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Advantus, Corp. v. Sandpiper of California, Inc.

United States District Court, M.D. Florida, Jacksonville Division

September 30, 2019

ADVANTUS, CORP., Plaintiff,
v.
SANDPIPER OF CALIFORNIA, INC., n/k/a DBJ Enterprises, Inc., PIPERGEAR USA, INC., and INNOVAPRO CORPORATION, Defendants.

          ORDER

          MARCIA MORALES HOWARD UNITED SLATES DISTRICT JUDGE

         THIS CAUSE is before the Court on several motions. Plaintiff Advantus, Corp. initiated this action on November 16, 2018, by filing a five count Complaint and Demand for Jury Trial (Doc. 1) against Defendants Sandpiper of California, Inc. n/k/a DBJ Enterprises, Inc. (Sandpiper), PiperGear USA, Inc. (PiperGear), and Innovapro Corporation (Innovapro). On January 28, 2019, each Defendant filed a motion seeking dismissal or transfer of this action. See Innovapro Corporation's Motion to Dismiss (Doc. 20; Innovapro Motion); Defendant PiperGear USA, Inc.'s Motion to Dismiss, or in the Alternative, Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) (Doc. 22; PiperGear Motion); Defendant Sandpiper of California, Inc.'s Motion to Dismiss, or in the Alternative, Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) (Doc. 23; Sandpiper Motion). Defendants argue that dismissal is warranted because this Court lacks personal jurisdiction over them. Alternatively, Defendants request the transfer of this action to the Southern District of California as a more convenient forum pursuant to 28 U.S.C. § 1404(a). Innovapro also moves to dismiss the Complaint for improper venue and pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure (Rule(s)), for failure to state a claim. On June 28, 2019, following limited-purpose discovery on the issue of personal jurisdiction, Advantus filed Plaintiff's Amended Consolidated Response to Defendants' Motions to Dismiss (Doc. 87; Response). Thereafter, with leave of Court, each Defendant filed a reply. See Defendant Sandpiper of California, Inc.'s Reply to Plaintiff's Opposition to its Motion to Dismiss, or in the Alternative, Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) (Doc. 88; Sandpiper Reply); Innovapro Corporation's Reply in Support of Motion to Dismiss (Doc. 89; Innovapro Reply); Defendant PiperGear USA, Inc.'s Reply to Plaintiff's Opposition to its Motion to Dismiss, or in the Alternative, Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) (Doc. 91; PiperGear Reply), all filed on July 10, 2019. In accordance with the Court's instructions, Advantus filed a consolidated sur-reply on August 23, 2019. See Plaintiff, Advantus, Corp.'s Sur-Reply (Doc. 101; Sur-Reply). Accordingly, this matter is now ripe for review.

         I. Standard of Review

         In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508, n 1 (2002); see also Lotierzo v. Woman's World Med. Ctr., Inc., 278 F.3d 1180, 1182 (11th Cir. 2002). In addition, all reasonable inferences should be drawn in favor of the plaintiff. See Omar ex. rel. Cannon v. Lindsey, 334 F.3d 1246, 1247 (11th Cir. 2003) (per curiam). Nonetheless, the plaintiff must still meet some minimal pleading requirements. Jackson v. BellSouth Telecomm., 372 F.3d 1250, 1262-63 (11th Cir. 2004) (citations omitted). Indeed, while “[s]pecific facts are not necessary, ” the complaint should “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Further, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “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.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). The “plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citations omitted); see also BellSouth Telecomm., 372 F.3d at 1262 (explaining that “conclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal”) (citations and quotations omitted). Indeed, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions, ” which simply “are not entitled to [an] assumption of truth.” See Iqbal, 556 U.S. at 679. Thus, in ruling on a motion to dismiss, the Court must determine whether the complaint contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. at 678 (quoting Twombly, 550 U.S. at 570).

         Additionally, in considering a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), the “plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.” See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). Where a defendant “challenges jurisdiction by submitting affidavit evidence in support of its position, ‘the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.'” See id. (quoting Meier ex rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002)). In ruling on a motion to dismiss for lack of personal jurisdiction, a district court has discretion to conduct an evidentiary hearing. See Delong Equip. Co. v. Wash. Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988). However, where the court does not conduct a hearing, “the plaintiff must present only a prima facie showing of . . . personal jurisdiction.” Id.

         A plaintiff makes a prima facie showing by presenting evidence sufficient to withstand a motion for directed verdict on the issue of personal jurisdiction. Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988). Thus, “[t]he district court must construe the allegations in the complaint as true, to the extent they are uncontroverted by defendant's affidavits[, ]” and “where the evidence presented by the parties' affidavits . . . conflicts, the court must construe all reasonable inferences in favor of the non-movant plaintiff.” Id. (citing Delong Equip. Co., 840 F.2d at 845); see also United Techs. Corp., 556 F.3d at 1274 (citing Polski Linie Oceaniczne v. Seasafe Transp. A/S, 795 F.2d 968, 972 (11th Cir. 1986)) (noting that, if the defendant rebuts the jurisdictional allegations in the plaintiff's complaint, “the plaintiff is required to substantiate [its] jurisdictional allegations [ ] by affidavits or other competent proof, and not merely reiterate the factual allegations in the complaint.”). This construction in favor of the plaintiff is particularly necessary where, as in the instant case, the jurisdictional questions are intertwined with the merits of a case. See Delong Equip. Co., 840 F.2d at 845.

         In accordance with this legal framework, the Court will summarize the facts alleged in the Complaint, and then review the substantial evidence put forth by the parties as to the question of personal jurisdiction, all the while construing the alleged facts and evidence in favor of the non-moving plaintiff, Advantus. Morris, 843 F.2d at 492.[1]

         II. Background

         A. Summary of the Complaint

         Advantus, a Florida corporation principally located in Jacksonville, Florida, manufactures and distributes products across five operating divisions. See Complaint ¶ 2. As relevant to this case, “Advantus manufactures backpacks, bug out bags, wallets, tactical gear, luggage, sports bags, tote bags, travel bags, and similar consumer products” under its Mercury Luggage and Mercury Tactical Gear brands. Id. ¶ 11. Defendants Sandpiper, PiperGear, and Innovapro, are California corporations, principally located in southern California, that manufacture or distribute similar products and target the same “customers and resellers” as Advantus. Id. ¶¶ 3-5, 11. As such, Advantus and Defendants are direct competitors and compete “for a common pool of customers, including merchandise buyers at Armed Forces Exchanges and Armed Forces servicemembers as end-user retail customers.” Id. ¶ 11. In the Complaint, Advantus alleges that Defendants are subject to the jurisdiction of this Court “because they committed tortious activities within the state of Florida, caused harm to Advantus within the state of Florida while engaged in unlawful advertising within the state, and are engaged in substantial and not isolated business activities within the state of Florida.” Id ¶ 9.

