SpyGlass Group, LLC v. Genesis Health Clubs Management, Inc.

CourtDistrict Court, N.D. Ohio
DecidedNovember 28, 2022
Docket1:22-cv-00131
StatusUnknown

This text of SpyGlass Group, LLC v. Genesis Health Clubs Management, Inc. (SpyGlass Group, LLC v. Genesis Health Clubs Management, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SpyGlass Group, LLC v. Genesis Health Clubs Management, Inc., (N.D. Ohio 2022).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

THE SPYGLASS GROUP, LLC, ) Case No. 1:22-cv-00131 ) Plaintiff, ) Judge J. Philip Calabrese ) v. ) ) GENESIS HEALTH CLUBS ) MANAGEMENT, INC., et al., ) ) Defendants. ) )

OPINION AND ORDER Plaintiff The SpyGlass Group, LLC, an Ohio limited liability company, agreed to perform certain audit services for Defendants Genesis Health Clubs Management, Inc. and Genesis Health Clubs Management, LLC, each of which is a Kansas company, to identify various cost savings. Plaintiff filed suit alleging that Defendants failed to pay according to their contract. The merits of that dispute are for another day. At the pleading stage, the record shows that the parties never met in person and conducted all business virtually from their respective locations in Ohio and Kansas. Under Rule 12(b)(2), Defendants move to dismiss for lack of personal jurisdiction. (ECF No. 24.) FACTUAL BACKGROUND On this motion to dismiss, the Court takes the following allegations in the first amended complaint as true and construes them in Plaintiff’s favor. A. First Amended Complaint The SpyGlass Group, LLC audits businesses’ telecommunications service accounts, including voice, data, internet, cloud service, and mobility/cellular

accounts, and recommends cost reductions and other savings. (ECF No. 15, ¶ 4, PageID #81–82.) Genesis Health Clubs Management, Inc. and Genesis Health Clubs Management, LLC operate health clubs and gyms in the States of Kansas, Nebraska, Colorado, Iowa, Oklahoma, and Missouri. (Id., ¶¶ 7–8, PageID #82.) A.1. The SpyGlass SnapShot Audit SpyGlass uses its “SnapShot Audit” technology expense management tool to analyze a client’s current technology spending and identify opportunities for potential savings. (ECF No. 15, ¶ 16, PageID #84.) SpyGlass reviews two months of a client’s

bills, then meets with the company to discuss the SnapShot Audit’s findings and recommend potential savings based on the client’s particular business needs. (Id., ¶¶ 17–18.) SpyGlass bills companies for its services based on verified savings from the audit. (Id., ¶ 19.) A.2. SpyGlass and Genesis Health Clubs In September 2020, a SpyGlass employee based in Ohio contacted Genesis Health Clubs to offer SpyGlass’ services. (Id., ¶ 20.) Genesis Health Clubs agreed to

a Zoom meeting with a SpyGlass sales representative, who explained the audit process and the potential for cost reductions. (Id., ¶ 21, PageID #84–85.) A few months later, SpyGlass and Genesis Health Clubs entered into a contract for SpyGlass to conduct a SnapShot Audit of Genesis Health Clubs’ telecommunication expenses. (Id., ¶ 22, PageID #85; ECF No. 15-1.) To execute the contract, SpyGlass sent Genesis Health Clubs an agreement, which Genesis Health Clubs signed electronically and returned electronically to SpyGlass in Ohio. (ECF No. 15, ¶ 22, PageID #85.)

The SnapShot Audit Agreement between the parties is a one-page document. (ECF No. 15-1, PageID #92.) The parties agreed to a kickoff meeting and a meeting at the end of the project for SpyGlass to summarize its findings. (Id.) However, it does not indicate where either meeting will take place. Kansas law governs the contract. (Id.) Also, it allows the parties to sign electronically, and the face of the document shows that they did. (Id.)

