Vantage Mobility International LLC v. Kersey Mobility LLC

• Court: District Court, D. Arizona
• Decided: January 17, 2020
• Docket: 2:19-cv-04684
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Vantage Mobility International LLC, No. CV-19-04684-PHX-JJT

10 Plaintiff, ORDER

11 v.

12 Kersey Mobility LLC, et al.,

13 Defendants. 14 15 At issue are Defendant Braun Corporation’s (“BraunAbility”) Motion to Dismiss 16 for Lack of Personal Jurisdiction (Doc. 20, Mot.), to which Plaintiff Vantage Mobility 17 International LLC (“VMI”) filed a Response (Doc. 31, Resp.) and BraunAbility filed a 18 Reply (Doc. 41, Reply); and BraunAbility’s Motion for Leave to Supplement Motion to 19 Dismiss for Lack of Personal Jurisdiction (Doc. 40), to which VMI filed a Response (Doc. 20 44) and BraunAbility filed a Reply (Doc. 51). The Court heard oral argument on the 21 Motions on October 17, 2019. (Docs. 74, 95.) In this Order, the Court will also resolve 22 BraunAbility’s Motion to Strike (Doc. 55). 23 I. BACKGROUND 24 Plaintiff VMI is an Arizona company that produces and sells wheelchair-occupied, 25 lowered-floor minivan conversions. Since 2011, Defendant Kersey Mobility LLC 26 (“Kersey”) has been an authorized dealer of VMI products in certain portions of the State 27 of Washington. Kersey is made up of two members, Defendants Kersey Mobility Systems, 28 Inc. and Jensen8, Inc. VMI alleges that Defendant Michael Kersey is the “sole governor” 1 of Kersey Mobility Systems, Inc. and Defendant Michael Jensen is a “governor” of 2 Jensen8. 3 In 2017, VMI and Kersey entered into an Authorized Dealer Agreement for Kersey 4 to sell VMI’s manual equipment (Doc. 54-8), and a Select Dealer Agreement for Kersey 5 to sell VMI’s powered equipment (Doc. 54-9). A Territory and Location Policy attached 6 to the Authorized Dealer Agreement provides that if Kersey wishes “to sell or cease 7 operating one of more of [Kersey’s] locations at or from which any or all of [VMI’s] 8 Products are sold,” VMI has a right of notice, first offer, and first refusal. (Doc. 54-8 at 7.) 9 Defendant BraunAbility is an Indiana company that also produces and sells 10 wheelchair-occupied, lowered-floor minivan conversions. VMI alleges that BraunAbility 11 orchestrated the purchase of all of the membership interests in Kersey by one of its 12 subsidiaries, Defendant Arch Channel Investments LLC, in June 2019, and that VMI stands 13 to lose market share in Washington to BraunAbility, since Kersey is now owned by one of 14 BraunAbility’s subsidiaries. VMI claims that, by entering into the membership interest 15 sale, Kersey breached its agreements with VMI (Count 1) and that Defendants’ conduct 16 constituted tortious interference with contractual relations (Count 2), unfair competition 17 (Count 3), civil conspiracy (Count 4), and consumer fraud (Count 5). (Doc. 37, First Am. 18 Compl. (“FAC”).) 19 BraunAbility now moves to dismiss the claims against it for lack of personal 20 jurisdiction under Federal Rule of Civil Procedure 12(b)(2). 21 II. LEGAL STANDARD 22 For a federal court to adjudicate a matter, it must have jurisdiction over the parties. 23 Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982). The party 24 bringing the action has the burden of establishing that personal jurisdiction exists. 25 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citing McNutt v. 26 Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83 (1936)); Data Disc, Inc. v. Sys. Tech. 27 Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). When a defendant moves, prior to trial, 28 to dismiss a complaint for lack of personal jurisdiction by challenging the plaintiff’s 1 allegations, the plaintiff must “‘come forward with facts, by affidavit or otherwise, 2 supporting personal jurisdiction.’” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) 3 (quoting Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). 4 Because there is no statutory method for resolving the question of personal 5 jurisdiction, “the mode of determination is left to the trial court.” Data Disc, 557 F.2d at 6 1285 (citing Gibbs v. Buck, 307 U.S. 66, 71-72 (1939)). Where, as here, a court resolves 7 the question of personal jurisdiction upon motions and supporting documents, the plaintiff 8 “must make only a prima facie showing of jurisdictional facts through the submitted 9 materials in order to avoid a defendant’s motion to dismiss.” Id. In determining whether 10 the plaintiff has met that burden, the “uncontroverted allegations in [the plaintiff’s] 11 complaint must be taken as true, and conflicts between the facts contained in the parties’ 12 affidavits must be resolved in [the plaintiff’s] favor.” Rio Props., Inc. v. Rio Int’l Interlink, 13 284 F.3d 1007, 1019 (9th Cir. 2002) (citation omitted). 14 To establish personal jurisdiction over a nonresident defendant, a plaintiff must 15 show that the forum state’s long-arm statute confers jurisdiction over the defendant and 16 that the exercise of jurisdiction comports with constitutional principles of due process. Id.; 17 Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Arizona’s 18 long-arm statute allows the exercise of personal jurisdiction to the same extent as the 19 United States Constitution. See Ariz. R. Civ. P. 4.2(a); Cybersell v. Cybersell, 130 F.3d 20 414, 416 (9th Cir. 1997); A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995) 21 (stating that under Rule 4.2(a), “Arizona will exert personal jurisdiction over a nonresident 22 litigant to the maximum extent allowed by the federal constitution”). Thus, a court in 23 Arizona may exercise personal jurisdiction over a nonresident defendant so long as doing 24 so accords with constitutional principles of due process. Cybersell, 130 F.3d at 416. 