         The claims Advantus asserts in this action arise out of Defendants' alleged false advertising that their products were manufactured in the United States of America. Id ¶ 1. According to Advantus, beginning in at least 2013, Sandpiper and PiperGear began advertising that their products were “made in the USA.” Id ¶ 12. In addition, Advantus alleges that Innovapro took-over the Sandpiper brand in 2018 and continued to engage in false advertising. Id ¶¶ 31-32. In the Complaint, Advantus identifies the following alleged acts of false advertising:

• Beginning at least as far back as 2013 and continuing until at least January 2018, Sandpiper represented in the Frequently Asked Questions section of its website that “‘[PiperGear] is our sister company based in Chula Vista, California. [PiperGear] produces U.S. made sewn goods and product development with manufacturing solutions to meet U.S. Government contract requirements including GSA and Berry Amendment.'” Id ¶¶ 12, 13a. (alterations in original).[2]
• “From 2013 through at least 2017, ” Sandpiper and PiperGear used a symbol in their product catalog which depicted a United States flag with the word “USA” and purported to signify that the products were “‘US Made: U.S. manufactured products. Eligible for Berry Amendment, NAFTA and/or GSA requirements.'” Id ¶ 13b.
• At some point, Sandpiper and PiperGear altered the legend for the flag symbol in its catalog “to read in small print at the bottom of the page ‘US Made: If this symbol is in a description, it means we also offer the ability to make the product in the U.S. (as well as the option of Berry and NAFTA complaint [sic]),' . . . .” Id. ¶ 13c. Despite this change Sandpiper and PiperGear continued to use the flag symbol with the word USA “next to many foreign made products in a manner that implied U.S. manufacture and would mislead the casual reader of the catalogue.” Id ¶ 13c.
• The “About” section of Sandpiper's Facebook page included the following statement: “The growth and success of our U.S. manufacturing is a great source of pride.'” Id. ¶ 13d. Significantly, this language remained on the Facebook page until at least mid-October of 2018, after Innovapro purchased the Sandpiper brand in August 2018. Id
• Sandpiper and PiperGear “disseminated claims of the U.S. manufacture of their products directly to consumers throughout the United States using the internet and mails.” Id ¶ 13e.
• Online consumers on Amazon.com demonstrated confusion as to the country of origin of Sandpiper and PiperGear products. Id. ¶ 13f. According to Advantus, Sandpiper and PiperGear “knowingly allowed consumers to labor under the misbelief that many of [Sandpiper's] and PiperGear's products were manufactured in the USA without correcting this impression.” Id. Sandpiper, PiperGear, and Innovapro have “failed to make online corrective statements to address the known consumer confusion thereby continuing to perpetuate the perception that many of their products are made in the USA when this perception is false.” Id
. Sandpiper “orally told merchandise buyers, including buyers at Armed Forces Exchanges, that its products were made in the United States to gain a competitive advantage over competitors who truthfully disclosed the non-United States origin of the competing products.” Id. ¶ 13g. Advantus contends that these misrepresentations caused a “direct loss of sales to Advantus.” Id
• Sandpiper and PiperGear “represented that their bags, backpacks, and other products were compliant with the Berry Amendment despite the fact the products contained substantial foreign components and subcomponents.” Id ¶ 13h.

         Advantus maintains that “[Sandpiper], PiperGear, and Innovapro's claims that their various products were made in the United States and/or were Berry Amendment compliant” were false. Id ¶ 14.

         Indeed, in the spring of 2018, the Federal Trade Commission (FTC) notified Sandpiper and PiperGear that it “had determined that nearly all of [Sandpiper's] and PiperGear's products are imported as finished goods or contain significant imported components despite PiperGear and [Sandpiper] having made express or implied claims that their products were manufactured in the United States of America.” Id. ¶ 15. “As a result, the FTC served a proposed complaint on Sandpiper and PiperGear charging them with false advertising, ” and on September 12, 2018, the FTC filed a proposed consent order for public comment. Id. ¶¶ 17-18, Exs. A-B. Advantus, among others, “filed public objections to the proposed consent order on the basis that it was too lenient and requested the FTC to take tougher action.” Id. ¶ 18. At the time the instant Complaint was filed, the FTC had not announced how it intended to proceed in light of the objections to the proposed consent order. Id.

         Advantus also alleges that Innovapro, Sandpiper and PiperGear were part of a conspiracy to import goods into the United States and advertise them as “‘Made in the USA.'” See Complaint ¶ 67. According to Advantus, Sandpiper promotes PiperGear as its “sister company” and these companies “share a common website, sandpiperca.com, as well as use joint catalogs to sell the products bearing their respective trademarks.” Id. ¶ 31. Additionally, Advantus maintains that Innovapro “was the primary consignee of record for goods that [Sandpiper] imported into the United States for resale under the [Sandpiper] brand, and Innovapro imported virtually nothing but [Sandpiper] goods, including some shipments which contained PiperGear purchase order numbers.” Id. ¶ 24. Advantus maintains that Innovapro knew that Sandpiper and PiperGear had advertised for years that PiperGear produced U.S.-made and Berry Amendment compliant goods. Id. ¶ 22. Advantus alleges that Innovapro knew these advertisements were false because it had imported to the United States completed goods from China that bore PiperGear purchase order numbers. Id. ¶ 23. Therefore, Advantus maintains that “[u]pon information and belief, Innovapro, was . . . knowingly or negligently helping [Sandpiper] and PiperGear conceal the foreign origin of the various products that [Sandpiper] and PiperGear were then claiming to have manufactured domestically.” Id. ¶ 25.

         Additionally, according to Advantus, on August 31, 2018, Innovapro “took over” the Sandpiper brand. Id. ¶ 27. Advantus alleges that this transaction was fraudulent and in furtherance of the conspiracy. Id. ¶¶ 68, 75. In support, Advantus contends that James Wu, the “principal owner” of Innovapro also has had an ownership interest in Sandpiper and the Chinese manufacturer. Id. ¶¶ 19-20. According to Advantus, the Defendants, “working in concert, ” caused Innovapro to file a UCC-1 Financing Statement against all of Sandpiper's assets “to create the appearance that Innovapro was an arms-length secured lender” to Sandpiper. Id. ¶ 26. Then, on August 31, 2018, “with no apparent exchange of consideration, ” Innovapro took over the Sandpiper brand and falsely represented to merchandise buyers that Sandpiper of California, Inc. had dissolved. Id. ¶ 27. Advantus alleges that Sandpiper of California, Inc. did not dissolve, but rather, “one of its principals, David Jacobs, signed a name change for Sandpiper of California, Inc. to change its name to DBJ Enterprises, Inc.” Id. ¶ 28. Although Jacobs signed the name change form on August 31, 2018, Sandpiper did not file the document with the California Department of State until October 5, 2018, “a few weeks after the FTC published its proposed consent order . . . .” Id. On September 5, 2018, Innovapro terminated its UCC-1 Financing Statement which, in conjunction with Innovapro's take-over representations, “created the appearance that Innovapro had foreclosed on its secured interest, or otherwise used its secured interest to obtain ownership of the secured assets.” Id. ¶ 30. However, Advantus maintains that this transaction “instead appears to have been a voluntary asset transfer from [Sandpiper] to Innovapro without an adversarial arms-length component to it.” Id.

