McGeachy v. Pinto Valley Mining Corporation et al

Filing 60

ORDER - Defendants Motion (Doc. 45 ) is granted. Defendants BHP Billiton Limited and BHP Billiton PLC are hereby dismissed from this case. Signed by Judge John W Sedwick on 7/24/17.(DXD)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 DISTRICT OF ARIZONA 10 11 Terry McGeachy, 12 13 14 15 Plaintiff, vs. Pinto Valley Mining Corp., et al., Defendants. ) ) ) ) ) ) ) ) ) ) 2:16-cv-03348 JWS ORDER AND OPINION [Re: Motion at Docket 45] 16 17 I. MOTION PRESENTED 18 At docket 45 defendants BHP Billiton Limited and BHP Billiton PLC move 19 pursuant to Federal Rules of Civil Procedure 12(b)(2) and (b)(6) for an order dismissing 20 plaintiff Terry McGeachy’s (“McGeachy”) claims against them. The declaration of Maria 21 Isabel Reuter (“Reuter”) supporting the motion is at docket 45-1. McGeachy opposes at 22 docket 52. BHP Billiton Limited and BHP Billiton PLC reply at docket 56. Oral 23 argument was not requested and would not assist the court’s resolution of the motion. 24 25 II. BACKGROUND McGeachy worked as a Heavy Duty Mechanic at the Pinto Valley copper mine 26 between 2012 and 2016. He alleges that he was forced to quit because of intolerable 27 and discriminatory working conditions. He is African-American and alleges that his 28 coworkers subjected him to repeated racist aggressions, including the use of racist language and the repeated placement of nooses and other racially-charged objects and 1 images near his workspace. His complaint alleges two § 1981 claims—hostile work 2 environment and retaliation 1—against the nine defendants that allegedly employed 3 him.2 McGeachy alleges that when he quit his job he was employed by the five 4 Capstone defendants: Pinto Valley Mining Corp.; Capstone Mining Corp.; Capstone PV 5 Mining Corp.; Capstone US Mining Corp.; and Capstone US Acquisitions Corp. He also 6 alleges that before October 11, 2013, he was employed by the four BHP Billiton 7 defendants: BHP Copper, Inc.; Broken Hills Proprietary (USA), Inc.; BHP Billiton 8 Limited; and BHP Billiton PLC. 9 “BHP Billiton” is a dual-listed company3 comprised of two parent companies: 10 defendants BHP Billiton Limited and BHP Billiton PLC (collectively, “the BHP Parents”). 11 Defendants BHP Copper, Inc. and Broken Hills Proprietary (USA), Inc. (collectively, “the 12 BHP Subsidiaries”) are wholly-owned subsidiaries of the BHP Parents. The BHP 13 Parents filed an initial motion to dismiss at docket 26, arguing that they were not 14 McGeachy’s employer. Before the motion was fully briefed, McGeachy filed a First 15 Amended Complaint (“FAC”) at docket 30. The BHP Parents’ renewed motion to 16 dismiss is currently before the court. 17 18 III. STANDARDS OF REVIEW “Where a defendant moves to dismiss a complaint [pursuant to Rule 12(b)(2)] for 19 lack of personal jurisdiction, the plaintiff bears the burden of establishing that a court 20 has personal jurisdiction over a defendant.”4 If, as here, the motion is based upon 21 22 1 23 Doc. 1 (citing 42 U.S.C. § 1981). 2 24 25 26 27 28 Id. at 2 (“At all relevant times, Defendants employed McGeachy as a Heavy Duty Mechanic.”). 3 See Sabo v. Carnival Corp., 762 F.3d 1330, 1334 (11th Cir. 2014) (“A dual-listed company (DLC) is a corporate structure that binds two separate corporations into a unified economic enterprise, but allows the participating entities to maintain their individual legal identities.”). 4 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). -2- 1 written materials and not an evidentiary hearing, the plaintiff is only required to make a 2 prima facie showing of personal jurisdiction.5 Uncontroverted allegations in the 3 complaint are taken as true and conflicts between statements contained in affidavits or 4 other written evidence are resolved in favor of the plaintiff.6 5 Rule 12(b)(6), tests the legal sufficiency of a plaintiff’s claims. In reviewing such 6 a motion, “[a]ll allegations of material fact in the complaint are taken as true and 7 construed in the light most favorable to the nonmoving party.”7 To be assumed true, 8 the allegations, “may not simply recite the elements of a cause of action, but must 9 contain sufficient allegations of underlying facts to give fair notice and to enable the 10 opposing party to defend itself effectively.”8 Dismissal for failure to state a claim can be 11 based on either “the lack of a cognizable legal theory or the absence of sufficient facts 12 alleged under a cognizable legal theory.”9 “Conclusory allegations of law . . . are 13 insufficient to defeat a motion to dismiss.”10 14 To avoid dismissal, a plaintiff must plead facts sufficient to “‘state a claim to relief 15 that is plausible on its face.’”11 “A claim has facial plausibility when the plaintiff pleads 16 factual content that allows the court to draw the reasonable inference that the 17 18 19 5 20 6 21 22 Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010). See also Schwarzenegger, 374 F.3d at 800 (“Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff’s favor.”); 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1351 (3d ed. 1998). 