Cerner Middle East Limited v. Icapital, Llc et al

Motion to Dismiss for Lack of Jurisdiction Defendants' Motion to Dismiss. Oral Argument requested.

D. Or.August 19, 2016

DEFENDANTS’ MOTION TO DISMISS Page 1 Gary I. Grenley, OSB # 751380 E-Mail: ggrenley@gsblaw.com Paul H. Trinchero, OSB #014397 E-Mail: ptrinchero@gsblaw.com Eryn Karpinski Hoerster, OSB #106126 E-Mail: ehoerster@gsblaw.com Garvey Schubert Barer Eleventh Floor 121 S.W. Morrison Street Portland, Oregon 97204-3141 Telephone: 503 228 3939 Facsimile: 503 226 0259 Attorneys for Defendants iCapital, LLC and Ahmed Saeed Mohammad Al Badi Al Dhaheri UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION CERNER MIDDLE EAST LIMITED, a Cayman Islands Exempted Company, Plaintiff, v. iCAPITAL, LLC, a U.A.E. limited liability company, and AHMED SAEED MAHMOUD AL-BADIE AL-DAHARI, an individual, Defendants. Case No. 3:16-cv-01631-YY DEFENDANTS’ MOTION TO DISMISS Pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(5) ORAL ARGUMENT REQUESTED LR 7-1(a) CERTIFICATION Defendants iCapital, LLC (“iCapital”) and Ahmed Saeed Mohammad Al Badi Al Dhaheri (“Dhaheri”) hereby certify pursuant to LR 7-1(a) that they have conferred in good faith with counsel for Plaintiff Cerner Middle East Limited (“Cerner”) to resolve all issues raised by this motion (the “Motion”), but the parties have been unable to reach agreement with respect to the issues at hand. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 1 of 13 DEFENDANTS’ MOTION TO DISMISS Page 2 MOTIONS Defendants respectfully move this Court to dismiss the Verified Complaint (the “Complaint”)1 of Plaintiff Cerner pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(5).2 These motions are supported by the Declaration of Paul H. Trinchero (“Trinchero Decl.”) filed herewith and the Declaration of Ahmed Saeed Al Badi Al Dhaheri (“Dhaheri Decl.”). The Dhaheri Decl. is attached as Exhibit 1 to the Trinchero Decl.3 MEMORANDUM OF LAW PRELIMINARY STATEMENT Cerner seeks recognition and enforcement of a $63 million foreign arbitration award against both Defendants. Defendant Dhaheri is an individual citizen and domiciliary of the United Arab Emirates (“UAE”). Defendant iCapital is a limited liability company formed under UAE law, having its principal place of business in the UAE. Mr. Dhaheri is one of iCapital’s two members, the other being his son, also a UAE citizen and domiciliary. Although Cerner fails to make any specific allegations regarding jurisdiction, it appears Plaintiff is relying on a quasi in rem jurisdiction based on Mr. Dhaheri’s alleged ownership of property located in Oregon.4 This theory is fatally flawed as to iCapital, because Cerner fails to allege (and cannot allege) that iCapital owns any property in 1 A true and correct copy of Cerner’s Complaint is attached as Exhibit A to the Notice of Removal (Docket No. 1-1). 2 iCapital makes only a limited appearance in this action for purposes of contesting the Court’s personal jurisdiction and Cerner’s service of process. iCapital hereby reserves all jurisdictional objections. Mr. Dhaheri also makes a limited appearance in this action. 3 Due to formatting issue in printing the declaration in Abu Dhabi, the signed Dhaheri Decl. was stripped of paragraph numbers. An unsigned version of the Dhaheri Decl. with correct formatting and paragraph numbers is included in the exhibit to the Trinchero Decl. for ease of reference and to facilitate citations. The Dhaheri Decl. is being filed contemporaneously in two related actions: Cerner Middle East Limited v. Belbadi Enterprises, LLC, a United States District Court, District of Oregon, Case No. 3:16-cv-01630-PK and Cerner Middle East Limited v. Belbadi Enterprises LLC, United States District Court, Western District of Washington, Case No. 3:16-cv-05706 RBL. 4 Complaint, ¶ 5. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 2 of 13 DEFENDANTS’ MOTION TO DISMISS Page 3 Oregon.5 The Court cannot exercise quasi in rem jurisdiction over iCapital in the absence of some identifiable asset in this forum. Cerner’s claims against iCapital should therefore be dismissed pursuant to Fed. R. Civ. P. 12(b)(2). Cerner identifies a bank account held by Mr. Dhaheri at U.S. Bank, NA in Portland, the existence of which, if proven, would support the Court’s exercise of quasi in rem jurisdiction only if (1) there is some nexus between the litigation, the property and the forum or (2) Mr. Dhaheri is subject to an existing judgment or award on the merits rendered by a court or tribunal of competent jurisdiction. Cerner appears to predicate its claim of quasi in rem jurisdiction on the latter theory, relying on an arbitration award (the “Award”) issued by the International Court of Arbitration of the International Chamber of Commerce (the “ICC”), nominally against iCapital and Mr. Dhaheri. But Mr. Dhaheri was not party to any agreement to arbitrate with Cerner, was not properly served with notice of the proceeding (the “Second Arbitration”) in which the Award was entered, and was consequently unable to present any case or defense in those proceedings.6 Mr. Dhaheri is not properly subject to the Award, and the ICC did not have the competence or authority to compel him to arbitrate. 5 In fact, iCapital has no offices or employees in Oregon, nor does it conduct any regular business in Oregon. Dhaheri Decl., ¶ 7 (as discussed above, the Dhaheri Decl. is attached as Exhibit 1 to the Trinchero Decl. filed herewith). 6 Under New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), as implemented by Chapter Two of the Federal Arbitration Act, the lack of notice and opportunity to be heard to Mr. Dhaheri is a grounds for non-recognition of the Award against him. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, Article V(b) (“Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if . . . [t]he party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”); 9 U.S.C. § 207 (“court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention”). Mr. Dhaheri disputes that he was properly served with notice of the Second Arbitration, and disputes that he is subject to any judgment or award by a court or tribunal of competent jurisdiction. In the absence of a valid award by a tribunal of competent jurisdiction, this Court is without quasi in rem jurisdiction to hear this case. Having said this, Mr. Dhaheri acknowledges that the issue of notice is factual in nature. Rather than seeking 12(b)(2) dismissal at this juncture on the issue of notice, Mr. Dhaheri reserves the right to raise this jurisdictional objection, if the case has not already been dismissed on other grounds, in a later dispositive motion. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 3 of 13 DEFENDANTS’ MOTION TO DISMISS Page 4 As a non-signatory to the various agreements that purported to require iCapital to arbitrate its dispute with Cerner, Mr. Dhaheri was entitled to have the threshold question of whether he could be compelled to arbitrate determined by a court - not by an arbitration panel that attempted to served him through a post office box, proceeded in absentia to validate the sufficiency of its own service, and then determined in absentia that Mr. Dhaheri was iCapital’s alter ego. The arbitration agreements between Cerner and iCapital all apply Missouri law, which consistently holds that arbitrators may not usurp authority to themselves by making the initial determination of whether a non-signatory is properly subject to their jurisdiction. This rule, also followed by the Supreme Court and the Ninth Circuit, recognizes that the theories that can be used to bind non-signatories to arbitration agreements (such as the alter ego theory relied upon in the Second Arbitration) implicate substantive rights and interests of the non-signatory. In the absence of a clear determination that a non-signatory has waived his due process rights to have his interests adjudicated by a court, an arbitral body is without authority to determine that a non-signatory is an alter ego of a signatory and is responsible for an award against the signatory. The ICC’s Award against Mr. Dhaheri, entered in absentia based solely on the submissions of Cerner, was not preceded by any judicial determination that Mr. Dhaheri was required to arbitrate. The ICC was without authority to make this determination for itself, and was without authority to force Mr. Dhaheri to appear and challenge Cerner’s alter ego theory. Under the Missouri law it was required to