         Following the asset purchase, “Innovapro continued to operate the business of [Sandpiper] in the same manner as [Sandpiper] operated prior to August 31, 2018.” Id. ¶ 29. Specifically, “Innovapro continued operating the Sandpiper brand in the same fashion without change to: the Sandpiperca.com website, the Sandpiper personnel, the Sandpiper email addresses, and the Sandpiper phone number itself.” Id. ¶ 31. According to Advantus, as of October 23, 2018, “the phone numbers remained the same, the emails were the same, the website was the same, the products were the same, the catalog was the same, some of the personnel were the same, and the factories manufacturing the products were the same.” Id. Advantus contends that other than the change of corporate ownership, “there does not appear to be any other visible difference” between the operation of the Sandpiper business before and after the takeover. Id. As such, Advantus alleges that Innovapro is both directly liable for its own false advertising and liable as a successor to Sandpiper. Id. ¶ 32.

         B. Summary of the Evidence

         1. The Corporations

         a. Sandpiper of California, Inc.

         As stated above, prior to the asset-purchase, Sandpiper was a corporation, located in California, engaged in the sale and distribution of various products, including military-style backpacks and travel bags. See Amended Declaration of David Jacobs, Corporate Representative, In support of Defendant DBJ Enterprises, Inc.'s Motion to Dismiss or, in the Alternative, Transfer and Memorandum of Law (Doc. 34-1; Jacobs Sandpiper Decl.) ¶ 6; see also Plaintiff's Notice of Filing Deposition Transcripts and Exhibits (Doc. 47; Notice), Exs. 2-3. Sandpiper did not manufacture its own products, rather it engaged other companies to do so, including Defendant PiperGear, as well as Sun Fai Industrial o/b Sunray Industries Limited (Sun Fai), and Textiles Costa Bella. See April 11, 2019 Deposition of David Bailey Jacobs (Doc. 55-2; Jacobs Dep.) at 28-29; Jacobs Sandpiper Decl. ¶ 7. Significantly, Sandpiper and PiperGear shared a common owner, California resident David Jacobs, and operated out of the same building, separated by a dividing wall, in California. See Jacobs Dep. at 10, 15-16, 19-20, 154; Jacobs Sandpiper Decl. ¶ 4. Jacobs also owns Textiles Costa Bella, a factory located in Mexico. See Jacobs Dep. at 23.

         b. PiperGear USA, Inc.

         PiperGear is a California corporation “in the business of manufacturing various fabric products, including backpacks.” See Jacobs PiperGear Decl. ¶ 3. PiperGear does not sell any products to end-users under its own label, rather PiperGear manufactures and labels products on behalf of other companies, one of which was Sandpiper. Id. ¶¶ 4, 23. As such, “[a]fter delivery of these products, PiperGear has no influence or right regarding where the products are then taken or delivered to be sold.” Id. ¶ 5. PiperGear does not conduct any business in Florida. Id. ¶ 8. Indeed, it does not operate any distribution centers or manufacturing plants in Florida, and it has not “sold products to, nor distributed products in, Florida.” Id. ¶¶ 8, 12.

         Jacobs started PiperGear as a “sewing company” in the second half of a building he owned after the existing tenant moved out. See Jacobs Dep. at 19-20.[3] Sandpiper was located in the other half of the building. See id. at 10. “At the time PiperGear was incorporated, [Sandpiper] loaned funds to PiperGear so PiperGear could begin doing business.” See Second Jacobs PiperGear Decl. ¶ 2. Notably, approximately 20% of PiperGear's total manufacturing output was on behalf of Sandpiper. See Jacobs PiperGear Decl. ¶ 4. However, PiperGear's “Sales by Customer Summary” records for the years 2017 and 2018 do not list Sandpiper as a customer. See Jacobs Dep. at 22, 25, Exs. 47, 48. Jacobs explains that PiperGear sold bags to Sandpiper “in theory” meaning “[i]t was done through the inner company, so rather than putting an invoice together, the - the loan, I believe, was lower because of the goods that were given to Sandpiper.” See Jacobs Dep. at 22. Although there is no promissory note documenting this loan, see Jacobs Dep. at 119-20, Jacobs maintains that it was “reflected on the books of both PiperGear and Sandpiper, ” see Second Jacobs PiperGear Decl. ¶ 2. An “Intercompany” “Transaction Report” shows the flow of money back and forth between the companies, with Sandpiper often paying bills on behalf of PiperGear. See Declaration of Richard D. Rivera (Doc. 99-1; Second Rivera Decl.) ¶ 2, Ex. A (Doc. 102). These records appear to reflect a balance as low as $820, 549.98 at the beginning of 2013, which grew to approximately $3.6 million as of August 2018. Id. Indeed, according to Jacobs, at the time of the asset sale PiperGear owed Sandpiper approximately $3.65 million. See Jacobs Dep. at 116-17.

         In addition to sharing the same owner, Sandpiper and PiperGear also had the same Chief Financial Officer, Morton Hollaender. See id. at 23. Evidence also suggests that Sandpiper and PiperGear shared several employees. For example, Reggie Regala worked in the Sandpiper marketing department. Id. at 71-72. However, his email signature block includes both “Sandpiper of California, Est. 1980” and “PiperGear USA, Inc.-Berry Compliant/GSA/NAFTA, Sewn goods manufacturing and production.” See Declaration of Richard D. Rivera (Doc. 45-1; Rivera Decl.), Ex. G (Doc. 60). Additionally, Jacobs identified Adolfo Coronel as an employee of Sandpiper in the purchasing department, see Jacobs Dep. at 100-01, and Ryan Mangahas as a Sandpiper employee in sales, id. at 101. Yet, Regala, Coronel and Mangahas all use email addresses with a “pipergear.com” domain name. See Rivera Decl., Ex. G at SOC000375, INNOVAPRO.002777. Most notably, Sandpiper's exchange sales manager, Robert Van Jones, utilized a business card “[f]or several years” that identified Sandpiper on the front and PiperGear on the back. See March 14, 2019 Deposition of Robert Van Jones (Doc. 47-1; Jones Dep.) at 86-87, Ex. 7; Jacobs Dep. at 70-74. Significantly, the PiperGear side of the card included the statements “Made in USA, ” “Berry Compliant, ” “NAFTA, ” “USA, ” “BAA.” See Jacobs Dep. at 73, Ex. 7. The PiperGear side of the card also included the Sandpiper logo in the top left corner. Id. Jacobs testified that, for a period of more than two years, he believed it was “typical” for Sandpiper business cards to utilize a two-sided design with Sandpiper on the front and PiperGear on the back. See Jacobs Dep. at 73-74. Despite his use of this business card, Jones testified that he was not employed by, and did not work on behalf of, PiperGear. See Jones Dep. at 89.

