TP Racing LLLP v. My Way Holdings LLC et al

Filing 16

ORDER: Defendant My Way Holdings, LLC's Motion to Dismiss for Lack of Personal Jurisdiction 7 is DENIED. The Alternative Motion to Dismiss for Improper Venue 7 is DENIED. The Alternative Motion to Transfer Venue to the District of New Mexico 7 is DENIED. Signed by Chief Judge G Murray Snow on 9/28/2018. (REK)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

TP Racing LLLP,
Plaintiff,

10
11

ORDER

v.

12

No. CV-18-00391-PHX-GMS

My Way Holdings LLC, et al.,

13

Defendants.

14
15

Pending before the Court is Defendant My Way Holdings, LLC’s Motion to

16

Dismiss for Lack of Personal Jurisdiction and alternative Motion to Dismiss for Improper

17

Venue or Transfer to the District of New Mexico. (Doc. 7.) For the following reasons,

18

the Court denies the Motion to Dismiss for Lack of Personal Jurisdiction, denies the

19

alternative Motion to Dismiss for Improper Venue, and denies the alternative Motion to

20

Transfer.
BACKGROUND

21
22

Plaintiff TP Racing, LLLP (“TPR”) is an Arizona corporation operating a horse

23

racing track in Arizona called Turf Paradise.

Defendant My Way Holdings, LLC

24

(“MWH”) is a Nevada limited liability company whose principal place of business—also

25

a racetrack—is in Sunland Park, New Mexico. MWH’s Sunland Park facility receives

26

and transmits “simulcasts” (real-time broadcasts) of horse races to and from other

27

locations around the country. Turf Paradise receives simulcasts from other racetracks,

28

including Sunland Park.

1

In 2016, a horse at MWH’s Sunland Park facility contracted Equine Herpes Virus.

2

After learning of the infection, MWH allegedly failed to take industry-standard

3

precautions, which would have included (1) quarantine of the facility and any horses

4

potentially exposed to the dangerous virus, and (2) notifying other facilities to which

5

horses housed at Sunland Park might be transferred. Horses housed at Sunland Park

6

during that time were subsequently transferred to TPR’s Turf Paradise facility in Arizona.

7

TPR alleges that the virus then spread from Sunland Park to Turf Paradise, resulting in

8

the euthanization of one horse and extensive economic losses for TPR when hundreds of

9

owners removed their horses from Turf Paradise.

10

TPR filed this tort action against MWH in the Superior Court for Maricopa

11

County. MWH then removed the case to this Court. (Doc. 1.) MWH now moves to

12

dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2),

13

or in the alternative to dismiss for improper venue or transfer venue to the District of

14

New Mexico. (Doc. 7.)

15
16

DISCUSSION
I.

Legal Standard

17

Plaintiffs bear the burden of establishing personal jurisdiction. See Ziegler v.

18

Indian River County, 64 F.3d 470, 473 (9th Cir. 1995). If the district court does not hear

19

testimony or make findings of fact and permits the parties to submit only written

20

materials, the plaintiff meets this burden by making a prima facie showing of

21

jurisdictional facts. See Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 268

22

(9th Cir. 1995).

23

Under this prima facie burden of proof, the plaintiff need only allege facts that if

24

true would support personal jurisdiction over the defendant. See Ballard v. Savage, 65

25

F.3d 1495, 1498 (9th Cir. 1995). If the plaintiff survives the motion to dismiss under a

26

prima facie burden of proof, however, the plaintiff still must prove the jurisdictional facts

27

by a preponderance of the evidence at a preliminary hearing or at trial. Data Disc, Inc. v.

28

Systems Tech. Assocs., Inc., 557 F.2d 1280, 1285 n.2 (9th Cir. 1977).

-2-

1

II.

Analysis

2

A.

3

Arizona’s long arm statute extends jurisdiction “to the maximum extent permitted

4

by the . . . Constitution of the United States.” Thus, resolution of the issues here requires

5

only a Due Process analysis. See Ariz. R. Civ. P. 4.2(a); Davis v. Metro Prod., Inc., 885

6

F.2d 515, 520 (9th Cir. 1989).

Personal Jurisdiction Generally

7

The Due Process Clause requires that nonresident defendants have sufficient

8

“minimum contacts” with the forum state so that the exercise of personal jurisdiction

9

“does not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v.

10

Washington, 326 U.S. 310, 316 (1945). The Clause protects a defendant’s “liberty

11

interest in not being subject to the binding judgments of a forum with which he has

12

established no meaningful ‘contacts, ties or relations.’” Omeluk, 52 F.3d at 269–70

13

(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471–72 (1985)).