23 7 24 8 25 9 26 27 28 Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997). Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 10 Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). 11 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). -3- 1 defendant is liable for the misconduct alleged.”12 “The plausibility standard is not akin 2 to a ‘probability requirement,’ but it asks for more than a sheer possibility that a 3 defendant has acted unlawfully.”13 “Where a complaint pleads facts that are ‘merely 4 consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and 5 plausibility of entitlement to relief.’”14 “In sum, for a complaint to survive a motion to 6 dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that 7 content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”15 8 9 IV. DISCUSSION Although the BHP Parents’ motion invokes both Rule 12(b)(2) and (b)(6), the 10 court need not reach the Rule 12(b)(6) argument because the BHP Parents’ 11 Rule 12(b)(2) jurisdictional argument is dispositive. “Where, as here, there is no 12 applicable federal statute governing personal jurisdiction, the district court applies the 13 law of the state in which the district court sits.” 16 Arizona Rule of Civil Procedure 4.2(a) 14 authorizes the exercise of jurisdiction to the extent permitted by federal due process 15 requirements.17 Due process requires that the defendant “have certain minimum 16 contacts with [the forum] such that the maintenance of the suit does not offend 17 traditional notions of fair play and substantial justice.” 18 18 19 Federal due process jurisprudence allows the exercise of both general and specific personal jurisdiction. The broader of the two, general personal jurisdiction, 20 21 12 22 13 23 14 24 15 25 Id. Id. (citing Twombly, 550 U.S. at 556). Id. (quoting Twombly, 550 U.S. at 557). Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). See also Starr, 652 F.3d at 1216. 26 16 27 17 28 18 Schwarzenegger, 374 F.3d at 800. Ariz. R. Civ. P. 4.2(a). Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). -4- 1 “requires that the defendant have ‘continuous and systematic’ contacts with the forum 2 state and confers personal jurisdiction even when the cause of action has no 3 relationship with those contacts.” 19 “Specific jurisdiction, on the other hand, must be 4 based on activities that arise out of or relate to the cause of action, and can exist even if 5 the defendant’s contacts are not continuous and systematic.”20 6 A. 7 Specific Jurisdiction The Ninth Circuit applies a three-prong test for determining whether specific 8 personal jurisdiction exists, under which courts ascertain whether: (1) the non-resident 9 defendant either “purposefully direct[ed] his activities or consummate[d] some 10 transaction with the forum or resident thereof,” or “perform[ed] some act by which he 11 purposefully avail[ed] himself of the privilege of conducting activities in the forum, 12 thereby invoking the benefits and protections of its laws; (2) the claim “arises out of or 13 relates to the defendant’s forum-related activities;” and (3) the exercise of 14 jurisdiction comports “with fair play and substantial justice, i.e., it [is] reasonable.” 21 15 “The plaintiff bears the burden of satisfying the first two prongs of the test.”22 “If the 16 plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the 17 defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be 18 reasonable.”23 19 20 21 22 23 24 25 19 Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2003) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984)). 20 Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed. Cir. 2009). 26 21 27 22 28 23 Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987). Schwarzenegger, 374 F.3d at 802. Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)). -5- 1 The first prong of the specific personal jurisdiction test includes two components: 2 purposeful availment and purposeful direction.24 “A purposeful availment analysis is 3 most often used in suits sounding in contract. A purposeful direction analysis, on the 4 other hand, is most often used in suits sounding in tort.”25 The parties here do not 5 express an opinion as to whether the purposeful availment or purposeful direction 6 analysis applies to § 1981 claims. The court holds that such claims sound in tort26 and 7 will therefore employ the purposeful direction analysis. 8 1. Purposeful direction 9 Purposeful direction is satisfied where the defendant takes actions outside the 10 forum state that are directed at the forum and have effect in the forum.27 To determine 11 whether purposeful direction exists, the Ninth Circuit employs a three-part “effects” 12 test28 based on the Supreme Court’s decision in Calder v. Jones.29 This test “requires 13 14 24 15 Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (the first prong “may be satisfied by purposeful availment of the privilege of 16 doing business in the forum; by purposeful direction of activities at the forum; or by some combination thereof.”). 17 18 19 20 21 22 23 24 25 25 Schwarzenegger, 374 F.3d at 802 (citations omitted). See also Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (“[W]e have typically analyzed cases that sound primarily in contract . . . under a ‘purposeful availment’ standard.”); Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (analyzing purposeful availment for both tort and contract claims because all claims arose out of a contractual relationship). 26 See Goodman v. Lukens Steel Co., 482 U.S. 656, 670 (1987) (characterizing § 1981 actions as tort actions); Curtis v. Loether, 415 U.S. 189, 196 n.10 (1974) (“An action to redress racial discrimination may also be likened to an action for defamation or intentional infliction of mental distress.”); Burke v. U.S., 929 F.2d 1119, 1122 (6th Cir. 1991) (recognizing the “long-held view of the tort-like nature of the injury resulting from unlawful discrimination.”); McAlester v. United Air Lines, Inc., 851 F.2d 1249, 1255 (10th Cir. 1988) (“[W]e believe an action under § 1981 sounds in tort rather than contract.”); Truvillion v. King’s Daughters Hosp., 614 F.2d 520, 528 (5th Cir. 1980). 26 27 27 28 28 29 Schwarzenegger, 374 F.3d at 803. Id. 465 U.S. 783 (1984). -6- 1 that the defendant allegedly have (1) committed an intentional act, (2) expressly aimed 2 at the forum state, (3) causing harm that the defendant knows is likely to be suffered in 3 the forum state.”30 The only part of this test in dispute here is the first: whether the BHP 4 Parents committed the intentional act of employing McGeachy. This dispute presents a 5 question of fact. 6 Because the BHP Parents have submitted a declaration stating that they did not employ 7 McGeachy,31 McGeachy must set forth evidence of facts that, if true, would contradict 8 the BHP Parents’ evidence.32 To this end, McGeachy attached to the FAC numerous 9 documents that McGeachy received from his employer that list his employer as “BHP 10 Billiton.” For example, his job application references the employment relationship 11 between “BHP Billiton and its employees.”33 And his employment offer letter states that 12 he was being offered a job “with BHP Billiton, Pinto Valley Operation,”34 that “BHP 13 Billiton offers a comprehensive range of benefits,”35 and that compliance with “[t]he BHP 14 Billiton Charter, the Code of Business Conduct[,] and other key policies [that] can be 15 found on the BHP Billiton intranet . . . is a condition of continued employment with BHP 16 Billiton.”36 Although 17 18 McGeachy’s evidence is insufficient. It merely shows that his employer used the BHP Billiton name to refer to itself, not that either BHP Billiton Limited or BHP Billiton 19 20 30 Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). 21 31 22 32 23 24 25 Doc. 45-1 at 2–3 ¶¶ 6–8. See Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995) (To “make a prima facie showing of jurisdictional facts” to defeat a motion to dismiss that is decided without an evidentiary hearing, “the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant.”). 33 Doc. 30-1 at 8. 