         The evidence also suggests that Sandpiper marketed itself in connection with PiperGear, promoting PiperGear as its “sister” company. On the Sandpiper website, Sandpiper described itself and included the following statements: “Featuring American Made products developed and manufactured by our sister company, PiperGear USA. We offer manufacturing options to meet Berry Amendment, NAFTA, GSA, or Buy American Act requirements. The growth and success of our U.S. manufacturing plant is a great source of pride to us.” See Jacobs Dep. at 147-48, Ex. 60 (printout of the Sandpiper website dated March 7, 2018) (emphasis added). The website included a PiperGear USA logo and the following description of PiperGear with a link to the PiperGear website: “Piper Gear USA is the manufacturing sister company of Sandpiper of California. PG USA provides additional options to customers providing materials and assembly to cover the full range of manufacturing requirements. Berry Amendment, Buy American Act, NAFTA, as well as overseas production.” Id. The Frequently Asked Questions section of the website also identified PiperGear as Sandpiper's “sister company” and included similar representations regarding U.S. manufacturing. See Jacobs Dep. at 150-51, Ex. 62. These representations were also present in Sandpiper's catalogs, see Jacobs Dep. at 25-26, Ex. 3 at 52, and included on a PowerPoint slide used during a sales presentation to the military exchange buyers, see Jacobs Dep. at 95-97, Ex. 46; April 10, 2019 Deposition of Jeff Payne (Doc. 59-2; Payne Dep.) at 9-10; April 10, 2019 Deposition of Sean Brown (Doc. 59-1; Brown Dep.) at 82-83.

         c. Innovapro Corporation

         Innovapro imports “military backpacks, gear bags, travel bags, and related goods, ” most of which are manufactured at a factory in China by Innovapro's affiliate Sun Fai, a Hong Kong company. See Wu Decl. ¶¶ 3-5. James Wu is the founder, vice-president, and a director of Innovapro. See id. ¶ 1. Prior to its acquisition of Sandpiper, Innovapro consisted solely of Wu and his wife, who is the president of Innovapro. See April 4, 2019 Deposition of James Wu (Doc. 55-1; Wu Dep.) at 15-16, 96. Wu started Innovapro in 1999 “mostly to handle business with Sandpiper, ” and indeed, Innovapro had no other customers besides Sandpiper. See id. at 15-16. At one time, around 2010, Wu was also a principal of Sun Fai, although he has “less involvement” with Sun Fai now. See id. at 14.

         Prior to the asset purchase, the goods Innovapro imported entered the United States through the port of entry in Los Angeles, California, and were then trucked to the Sandpiper warehouse in Chula Vista, California. See Jacobs Dep. at 128-29, 158-59; Wu Decl. ¶¶ 6-7. From there, Sandpiper shipped the goods either to its retail-customer's distribution center, or directly to the individual retail stores. See Jacobs Dep. at 129. At times, Sandpiper obtained goods directly from Sun Fai where “Sandpiper's customer would purchase goods from Sandpiper and pick them up directly from the factory in China.” See Wu Decl. ¶ 12.[4] Innovapro also served in the “product development process, ” communicating with Sandpiper, putting together a design, and then sending the design to Sun Fai “for them to produce sample, to develop the product.” See Wu Dep. At 15. According to Wu, all of the goods imported by Innovapro or produced by Sun Fai bear “MADE IN CHINA” labels sewn into the fabric of the product. See Wu Decl. ¶ 27.

         2. Sandpiper Operations

         The majority of Sandpiper's sales were made in bulk to vendors such as the Army Air Force Exchange System (AAFES), as well as the Marines Corps Exchange (MCX) and the Navy Exchange (NEXCOM). See Jacobs Decl. ¶¶ 13, 18; Jacobs Dep. at 154. Significantly, “[a]ll military exchanges practice central buying. So all buying decisions are made at [headquarters], and then planners and allocators and replenishers determine stock levels at each individual location, and the product is distributed to those locations appropriately from the distribution centers.” See Brown Dep. at 25. Thus, sales of Sandpiper products to military exchanges occurred at two-levels. See Deposition of Robert Van Jones (Doc. 47-1; Jones Dep.) at 10-11; see also Declaration of Zach Mitchell (Doc. 45-3; Mitchell Decl.) ¶¶ 4-6 (generally describing the system-wide and store-level sales that occur within the Exchange Systems). At the first level, Sandpiper sold its product to the system-wide exchange buyers who were located at headquarters in Dallas (for AAFES), and Virginia Beach (for MCX and NEXCOM). See Brown Dep. at 24-25; Jones Dep. at 9-10; see also Mitchell Decl. ¶ 5 (“First, system-wide AAFES buyers at headquarters will purchase product to stock in the stores, system-wide.”). These system-wide buyers chose the products and set the planogram (POG), that is, the “model that goes into the stores.” See Jones Dep. at 10.

         The second-level occurs at the individual stores where Sandpiper also played an active role. Id. at 10-11; see also Jacobs Dep. at 38-39, 42-46, Ex. 6: SOC Triangle for Success, In-Store Plan. Within the AAFES system, Sandpiper could monitor the amount of product at an individual store location, and if a store was low, ensure that additional product was delivered to the store to satisfy the anticipated need. See Jacobs Dep. at 54-55. In addition, “with the stores, [a sales representative] can go in and . . . create promotions, one-time buys on occasion, and . . . for a promotion, [the representative] can get them to increase their inventory level. That's instrumental.” See Jones Dep. at 10-11; see also Mitchell Decl. ¶ 5 (“[O]nce a product has been added system-wide, AAFES individual store managers can request to buy additional products as needed, sometimes as a result of sales that sales representatives make to the AAFES local store managers on a store by store basis at the individual store level.”). According to Sandpiper's exchange sales manager, Robert Van Jones:

What the stores were used to doing-and I think it's commonplace with most manufacturers-they would-for a given promotion, they would say, ‘All right. We're going to have a 20-percent-off sale on Sandpiper for this weekend.' What would happen is, we would give a discount of 10 percent. The store would match it with 10 percent.

See Jones Dep. at 23. Indeed, Jones testified that “[a] lot of times” store managers would contact him directly to negotiate Sandpiper's assistance with a promotion. Id. Sandpiper also worked with individual stores to add new fixtures to display Sandpiper products. See Jones Dep. at 20-21; Jacobs Dep. at 39-40, 45-46 (explaining that after receiving approval from the military buyers for the display, “you have to go into the stores individually, speak to the manager, the GM, . . . and sell the idea. The idea was to bring the display in, to give us extra support as far as being able to show more of our product inside of the store.”). Although such fixtures had to be approved at the system-wide level, the fixtures were then shipped from Sandpiper directly to individual stores and then assembled, typically by a Sandpiper contractor who serviced the store. See Jones Dep. at 20-21; Jacobs Dep. at 45-46.