25 Due process requires that a nonresident defendant have sufficient minimum contacts 26 with the forum state so that “maintenance of the suit does not offend ‘traditional notions of 27 fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) 28 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)); see also Data Disc, 557 F.2d at 1 1287. Courts recognize two bases for personal jurisdiction within the confines of due 2 process: “(1) ‘general jurisdiction’ which arises when a defendant’s contacts with the 3 forum state are so pervasive as to justify the exercise of jurisdiction over the defendant in 4 all matters; and (2) ‘specific jurisdiction’ which arises out of the defendant’s contacts with 5 the forum state giving rise to the subject litigation.” Birder v. Jockey’s Guild, Inc., 444 F. 6 Supp. 2d 1005, 1008 (C.D. Cal. 2006). 7 III. ANALYSIS 8 A. General Jurisdiction 9 BraunAbility first argues that it is not subject to general personal jurisdiction in 10 Arizona. (Mot. at 4-5.) As a threshold matter, because VMI filed the FAC after 11 BraunAbility filed its Motion to Dismiss, the Court will consider VMI’s allegations in the 12 FAC in resolving the Motion to Dismiss. Conversely, in the interest of efficiency and in 13 lieu of requiring the parties to re-brief the Motion to Dismiss, the Court will consider the 14 Motion to Dismiss filed prior to the FAC but will grant BraunAbility’s Motion for Leave 15 to Supplement (Doc. 40) and consider BraunAbility’s supplemental Declaration submitted 16 after VMI filed the FAC (Doc. 40-1). 17 “[T]he place of incorporation and principal place of business are paradigm bases 18 for general jurisdiction” over a corporation. Daimler AG v. Bauman, 571 U.S. 117, 137 19 (2014). Under International Shoe, general or all-purpose jurisdiction over a corporation 20 arises in “instances in which the continuous corporate operations within a state [are] so 21 substantial and of such a nature as to justify suit . . . on causes of action arising from 22 dealings entirely distinct from those activities.” Id. at 138 (quoting Int’l Shoe Co., 326 U.S. 23 at 318) (internal quotations omitted). It is not sufficient that a corporation simply “engages 24 in a substantial, continuous, and systematic course of business” in the forum state; instead, 25 general jurisdiction over a corporation exists only when the corporation’s “affiliations with 26 the State are so continuous and systematic as to render them essentially at home in the 27 forum state.” Id. at 127, 137-38 (internal quotations and citations omitted). Thus, “the 28 general jurisdiction inquiry does not focus solely on the magnitude of the defendant’s in- 1 state contacts,” but rather “calls for an appraisal of a corporation’s activities in their 2 entirety.” Id. at 139 n.20. Ultimately, “a corporation that operates in many places can 3 scarcely be deemed at home in all of them.” Id. 4 In the FAC, VMI added an allegation that BraunAbility “operates five dealerships” 5 in Arizona. (Doc. 38-1 ¶ 18.) In BraunAbility’s supplemental Declaration, its General 6 Counsel avers that, while the five Arizona dealerships sell BraunAbility products, they are 7 owned and operated by Arch. (Doc. 40-1 ¶ 4.) Even if the Court takes as true that 8 BraunAbility operates dealerships in Arizona, that allegation is insufficient to confer the 9 Court with all-purpose jurisdiction over BraunAbility in Arizona. In the Affidavit 10 BraunAbility filed with its Motion to Dismiss, its General Counsel avers that both the place 11 of incorporation and principal place of business of BraunAbility are Indiana. Arizona 12 contains none of its corporate management and fewer than 1% of its employees, and less 13 than 1.5% of its revenue comes from Arizona. (Doc. 20-1 ¶¶ 7-9.) Even after considering 14 Plaintiff’s allegations that BraunAbility has conducted training, participated in disability 15 conventions, and located a service facility in Arizona, the Court finds that BraunAbility’s 16 affiliations with Arizona are not so extensive as to render it essentially at home in Arizona 17 when considering its activities in their entirety.1 The Court thus does not have general 18 jurisdiction over BraunAbility in Arizona. 19 B. Specific Jurisdiction 20 BraunAbility also contends that it is not subject to specific personal jurisdiction in 21 Arizona. (Mot. at 5-9.) Whether a court may exercise specific jurisdiction in a given case 22 turns on the extent of the defendant’s contact with the forum and the degree to which the 23 plaintiff’s suit is related to the defendant’s contacts. Yahoo! Inc. v. La Ligue Contre Le 24 Racisme et L’Antisemitisme, 433 F.3d 1199, 1210 (9th Cir. 2006). The Ninth Circuit uses 25 the following approach to determine whether a court may exercise specific jurisdiction over 26 a nonresident defendant: (1) the nonresident defendant must do some act in or consummate