apply, the ICC lacked authority to render any Award against Mr. Dhaheri. Because the existence of a judgment or award by a court or tribunal of competent jurisdiction is a prerequisite for the Court’s quasi in rem jurisdiction, the ICC’s lack of competence and authority is a jurisdictional defect requiring dismissal of this action against Mr. Dhaheri. Mr. Dhaheri, who at all relevant times has been a citizen and domiciliary of the UAE, is entitled to have the question of his liability as iCapital’s alter ego determined by a Court sitting in a forum where he is personally found and can reasonably expect to be sued. Cerner’s alter ego claims were not properly decided by the ICC, and would not be properly decided by this Court, which lacks any basis for jurisdiction over Mr. Dhaheri Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 4 of 13 DEFENDANTS’ MOTION TO DISMISS Page 5 in the absence of an enforceable award or judgment against him. Accordingly, Cerner’s claims against both Defendants should be dismissed for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). STATEMENT OF FACTS As alleged in the Complaint, iCapital is a UAE limited liability company with its principal place of business in Abu Dhabi, UAE.7 Plaintiff does not allege that iCapital owns property or assets in the State of Oregon.8 Mr. Dhaheri is a natural person, a citizen and domiciliary of the UAE,9 and one of two members of iCapital.10 The other member of iCapital is Mr. Dhaheri’s son, Mohammed Al Badi Al Dhaheri, also a citizen and domiciliary of the UAE.11 Because both of iCapital’s members are citizens of the UAE, iCapital is considered a citizen of the UAE for jurisdictional purposes. The Award Cerner seeks to confirm in this action was issued by the ICC on July 16, 2015, and purports to bind both iCapital and Mr. Dhaheri personally.12 The ICC panel acknowledged that Mr. Dhaheri was not a signatory to the CBA, the SPA, or any other contract containing an agreement to arbitrate.13 The ICC panel acknowledged that Mr. Dhaheri never appeared in the action himself or through a representative, and was served only at two post office boxes identified as his last known addresses.14 Though iCapital appeared briefly in the Second Arbitration to challenge the panel’s 7 Complaint, ¶ 4. 8 In fact, iCapital does not have offices, employees in Oregon nor does it conduct any regular business in Oregon. Dhaheri Decl., ¶ 7. 9 Id. ¶ 2. 10 Id. ¶ 4. 11 Id. 12 Complaint, ¶¶ 39 & 44. A copy of the Award is attached as Exhibit D to the Complaint (Docket No. 1-1) (hereinafter “Award”). 13 Award, p. 33, ¶ 3.6.4 & p. 41, ¶ 6.1.9. (Docket No. 1-1, p. 107). 14 Id., p. 9, ¶ 1.2.4. (Docket No. 1-1, p. 83). Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 5 of 13 DEFENDANTS’ MOTION TO DISMISS Page 6 authority over the matter,15 Mr. Dhaheri did not appear at all and was never properly served with notice of the proceedings.16 The Second Arbitration was commenced pursuant to arbitration clauses in two agreements between Cerner and iCapital (the Cerner Business Agreement or “CBA” and the Settlement and Payment Agreement or “SPA”).17 While iCapital and Cerner are signatories to both the CBA and the SPA, Mr. Dhaheri is not a signatory to either agreement in his individual capacity.18 The CBA applies Missouri law,19 and the SPA states that “[t]he governing law provision of the CBA shall be applicable to this agreement.”20 The controlling arbitration clause (the “Arbitration Clause”) that Cerner invoked to initiate the Second Arbitration is found in Amendment No. 5 to the CBA, which amended Section 9.3 of the CBA to provide that “Each party to this Agreement hereby submits to binding arbitral proceedings in the event of a dispute to be heard under the exclusive jurisdiction of the [ICC] using the Rules of Conciliation and Arbitration of the [ICC] then in effect.”21 The Arbitration Clause does not expressly delegate authority to the arbitrators to decide whether any non-signatories could be compelled to arbitration.22 Plaintiff’s counsel signed a Summons for the state court action on July 21, 2016.23 However, the “proof of service” is blank.24 At the time of this Motion, Plaintiff has not filed any return of 15 Id., p. 8, ¶ 1.2.3. (Docket No. 1-1, p. 82). 