         Notably, Jacobs believed Sandpiper's involvement at the store-level was so important to its business that he developed the “SOC Triangle for Success, In-Store Plan” in order “to optimize our sales in just about all the different-all of the stores that we sold to, whether it was through AAFES, MCX, which is the Marines, NEXCOM, the Navy, to cover all this data here to promote our product.” See Jacobs Dep. at 36-37, Ex. 6. The “Triangle” consisted of AAFES[, ] management in San Diego[, ] and in-field management working together in a relationship. Three-legged stool.” See Jones Dep. at 75. “In-Store” referred to Sandpiper's physical presence in the stores for implementation of the plan. See Jacobs Dep. at 38-39. The plan outlined objectives under several headings, including “Store management communications, ” “product promotion support, ” “store level merchandising support, ” and “competitive disruption at all stores, floor displays, POS, ” among others. See Notice (Doc. 47), Ex. 6. The “competitive disruption” heading included a sub-heading titled “capture the hearts and minds of AAFES Managers, ” which is followed by several bullet points, one of which references “product sales monitoring and order suggestions.” Id.

         In 2014, Sandpiper hired Paragon Brokerage Inc. to act as a broker between Sandpiper, the supplier, and the military exchange buyers. See Payne Dep. at 6-7; Brown Dep. at 16-17, 32-33, Ex. 37; Jacobs Dep. at 91.[5] Paragon is a military brokerage company founded by Sean Brown in 1994 with over 80 major clients. See Brown Dep. at 9-10, 22, 50. Paragon operates as an independent contractor and is “paid commission on sales that [it] generate[s] at headquarters, military exchange headquarters.” See id. at 16, 22. Sandpiper and Paragon entered into a “Supplier Authorization Agreement” in 2014, whereby Paragon agreed to serve as Sandpiper's “exclusive worldwide sales representative” with the AAFES. See id. at 32-33, Ex. 37. This relationship was later expanded to include MCX and NEXCOM as well. See Jacobs Dep. at 87-88; Brown Dep. at 33-34. Pursuant to this agreement, Paragon made presentations at military headquarters regarding “new items for their consideration for stock assortments.” See Brown Dep. at 25. Notably, a Sandpiper sales manager, Dino Riggott, participated in all of these presentations. Id. at 23. In addition, Sandpiper “essentially always” provided Paragon with sales materials “whenever [it] would go into a headquarters meeting or presentation with a buyer.” See Payne Dep. at 9-10, Ex. 46. Such materials included a PowerPoint presentation with a slide that depicted a “Made in USA” decal and the following statements: “Featuring American Made products developed and manufactured by our sister company, PiperGear USA. We offer manufacturing options to meet Berry Amendment, NAFTA, GSA or Buy American Act requirements. The growth and success of our U.S. manufacturing plant is a great source of pride to us.” See id., Ex. 46.

         Paragon also provides services to its clients, including Sandpiper, at the individual store level. See Brown Dep. at 23-24, Ex. 37. Specifically, Paragon operates “a worldwide sales force of independent contractors” whose responsibilities include:

Stocking the shelves, setting new planograms. So as the buyer changes out the assortments, we go in and make those changes, make sure the products are priced correctly, the pegs-you know, the peg that you see at the end-where something is hanging, make sure that's been adjusted. We do cooking demos, food demos. We facili[tate] getting the manufacturer on base. A lot of the manufacturers like to visit bases to check it out. Our reps do that. As I think I mentioned earlier, return defective stock and-primarily they're merchandisers. Probably 90 percent of their efforts are merchandising, if we include doing demonstrations.

See id. at 23-24. These merchandisers are “a vast network of retired military people and dependents of military people.” Id. at 52. According to Brown, these individuals are independent contractors who are paid by the hour and “might work for ten companies like [Paragon].” Id. at 52-53, 104, 107. Because most planograms contain products for several different companies, Paragon pays the individual to put out its client's products on the planogram, “then the next company pays for them to put their products on, and then the next company pays them to put their products on.” Id. at 53-54. Significantly, Paragon never provides these merchandisers with catalogs or sales literature “because selling directly to stores is not permitted.” Id. at 55. According to Brown, the merchandisers are “not selling, ” rather “[t]hey're merchandisers . . . . They're just there to make sure our products are on the shelves.” Id. at 56.

         Notably, direct communication between Paragon merchandisers and Sandpiper was strictly forbidden. Id. at 110, 126-27. According to Brown, Paragon merchandisers were “under strict instructions” not to take directives from Sandpiper because ultimately, the time sheets go to Paragon. Id. at 127. Brown explains that Paragon “can't have our manufacturers telling [the merchandisers] what to do or asking them to do a project and then we get the time sheet for it.” Id. Indeed, Paragon goes so far as to “hide” the contact information for the merchandisers from the suppliers so that suppliers will not be able to issue directives directly to merchandisers. Id. at 128. Although the SOC Triangle for Success In-Store Plan was “consistently pushed by the executives at [Sandpiper], ” Brown thought the Triangle was “ridiculous, ” and had “no relevance to anything” Paragon did. Id. at 93-94. According to Brown, Paragon was “not directed to do anything” regarding the Triangle, never used the Triangle in presentations, and ignored it Id. at 94.

         Significantly, in addition to the Paragon merchandisers, Sandpiper engaged its own network of store-level representatives. Indeed, Jacobs strongly believed in developing good relationships and goodwill at the store level. See Jones Dep. at 10. In 2010, Sandpiper hired Jones as a salaried employee to work “very closely with the individual bases.” Id. at 8-9; Jacobs Dep. at 41-42, 181. At the time he was hired, Jones lived in Georgia and held the title of “Regional Sales Manager.” See Jones Dep. at 25. Jones traveled from base to base, “selling them products, selling them displays, working with the managers, creating trust and relationships and so on.” Id. at 8-9. Despite the “regional” title, Jones traveled beyond just the southeast, including trips to New England and Oklahoma. Id. at 25. In approximately 2012, his title changed to “Exchange Stores Sales Manager” and remained the same throughout the remainder of his employment with Sandpiper. Id. at 43; Jacobs Dep. at 70 (identifying Jones' title as “Exchange Sales Manager”). In 2015, for personal reasons, Jones moved to Navarre, Florida, where he is currently living. See Jones Dep. at 90-91.