26 34 27 35 28 36 Id. at 15. Id. Id. at 16. -7- 1 PLC actually owned or operated the mine where he worked. What matters for present 2 purposes is the identity of McGeachy’s actual employer, not what his employer called 3 itself. The only evidence in the record on that point comes from the Reuter declaration, 4 which states that BHP Copper, Inc. owned the Pinto Valley Operation and Broken Hill 5 Proprietary (USA), Inc. issued McGeachy’s paychecks.37 Because McGeachy lacks 6 evidence showing that the BHP Parents employed him, his purposeful direction 7 argument fails at the first part of the Calder effects test. 8 2. Imputing the BHP Subsidiaries’ Actions to the BHP Parents 9 Having failed to show that the BHP Parents are subject to this court’s jurisdiction 10 through their own actions, McGeachy attempts to show that the BHP Subsidiaries’ 11 actions may be imputed to the BHP Parents under an alter ego theory.38 Under this 12 theory, courts in certain limited circumstances will pierce the corporate veil and impute 13 a subsidiary’s local contacts to a foreign parent.39 “The alter ego test is designed to 14 determine whether the parent and subsidiary are ‘not really separate entities,’ such that 15 one entity’s contacts with the forum state can be fairly attributed to the other.” 40 16 In federal-question cases such as this, district courts apply federal common law 17 when determining whether they “can exercise personal jurisdiction over a party based 18 on alter ego theory.”41 To satisfy the alter ego test under federal law, the plaintiff must 19 20 21 22 23 24 25 26 27 28 37 Doc. 45-1 at 2 ¶ 6. 38 In passing McGeachy also argues that the BHP Parents and BHP Subsidiaries were his joint employers, doc. 52 at 9 (quoting E.E.O.C. v. Pac. Mar. Ass’n, 351 F.3d 1270, 1275 (9th Cir. 2003)), and that the BHP Subsidiaries acted with apparent authority. Id. at 10 (citing Miller v. Mason-McDuffie Co. of S. California, 739 P.2d 806, 810 (Ariz. 1987)). McGeachy’s hasty arguments are unavailing because he does not discuss the elements of either doctrine or apply those elements to the facts of this case. 39 See Ranza v. Nike, Inc., 793 F.3d 1059, 1071 (9th Cir. 2015). 40 Id. (quoting Doe v. Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001)). 41 Johnson v. Serenity Transportation, Inc., 141 F. Supp. 3d 974, 984 n.1 (N.D. Cal. 2015). See also Ranza, 793 F.3d at 1073 (applying federal law). But see Ministry of Def. of the Islamic Republic of Iran v. Gould, Inc., 969 F.2d 764, 769 n.3 (9th Cir. 1992) (noting strong -8- 1 show “(1) that there is such unity of interest and ownership that the separate 2 personalities [of the parent and subsidiary] no longer exist and (2) that failure to 3 disregard [their separate identities] would result in fraud or injustice.”42 The first prong 4 is only satisfied where the parent exercises such “pervasive control” over the subsidiary 5 that the latter is properly viewed as a “mere instrumentality of the former.”43 It is not 6 enough that the parent wholly owns the subsidiary or that both corporations share 7 management personnel. 44 Such pervasive control may be found where, for example, 8 the parent “uses its subsidiary ‘as a marketing conduit’ and attempts to shield itself from 9 liability based on its subsidiaries’ activities,”45 or “dictates ‘[e]very facet [of the 10 subsidiary’s] business-from broad policy decisions to routine matters of day-to-day 11 operation[.]’”46 It is not found where the two corporations observe their respective 12 corporate formalities47 or where the parent does not direct the subsidiary’s routine day- 13 to-day operations.48 14 15 16 17 18 19 20 21 presumption that state law should be incorporated into federal common law when corporation law is at issue). Even if Arizona law applies, the result here would be the same because the alter ego doctrine is substantially the same under federal and Arizona law. Compare Ranza, 793 F.3d at 1073 (federal alter ego test asks whether (1) there is sufficient unity of interest and ownership and (2) maintaining corporate formalities would result in fraud or injustice), with Gatecliff v. Great Republic Life Ins. Co., 821 P.2d 725, 728 (Ariz. 1991) (Arizona law applies the same test). 42 Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996) (internal quotation omitted). 43 Ranza, 793 F.3d at 1073 (internal quotation omitted). 22 44 23 Id. 45 24 25 26 Unocal Corp., 248 F.3d at 926 (quoting United States v. Toyota Motor Corp., 561 F.Supp. 354, 359 (C.D.Cal.1983)). 46 Id. (quoting Rollins Burdick Hunter of So. Cal., Inc. v. Alexander & Alexander Servs., Inc., 253 Cal. Rptr. 338, 344 (Cal. Ct. App. 1988)). 