16 Id., p. 9, ¶ 1.2.4. (Docket No. 1-1, p. 83). 17 Complaint, ¶¶ 28-29. The CBA is attached as Exhibit A to the Complaint. (Docket No. 1-1, pp. 18-40) and the SPA is attached as Exhibit B (Docket No. 1-1, pp 41-58). 18 See CBA and SPA. 19 CBA, § 9.14 (Docket No. 1-1, p. 29). 20 SPA, § 14 (Docket No. 1-1, p. 46). 21 Amendment No. 5, § 9.3 (Docket No. 1-1, pp. 62-63). 22 Id. 23 Exhibit A to the Notice of Removal (Docket No. 1-1, pp. 1-4). 24 Id. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 6 of 13 DEFENDANTS’ MOTION TO DISMISS Page 7 service in this Court or in the state court from which this proceeding was removed.25 Neither Defendant has been served with process in this action through any of the channels prescribed by UAE law, and to the best of Defendants’ knowledge, they have not been served by any other means.26 ARGUMENT I. The Court Lacks Necessary in Personam Jurisdiction Over Both Defendants The enforceability of the Award, rendered by the ICC in Paris, France, is governed by Convention, as implemented by Chapter Two of the Federal Arbitration Act. See 9 U.S.C. §§ 201, 202. “An action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States. The district courts of the United States . . . shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy.” 9 U.S.C. § 203. See also Infuturia Global Ltd. v. Sequus Pharmaceuticals, 631 F.3d 1133, 1138 (9th Cir. 2011) (proceeding involving a foreign arbitral award is removable “whenever an arbitration agreement falling under the Convention could conceivably affect the outcome of the plaintiff’s case.”) (emphasis in original) (quoting Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir. 2002)). This proceeding therefore “arises under federal law,” and the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 9 U.S.C. § 203. The nature of the Court’s subject matter jurisdiction guides the method of the Court’s personal jurisdiction inquiry. “To exercise personal jurisdiction over a non-resident defendant in a federal question case, the district court ha[s] to determine that a rule or statute potentially confers jurisdiction over the defendant and then conclude that asserting jurisdiction does not offend the principles of Fifth Amendment due process.” Go-Video, Inc. v. Akai Elec. Co., Ltd., 885 F.2d 1406, 1413 (9th Cir.1989). Federal courts have narrowly limited the doctrine of quasi in rem jurisdiction to comport with the minimum contacts and due process requirements of International Shoe Co. v. Washington, 326 25 Trinchero Decl., ¶ 3. 26 Dhaheri Decl., ¶¶ 9 & 11. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 7 of 13 DEFENDANTS’ MOTION TO DISMISS Page 8 U.S. 310 (1945). A plaintiff asserting quasi in rem jurisdiction “by attachment,” in a dispute that does not relate to the property to be attached, must demonstrate some nexus between the defendant, the forum, and the litigation beyond the defendant’s mere ownership of property there: [I]n order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising “jurisdiction over the interests of persons in a thing.” The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe. . . . [A]lthough the presence of the defendant's property in a State might suggest the existence of other ties among the defendant, the State, and the litigation, the presence of the property alone would not support the State's jurisdiction. . . . For in cases such as Harris and this one, the only role played by the property is to provide the basis for bringing the defendant into court. . . . In such cases, if a direct assertion of personal jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally impermissible. Shaffer v. Heitner, 433 U.S. 186, 207-10 (1977) (internal citations and footnotes omitted). See also, Office Depot Inc. v. Zuccarini, 596 F.3d 696, 699-700 (9th Cir.2010) (to assert “type two quasi in rem” jurisdiction, where the in-forum property is unrelated to the dispute at bar, “[d]ue process requires a constitutionally sufficient relationship among the defendant, the forum, and the litigation”) (citing Shaffer, supra, 433 U.S. at 204). Shaffer expressly left open the possibility that due process concerns might be satisfied where quasi in rem jurisdiction was asserted for purposes of enforcing