         Beginning in 2015, because Paragon's “strategy in the field was not exactly what [Jacobs] wanted, ” Jacobs directed Jones to “hire on as many people as [he] could in all stores that would work strictly-merchandisers that would work strictly for Sandpiper. We could control them; we could make sure they're in there.” Id. at 16, 26-27; see also Jacobs Dep. at 52-53. Jones explained that Sandpiper “wanted that extra layer of support and . . . [was] coming with new products . . . and new fixtures, new marketing tools-we wanted to make sure those were in place and represented as well as possible.” See Jones Dep. at 16. According to Jones, Jacobs' plan “was to try to get as many merchandisers in as many stores as possible.” Id. at 26. As a result, Sandpiper went from “just a handful of representatives to about 60 in AAFES, ” “[a]bout eight to ten” in the Navy, and a few in the Marines. Id. at 27. Jones was responsible for training and supervising these Sandpiper merchandisers. See Jones Dep. at 18. Sandpiper developed checklists for the merchandisers to complete and required the merchandisers to submit pictures of the completed planograms to Jones. Id. at 18-19. At his deposition, Jones explained that “[t]here's a basic inventory checklist that has every item in the [planogram] listed, and [the merchandisers] have to do on-hands and on-orders . . . and then turn that in.” Id. at 36. At smaller stores, merchandisers provided this information once a month, at larger stores, twice a month. Id. at 36. According to Jones, this information was of “utmost importance” because it provided him with insight as to what was occurring at the store-level. Id. As such, Jones told the merchandisers that they were Sandpiper's “‘eyes and ears in the store.'” Id.

         Sandpiper's merchandisers were paid by the hour and submitted their timesheets to Jones for approval on a monthly basis. Id. at 31. Jones sent the information to Sandpiper in California, and Sandpiper then mailed paychecks directly to the merchandisers at their homes, including to those merchandisers who lived in Florida. Id.; Jacobs Dep. at 60-61, 86. Similar to the Paragon merchandisers, Sandpiper merchandisers were independent contractors who worked for other companies as well, although Sandpiper typically would not hire a merchandiser if he or she worked for a competing line. See Jones Dep. at 12-14; Jacobs Dep. at 168-69. Unlike Paragon, Sandpiper merchandisers were supposed to try and persuade the store manager to buy more product, where warranted. See Jones Dep. at 48. Thus, in addition to ensuring that Sandpiper fixtures were stocked and clean, with correct signage, Jones trained merchandisers to “have relationships with the managers; because, the more you can get out of the managers, the better it is for the company.” Id. at 18-19. Notably, Sandpiper expected its merchandisers to have “competent product knowledge, ” which according to Jacobs, “probably” included information regarding the country of origin of the particular products. See Jacobs Dep. at 56-57. However, merchandisers were not provided with Sandpiper's product catalog due to the cost and because “they really didn't need it.” See Jones Dep. at 61.

         Florida is not a major market for Sandpiper brand products. Id. at 14-15, 34, 93; see also Brown Dep. at 105, 130-31.[6] In 2016, Florida accounted for only 1.39% of Sandpiper's total sales. See Wu Decl. ¶ 43. In 2018, up to the date of the asset sale, only 2.2% of Sandpiper's total sales came from Florida. See id. According to Brown, between March 19, 2014, and March 20, 2019, Sandpiper sold, in total, approximately $1.2 million in retail dollars-worth of products at AAFES and NEXCOM exchange stores in Florida. See Brown Dep. at 112-13, Ex. 40. In comparison, the annual military business worldwide of Sandpiper brand products is approximately $13.5 million. Id. at 113; see also Wu Decl. ¶ 43. Brown further testified that Paragon does not have a “significant rep presence” in Florida because “Florida doesn't have a lot of bases.” See Brown Dep. at 51, Ex. 39. For example, over the last five years, Paragon has paid $62, 256.26 to merchandisers servicing Sandpiper products, and only $3, 010 of that went to merchandisers working in Florida. See Brown Dep. at 108, Ex. 38. This amounts to only 251 hours of service on behalf of Sandpiper products in Florida by Paragon merchandisers over a five-year period. Id. at 124. The vast majority of Sandpiper's internal merchandisers served exchanges and bases outside the state of Florida. See Jacobs Dep. at 169-70. Sandpiper records reflect that it employed only three merchandisers with Florida addresses to work on its behalf at military exchange stores in Florida. See Notice (Doc. 47), Ex. 15; Jones Dep. at 34, 37-38; Notice (Doc. 73), Ex. E (Doc. 78). And, Jones, the salaried exchange sales manager has lived and worked out of a home office in Navarre, Florida since December 2015. See Jones Dep. at 43, 52, 90-91. As part of his job responsibilities, Jones called on various military bases in Florida, including Eglin, Pensacola Navy, Hurlburt Field and Tyndall Air Force Base, see Jones Dep. at 15, 33, nevertheless, the majority of Jones' work was directed at areas outside Florida, see Jacobs Dep. at 172.

         Although most of Sandpiper's business involved bulk sales to retailers, Sandpiper also operated a website which included an option for individual sales. See Jacobs Sandpiper Decl. ¶ 14. Individual internet sales overall accounted for less than 1% of Sandpiper's annual business, and only a small percentage of those internet sales were made either from Florida or shipped to Florida. Id. ¶¶ 15-16. From January 1, 2018, until August 31, 2018, only six individual sales through the website were related to Florida, amounting to no more than 0.007% of Sandpiper's sales during that time frame. Id. ¶ 16. In 2017, internet sales to Florida represented 0.01% of Sandpiper's total sales, and in 2016 represented 0.02% of total sales. Id.

         3. FTC Action

         Jacobs first became aware that the FTC was investigating his companies when he received a letter from the FTC on April 5, 2018. See Jacobs Dep. at 104. In the letter, the FTC informed Jacobs that it had investigated Sandpiper and PiperGear and intended to pursue a formal enforcement action against Sandpiper and PiperGear for violating 15 U.S.C. § 45 “in connection with the advertising and sale of certain backpacks and tactical gear as made in America or the United States, even though they are wholly imported or contain significant imported content.” See Jacobs Dep. at 103-04, Ex. 20 at SOC000235. The FTC “served a proposed complaint on [Sandpiper] and PiperGear charging them with false advertising in connection with their claims that [Sandpiper] and PiperGear manufactured their products in the United States.” See Complaint, Ex. A: Proposed FTC Complaint. The Proposed FTC Complaint specifically referenced statements made on the Sandpiper and PiperGear websites, as well as posts which Sandpiper made on Instagram. See Proposed FTC Complaint ¶ 6. The FTC also referenced “certain wallets imported from Mexico as finished goods, ” in which Sandpiper and PiperGear “hid truthful country-of-origin information on the back of tags, and inserted cards that prominently displayed false U.S.-origin claims.” Id. ¶ 7. On May 1, 2018, Jacobs, on behalf of Sandpiper and PiperGear, executed a Consent Order with the FTC. See Jacobs Dep. at 110-11, Ex. 50.