27 1 In its briefing (Resp. at 4-5), VMI applied a pre-Daimler standard for general personal jurisdiction over a corporation that focused on whether the defendant’s contacts with the 28 forum state were simply “substantial, continuous and systematic,” which standard the Daimler Court characterized as “unacceptably grasping.” 571 U.S. at 138. 1 some transaction with the forum, or perform some act by which it purposefully avails itself 2 of the privilege of conducting activities in the forum, thereby invoking the benefits and 3 protections of its laws; (2) the claim must be one which arises out of or results from the 4 defendant’s forum-related activities; and (3) the exercise of jurisdiction must be 5 reasonable. Data Disc, 557 F.2d at 1287. 6 The plaintiff bears the burden of establishing the first two requirements of the test. 7 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). If the 8 plaintiff establishes the first two requirements, the burden shifts to the defendant to 9 establish that the third requirement is not met. Mavrix Photo, Inc. v. Brand Techs., Inc., 10 647 F.3d 1218, 1228 (9th Cir. 2011) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 11 476-78 (1985)). All three requirements must be met for the exercise of jurisdiction to 12 comport with constitutional principles of due process. Omeluk, 52 F.3d at 270. 13 To meet the first element—that the defendant purposefully directed activities at the 14 forum state—the plaintiff must show the defendant “either (1) ‘purposefully availed’ 15 himself of the privilege of conducting activities in the forum, or (2) ‘purposefully directed’ 16 his activities towards the forum.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th 17 Cir. 2006) (quoting Schwarzenegger, 374 F.3d at 802). The purposeful direction analysis 18 is most commonly applied in cases alleging tortious conduct, as in this case. Mavrix Photo, 19 Inc., 647 F.3d at 1228. 20 To determine whether the defendant’s actions constitute purposeful direction, courts 21 apply the “effects” test that was developed in Calder v. Jones, 465 U.S. 783, 789-90 (1984). 22 The effects test requires that “the defendant allegedly must have (1) committed an 23 intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant 24 knows is likely to be suffered in the forum state.” Yahoo!, 433 F.3d at 1206. “The proper 25 question is not where the plaintiff experienced a particular injury or effect but whether the 26 defendant’s conduct connects [it] to the forum in a meaningful way.” Walden v. Fiore, 571 27 U.S. 277, 290 (2014). In other words, the relationship between the defendant, the forum 28 state, and the litigation “must arise out of contacts that the defendant himself creates with 1 the forum State” and not just “the defendant’s contacts with persons who reside there.” Id. 2 at 284. 3 BraunAbility argues that VMI has not demonstrated BraunAbility committed an 4 intentional act aimed at Arizona because the purchase of the Kersey membership interests 5 without VMI’s knowledge—which underpins VMI’s claims—was effectuated by Arch, not 6 BraunAbility. (Mot. at 7.) BraunAbility also points out that VMI “pleads no grounds to 7 ignore the corporate form between BraunAbility and Arch.” (Mot. at 7.) But VMI does 8 allege that “the Chief Executive Office of [BraunAbility], Staci Kroon, sent an email to 9 VMI’s Chief Executive Officer, Mark Shaughnessy, stating, ‘As Mark Kersey shared with 10 you earlier, BraunAbility has acquired his dealerships,’” which indicates that BraunAbility 11 orchestrated Arch’s purchase of Kersey. (FAC ¶ 43.) VMI also alleges that, on the day of 12 Arch’s purchase of Kersey, “Arch, acting at the direction of Braun, filed suit against VMI 13 . . . claiming VMI’s rights of first offer and first refusal do not apply to Arch’s acquisition 14 of Kersey and that such provisions were void and unenforceable.” (FAC ¶ 45.) 15 BraunAbility has not produced evidence challenging these allegations. 16 By themselves, these allegations go to whether BraunAbility engaged in intentional 17 conduct leading to VMI’s claims.2 For example, in Count 2, VMI claims that BraunAbility 18 engaged in tortious interference with contractual relations by “inducing Kersey to enter 19 into an Agreement with Arch to acquire 100% of the membership interests in Kersey 20 Mobility, LLC, without providing VMI notice of Kersey’s intent to sell.” (FAC ¶ 70.) Thus, 21 VMI does not allege claims against BraunAbility based solely on the acts of Arch, but also 22 on BraunAbility’s own conduct. 23 Although VMI satisfactorily pleads that BraunAbility committed intentional acts 24 giving rise VMI’s claims, allegations going to whether those acts were expressly aimed at 25 Arizona are inadequate.3 At base, VMI’s allegations of injury resulting from