an existing judgment. “Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.” Shaffer, supra, 433 U.S. at 210, n. 36 (emphasis added). Relying on this footnote, the Ninth Circuit permits quasi in rem jurisdiction over a defendant that has already had an award or judgment entered against it by a court or tribunal with the necessary authority and jurisdiction. See Office Depot v. Zuccarini, 596 F.3d 696, 700 (“In an action to execute on a judgment, due process concerns are satisfied, assuming proper notice, by the previous rendering of a judgment by a court of competent jurisdiction”) (emphasis added) (citing Shaffer). Cf. H. Ray Baker, Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 8 of 13 DEFENDANTS’ MOTION TO DISMISS Page 9 Inc. v. Associated Banking Corp., 592 F.2d 550, 552 (9th Cir.1979) (in action seeking original determination of liability rather than enforcement of extant judgment by court of competent jurisdiction, “[t]he presence of assets in California is a relevant contact, though not one that is sufficient by itself to confer jurisdiction”). The Ninth Circuit has extended the quasi in rem doctrine to actions seeking confirmation of arbitral awards under the Convention. See Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1127 (9th Cir. 2002) (“Considerable authority supports [plaintiff’s] position that it can enforce the award against [defendant’s] property in the forum even if that property has no relationship to the underlying controversy between the parties”). Even so, the assertion of quasi in rem jurisdiction must satisfy at least two requirements: the existence of an award from a tribunal “of competent jurisdiction”; and “the identification of some asset” in the forum. Id. A. Cerner Identifies No iCapital Assets in the Forum, Requiring iCapital’s Dismissal. Cerner’s Complaint does not (and cannot) allege or identify any assets held by iCapital in the forum. The identification of specific assets in the forum is a prerequisite to the Court’s assertion of quasi in rem jurisdiction over a defendant: [T]he sine qua non of basing jurisdiction on a defendant’s assets in the forum is the identification of some asset. [Plaintiff] fails to identify any property owned by [defendant] in the forum against which [plaintiff] could attempt to enforce its award. Indeed, the best [plaintiff] can say is that it believes in good faith that [defendant] has or will have assets located in the forum. This is simply not enough. Given the record before us, we must reject [plaintiff’s] argument for jurisdiction based on property in the forum. Id. at 1127-28. In the absence of any allegation by Cerner identifying iCapital’s assets in the forum, its claims against iCapital must be dismissed pursuant to Fed. R. Civ. P. 12(b)(2). B. Mr. Dhaheri Is Not Subject to an Award by a Tribunal of Competent Jurisdiction. The ICC derived its authority from the Arbitration Clause of the CBA, also incorporated by the SPA,27 acknowledging that “[t]he applicable substantive law in these proceedings is the law of the 27 Award, pp. 10-12, ¶ 1.4. (Docket No. 1-1, pp. 27-29). Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 9 of 13 DEFENDANTS’ MOTION TO DISMISS Page 10 USA, and in particular, the laws of the State of Missouri, as set out of in Section 9.14 of the CBA.”28 The law of the United States - followed in Missouri as well as the Ninth Circuit - holds that: [A]rbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration. . . . Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator. . . . The duty to arbitrate being of contractual origin, a compulsory submission to arbitration cannot precede judicial determination that the . . . agreement does in fact create such a duty. AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649-50 (1986) (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964)) (other internal quotations and citations omitted) (emphasis added). The arbitration clauses contained in the CBA and SPA do not provide that questions regarding the existence of an agreement to arbitrate (including questions regarding whether non-signatories can be compelled to arbitrate) are to be decided by the ICC.29 The Eighth Circuit, which includes Missouri, has followed this rule to conclude that