order of June 30, 2003, which dismissed the complaint for lack of
personal jurisdiction, even though the notice of appeal states that the order being appealed
is the District Court’s order of August 27, 2003, which denied the plaintiffs’ motion to
3
amend the order of June 30, 2003. “We have appellate jurisdiction over orders not
specified in the notice of appeal if there is a connection between the specified and
unspecified order, the intention to appeal the unspecified order is apparent and the
opposing party is not prejudiced and has a full opportunity to brief the issues.” Williams
v. Guzzardi, 875 F.2d 46, 49 (3d Cir. 1989). Here, the requisite connection exists
between the order dismissing the case and the order denying the motion to amend that
order, and Holt’s intention to appeal the dispositive order is apparent from the issues
addressed in the brief. Finally, appellees have made no showing that they would be
prejudiced by the exercise of appellate jurisdiction. Therefore, the plaintiffs’ failure to
specify the proper order in his notice of appeal was harmless error, and jurisdiction is
proper. See United States v. Certain Land in the City of Paterson, 322 F.2d 866, 869-70
(3d Cir. 1963).
II.
A plaintiff bears “the burden of demonstrating [that the defendants’] contacts with
the forum state [are] sufficient to give the court in personam jurisdiction.” Mesalic v.
Fiberfloat Corp., 897 F.2d 696, 699 (3d Cir. 1990). These contacts must be shown “with
reasonable particularity.” Mellon Bank v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). In
considering a motion to dismiss on the basis of affidavits, a District Court must resolve all
material factual disputes in favor of the plaintiffs. Pinker v. Roche Holdings, Ltd., 292
F.3d 361, 368 (3d Cir. 2002). Whether a given set of contacts is sufficient to create
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personal jurisdiction is a question of law, and therefore our review is plenary. Id. at 1221.
Personal jurisdiction can be either general or specific. 1 Specific jurisdiction over a
defendant can be established when the claim is related to or arises out of the defendant’s
forum-related activities such that the defendant should reasonably anticipate being haled
into court there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985); Imo
Industries, Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998). Once minimum
contacts are established, jurisdiction may be exercised when the court determines that to
do so would comport with traditional notions of fair play and substantial justice.
Vetrotex, 75 F.3d at 150-51.
III.
The District Court erred in its ruling that none of the defendants’ contacts with
New Jersey were related to plaintiffs’ causes of action. The discussion below addresses
the jurisdictional question with respect to the distinct groups of defendants remaining in
the case.
A.
The DMC defendant group is comprised of Steven Ritchey, Allen Stern, Donald
Barrett, Triad Marketing, King Media, and Direct Marketing Concepts.2 The affidavits
1
Given the limited scope of defendants’ contacts with New Jersey an analysis of
general jurisdiction is not necessary.
2
Given the state of the record, on remand the District Court may address the
question of whether the individual defendants Ritchey, Stern and Barrett are not subject to
personal jurisdiction because the relevant contacts were established in their roles as
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and depositions submitted are sufficient to support Holt’s claim that these corporations
worked in concert to produce and distribute an infomercial and to process telephone
orders for the calcium supplements and books promoted in that infomercial. Between
January 2002 and September 2002, the infomercial resulted in approximately 6,856 sales
to customers in New Jersey totaling over $820,000.00 worth of merchandise. (DMC
Brief at 11.)
Holt claims that the promotion and distribution of the books The Calcium Factor
and Death by Diet infringe on his copyright to the book Barefoot on Coral Calcium.
These claims arise out of DMC’s activity in New Jersey because DMC distributed the
allegedly infringing books to New Jersey residents. There was nothing fortuitous about
the presence of these books in New Jersey–DMC advertised the books to New Jersey
customers, answered the phone when those customers called, and then arranged to have
the books shipped to New Jersey addresses.3 The misappropriation claims are clearly
related to the distribution of the infringing books, and because the books were knowingly
sent to New Jersey by DMC, DMC should expect to be subject to jurisdiction in that
state.
Holt alleges that DMC violated the Lanham Act, 15 U.S.C. § 1125(a), and
corporate officers. See Educational Testing Service v. Katzman, 631 F.Supp. 550, 556-
59 (D.N.J. 1986).
3
The fact that the defendants forwarded processed orders to centers where the
advertised product was packaged and shipped does not reduce the significance of DMC’s
essential role.