In January 2021, SpyGlass hosted a kick-off meeting with Genesis Health Clubs via Zoom, in which SpyGlass explained the audit process. (ECF No. 15, ¶¶ 24–25, PageID #85.) A month later, Genesis Health Clubs uploaded its bills and invoices to SpyGlass for review in Ohio through SpyGlass’ electronic portal, which is housed in Ohio. (Id., ¶ 27, PageID #86.) Between January 2021 and May 2021, Genesis Health Clubs supplied SpyGlass in Ohio with the necessary materials and authority to complete the audit and communicated with SpyGlass in Ohio. (Id., ¶¶ 23

& 26, PageID #85.) During a videoconference in May 2021, SpyGlass presented its audit findings and made recommendations to Genesis Health Clubs based on the audit. (Id., ¶ 30, PageID #86.) Then, the parties made a list of action items for SpyGlass to perform based on the recommendations. (Id.; see also id. ¶ 31.) A few weeks later, the parties participated in a follow-up Zoom meeting in which they agreed on a strategy for SpyGlass to implement its recommendations. (Id., ¶ 33, PageID #87; ECF No. 15-3.) With authority from Genesis Health Clubs,

SpyGlass communicated from its offices in Ohio with Genesis Health Clubs’ service providers to implement the recommendations. (ECF No. 15, ¶ 32, PageID #86.) These changes allegedly saved Genesis Health Clubs over $7,3800 per month. (Id., ¶ 36, PageID #87.) SpyGlass billed Genesis Health Clubs about $88,000 for its services. (Id., ¶ 45; ECF No. 15-4.) A.3. The Dispute On two separate occasions in June 2021, a SpyGlass representative emailed

Genesis Health Clubs requesting a meeting to provide an update on the project along with possible opportunities to save additional money. (ECF No. 15, ¶¶ 43–44, PageID #88.) Soon after sending the invoice, a representative from Genesis Health Clubs informed SpyGlass that its point-of-contact had changed and requested that SpyGlass resend the invoice. (Id., ¶ 46, PageID #88.) A representative from Genesis Health Clubs then informed SpyGlass that the

owner of Genesis Health Clubs was unhappy with the amount invoiced and that Genesis Health Clubs would likely cancel SpyGlass’ services. (Id., ¶ 47.) SpyGlass made several attempts to reach Genesis Health Clubs’ point-of-contact regarding the unpaid invoice, to no avail. (Id., ¶¶ 49–50, PageID #88–89.) SpyGlass alleges that Genesis Health Clubs has yet to pay for the services it performed. (Id., ¶ 51, PageID #89.) Plaintiff asserts three claims: (1) breach of contract (Count I), (2) quantum meruit (Count II), and (3) unjust enrichment (Count III). (Id. ¶¶ 52–70, PageID #89–91.) B. Declarations

With respect to personal jurisdiction, the amended complaint shows that SpyGlass and Genesis Health Clubs never met in person. Neither traveled to the location of the other. Instead, the parties conducted business remotely by email, Zoom or videoconference, and exchanged information through various technology tools. Additionally, construing the record in Plaintiff’s favor, as the Court must in the present procedural posture, Genesis Health Clubs knew that SpyGlass conducted its business from Ohio and that it delivered documents and other information to

SpyGlass in Ohio to perform that work. (Id., ¶¶ 24 & 32, PageID #85 & #86.) Each party submitted declarations setting forth additional facts. For Genesis Health Clubs, Rodney L. Steven II, the company’s president, declares that Genesis Health Clubs Management, Inc. is a Kansas corporation headquartered in Kansas, while Genesis Health Clubs Management, LLC is a limited liability company headquartered in Kansas where each of its two members also reside. (ECF No. 10,

¶¶ 3 & 4, Page ID #46.) Genesis Health Clubs does not have property or facilities in Ohio. (Id., ¶¶ 6–7.) Nor does Genesis Health Clubs “have any contacts with Ohio.” (Id., ¶ 5.) Further, it does not have employees in Ohio or that travel to Ohio at any time. (Id., ¶ 8, PageID #47.) And Genesis Health Clubs does not direct advertising at Ohio, solicit business from persons or companies in Ohio, transact any business in Ohio, receive any revenue from customers in Ohio, or maintain an Ohio bank account. (Id., ¶¶ 9–11.) Consequently, Genesis has not paid any taxes in Ohio. (Id., ¶13.) A second declaration, from Genesis Health Clubs’ IT director, Richard Thompson, confirms that the parties communicated exclusively using Zoom, email, and other technologies. (ECF No. 11, ¶ 4, PageID #48.) No one from Genesis Health

Clubs traveled to Ohio during the audit services SpyGlass performed.

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SpyGlass Group, LLC v. Genesis Health Clubs Management, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/spyglass-group-llc-v-genesis-health-clubs-management-inc-ohnd-2022.