Hearing a complaint from the discount grocery giant against British Columbia shopkeepers accused of buying and reselling TJ's goods, U.S. District Judge Marsha Pechman ruled that Trader Joe's hasn't shown her court has jurisdiction over the matter. Pechman gave the California company two weeks to argue that the case deserves to be heard in a Washington federal court.
Filing the lawsuit in May, attorneys for Trader Joe's claimed operators of the Vancouver store had essentially built a bogus Trader Joe's. The store's name left little doubt - the shop is called Pirate Joe's.
The chain's attorneys claim those behind Pirate Joe's buy Trader Joe's products in the United States, drive them to Canada and resell them at inflated prices. The chain argues Pirate Joe's advertises that they have Trader Joe's products for sale.
Noting that Trader Joe's does no business in Canada, store owner Michael Hallatt admitted the store is reselling Trader Joe's products. Writing the court, Hallatt said he has violated no U.S. or Canadian law by importing the Trader Joe's products.
Hallatt also contended Trader Joe's has failed to show its lawsuit can be brought in U.S. District Court and demanded the suit be dismissed. On Monday, Pechman agreed to do so unless Trader Joe's can show why the case should remain before her.
Speaking with the Vancouver Sun, Hallatt said he is optimistic about Pechman's decision.
"We were thrilled that the judge looked at this and saw it for what it was, which was a frivolous lawsuit," Hallatt told a Canadian Press reporter.
Pechman ruled that because Trader Joe's does no business in Canada and Pirate Joe's does no business in the United States that the statute allowing federal courts to preside over some transnational disputes does not apply.
"All alleged infringement takes place in Canada and Trader Joe's cannot show economic harm," Pechman said her ruling. "Even if Canadian consumers are confused and believe they are shopping at Trader Joe's ... there is no economic harm to Trader Joe's because the products were purchased at Trader Joe's at retail price."
Trader Joe's could still bring the case if its attorneys can convince Pechman that they have a cause of action under Washington state law. Federal courts can preside over disputes involving state law if the dispute crosses state lines.