Smith v. Kellogg Company et al

RESPONSE to 31 Motion to Amend/Correct Complaint

D. Nev.September 15, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GREENBERG TRAURIG, LLP Tami D. Cowden (8994) cowdent@gtlaw.com 3773 Howard Hughes Parkway Suite 400 North Las Vegas, Nevada 89169 Tel: (702) 792-3773 Fax: (702) 792-9002 James N. Boudreau (PA 77891), pro hac vice boudreauj@gtlaw.com Christiana L. Signs (PA 317851), pro hac vice signsc@gtlaw.com 2700 Two Commerce Square 2001 Market Street Philadelphia, PA 19103 Tel: (215) 988-7800 Fax: (215) 988-7801 James Nelson (CA 116442), pro hac vice nelsonj@gtlaw.com 1201 K. Street, Suite 1100 Sacramento, CA 95814 Tel: (916) 442-1111 Fax: (916-448-1709 Attorneys for Defendants UNITED STATES DISTRICT COURT DISTRICT OF NEVADA BRIAN SMITH, on behalf of himself and those similarly situated persons, Plaintiffs, v. KELLOGG COMPANY and KELLOG SALES COMPANY, Defendants. CASE NO. 2:17-cv-01914 APG-GWF POINTS AND AUTHORITIES IN OPPOSITION TO MOTION TO AMEND COMPLAINT Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 1 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 I. INTRODUCTION Defendants Kellogg Company and Kellogg Sales Company (collectively “Defendants” or “Kellogg”) oppose Plaintiff Brian Smith’s motion to amend the complaint to add Charles Sewell as a second named plaintiff (ECF No. 31). The Court does not have personal jurisdiction over Kellogg with respect to Mr. Sewell’s claims. As a result, the proposed amendment is futile. In the Ninth Circuit, the “general rule that parties are allowed to amend their pleadings . . . does not extend to cases in which any amendment would be an exercise in futility.” Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998). Further counseling against permitting amendment in this case is that the named plaintiff, Brian Smith - unlike Mr. Sewell - is subject to an arbitration agreement with Defendants, which Defendants intend to enforce. (See Motion to Compel Arbitration filed concurrently herewith). Accordingly, this case is likely to be dismissed or stayed in some respect in any event. In short, should Mr. Sewell wish to proceed on his claim, he should do so on his own in a court of competent jurisdiction. II. FACTUAL AND PROCEDURAL BACKGROUND A. Mr. Smith’s Claims Against Kellogg. Plaintiff Brian Smith lives in North Las Vegas, Nevada. (ECF No. 1, ¶ 16). He began working for Kellogg in Nevada in April 2014. (Id. at 17). He worked as a Retail Sales Representative, or “RSR,” as of approximately August 2014. (Id. at ¶ 17). According to Mr. Smith, this job required him to call on retail stores in Nevada. (Id. at ¶ 1). On July 13, 2017, Mr. Smith filed this lawsuit alleging a single claim: that Kellogg violated the Fair Labor Standards Act (“FLSA”) by failing to pay him and other employees overtime (i.e., one-and- one-half times their regular rates for all hours worked in excess of 40 in a week) when they worked in the RSR and similar positions. (Id. at ¶ 1). B. Mr. Sewell’s Proposed Claims Against Kellogg. Mr. Smith now wants to add a second named plaintiff to his case. (ECF No. 31). The proposed new plaintiff, Charles Sewell, lives in Corbin, Kentucky. (ECF No. 31-1, ¶ 22). He worked for Kellogg in Kentucky from approximately February 2013 until approximately February 2016. (Id. at ¶ 23). He also worked in a RSR position. (Id.) He has no apparent connection to the State of Nevada. /// Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 2 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 C. Kellogg’s Business And Nevada State Contacts. Kellogg manufactures and markets ready-to-eat cereal and snack and convenience foods throughout the United States and around the world.1 Kellogg Company, a holding company, is incorporated in Delaware with its principal place of business in Battle Creek, Michigan.2 Through its operating subsidiaries, it owns manufacturing facilities in 18 different states and 21 countries around the world.3 In 2016, the Kellogg family of companies reported over $7.4 billion in net sales in the U.S. and employed approximately 37,369 people globally.4 Defendant Kellogg Sales Company is a Kellogg subsidiary.5 It employs approximately 2,050 people.6 Like Kellogg Company, Kellogg Sales Company is incorporated in Delaware with its principal place of business in Battle Creek, Michigan.7 Defendants have virtually no connections to the State of Nevada. Although Kellogg Sales Company is registered to do business here, and sells its products to retail outlets in the State, it neither owns nor leases any property in Nevada.8 It employs approximately six people in the State.9 Kellogg Company, on the other hand, is not even registered to do business in Nevada.10 It does not own or lease any property here, either.11 Of the more than 37,000 people whom Kellogg and its various subsidiaries employ, a total of six (6) work in Nevada.12 Together, the sales of the Kellogg family of companies in the State of Nevada make up less than 1% of Kellogg’s total U.S. sales.13 /// /// /// /// 1 Exhibit A, Declaration of Daryl Nisenson, (“Nisenson Decl.”), at ¶¶2-4. 