27 47 28 48 Id. Ranza, 793 F.3d at 1075. -9- 1 McGeachy points to the following facts and allegations that support his argument 2 that the court should disregard corporate formalities and impute the BHP Subsidiaries’ 3 contacts to the BHP Parents: (1) McGeachy’s employment documents discussed above 4 reference the “BHP Billiton” name and logo and not a subsidiary’s name or logo; 5 (2) some directors and officers of the BHP Subsidiaries also work for the BHP Parents; 6 (3) Broken Hills Proprietary (USA), Inc. has no revenue from outside operations and 7 therefore the BHP Parents must be indirectly paying the salaries of BHP Copper, Inc.’s 8 employees; (4) BHP’s filings with the SEC state, among other things, that “BHP Billiton” 9 operates “as a single economic entity, run by a unified Board and management team”49 10 and that BHP Billiton’s Charter, Code of Business Conduct, and Group Level 11 Documents prescribe to employees “what we will do and how we will do it;”50 and 12 (5) BHP Billiton held a memorial for a worker who died at the Pinto Valley mine.51 13 Based on the above facts, McGeachy argues that the BHP Subsidiaries are “mere 14 shells.”52 15 Accepting this evidence as true and viewing it in the light most favorable to 16 McGeachy, it is insufficient to support this court’s exercise of jurisdiction. McGeachy 17 has not shown that the BHP Parents direct the BHP Subsidiaries’ day-to-day 18 operations, nor has he shown that the parties have failed to observe their separate 19 corporate formalities. In accord with the Ninth Circuit’s decision Ranza, McGeachy’s 20 evidence does not show the pervasive control necessary to establish an alter ego 21 relationship.53 22 23 49 24 50 25 51 26 27 28 Doc. 30 at 18 ¶ 80.A. Id. at ¶ 80.C. Id. at 19 ¶ 82. 52 Doc. 52 at 13. 53 Because McGeachy has not satisfied the “unity of interest and ownership” prong of the alter ego test, the court need not address the “fraud or injustice” prong. See Ranza, 793 F.3d -10- 1 B. 2 General Jurisdiction Alternatively, McGeachy argues that the BHP Parents are subject to general 3 personal jurisdiction in Arizona. “A court may assert general jurisdiction over foreign 4 (sister-state or foreign-country) corporations to hear any and all claims against them 5 when their affiliations with the State are so ‘continuous and systematic’ as to render 6 them essentially at home in the forum State.”54 “The standard for general jurisdiction ‘is 7 an exacting standard, as it should be, because a f inding of general jurisdiction permits a 8 defendant to be haled into court in the forum state to answer for any of its activities 9 anywhere in the world.’”55 10 McGeachy’s general jurisdiction arguments are essentially the same as his 11 specific jurisdiction arguments. He argues that the BHP Parents employed him or, 12 alternatively, that the alter ego doctrine applies. These arguments fail for the same 13 reasons discussed above. 14 C. 15 Jurisdictional Discovery Finally, McGeachy requests “leave to take expedited discovery on the issue of 16 jurisdiction.”56 This request is subject to the court’s discretion. 57 “Discovery may 17 appropriately be granted where pertinent facts bearing on the question of jurisdiction 18 are controverted or where a more satisfactory showing of the facts is necessary.”58 19 McGeachy does not identify the discovery he might request or the subject matter or 20 21 at 1075 n.9. 22 54 23 24 25 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting Int’l Shoe, 326 U.S. at 317). 55 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1224 (9th Cir. 2011) (quoting Schwarzenegger, 374 F.3d at 801). 26 56 27 57 28 58 Doc. 52 at 16. Boschetto, 539 F.3d at 1020. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 1977). -11- 1 matters to which his discovery would pertain. He merely states that the Reuter 2 declaration contains “a number of assertions that McGeachy has not had an opportunity 3 to investigate.”59 Because McGeachy has not articulated a basis for questioning any 4 facts in the Reuter declaration, he has demonstrated little more than a “hunch that 5 [discovery] might yield jurisdictionally relevant facts.”60 As such, McGeachy’s request is 6 denied. 7 V. CONCLUSION 8 Based on the preceding discussion, Defendants’ motion at docket 45 is 9 GRANTED. Defendants BHP Billiton Limited and BHP Billiton PLC are hereby 10 11 dismissed from this case. DATED this 24th day of July 2017. 12 13 /s/ JOHN W. SEDWICK SENIOR JUDGE, UNITED STATES DISTRICT COURT 14 15 16 17 18 19 20 21 22 23 24 25 26 27 59 28 60 Doc. 52 at 16. Boschetto, 539 F.3d at 1020. -12-

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