14

In making a “minimum contacts” analysis, “courts focus on ‘the relationship

15

among the defendant, the forum, and the litigation.’” Brink v. First Credit Resources, 57

16

F. Supp. 2d 848, 860 (D. Ariz. 1999) (citing Shaffer v. Heitner, 433 U.S. 186, 204

17

(1977)). Courts must determine whether the defendant’s contacts with the forum are

18

sufficient to support either “general” or “specific” jurisdiction.

19

Nacionales de Colombia v. Hall, 466 U.S. 408, 414–15 nn.8–9 (1984); Ziegler, 64 F.3d at

20

473. TPR alleges that this Court has both specific and general jurisdiction over MWH.

See Helicopteros

21

B.

22

Establishing general personal jurisdiction typically requires that the Defendant

23

have “affiliations so continuous and systematic as to render the foreign corporation

24

essentially at home in the forum State, i.e., comparable to a domestic enterprise in that

25

state.” Ranza v. Nike, Inc., 793 F.3d 1059, 1069 (9th Cir. 2015). Engaging in business

26

with a forum rather than in a forum is insufficient to create general jurisdiction, and

27

“engaging in commerce with those who do business in the forum state is not in and of

28

itself the kind of activity that approximates physical presence within the state’s borders.”

General Personal Jurisdiction

-3-

1

Bancroft & Masters, Inc. v. Augusta National, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).

2

The bottom line is that generally, the most appropriate locations where general

3

jurisdiction can be exercised over a business are the state in which it is organized and its

4

principal place of business, “[and] [o]nly in an exceptional case will general jurisdiction

5

be available anywhere else.” Ranza, 793 F.3d at 1069.

6

The facts here do not present an exceptional case. MWH’s contacts with Arizona

7

do not “approximate physical presence in” the state. See Schwarzenegger v. Fred Martin

8

Motor Co., 374 F.3d 797, 801 (9th Cir. 2004). MWH does not engage in business or

9

solicit business in Arizona, make sales in Arizona, or hold a license from Arizona. (Doc.

10

7-1 at 1.) MWH’s members—two trusts created in Nevada—have no Arizona ties. The

11

trustees of both are residents or citizens of Virginia. (Id.) MWH has not designated an

12

agent for the service of process in Arizona and does not own any real estate, personal

13

property, or other assets in Arizona. (Id.) See also Bancroft, 223 F.3d at 1086 (listing

14

factors for courts to consider when analyzing a business’s contacts with the forum state).

15

From the parties’ filings it appears that MWH’s only contacts with Arizona are (1) the

16

simulcasts of races broadcast from Sunland Park and (2) allowing transfer of horses from

17

Sunland Park to Turf Paradise.

18

And those contacts are insufficient by themselves to subject MWH to general

19

jurisdiction in Arizona courts. TPR contends that regular simulcasting is sufficient to

20

establish general jurisdiction by pointing to three cases from other jurisdictions outside

21

this circuit.1 However, the Ninth Circuit has held that transacting business in a forum

22

through an independent third party is insufficient to establish general personal

23

jurisdiction. In Congoleum Corp. v. DLW Aktiengesellschaft, the court concluded that

24

general personal jurisdiction did not exist when the defendant conducted sales and

25
1

26
27
28

The three cases cited by TPR are distinguishable, New England Horsemen’s
Benev. & Protective Ass’n, Inc. v. Rockingham Ventures, Inc., No. CIV. A. 97-12701PBSm, 1999 WL 350653 (D. Mass. Jan. 11, 1999) (simulcasting in addition to other
contacts with the forum state); Waldman v. Delaware Park, L.L.C., No. CIV. 00-1136
(AET), 2000 WL 33416863 (D.N.J. May 19, 2000) (same); or inapplicable, Saratoga
Harness Racing Inc. v. Veneglia, 897 F. Supp. 38, (N.D.N.Y. 1995) (analysis under a
New York statute rather than the federal Due Process Clause).
-4-

1

marketing activities in California through an independent consultant. 729 F.2d 1240,

2

1243 (9th Cir. 1984).

3

Here, MWH’s contacts with Arizona are even less extensive than the Congoleum

4

defendant’s were with California. MWH’s simulcasting agreements are with a third

5

party, Monarch Content Management, LLC—a Delaware corporation based in California.

6

(Doc. 14 at 2). Unlike the third-party consultant in Congoleum that was actively involved

7

in soliciting sales, conducting marketing, and growing the defendant’s business, Monarch

8

Management simply transmits simulcasts of races to Turf Paradise. Id. Monarch does

9

not solicit business or advertise for MWH in Arizona. Like the defendant in Congoleum,

10

MWH’s contacts with the forum state through an independent third party are insufficient

11

to subject MWH to general personal jurisdiction in Arizona.