2 Id. at ¶3. 3 Id. at ¶4. 4 Id. at ¶¶5-6. 5 Id. at ¶7. 6 Id. at ¶8. 7 Id. at ¶7. 8 Id. at ¶¶9-10. 9 Id. at ¶11. 10 Id. at ¶12. 11 Id. at ¶13. 12 Id. at ¶14. 13 Id. at ¶15. Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 3 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 III. THE COURT SHOULD DENY PLAINTIFF’S MOTION BECAUSE THE COURT LACKS PERSONAL JURISDICTION OVER KELLOGG VIS-À-VIS MR. SEWELL. A. Courts Do Not Permit Futile Amendments. Although there is a general rule that parties are allowed to amend their pleadings, and that courts should grant leave as justice requires (Fed. R. Civ. P. 15(a)(2)), that rule is not without its limits. It “does not extend to cases in which any amendment would be an exercise in futility . . . .” Steckman, 143 F.3d 1293, 1298. “The decision of whether to grant leave to amend nevertheless remains within the discretion of the district court.” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008). In the Ninth Circuit, “district courts determine[] the propriety of a motion to amend by ascertaining the presence of any of four factors: bad faith, undue delay, prejudice to the opposing party, and/or futility.” Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (courts may deny leave where there is an “apparent or declared reason” to do so, “such as . . . futility of amendment”). B. The Proposed Amendment Is Futile Because This Court Lacks Personal Jurisdiction With Respect To The Proposed New Plaintiff. Although Mr. Sewell desires to join this action as a named plaintiff, a recent United States Supreme Court case dictates that this Court lacks jurisdiction over Kellogg with respect to his claims. This renders the proposed amendment futile. In Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., __ U.S. __, 137 S. Ct. 1773 (2017) (“BMS”), decided June 19, 2017, the Supreme Court held that a court does not have jurisdiction over a defendant with respect to the claims of out-of-state plaintiffs just because it has jurisdiction with respect to the claims of in-state co-plaintiffs. 137 S. Ct. 1773, 1781-82. In BMS, a California state court had exercised personal jurisdiction over an out-of-state defendant in consolidated drug product liability lawsuits brought by “86 California residents and 592 residents from 33 other States.” BMS, 137 S. Ct. at 1778-79. The Supreme Court reasoned that because the out-of-state plaintiffs were not prescribed the drug at issue in California, did not purchase the drug in California, and were not injured by the drug in California, California did not have specific jurisdiction over the defendant with respect to the out-of-state plaintiffs’ product liability claims. Id. at 1781. It mattered naught that Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 4 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 “other plaintiffs were prescribed, obtained, and ingested” the drug in California. Id. (emphasis added). Nor did it matter that the defendant had conducted research in California on a matter unrelated to the drug at issue. Id. Because the facts giving rise to the claims of the out-of-state plaintiffs were unconnected to California, the Supreme Court held that the Due Process Clause prevented the California court from asserting jurisdiction over the defendant as to the claims of the out-of-state plaintiffs. Id. Fed. R. Civ. P. 4(k)(1)(A) restricts the personal jurisdiction of a federal court to the same as the jurisdiction of a state court “in the state where the district court is located.” See also Daimler AG v. Bauman, __ U.S. __, 134 S. Ct. 746, 753 (2014) (“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.”) (citing Fed. R. Civ. P. 4(k)(1)(A)).14 In Nevada, personal jurisdiction “reaches the limits of due process set by the United States Constitution.” Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court ex rel. Cty. of Clark, 134 P.3d 710, 712 (Nev. 2006). The Due Process Clause of the United States Constitution, in turn, requires that for a court to have jurisdiction over a defendant, the case must “have certain minimum contacts” with the state in which the court sits, “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945). There are two types of such jurisdiction: (1) general or all-purpose jurisdiction; and (2) specific or case-linked jurisdiction. BMS, 137 S. Ct. 1773, 1779-80. 