claims seeking to compel a non-signatory to arbitration, including claims predicated on an alter ego theory, must be decided by courts rather than arbitrators. “[J]urisdictional challenges of a substantive nature are generally for the courts to resolve. The question of whether [defendant’s] new company, a non-signatory to the [arbitration agreement], is nevertheless subject to the [arbitration agreement] as the alter ego of a signatory company fits squarely within the realm of substantive jurisdictional challenges.” Local 36 Sheet Metal Workers' Intern. Ass'n, AFL-CIO v. Whitney, 670 F.3d 865, 867- 68 (8th Cir.2012) (internal quotations and citations omitted). Because a claim of alter ego liability is “substantive” in nature, implicating substantive rights far beyond the scope of the arbitration, the ICC was required to consult “the law of the USA, and in particular, the laws of the State of Missouri” to determine whether it had authority to adjudicate Cerner’s alter ego claims. The ICC panel failed to undertake this analysis, and exceeded its authority. 28 Id., p. 13, ¶ 1.5.5. (Docket No. 1-1, p. 30). 29 CBA § 9.3 (Docket No. 1-1, p.27); SPA, § 9.3 (Docket No. 1-1, pp. 62-63). Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 10 of 13 DEFENDANTS’ MOTION TO DISMISS Page 11 Where an arbitral body exceeds its authority and holds a non-signatory to be bound to arbitration without any prior judicial determination, courts will not honor or recognize the arbitral holdings, even in an action to enforce an arbitral award. The Eighth Circuit’s decision in Local 36 speaks directly to this issue: A district court's independent determination of alter ego signifies that, for all relevant purposes, the non-signatory is legally equivalent to the signatory and is itself a party to the CBA. Only where this threshold determination has been made would a non- signatory be bound by an arbitral award and time-barred after expiration of the ninety day period from challenging the confirmation of the award. . . . We . . . hold that a non- signatory to an arbitration agreement need not participate in the arbitration while expressly reserving jurisdictional questions, file a preemptive declaratory judgment action, notify the arbitrator of its refusal to participate, or timely initiate a court action to vacate the arbitrator's award in order to have the question of whether the parties agreed to arbitrate . . . be decided by the court, not the arbitrator. . . . In this case, [defendant’s] decision not to acknowledge any communications or actions of the [arbitral body] - a tribunal that obtained its power only through an agreement that Whitney never signed - cannot reasonably be characterized as showing his intent to submit to its authority to any degree, much less ‘clearly and unmistakably.’ . . . For the foregoing reasons, we agree with [the non-signatory defendant] that the [arbitral body] had no authority to determine whether his new company was the alter ego of [the arbitration respondent] and, thus, bound by the [arbitration agreement]. Id. at 869-70. Courts of the Ninth Circuit follow a similar rule. See Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1127 (9th Cir.2013) (“Given the absence of clear and unmistakable evidence that Plaintiffs agreed to arbitrate arbitrability with nonsignatories, the district court had the authority to decide whether the instant dispute is arbitrable”); Carpenters 46 N. Cal. Counties Conference Bd. v. Zcon Builders, 96 F.3d 410, 416 (9th Cir.1996) (where arbitrator had held non-signatory was bound to arbitration clause under alter ego theory, “the district court erred in deferring to the arbitrator’s decision that [the non-signatory] was bound by the mandatory arbitration provisions”). Because Cerner has brought suit in this forum under a theory of quasi in rem jurisdiction, the ICC’s authority to issue the Award is relevant not only to the ultimate questions of this lawsuit - but to the threshold matter of the Court’s jurisdiction over Mr. Dhaheri, which hinges on the existence of a judgment or award against Mr. Dhaheri from a competent tribunal. Under the law of Missouri, Mr. Dhaheri is not bound by the Award. See Local 36, supra, 670 F.3d at 869 (only where court has Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 11 of 13 DEFENDANTS’ MOTION TO DISMISS Page 12 made threshold determination that non-signatory is required to arbitrate “would a non-signatory be bound by an arbitral award”). And under the law of the Ninth Circuit, it is reversible error to defer to an “arbitrator’s decision that [a non-signatory] was bound by the mandatory arbitration provisions.” Carpenters 46 N. Cal. Counties Conference Bd., supra, 93 F.3d at 416. Because the ICC lacked competence and authority to render any Award with respect to Mr. Dhaheri, and because he is not bound by that Award under Missouri law, this Court may not exercise quasi in rem jurisdiction. If the Court determines that the ICC lacked authority to decide Mr. Dhaheri was bound by the arbitration agreement on an alter ego theory,30 its analysis should end there, and it should dismiss Cerner’s claims for lack of personal jurisdiction. The determination of Cerner’s alter ego claims against Mr. Dhaheri is not a question for this Court, but an issue for a court of competent jurisdiction, sitting in a forum where both Mr. Dhaheri and iCapital could fairly expect to be sued. “[T]he Due Process Clause . . . ‘does not contemplate that a state may make binding a judgment . . . against an individual or corporate defendant with which the state has no contacts, ties, or relations.’” Shaffer, supra, 433 U.S. at 204 (quoting International Shoe, supra, 326 U.S. at 319). Once the Court satisfies itself that the ICC lacked authority to bind Mr. Dhaheri to any Award, the Court should dismiss this action pursuant to Fed. R. Civ. P. 12(b)(2). II. Defendants Have Not Been Served Though Cerner’s counsel issued summons in the state court proceeding when it commenced this action, it has not at the time of this Motion filed any corresponding returns of service.31 Cerner’s service of process is therefore presently incomplete. See Or. R. Civ. P. 7(F). While Defendants’ removal of this action from state court necessitated submission of this Motion within the time provided by Fed. R. Civ. P. 81(c), Defendants make only a limited appearance to challenge personal jurisdiction and service. Defendants vigorously contest this Court’s jurisdiction, and maintain that no 30 This issue can be decided as a matter of law based on a plain reading of the arbitration provision. 31 Trinchero Decl., ¶ 3. Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 12 of 13 DEFENDANTS’ MOTION TO DISMISS Page 13 further proceedings should be held in this matter until, at minimum (a) the Court decides the instant Motion to Dismiss for lack of personal jurisdiction and (b) Cerner properly joins Defendants to this action by effectuating proper service of process. Cerner must perfect service within 90 days of the August 12, 2016 removal of this action from state court. See Fed. R. Civ. P. 4(m),32 81(c)(1); 28 U.S.C. § 1448. If Cerner fails to perfect service by November 10, 2016, its failure would constitute an additional grounds of dismissal under Fed. R. Civ. P. 12(b)(5). See Foster v. Rescare, Inc., 2016 WL 3388387, at *2-3 (citing Rice v. Alpha Sec., Inc., 556 Fed.Appx. 257, 260 (4th Cir. 2014); Wallace v. Microsoft Corp., 596 F.3d 703, 706-07 (10th Cir. 2010)). WHEREFORE, iCapital, LLC and Ahmed Saeed Mohammad Al Badi Al Dhaheri respectfully request that the Court dismiss the Complaint in full, pursuant to Fed. R. Civ. P. 12(b)(2) and (b)(5), for lack of in personam jurisdiction, and for insufficient service of process. DATED this 19th day of August, 2016. Respectfully submitted, GARVEY SCHUBERT BARER By s/ Gary I. Grenley Gary I. Grenley, OSB #751380 ggrenley@gsblaw.com Paul H. Trinchero, OSB #014397 ptrinchero@gsblaw.com Eryn Karpinski Hoerster, OSB #106126 ehoerster@gsblaw.com Tel: 503 228 3939 / Fax: 503 226 0259 Attorneys for Defendants iCapital, LLC and Ahmed Saeed Mohammed Al Badi Al Dhaheri GSB:7995507.4 32 Fed. R. Civ. P. 4(m) was amended in 2015 to reduce the time for service from 120 to 90 days. Older cases reviewing the plaintiff’s time to complete unperfected service upon removal of an action to state court apply the 120-day window set forth in the prior version of Rule 4(m). Case 3:16-cv-01631-YY Document 4 Filed 08/19/16 Page 13 of 13