12

C.

13

The Ninth Circuit applies a three-part test to determine whether the defendant’s

14

contacts with the forum state are sufficient to subject it to the state’s specific jurisdiction.

15

Specific jurisdiction exists only if (1) the defendant purposefully availed himself of the

16

privileges of conducting activities in the forum, thereby invoking the benefits and

17

protections of its laws, or purposely directed conduct at the forum that had effects in the

18

forum; (2) the claim arises out of the defendant’s forum-related activities; and

19

(3) the exercise of jurisdiction comports with fair play and substantial justice, i.e., it is

20

reasonable. See, e.g., Schwarzenegger, 374 F.3d at 802 (citing Burger King Corp. v.

21

Rudzewicz, 471 U.S. 462, 476–78 (1985)). The plaintiff must satisfy the first two prongs

22

of the test. Id. If it does so, a presumption of reasonability arises, and the defendant must

23

then make a “compelling case” that jurisdiction would not be reasonable. Haisten v.

24

Grass Valley Medical Reimbursement Fund, 784 F.2d 1392, 1397 (9th Cir. 1986).

Specific Jurisdiction

25

Under the first prong, courts apply a “purposeful direction” analysis to tort cases.

26

Id. A defendant “purposefully directs” his action at a forum when he “engage[s] in

27

wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the

28

forum state.” Bancroft, 223 F.3d at 1087. On the facts alleged in the Complaint, which

-5-

1

we take for purposes of this motion to be true, MWH purposefully directed its action at

2

Arizona by targeting a known Arizona resident and business rival—TPR. (Doc. 1-1 at

3

¶¶ 17–20.) TPR alleges that MWH intentionally failed to inform TPR of the infection

4

spreading at Sunland Park, knowing that some of the horses that were exposed to the

5

virus were being transferred to Turf Paradise. (Doc. 1-1 at ¶¶ 35–42.) MWH was aware

6

that TPR’s facility was located in Arizona. (Doc. 1-1 at ¶ 39.) Under the facts alleged in

7

the complaint, MWH’s “purposely directed” its conduct at Arizona.

8
9

The second prong requires that TPR’s alleged injury “arise out of” MWH’s forumrelated activities.

In deciding whether TPR’s claims “arise out of” MWH’s local

10

conduct, this circuit applies a “but for” test. That is, TPR must show that it would not

11

have suffered an injury “but for” MWH’s forum-related conduct. See Myers v. Bennett

12

Law Offices, 238 F.3d 1068, 1075 (9th Cir. 2001) (internal citations omitted). TPR has

13

alleged facts sufficient to meet this test: the allegations demonstrate that TPR’s injuries

14

arise out of MWH’s knowing failure to institute quarantine and notify TPR of the

15

spreading virus. (Doc. 1-1 at ¶¶ 33–38.) TPR’s alleged injuries in this case would not

16

have arisen but for MWH’s actions. Therefore, TPR has alleged sufficient facts to

17

establish the first two prongs of the test.

18

The burden now shifts to MWH to make a compelling case that the exercise of

19

jurisdiction by this Court in this case would nevertheless be unreasonable. See Haisten,

20

784 F.2d at 1397. MWH has failed to do so. When determining the reasonableness of

21

exercising jurisdiction over a defendant, courts in this circuit analyze

22
23
24
25
26

(1) the extent of the defendants’ purposeful injection into the forum state’s
affairs; (2) the burden on the defendant of defending in the forum; (3) the
extent of conflict with the sovereignty of the defendant’s state; (4) the
forum state’s interest in adjudicating the dispute; (5) the most efficient
judicial resolution of the controversy; (6) the importance of the forum to the
plaintiff’s interest in convenient and effective relief; and (7) the existence
of an alternative forum.
Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1115 (9th Cir. 2002).

27

Purposeful Injection. The Ninth Circuit has noted that a conclusion that the

28

defendant purposefully directed its conduct toward a forum state “militates against use of

-6-

1

the purposeful interjection factor on the [defendant’s] behalf.” Haisten, 784 F.2d at

2

1401. MWH offers no reason here to deviate from that norm. This factor favors

3

jurisdiction in Arizona.

4

Defendant’s Burden. While forcing MWH to litigate in Arizona would constitute

5

a burden because they are not located in the state, “this factor is not dispositive.” Dole,

6

303 F.3d at 1115. Defendants cite no special circumstances that would make litigating

7

this suit in Arizona a burden sufficient to make the exercise of jurisdiction over them

8

unreasonable.

9

Conflict with the Sovereignty of Defendant’s State. This factor also does not help

10

MWH. MWH has cited no reasons why the exercise of jurisdiction by Arizona courts

11

would conflict with the sovereignty of New Mexico.