         In late May of 2018, Sandpiper began a recall of the objectionable wallets from AAFES locations. See Brown Dep. at 63, Exs. 20, 41; see also Payne Dep. at 17-18, see id. at 12, Ex. 20. Significantly, some of those wallets were sold at military exchange bases in Florida. See Brown Dep. at 121-22, Ex. 20. Despite the recall, as of February 19, 2019, some of the improperly labeled wallets remained in exchange stores. See Declaration of Teresa Carlson (Doc. 45-5) ¶ 7 (asserting that on the week of February 19, 2019, she found Sandpiper wallets with the misleading label at the Lackland Air Force Base Exchange store and the Fort Lee Exchange store). Significantly, in December 2016, Advantus had attempted to sell “a wallet program to AAFES for six SKUs that AAFES was planning to carry in various exchanges throughout the country, including the AAFES locations at MacDill and Eglin Air Force bases.” See Mitchell Decl. ¶ 11. Advantus “lost that proposal to Sandpiper and [was] informed that it was because AAFES went with the Sandpiper products because AAFES wanted to have domestic production for those products.” Id.

         4. Innovapro's Takeover

         As stated above, Sandpiper purchased goods from Innovapro, which imported them from the manufacturer, Sun Fai, in China. Sandpiper also purchased goods directly from Sun Fai. According to Wu, “[b]etween January 2015 and mid-2018, Sandpiper purchased over $25 million in goods from Innovapro and Sun Fai on credit accounts.” See Wu Decl. ¶ 14. However, “Sandpiper was unable to pay for all the goods it purchased and by the early spring of 2018, the combined debt owed by Sandpiper to Innovapro and Sun Fai exceeded $10 million.” Id. ¶ 15. Wu asserts that “Sun Fai assigned its portion of the debt to Innovapro for collection.” Id. ¶ 16. “After being threatened with collection proceedings, Sandpiper attempted to negotiate a workout whereby the debt would be reduced and paid off over time.” Id. ¶ 17; see also Innovapro Reply, Ex. C (Doc. 96) (email chain between counsel for Sandpiper and Innovapro's counsel negotiating a plan to address Sandpiper's debt including a payment plan, granting Innovapro a security interest, and ultimately proposing an asset sale). Although these negotiations began around the same time that Sandpiper learned of the FTC investigation, Jacobs maintains that the FTC action was not a precipitating cause of the negotiations leading to the asset sale. See Jacobs Dep. at 107. Rather, in April of 2018, Sandpiper attempted to pay Innovapro “a million dollars in postdated checks, ” two of which “were good, so bought some time there, ” but then “the subsequent checks bounced.” Id. at 107-08. According to Jacobs, “that's what probably precipitated the negotiations as far as, you know, [‘]Dave [Jacobs], this isn't working. Let's try to work something else out.[']” Id. at 108. Soon after, Sandpiper granted bank access to Wu so he could “monitor and see that we're not going to bounce anymore checks on you going forward, number one. And number two is if you're going to continue to give us any kind of credit, it's okay that you're at [sic] looking in on our business.” Id. at 109. This occurred at approximately the same time that Sandpiper and PiperGear signed the Proposed Consent Order with the FTC. Id. at 111.

         As negotiations continued, “Sandpiper agreed to secure the debt in exchange for a temporary forbearance on collection proceedings. Innovapro filed a UCC-1 financing statement in July of 2018 against Sandpiper in California to perfect its security interest.” See Wu Decl. ¶ 18; see also Jacobs Dep. at 122-24, Ex. 52: Extension Agreement; Innovapro Reply, Ex. C at INNOVAPRO.000448-452. Ultimately, “Innovapro and Sandpiper agreed to terms for resolution of the debt that took the form of a forgiveness of debt in return for a transfer of assets from Sandpiper to Innovapro.” See Wu Decl. ¶ 20. Indeed, on July 6, 2018, Innovapro and Sandpiper entered an “Extension Agreement” which memorialized the existence of a “preliminary agreement” as follows: “The first step involves the acknowledgement of debt by [Sandpiper], the granting of a security interest by [Sandpiper], the timely delivery of product to [Sandpiper], and the oversight of the operation of [Sandpiper's] business by [James Wu] until such time as the assets of [Sandpiper] are sold to [Innovapro].” See Jacobs Dep. at 122-23, Ex. 52: Extension Agreement at 1. Pursuant to the Extension Agreement, Innovapro agreed to “allow [Sandpiper] to maintain access to goods to be sold by [Sandpiper], ” in consideration for Sandpiper “granting a security interest as set forth in this agreement . . . .” See Extension Agreement at 1. The Extension Agreement further provided that “[o]n the completion of the Asset Sale, all indebtedness secured by this agreement will expire, and Creditor's security interest in the Collateral, as set forth in this Agreement, will terminate.” See Id. at 7.

         On August 31, 2018, Innovapro and Sandpiper entered into a written Asset Purchase Agreement. See Wu Decl. ¶ 21, Ex. A: Asset Purchase Agreement (APA). At the time of the asset sale, Sandpiper was insolvent. See Wu Dep. at 51-52. Pursuant to the APA, Innovapro acquired Sandpiper's outstanding inventory, customer contacts, trademarks, trade names, domain name, website and social media sites. See Wu Decl. ¶ 23. Innovapro did not acquire “any aspect of the Piper Gear USA business or assets, nor did it acquire a line of wallets that was the subject of a pending [FTC] investigation based on false origin claims.” Id. ¶ 26. Innovapro also declined to purchase outstanding loans that both Jacobs and PiperGear owed to Sandpiper, and did not require Jacobs or PiperGear to pay this money back. See APA ¶ 1.B; Jacobs Dep. at 117; Wu Dep. at 53-54. According to Jacobs, beginning in 2006 or 2007, and extending possibly through 2018, he borrowed close to $1.1 million from Sandpiper. See Jacobs Dep. at 115-16. Jacobs testified at his deposition that PiperGear owed $3.65 million to Sandpiper. Id. at 116-17. According to Jacobs, Sandpiper loaned money to PiperGear at the time it was incorporated so that PiperGear “could begin doing business.” See Second Jacobs PiperGear Decl. ¶ 2. Jacobs maintains that the loan was “partially repaid over time” and “ultimately the remaining balance on August 31, 2018, was forgiven.” See id. ¶ 2; Jacobs Dep. at 117. Neither Jacobs nor PiperGear ever signed a promissory note for these loans. See Jacobs Dep. at 120. Moreover, as previously noted, these loans are not reflected in Sandpiper's accounts receivable ledger, see Jacobs Dep. at 119-20, Ex. 29, and according to Wu, he never saw any documentation for these loans. See Wu Dep. at 85-86. Nevertheless, Jacobs maintains that the CFO for PiperGear and Sandpiper kept track of the loans and they were accounted for in the records of those companies. See Jacobs Dep. at 176-77; Second Jacobs PiperGear Decl. ¶ 2.

         With limited exceptions not relevant here and expressly outlined in the APA, “Innovapro did not assume any liabilities of Sandpiper . . . .” See Wu Decl. ¶ 24; see also APA ¶ 2. As part of the APA, Innovapro entered into a two-year consulting agreement and a five-year-non-compete agreement with David Jacobs. See Wu Decl. ¶ 29; APA ¶¶ 8-9, Sched. 8-9. Although Jacobs has received payment under the consulting agreement, Wu has not asked him to provide any services. See Wu Dep. at 59; Jacobs Dep. at 33. In conjunction with the APA, Sandpiper agreed to amend its articles of incorporation to change its name to DBJ Enterprises. See Wu Decl. ¶ 30; APA ¶ 12. On September 4, 2018, Sandpiper notified the FTC of the asset sale to Innovapro and the agreement to change its name to DBJ Enterprises. See Jacobs Dep. at 160, Ex. 55. The certificate of amendment making this change, signed by Jacobs and dated August 31, 2018, was filed with the California Secretary of State on October 5, 2018. See Jacobs Dep. at 125-26, Ex. 53.