1. This Court Does Not Have General, All-Purpose Jurisdiction Over Kellogg. “[O]nly a limited set of affiliations with a forum will render a defendant amenable to all-purpose jurisdiction.” Daimler, 134 S. Ct. 746, 760. General, all-purpose jurisdiction exists only where the defendant’s “affiliations with the [forum] State are so ‘continuous and systematic’ as to render [it] essentially at home” there. Id. at 754 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 914 (2011)). A corporation is deemed at “home” in the state where it is incorporated and has its principal place of business. Id. at 760. Although general jurisdiction is not limited solely to these “paradigm” locations, a corporation will not be subject to general jurisdiction in a state merely because it 14 Fed. R. Civ. P. 4(k)(2), which addresses claims that arise under federal law, does not apply if a defendant is “subject to jurisdiction in any state’s courts of general jurisdiction.” At a minimum, Kellogg is subject to general jurisdiction in the courts of Delaware and Michigan. Fed. R. Civ. P. 4(k)(2) therefore does not apply to Kellogg. Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 5 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 “engages in a substantial, continuous, and systematic course of business” there. Id. at 760-61. As the Supreme Court has explained, such a proposition is “unacceptably grasping.” Id. at 761. Instead, a corporation may be subject to general jurisdiction outside the state where it is incorporated and has its principal place of business only in an “exceptional case.”15 Id. at 761 n.19. To determine whether the case before it is such an “exceptional case,” a court must compare the overall corporate activities of the defendant with its activities in the forum state. BNSF Ry. Co. v. Tyrrell, __ U.S. __, 137 S. Ct. 1549, 1559 (2017). “[A] corporation that operates in many places can scarcely be deemed at home in all of them.” Id. (internal citations omitted). Here, neither Kellogg Company nor Kellogg Sales Company is incorporated in Nevada, and neither has a principal place of business in the State.16 Kellogg’s Nevada sales make up less than 1% of its total U.S. sales.17 The Kellogg family of companies has manufacturing facilities in 18 different states and in 21 countries around the world.18 Not one of those facilities in located in Nevada. Neither Defendant owns or leases any property in the State.19 Indeed, the Kellogg family of companies employs less than .1% of its workforce in Nevada - six (6) people out of over 37,000.20 Of Kellogg Sales Company’s 2,050 employees, only the six work in Nevada.21 Kellogg Company is not even registered to do business in the State.22 These contacts (or lack of contacts) show that neither Kellogg Company nor Kellogg Sales Company is “essentially at home” in Nevada. Cf. BNSF Ry. Co., 137 S. Ct. at 1559. As a result, Nevada courts do not have general, all-purpose jurisdiction over Defendants. /// 15 The Supreme Court explained that its decision in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), is the “textbook” example of an exceptional case. Daimler, 134 S. Ct. at 761 n.19. In Perkins, the defendant was a Philippines- based corporation that had to relocate temporarily to Ohio due to the Japanese occupation of the Philippines during World War II. 342 U.S. at 447-48. The Court held that an Ohio court could exercise jurisdiction over the defendant because “[g]iven the wartime circumstances,” Ohio “was the corporation’s principal, if temporary, place of business.” Daimler, 134 S. Ct. at 756 & n.8. Thus, Perkins is not a case in which the Court recognized “an additional basis for general jurisdiction outside the two [Daimler] paradigms.” E.g., Kraft v. Johnson & Johnson, 97 F. Supp. 3d 846, 853 (S.D. W. Va. 2015). Rather, it is “a case in which the defendant’s supervisory operations in the forum effectively rendered the forum the defendant’s principal place of business.” Id. As detailed above, that is not the case here. 16 Nisenson Decl. ¶¶3, 7, Ex. A. 17 Id. at ¶¶5, 15. 18 Id. at ¶4. 19 Id. at ¶¶10, 13. 20 Id. at ¶¶6, 14. 21 Id. at ¶¶¶8, 11. 22 Id. at ¶9. Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 6 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 2. This Court Does Not Have Specific Jurisdiction Over Kellogg Vis-à-vis Mr. Sewell’s Claims. Because this Court does not have general jurisdiction over either Kellogg defendant, it must then have specific jurisdiction over them to be empowered to adjudicate Mr. Sewell’s claims. Specific jurisdiction “is very different” from general, all-purpose jurisdiction. BMS, 137 S. Ct. 1773, 1780. It follows only when the particular lawsuit at issue arises out of events in the forum state. “In other words, there must be ‘an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Id. (internal citations