12

Arizona’s Interest. Arizona has a strong interest in vindicating the rights of its

13

citizens who are tortiously injured.

14

factor supports jurisdiction there.

The location of TPR’s injury is in Arizona. This

15

Efficient Resolution. This factor does not point strongly toward either Arizona or

16

New Mexico. The allegations in this case suggest that discovery would need to be done

17

in both states—New Mexico as the place where the alleged tortious actions took place,

18

and Arizona as the location of the alleged injury.

19

Convenience to TPR.

“In this circuit, the plaintiff’s convenience is not of

20

paramount importance.” Id. That being said, it is clear from the record that it would be

21

most convenient for TPR, an Arizona corporation with its principal place of business also

22

in that state, to litigate the case in Arizona.

23

Alternative Forum. In this case, there is a clear alternative forum: the District of

24

New Mexico. However, New Mexico is not so much more convenient a forum that

25

jurisdiction in Arizona would be unreasonable.

26

MWH has not made a compelling case demonstrating that jurisdiction would be

27

unreasonable as required by Ninth Circuit law. Haisten, 784 F.2d at 1397. Specific

28

personal jurisdiction over MWH is appropriate.

-7-

1

D.

Venue

2

Defendants move in the alternative to dismiss for improper venue or to transfer

3

venue to the District of New Mexico. (Doc. 7 at 8.) Venue is generally determined under

4

28 U.S.C. § 1391. However, when a case has been removed from state to federal court,

5

28 U.S.C. § 1441(a) governs questions of venue. Polizzi v. Cowles Magazines, Inc., 345

6

U.S. 663, 665 (1953) (“[O]n the question of venue, Section 1391 has no application to

7

this case because it is a removed action. The venue of removed actions is governed by 28

8

U.S.C. § 1441(a).”). That section provides:

9

11

(a) . . . Except as otherwise expressly provided by Act of Congress, any
civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant
or the defendants, to the district court of the United States for the district
and division embracing the place where such action is pending.

12

This case was originally filed in the Superior Court for Maricopa County and then

13

properly removed to this court. Since this Court “embrac[es] the place” where the action

14

was filed, venue here is proper. See Polizzi, 345 U.S. at 666.

10

15

After considering “the convenience of the parties and witnesses . . . [and] the

16

interest of justice[,]” it is not clear to this Court that transfer is appropriate. See 28

17

U.S.C. § 1404. Although much discovery regarding the claims will undoubtedly center

18

on New Mexico, discovery regarding damages will likely focus on Arizona. Decisions

19

regarding transfer under section 1404 are discretionary and are made on a case-by-case

20

basis. Stewart Org., Inc. v. Ricoh Corp., 486 U.S. 22, 29 (1988). The Ninth Circuit has

21

established a non-exclusive list of factors for courts to consider when deciding whether to

22

transfer. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (listing

23

factors for courts to consider). Consideration of the relevant factors does not suggest that

24

transfer is required here.

25

Plaintiff’s Choice of Forum. Plaintiffs’ choice of forum is usually given great

26

deference. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir.

27

1986). TPR chose to file this action in Arizona, so this factor counsels against transfer.

28

///

-8-

1

Parties’ Contacts with Forum. While TPR has significant contacts with Arizona,

2

MWH does not. Conversely, MWH has significant contacts with New Mexico, but TRP

3

apparently does not. This factor does not favor either transfer or retaining the case.

4

Ease of Access to Evidence. TPR’s facility is located in Arizona, and much of the

5

discovery regarding damages will have to be done in Arizona. MWH’s facility, where

6

the alleged tortious conduct took place, is in New Mexico, and much of the discovery

7

regarding the claims will take place there. This factor also does not weigh heavily in

8

favor of either forum.

9

Costs of Litigation. As with the previous factor, this factor does not weigh heavily

10

in favor of New Mexico or Arizona.

11

regardless of which forum is chosen. It is not clear to this Court that costs for one side

12

will be unacceptably large.

13
14
15
16
17
18
19
20
21
22

This action will require travel for one side

Other factors do not shed helpful light on the transfer question. On balance, the
factors considered do not weigh in favor of transfer to the District of New Mexico.
CONCLUSION
IT IS THEREFORE ORDERED that Defendant My Way Holdings, LLC’s
Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 7) is DENIED.
IT IS FURTHER ORDERED that the Alternative Motion to Dismiss for
Improper Venue (Doc. 7) is DENIED.
IT IS FURTHER ORDERED that the Alternative Motion to Transfer Venue to
the District of New Mexico (Doc. 7) is DENIED.
Dated this 28th day of September, 2018.

23
24
25
26
27
28

-9-