         Since acquiring Sandpiper's assets, Innovapro has continued Sandpiper's business of supplying Sandpiper-branded products to the military exchanges. See Wu Decl. ¶ 36. Prior to the take-over, Innovapro entered a contract with Paragon so that Paragon would seamlessly continue its services as the sales representative for the Sandpiper brand. See Wu Dep. at 47-48. Jeff Payne, Paragon's national account manager, testified that Paragon's responsibilities on behalf of the Sandpiper brand have not changed since Innovapro's take-over. See Payne Dep. at 6-7; Brown Dep. at 95. With Paragon's assistance, Innovapro “went through all the steps necessary to be set up as a new- essentially a brand new vendor in the AAFES system.” See Payne Dep. at 11, 22-23. After the asset sale, Innovapro met with AAFES to “announc[e] the new ownership and introduc[e] Michael Bennett as the new direct representative at Sandpiper.” Id. at 10-11. However, at the time of Payne's April 10, 2019 deposition, Paragon had not “had any new product presentations, ” and Innovapro had not provided Paragon with “any marketing materials” or a new product catalog. Id. at 23. According to Payne, the Sandpiper brand product line sold to AAFES has remained the same, with the exception of the wallet series that was recalled in May 2018. Id. at 8.[7]

         As part of the take-over, Innovapro terminated all Sandpiper employees. See Wu Dep. at 31-32. Innovapro then re-hired “7 or 8” of those employees, including Jones. See Wu Dep. at 30-32; Jones Dep. at 92. Jones' first responsibility on behalf of Innovapro was to terminate all of Sandpiper's internal merchandisers, with the exception of a “handful” serving the major stores, none of which are in Florida. See Jones Dep. at 92-93. The work that was previously performed by Sandpiper's merchandisers is now handled by Paragon's field force. Id. at 107. According to Jones, Innovapro made a business decision to terminate these internal merchandisers and instead let Paragon's merchandisers take over because “they're getting a commission on everything anyway.” Id. at 94-95. According to Jones, two of the Florida merchandisers had previously left due to personal reasons, and Jones terminated the “one in Jacksonville that did Mayport and JAX Navy and Camp Lejeune” on October 1, 2018. Id. at 94.[8] Jones exercises no managerial authority over the Paragon merchandisers, as “Paragon handles that themselves.” Id. at 95. Instead, Jones' job responsibilities for Innovapro consist primarily of managing the activities of the few remaining Sandpiper merchandisers at the larger exchange stores, and maintaining “[r]elationships with managers and the GMs at store level, which is kind of the next step up from the merchandisers . . . .” Id. at 99; see also Wu Dep. at 34 (“A. Mr. Van Jones's main job is for service. Not much of sales. Q. The servicing of the stores and the customers? A. The service, yeah.”). Although Jones agreed that his job is to maintain relationships with managers both inside and outside of Florida, he reiterated-"But, again, Paragon is taking over all of the representation in Florida. I really am not going to be involved in that.” See Jones Dep. at 99-100. Since the take-over, Jones has, on two occasions, visited the exchange store at the Pensacola Naval Air Station in Florida, in his capacity as an Innovapro employee. Id. at 96. While there, he briefly met with the manager of the exchange store who was requesting additional fixtures for the store. Id. Other exchanges in Florida are too small for Jones to call on, such that the majority of his work is done over the phone and e-mail with people located outside the state of Florida. Id. at 100-01.

         Florida remains a minor market for Sandpiper-brand products after the take-over. See Wu Decl. ¶¶ 40-43. Nevertheless, Innovapro does ship products directly to Florida. See Wu Dep. at 79, Ex. 27 (identifying Exhibit 27 as “[o]ne of our printouts for shipping location when in state of Florida” with item numbers identifying Innovapro products). According to Wu, the primary customers for Innovapro's Sandpiper products are the military exchanges, AAFES and NEXCOM, and Innovapro's business dealings with these customers occur at their headquarters in Dallas (AAFES) and Virginia (NEXCOM). Id. ¶¶ 36-37. Wu maintains that “Innovapro's military exchange customers arrange to pick up prepackaged product at Innovapro's warehouse in California, and then ship the product to their own distribution centers for further processing.” Id. ¶ 39. As such, according to Wu, “Innovapro does not deal directly with the Florida stores or deliver product directly to the Florida stores.” Id. ¶ 38. Sandpiper products sold in military exchange stores located in Florida “account for fewer than 2% of total Sandpiper sales nationwide.” Id. ¶ 40. Sandpiper products are also sold in Florida through “small, independent retailers, ” and online through the Amazon.com marketplace, as well as the Sandpiper website. See Id. ¶ 41. These sales amount to less than 0.5% of Innovapro's total Sandpiper sales. Id.

         According to Wu, “[t]here have been only three online sales delivered to Florida since Innovapro took over the www.sandpiperca.com website.” Id. ¶ 42. Since the take-over, Florida sales of Sandpiper products through all channels make up 2.15% of Innovapro's total Sandpiper sales. Id. ¶ 43. However, Florida's share of Sandpiper's total sales, although small, has gradually been increasing since 2016. Id.

         III. Personal Jurisdiction

         A. Applicable Law

         “A federal district court in Florida may exercise personal jurisdiction over a nonresident defendant to the same extent that a Florida court may, so long as the exercise is consistent with federal due process requirements.” See Licciardello v. Lovelady, 544 F.3d 1280, 1283 (11th Cir. 2008). “If both Florida law and the United States Constitution permit, the federal district court may exercise jurisdiction over the nonresident defendant.” Id. Thus, to determine whether personal jurisdiction exists over Defendants, the Court must engage in a two-part inquiry. See Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1319 (11th Cir. 2004). First, the Court must determine “whether the exercise of jurisdiction is appropriate under [Florida]'s long-arm statute.” Id. (citing Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996)). Second, the Court must consider whether exercising personal jurisdiction over Defendants is consistent with “the Due Process Clause of the Fourteenth Amendment to the United States Constitution, which requires that the defendant have minimum contacts with the forum state and that the exercise of jurisdiction over the defendant does not offend ‘traditional notions of fair play and substantial justice.'” Id. (quoting Sculptchair, Inc., 94 F.3d at 626). “Only if both prongs of the analysis are satisfied may a federal or state court exercise personal jurisdiction over a nonresident defendant.” Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 256 (11th Cir. 1996) (internal quotations omitted).

         1. Florida's ...


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