omitted); accord Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (“We apply a three-part test to determine whether the exercise of specific jurisdiction over a nonresident defendant is appropriate: (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.”) (internal citations omitted). In determining whether specific jurisdiction exists, courts consider the interests of the forum state and of the plaintiff. BMS, 137 S. Ct. 1773, 1780. They must “consider the practical problems resulting from litigating in the forum,” as well as “the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question.” Id. In this case, as in BMS, the only connections giving rise to specific jurisdiction exist exclusively as to the in-state plaintiff(s) - here, Mr. Smith, who worked for Kellogg in Nevada. Mr. Smith alleges Kellogg did not pay him properly for his work in Nevada. Nevada certainly has an interest in the employees who work within its borders, and this Court has specific jurisdiction vis-à-vis claims related to them. See Int’l Shoe, 326 U.S. 310, 316 (holding that forum state has specific jurisdiction over out-of- state defendant with respect to claim arising out of salespeople it employed in forum). Nevada does not, however, have any interest in claims related to residents of other states who worked in other states. See BMS, 137 S. Ct. at 1781 (“As noted, the nonresidents were not prescribed Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 7 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. […] What is needed-and what is missing here-is a connection between the forum and the specific claims at issue.”). The facts giving rise to Mr. Sewell’s claim have no connection to Nevada. Mr. Sewell is not a resident of Nevada; he did not work for Kellogg in Nevada; and he did not receive pay from Kellogg in Nevada. Not one fact in the proposed amended complaint connects him to Nevada. Mr. Smith, Mr. Sewell’s putative co-plaintiff, is the only thing connecting him to Nevada. As the Supreme Court held in BMS, this kind of connection does not give rise to specific jurisdiction. See also, e.g., Jordan v. Bayer Corp., No. 4:17-CV-865, 2017 WL 3006993 (E.D. Mo. July 14, 2017) (citing BMS, dismissing claims brought by 87 non-Missouri plaintiffs against medical device makers for lack of personal jurisdiction because those plaintiffs had not “acquired the [medical] device from a Missouri source [and] were not injured or treated in Missouri […]”); Ferrari v. Mercedes Benz USA, LLC, No. 17-CV-00018-YGR, 2017 WL 3115198, at *2 (N.D. Cal. July 21, 2017) (citing BMS, dismissing putative class action brought by 23 named plaintiffs in California as against defendant that did not have any offices or employees in California, did not regularly conduct business there, had no agent for service of process in California, and did “not make, manufacture, or sell any product in California, including zMax, the oil-additive product that is at the center of many of plaintiffs’ allegations in this action”); Andrew v. Radiancy, Inc., No. 616CV1061ORL37GJK, 2017 WL 2692840, at *6 (M.D. Fla. June 22, 2017) (citing BMS, dismissing products liability action; “[t]he law is clear that, when specific jurisdiction is at issue, the Court must disregard forum contacts that are not connected to the plaintiff’s causes of action”). In short, BMS leaves no room for doubt. This Court lacks personal jurisdiction over Defendants with respect to Mr. Sewell’s claims. /// /// /// /// /// /// Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 8 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 IV. CONCLUSION Because adding Mr. Sewell as a named plaintiff is therefore futile, the Court should deny Mr. Smith’s motion to amend complaint (ECF No. 31). DATED: September 15, 2017 GREENBERG TRAURIG, LLP By: /s/ Tami D. Cowden Tami D. Cowden (8994) cowdent@gtlaw.com 3773 Howard Hughes Parkway, Suite 400 North Las Vegas, Nevada 89169 James N. Boudreau (PA 77891) (pro hac vice) boudreauj@gtlaw.com Christiana L. Signs (PA 317851) (pro hac vice) signsc@gtlaw.com Two Commerce Square 2001 Market Street Philadelphia, PA 19103 James Nelson (CA 116442) (pro hac vice) nelsonj@gtlaw.com 1201 K Street, Suite 1100 Sacramento, CA 95814 Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 9 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 CERTIFICATE OF SERVICE Pursuant to Fed. R. Civ. P. 5(b), I hereby certify that on September 15, 2017, service of the foregoing Points and Authorities in Opposition to Motion to Amend Complaint was made this date through the Court’s CM/ECF electronic filing system, and served upon all counsel of record through the Court’s electronic filing system. /s/ Andrea Lee Rosehill An employee of Greenberg Traurig, LLP Case 2:17-cv-01914-APG-GWF Document 54 Filed 09/15/17 Page 10 of 10