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common law prohibitions on false advertising on the basis of statements made in Coral
Calcium I. These claims are related to DMC’s activity in New Jersey because the
broadcasts which form the basis of the claims were viewed in New Jersey. It is true that
an advertising campaign with national scope does not by itself give rise to general
jurisdiction in a state where it is broadcast. See, e.g., Gehling v. St. George’s Sch. of
Med., Ltd.. 773 F.2d 539 (3d Cir. 1985); Giangola v. Walt Disney World Co., 753
F.Supp. 148 (D.N.J. 1990). That principle is inapplicable to this case, however. First,
those precedents involve injuries unrelated to the broadcast of the advertisement in the
forum state, and therefore are inapplicable to a specific-jurisdiction inquiry. A claim of
false advertising, and the injury that results from false advertising, are inextricably related
to the broadcast of the allegedly false advertisement. Second, the advertisement in this
case induced viewers to establish direct contact with DMC by calling its toll-free phone
number to place orders. This inducement destroys any semblance of the passive
advertising addressed in Giangola, 153 F.Supp. at 155-56, which expressly distinguished
advertisements in the form of direct mail solicitations. For purposes of jurisdictional
analysis, an infomercial broadcast that generates telephone customers is the equivalent of
an interactive web-site through which a defendant purposefully directs its commercial
efforts towards residents of a forum state. See Toys “R” Us, Inc. v. Step Two, S.A., 318
F.3d 446, 452 (discussing Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119
(W.D.Pa. 1997)). Under these circumstances, it is both reasonable and fair for the DMC
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defendants to appear in a New Jersey court to answer charges related to the broadcast of
this infomercial.
Finally, Holt alleges that DMC tortiously interfered with a contract existing
between Holt and Robert Barefoot by featuring Barefoot in the coral calcium infomercial
and otherwise using Barefoot to promote their product. This claim calls for an
application of the “effects” analysis set forth in Calder v. Jones, 465 U.S. 783 (1984);
Remick v. Manfredy, 238 F.3d 248, 260 (3d Cir. 2001). In Remick, this court held that
because the beneficiary of a contract resided and worked in Pennsylvania, “the effects of
any intentional conduct by the defendants designed to interfere with . . . contractual
relations . . . necessarily would have been felt in Pennsylvania.” Remick, 238 F.3d at
260. Holt, as a resident of New Jersey, suffered the alleged injury resulting from DMC’s
intentional conduct in New Jersey. In this sense, although DMC’s business strategy may
not have targeted New Jersey, with regard to Holt’s contract with Barefoot, DMC’s
alleged intentional interference was expressly aimed at the forum.
Because the District Court determined that minimum contacts did not exist, no
ruling was made on whether the exercise of personal jurisdiction over the DMC
defendants would comport with substantial justice. It is apparent from the record,
however, that considerations of substantial justice do not counsel against jurisdiction in
this case. Although receipts from New Jersey customers were a small percentage of
DMC’s total business, those receipts were substantial in absolute terms and reflected the
8
size of the state’s economy relative to the national market. Furthermore, New Jersey has
a substantial interest in protecting its general population from allegedly misleading
advertising and also in vindicating Holt’s rights.
B.
The Shop America defendant group is comprised of Shop America L.L.C. and
Kevin Trudeau. Trudeau and Shop America worked in concert to produce a second
infomercial featuring Robert Barefoot and to process telephone orders for the calcium
supplements and books promoted in that infomercial. That infomercial resulted in at least
22,352 orders from New Jersey customers representing approximately $1.14 million of
merchandise. (Shop America Brief at 011.)
Holt brings the same allegations of copyright infringement, false advertising and
tortious interference against Shop America as he alleges against the DMC defendants.
While the contacts of Shop America are entirely distinct from the DMC group, and must
be independently sufficient in order to support personal jurisdiction, the same legal
analysis applies to both groups. Like DMC, however, Shop America distributed copies of
The Calcium Factor and Death By Diet in New Jersey, used Robert Barefoot to promote
their coral calcium product, produced an infomercial viewed in New Jersey and processed
orders for merchandise from New Jersey customers. Because the nature and scope of
Shop America’s contacts with New Jersey, Dr. Holt, and the litigation at hand are
substantially the same as those explored above relating to the DMC group, we hold that
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personal jurisdiction over the Shop America defendants is proper.
C.
The District Court found no personal jurisdiction over Advanced Nutritional
Innovations, Inc. (“ANI”). Although Holt states in his complaint that ANI made false
statements to some of Holt’s New Jersey customers, this allegation does not serve as the
basis of any claim made against ANI, nor was it the subject of discovery, nor did Holt
otherwise substantiate this allegation before the District Court. ANI had no role in the
production or distribution of the infomercials that serve as the centerpiece of this
litigation, nor is there any connection between Robert Barefoot and ANI. With regard to
this defendant, Holt did not meet his burden of pleading jurisdictional facts with
reasonable particularity.
IV.
For the above reasons, we affirm the order of the District Court with regard to
Advanced Nutritional Innovations, Inc. and reverse with regard to Kevin Trudeau, Shop
America, Direct Marketing Concepts, Triad Direct Response Marketing, King Media,
Steven Ritchey, Allen Stern, and Donald Barrett.