Harding v. Alaska Fuel Distributors, Inc. et al

MOTION to Dismiss for Lack of Jurisdiction

W.D. Tex.March 23, 2017

DM2\7630555.5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS MIDLAND-ODESSA DIVISION WILLIAM DOUGLAS HARDING, § Plaintiff, § § v. § CIVIL NO. 7: 17-CV-00008-RJ § ALASKA FUEL DISTRIBUTORS, INC. § d/b/a AFD PETROLEUM and AFD § PETROLEUM, LTD., § Defendants. § DEFENDANT AFD PETROLEUM. LTD.’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION TO THE HONORABLE U.S. DISTRICT JUDGE: AFD Petroleum, Ltd. (“AFD Canada”) submits this Motion to Dismiss for Lack of Jurisdiction under FED. R. CIV. P. 12(b)(2), and requests the Court to dismiss Harding’s claims against it because Plaintiff's Original Complaint (“Complaint”) (Dkt. #1) fails to establish, and AFD Canada does not have, the necessary minimum contacts with the forum required to subject it to personal jurisdiction in Texas. For the reasons set forth and further explained herein, AFD Canada’s motion should be granted. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 1 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 1 DM2\7630555.5 I. FACTUAL BASIS OF MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION In the Complaint, Harding has included AFD Canada as a defendant and has alleged that it is liable for Harding’s termination. After being served, AFD Canada timely filed its Motion to Dismiss for Lack of Personal Jurisdiction, because this Canadian company lacks sufficient minimum contacts with Texas and Harding, so that exercising personal jurisdiction over it would violate due process and offend traditional notions of fair play and substantial justice. AFD Canada is “a Canadian limited partnership” whose headquarters is located in Alberta, Canada. See Dkt. #1 at ¶5. The Complaint does not come close to establishing that AFD Canada had such extensive contacts that it’s “essentially at home” in Texas and, therefore, subject to “general” or “all-purpose” jurisdiction. More specifically, as explained in the Affidavit of Ted Rutherglen (“Rutherglen Aff.”), the Vice President of Human Resources for AFD Canada, the company lacks any significant or continuous contacts with Texas because, inter alia, it: • does not maintain an office in Texas; • has not owned, rented, or leased any property in Texas; • has not had a Texas bank account; • has not entered into transactions or agreements that contemplated conducting business in Texas; • has only, sporadically, sent its agents, employees, or corporate representatives to Texas, approximately one to two times a year; • has not had any officers or directors who lived in Texas; • has not had a Texas mailing address or a telephone listing; • has not paid taxes in Texas; Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 2 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 2 DM2\7630555.5 • has not directed business to any Texas entity or individual; • has not stored or kept any equipment or inventory in Texas; • does not have sales personnel in Texas to call upon potential customers; • does not maintain a registered agent for service of process in Texas; and • has not conducted, or been licensed to conduct, business in Texas. II. ARGUMENT AND AUTHORITIES SUPPORTING JURISDICTIONAL CHALLENGE A. Standards for the Exercise of Jurisdiction over a Foreign Entity Since AFD Canada is not registered as a foreign corporation transacting business in Texas, Harding had it served through The Hague Convention pursuant to Federal Rule of Civil Procedure 4(h)(2). As a general matter, a federal court “may exercise personal jurisdiction over a foreign defendant if (1) the long arm statute of the forum state creates personal jurisdiction over the defendant; and (2) the exercise of personal jurisdiction is consistent with the due process guarantees of the United States Constitution.” Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002). As the Revell court explained: The Due Process Clause of the Fourteenth Amendment permits a court to exercise personal jurisdiction over a foreign defendant when (1) “that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing ‘minimum contacts’ with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend ‘traditional notions of fair play and substantial justice.’” Sufficient minimum contacts will give rise to either specific or general jurisdiction. “General jurisdiction exists when a defendant’s contacts with the forum state are unrelated to the cause of action but are ‘continuous and systematic.’” Specific jurisdiction arises when the defendant’s contacts with the forum “arise from, or are directly related to, the cause of action.”1 The Supreme Court long ago held that the Due Process Clause of the Fourteenth Amendment guarantees that no federal court may assume in personam jurisdiction over a 1 Revell, 317 F.3d at 470. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 3 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 3 DM2\7630555.5 nonresident defendant who lacks meaningful “contacts, ties, or relations” with the forum state. Int’l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). Subsequently, in Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 115, 107 S.Ct. 1026, 1034-35 (1987), the Court held that federal judges should carefully consider other nations’ interests before asserting jurisdiction over a foreign defendant. Accordingly, Harding must present prima facie evidence to establish jurisdiction over this Canadian entity. Id. at 469. His allegations are devoid of any facts but instead offer only the conclusion that AFD Canada was his employer. See Dkt. #1 at ¶ 5. Harding has not alleged any specific activity by AFD Canada performed in or directed toward Texas. Instead, he broadly claims that AFD Canada was his employer along with AFD Alaska. See Dkt. #1 at ¶¶ 4-5, 14. He offers the conclusory statement that AFD Canada terminated his employment. Id. at ¶ 11. But AFD Canada never employed Harding;2 rather, Harding was employed by AFD Alaska.3 As a general rule, the mere making of conclusory statements in a complaint without supporting facts, as done here, will not establish personal jurisdiction over a non-resident defendant. See, e.g., Autoflex Leasing, Inc. v. Team Motor Sports, Inc., No. 3:03-CV-2786-R, 2004 U.S. Dist. LEXIS 11513 (N.D. Tex. June 23, 2004) (Buchmeyer, J.) (granting motion to dismiss). See also, Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868 (5th Cir. 2001) (“Establishing a prima facie case still requires the plaintiff to show the nonresident defendant’s purposeful availment of the benefits and protections of and minimum contacts with the forum state”) (emphasis supplied). Moreover, “[w]hen [as here] a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the district court’s jurisdiction over the defendant.” Doddy v. Oxy USA, Inc., 101 2 See the March 23, 2017 Declaration Under Penalty of Perjury of Ted Rutherglen (“Rutherglen Dec.”) at ¶ 20. 3 Id. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 4 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 4 DM2\7630555.5 F.3d 448 (5th Cir. 1996). This is because a federal court only can exercise personal jurisdiction over a nonresident defendant if the defendant has purposefully established “minimum contacts” with the forum state and the exercise of jurisdiction comports with “fair play and substantial justice.” Burger King v. Rudzewicz, 471 U.S. 462, 474-76 (1985). Again, the key question is “whether the defendant purposefully established ‘minimum contacts’ in the forum State.” Alpine View, 205 F.3d at 215 (quoting Burger King v. Rudzewicz, 471 U.S. 462 (1985)). Here, as Mr. Rutherglen’s Affidavit establishes, AFD Canada has not “purposefully established ‘minimum contacts’” with Texas.4 Moreover, even if a defendant has minimum contacts with the forum state (which is not the case here), an exercise of jurisdiction also must comport with traditional conceptions of fair play and substantial justice.” Id. at 214 (quoting Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999)). B. General Jurisdiction Does Not Exist As recently explained in Sciortino v. CMG Capital Management Group, Inc., Civ. No. 16-11012, 2016 WL 4799099 *4 (E.D. La. Sept. 14, 2016) (Feldman, J.) (slip copy), “for a corporate defendant, the place of incorporation and principal place of business are paradigm bases for general jurisdiction. Daimler AG v. Bauman, 134 S. Ct. 746 (2014); Monkton Ins. Servs. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014) (noting that it’s “[i]ncredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”). In this matter, general jurisdiction over AFD Canada is clearly lacking since Harding has not alleged sufficient facts to demonstrate that AFD Canada had continuous and systematic contacts with Texas from which to deem that it had purposefully availed itself of the privileges 4 Rutherglen Dec. at ¶¶ 12-17. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 5 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 5 DM2\7630555.5 of conducting business here.5 Further, the Rutherglen Affidavit establishes that AFD Canada hasn’t conducted significant business activities in Texas, directly or indirectly.6 Among other key facts, it does not have an office in Texas its agents, employees, or corporate representatives have only sporadically travelled to Texas.7 While AFD Canada operates a website, https://www.afdpetroleum.com/, that is not sufficient to support finding general or specific jurisdiction given the recognized distinction between “doing business with Texas” as opposed to “doing business in Texas.” Revell, 317 F.3d at 471. Stated another way, the limited interactivity of AFD Canada’s website would not establish general personal jurisdiction over AFD Canada since it lacks the continuous and substantial contacts needed to be considered “at home” in Texas. See, e.g., Optimal Beverage v. United Brands, Civ. No. H-06-1386, 2007 U.S. Dist. LEXIS 13274, *10 (S.D. Tex. Feb. 27, 2007) (Hoyt, J.) (“[M]ere interactivity, even when coupled with evidence of actual transactions with forum residents, is not enough to establish [general personal jurisdiction].”). Further, Harding’s employment in Texas, and his purported injury in this forum, cannot support jurisdiction. Revell, at 473.8 Accordingly, an exercise of in personam jurisdiction over AFD Canada based on general jurisdiction would not comport with the required traditional notions of fair play and substantial justice given the lack of minimum contacts upon which to 5 In just one case since Int’l Shoe has the Court held that an out-of-state corporate defendant’s in-state contacts were sufficiently “continuous and systematic” to justify exercising general jurisdiction of claims unrelated to such contacts. Cf., Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413 (1952) (general jurisdiction in Ohio proper over Philippine corporation that had ceased activity in Philippines during war, then conducted all its business in Ohio). 6 Rutherglen Dec. at ¶¶ 4-13. 7 Id. at ¶¶ 4, 13. 8 The Revell court favorably cited to ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 625 (4th Cir. 1997) (which found that Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482 (1984) was inapplicable when the alleged tortious activity focused “more generally on customers located throughout the United States and Canada without focusing on and targeting South Carolina”). Revell, 317 F.3d at 475, n.53. Here, Rutherglen’s affidavit establishes that there were no direct sales to any Texas resident or company. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 6 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 6 DM2\7630555.5 constitutionally do so. Revell 317 F.3d at 469; see also Origin Instruments Corp. v. Adaptive Computer Systems, Inc., Civ. No. 3:97-CV-2595-L1999, U.S. Dist. LEXIS 1451 *11 (N.D. Tex. Feb. 3, 1999) (Lindsay, J.) (while internet marketing may be relevant to minimum contacts analysis, personal jurisdiction should not be premised on the mere possibility that a defendant may be able to do business with Texans over its web site, with nothing more); Arriaga v. Imperial Palace, 252 F. Supp. 2d 380, 386 (S.D. Tex. 2003) (Hittner, J.) (website was not targeted specifically to reach Texans); Dymatize Enterprises Inc. v. Reflex Nutrition Ltd., Civ. A. No. 3:07-CV-907-M, 2008 U.S. Dist. LEXIS 3711 (N.D. Tex. Jan. 17, 2008) (Lynn, J.) (mere possibility of a Texas audience did not establish purposeful availment). C. Specific Jurisdiction Is Lacking In Pervasive Software, Inc. v. Lexware GMBH & Co. KG, 688 F.3d 214, 227 (5th Cir. 2012), the Fifth Circuit set out a three-step test for evaluating whether alleged specific personal jurisdiction is proper, namely: (1) did plaintiff's cause of action arise or result from the defendant’s forum-related contacts; (2) did defendant purposefully direct its activities toward the forum state or purposefully avail itself of the privilege of conducting activities therein; and (3) would the exercise of personal jurisdiction over the defendant be reasonable and fair? A court cannot exercise specific jurisdiction over a nonresident defendant unless the nonresident defendant’s activities were purposefully directed to the forum state and the litigation resulted from alleged injuries that arise from or relate to those activities. J. McIntrye Mach. Ltd. V. Nicastro, 131 S. Ct. 2780, 2787-88 (2011) (plurality op.). Harding’s Complaint lacks any facts that demonstrate AFD Canada had any contact with Texas. Harding only pleads conclusory statements that AFD Canada was his employer and that AFD Canada was involved in his termination. See Dkt. #1 at ¶¶ 4-5, 14. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 7 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 7 DM2\7630555.5 This Court does not have specific jurisdiction over AFD Canada since the company did not purposefully direct its activities toward Texas. AFD Canada was not involved in the decision to terminate Harding and he was never an employee of AFD Canada.9 As Mr. Rutherglen explains, he was only contacted after AFD Alaska made the decision to terminate Harding.10 AFD Canada merely confirmed that AFD Alaska could terminate Harding.11 AFD Canada then provided a form termination letter for AFD Alaska’s use.12 AFD Canada’s contacts with the Texas arose after the decision had been made to terminate Harding. Simply put, Harding’s cause of action, if any, arose before AFD Canada’s contacts with Texas. Therefore, Harding’s cause of action cannot be based upon AFD Canada’s subsequent contacts with Texas since such contacts happened after the decision to terminate Harding had been made. Since Harding’s cause of action does not arise from AFD Canada’s very limited contacts with Texas, and AFD did not direct the alleged injury causing activities toward Texas, for these reasons, Harding’s Complaint against AFD Canada should be dismissed. D. AFD Canada Did Not Purposefully Avail Itself of the Benefits or Protections of Texas The “purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely because of random, fortuitous, or attenuated contacts, or due to the unilateral activity of another party or third person. Burger King, 471 U.S.at 475; Patterson v. Dietze, Inc., 764 F.2d 1145, 1147-48 (5th Cir. 1985). Moreover, a plaintiff must present evidence on the first two prongs of the three-part test before the burden shifts to a defendant to defeat jurisdiction by showing that its exercise would be unfair or unreasonable. Seiferth v. Helicopteros Atuneros, 9 Rutherglen Dec. at ¶¶ 18, 20. 10 Id. at ¶ 18. 11 Id. 12 Id. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 8 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 8 DM2\7630555.5 Inc., 472 F.3d 266, 271 (5th Cir. 2006) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471, 105 S.Ct. 2174 (1985)). In Walden v. Fiore, 571 U.S. ___, 134 S. Ct. 1115, 1122 (2014), the unanimous Court further narrowed the framework for analyzing specific jurisdiction. Critically, the Court explained that a judge must examine “the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Walden v. Fiore, 134 S. Ct. at 1121 (emphasis added). In making this assessment, a judge should “focus[] on the ‘relationship among the defendant, the forum, and the litigation.’” Id. at 1122 (emphasis in original) (quoting Burger King, 471 U.S. at 475). The relationship must arise out of contacts that the “‘defendant himself’ creates with the forum State.” Id. at 1122. Here, Harding has not pled that AFD Canada had sufficient contacts with Texas as required to hale this Canadian company into this forum. Harding has not pled any facts alleging AFD Canada’s contact with Texas, only conclusions. As Mr. Rutherglen’s Affidavit reflects, AFD Canada had no contacts with Texas and was not registered to do business in Texas. At most, any contacts between AFD Canada and Texas were random, fortuitous, or attenuated.13 “[T]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant’s conduct connects him to the forum in a meaningful way.” Id. at 1125. That is simply not the case here. AFD Canada directs no business toward Texas and has no presence here.14 Additionally, AFD Canada does not solicit business in Texas. AFD Canada has not purposefully availed itself of the privilege of doing business in Texas. Therefore, the Court lacks jurisdiction over AFD Canada and Harding’s Complaint should be dismissed. 13 Rutherglen Dec. at ¶¶ 4-13. 14 Id. Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 9 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 9 DM2\7630555.5 III. CONCLUSION As demonstrated, Harding’s request for the Court to assert jurisdiction over AFD Canada would offend traditional notions of fair play and substantial justice since AFD Canada’s home is Canada, it did not direct its activities toward this forum, and it has not sought the benefits or protections of Texas law. For these and other reasons, Harding’s claims against AFD Canada should be dismissed pursuant to FED. R. CIV. P. 12(b)(2). Respectfully submitted, DUANE MORRIS LLP By: /s/ Cameron J. Asby______ Cameron J. Asby Texas Bar No. 24078160 cjasby@duanemorris.com Duane Morris LLP 1330 Post Oak Blvd., Suite 800 Houston, Texas 77056 Tel: (713) 402‐3900 Fax: (713) 402‐3901 Michael E. Clark Texas Bar No. 04293200 meclark@duanemorris.com Duane Morris LLP 1330 Post Oak Blvd., Suite 800 Houston, Texas 77056 Tel: (713) 402‐3900 Fax: (713) 402‐3901 ATTORNEYS FOR DEFENDANT AFD PETROLEUM, LTD Case 7:17-cv-00008-RAJ Document 15 Filed 03/23/17 Page 10 of 11 AFD Petroleum, Ltd,’s Motion to Dismiss 10 DM2\7630555.5 CERTIFICATE OF SERVICE I hereby certify that on March 23, 2017, all counsel of record who are deemed to have consented to electronic service are being served with this document via the Court’s CM/ECF system pursuant to Local Rule CV-5(b) and Rule 5(b) of the Federal Rules of Civil Procedure. /s/ Cameron J. Asby______ Cameron J. 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