Toys "R" Us, Inc. v. Step Two, S.A. - 318 F.3d 446 (3d Cir. 2003)

Rule:

Although the plaintiff bears the burden of demonstrating facts that support personal jurisdiction, courts are to assist the plaintiff by allowing jurisdictional discovery unless the plaintiff's claim is clearly frivolous. If a plaintiff presents factual allegations that suggest with reasonable particularity the possible existence of the requisite contacts between the party and the forum state, the plaintiff's right to conduct jurisdictional discovery should be sustained.

Facts:

Plaintiff Toys "R" Us, Inc. and Geoffrey, Inc. ("Toys"), a Delaware corporation with its headquarters in New Jersey, owned retail stores worldwide where it sold toys, games, and numerous other products. Defendant Step Two, S.A. and Imaginarium Net, S.L. ("Step Two") was a Spanish corporation that owned or franchised toy stores in Spain and nine other countries. Defendant did not operate any stores, maintain any offices or bank accounts, or have any employees anywhere in the U.S. Nor did it pay taxes to the U.S. or to any U.S. state. Plaintiff, alleging that defendant used its Internet web sites to engage in trademark infringement, unfair competition, misuse of the trademark notice symbol, and unlawful "cybersquatting," in violation of the Lanham Act, 15 U.S.C. § 1501 et seq., and New Jersey state law, brought suit against defendant. Defendant filed a motion to dismiss for lack of personal jurisdiction. On the other hand, plaintiff requested that it be allowed jurisdictional discovery, contending that defendant’s president attended the New York Toy Fair once each year, and has substantial regular and systematic contacts with the United States. The district court granted defendant’s motion to dismiss and denied plaintiff’s request for jurisdictional discovery. Plaintiff appealed.

Issue:

Did the district court err in denying plaintiff’s request for jurisdictional discovery?

Answer:

Yes.

Conclusion:

The court held that the district Ccurt erred when it denied plaintifff’s request for jurisdictional discovery. The district court's unwavering focus on the web site precluded consideration of other Internet and non-Internet contacts, which, if explored, might provide the "something more" needed to bring defendant within the court’s jurisdiction. The court averrd that although the plaintiff bore the burden of demonstrating facts that supported personal jurisdiction, courts were to assist the plaintiff by allowing jurisdictional discovery unless the plaintiff's claim was "clearly frivolous." According to the court, if a plaintiff presented factual allegations that suggested with reasonable particularity the possible existence of the requisite contacts between the party and the forum state, the plaintiff's right to conduct jurisdictional discovery should be sustained. Accordingly, the denial of the request for jurisdictional discovery was reversed, the dismissal of the complaint was vacated, and the case was remanded for limited jurisdictional discovery.