26 2 The Court does not resolve here whether VMI has stated claims under Rule 12(b)(6), but rather whether the allegations are sufficient to subject BraunAbility to personal jurisdiction 27 in Arizona.

28 3 In its briefing, VMI cites pre-Walden cases to argue that BraunAbility’s conduct was aimed at Arizona because VMI is located in Arizona and the harm resulting from the 1 BraunAbility’s alleged conduct relate to a loss of market share in the State of Washington. 2 VMI does not claim that BraunAbility’s actions hurt VMI in the Arizona market, and 3 instead argues that the effects of a loss of sales in Washington will be felt in Arizona 4 because VMI is located here.4 In Walden, the Supreme Court clarified that a defendant’s 5 connection to the forum state through the plaintiff alone is insufficient to confer specific 6 jurisdiction over the defendant. 571 U.S. at 290; see also Burger King, 471 U.S. at 474 7 (stating that the foreseeability of injury in a forum state “is not a sufficient benchmark for 8 exercising personal jurisdiction” (internal quotations omitted)); Morrill v. Scott Fin. Corp., 9 873 F. 3d 1136, 1144-45 (9th Cir. 2017). Without more, Plaintiff has failed to show 10 purposeful direction on the part of BraunAbility and, as a result, the Court lacks specific 11 personal jurisdiction over BraunAbility. See In re W. States Wholesale Nat. Gas Antitrust 12 Litig., 715 F.3d 716, 742 (9th Cir. 2013) (“If any of the three requirements is not satisfied, 13 jurisdiction in the forum would deprive the defendant of due process of law.”). 14 C. Motion to Strike 15 BraunAbility also filed a Motion to Strike (Doc. 55) related to paragraph 3 of the 16 FAC. In that paragraph, VMI alleges that the United States Department of Justice 17 conducted an antitrust inquiry into BraunAbility, which BraunAbility argues is untrue, 18 immaterial, and scandalous. Because the Court is granting the Motion to Dismiss VMI’s 19 claims against BraunAbility for lack of personal jurisdiction, no allegations against 20 BraunAbility will remain in this lawsuit. The Court will therefore deny the Motion to Strike 21 as moot. 22 IT IS THEREFORE ORDERED granting Defendant Braun Corporation’s Motion 23 to Dismiss for Lack of Personal Jurisdiction (Doc. 20) and dismissing Plaintiff’s claims 24 against Braun Corporation. 25 . . . . 26 conduct will be felt in Arizona. (Resp. at 7-8.) 27 4 The FAC also contains broad allegations of anticompetitive behavior on a national scale 28 by BraunAbility, but none of those allegations go to the specific claims raised by VMI in this lawsuit. 1 IT IS FURTHER ORDERED granting Defendant Braun Corporation’s Motion || for Leave to Supplement Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 40). 3 IT IS FURTHER ORDERED denying as moot Defendant Braun Corporation’s 4|| Motion to Strike (Doc. 55). 5 Dated this 16th day of January, 2020. CN

7 hlee— Unifga StatesDistrict Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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