RAVEN HILL PARTNERS INC v. BASF CORPORATION et al

Filing 71

ORDER regarding 56 MOTION to Dismiss for Lack of Jurisdiction MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by BASF NEDERLAND BV: The Court believes it appropriate that BASF Nederland counsel file a pleading confirming their aut hority to acknowledge service on behalf of BASF Nederland in the event further developments warrant the rejoinder of BASF Nederland. Upon the filing of that authorization, BASF Nederland shall be dismissed. Ordered by U.S. District Judge MARC THOMAS TREADWELL on 3/13/2014. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
RAVEN HILL PARTNERS, INC.,
Plaintiff,
v.
BASF CORPORATION, et al.,
Defendants.

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CIVIL ACTION NO. 5:12-CV-411(MTT)

ORDER
This matter is before the Court on Defendant BASF Nederland B.V.’s motion to
dismiss. (Doc. 56).
I. FACTUAL AND PROCEDURAL BACKGROUND
Between 2010 and 2012, Plaintiff Raven Hill Partners, Inc. alleges it negotiated
with Defendants BASF Corporation, BASF Catalysts, LLC, BASF SE, and BASF
Nederland B.V. regarding the possible purchase of the Defendants’ kaolin clay
processing operations, known as the “Palau Operations.” (Doc. 38 at ¶ 1). Raven Hill
also alleges the Defendants agreed to reimburse its due diligence expenses to keep
Raven Hill interested in the transaction. (Doc. 38 at ¶ 2). Raven Hill contends the
Defendants breached that contract and have refused to reimburse its expenses. (Doc.
38 at ¶ 2). Further, Raven Hill claims the Defendants concealed material information
and made material misrepresentations regarding the true value of the Palau Operations,
and as a result, Raven Hill incurred substantial costs in its efforts to purchase the
operations. (Doc. 38 at ¶ 3).

Raven Hill named BASF Nederland and BASF SE as defendants in its original
complaint. (Doc. 1). Raven Hill asserts that it then omitted those Defendants in its first
amended complaint based on statements by the Defendants’ counsel that BASF
Nederland and BASF SE were not necessary parties, but Raven Hill reserved the right
to join them in the future if joinder became appropriate. (Doc. 4 at 1 n.1). Raven Hill
subsequently experienced difficulty obtaining discovery from BASF Nederland and
BASF SE because the Defendants’ counsel asserted that they did not represent those
entities. Because of these difficulties, Raven Hill amended its complaint to rejoin BASF
Nederland and BASF SE as defendants.1 BASF Nederland has now moved to dismiss,
claiming this Court lacks personal jurisdiction and that Raven Hill’s second amended
complaint fails to state a claim.2
BASF Nederland is a private company organized under the laws of the
Netherlands with its principal place of business in Arnhem, the Netherlands. (Doc. 56-2
at ¶ 3). BASF Nederland is wholly owned by BASF SE. (Doc. 56-2 at ¶ 3). BASF
Nederland’s only connection to BASF Corporation’s kaolin clay business appears to be
through BASF Nederland’s wholly-owned subsidiary, BASF Minerals Oy (“BMO”), which
is not a party to this action. (Doc. 56-2 at ¶ 42). BMO is organized under the laws of
Finland with its principal place of business in Helsinki, Finland. (Doc. 56-2 at ¶ 41).
BMO sells kaolin mineral products to the paper industry in Finland and handles certain
customer care activities throughout Europe for its kaolin business. (Doc. 56-2 at ¶ 43).

1

Raven Hill decries the “sharp” practices of defense counsel. (Doc. 61 at 6). Without suggesting that
defense counsel has acted improperly, the Court notes that their conduct has no bearing on the question
of whether BASF Nederland is subject to the personal jurisdiction of this Court.

2

BASF SE has also moved to dismiss on substantially the same grounds, but that motion is not yet ripe.
(Doc. 67).
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BMO’s business, assets, and operations located in Finland were to be included as a
divested business in the sale of the Palau Operations. (Doc. 56-2 at ¶ 41).
Raven Hill received a letter from Dr. Uwe Liebelt, an employee of BASF Schweiz
AG,3 containing a counterproposal for the sale of the Palau Operations. Raven Hill
alleges this letter shows Dr. Liebelt was acting as an agent of BASF Nederland. (Doc.
4-5). The letter noted that the Palau Operations sale included the working capital in
BMO, but the letter did not mention BASF Nederland. (Doc. 4-5 at 3). Raven Hill also
alleges BASF Nederland was included as a seller in the drafts of the asset purchase
agreement and as an assignor in drafts of assignment agreements regarding patent and
trademark rights.
II. DISCUSSION
A.

Burden of Proof

“A plaintiff seeking the exercise of personal jurisdiction over a nonresident
defendant bears the initial burden of alleging in the complaint sufficient facts to make
out a prima facie case of jurisdiction.” Diamond Crystal Brands, Inc. v. Food Movers
Int’l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (internal quotation marks and citation
omitted). “Where, as here, the defendant challenges jurisdiction by submitting affidavit
evidence in support of its position, ‘the burden traditionally shifts back to the plaintiff to
produce evidence supporting jurisdiction.’” Id. (citation omitted). “‘Where the plaintiff’s
complaint and supporting evidence conflict with the defendant’s affidavits, the court
must construe all reasonable inferences in favor of the plaintiff.’” Id. (citation omitted).

3

BASF Schweiz AG is not a party to this action either.
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B.

Diamond Crystal Jurisdictional Analysis

Raven Hill contends this Court has personal jurisdiction over BASF Nederland
pursuant to Georgia’s long-arm statute, O.C.G.A. § 9-10-91, and the Due Process
Clause of the Fourteenth Amendment. “A federal court sitting in diversity undertakes a
two-step inquiry in determining whether personal jurisdiction exists: the exercise of
jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate
the Due Process Clause of the Fourteenth Amendment to the United States
Constitution.” Id. at 1257-58 (internal quotation marks and citation omitted). This twostep inquiry is necessary because the long-arm statute does not provide jurisdiction to
federal courts in Georgia that is coextensive with procedural due process. Id. at 1259.
Rather, the statute “imposes independent obligations that a plaintiff must establish for
the exercise of personal jurisdiction that are distinct from the demands of procedural
due process.” Id. In short, jurisdiction that might appear to be conferred by statute may
be negated by due process concerns, and vice versa. See id. at 1261.
(1)

The Long-Arm Statute

Raven Hill argues that the Court has jurisdiction over BASF Nederland under
Subsection (1) of the Georgia long-arm statute: “[a] court of this state may exercise
personal jurisdiction over any nonresident … in the same manner as if he were a
resident of the state, if in person or through an agent, he … [t]ransacts any business
within this state … .” O.C.G.A. § 9-10-91(1). Diamond Crystal instructs federal courts
to interpret Georgia’s long-arm statute literally. 593 F.3d at 1264.
Under Subsection (1),
[j]urisdiction exists on the basis of transacting business in this state if (1)
the nonresident defendant has purposefully done some act or
consummated some transaction in this state, (2) if the cause of action
arises from or is connected with such act or transaction, and (3) if the
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exercise of jurisdiction by the courts of this state does not offend
traditional fairness and substantial justice.
Amerireach.com, LLC v. Walker, 290 Ga. 261, 269, 719 S.E.2d 489, 496 (2011)
(quoting Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515, 517-18, 631 S.E.2d 734,
737 (2006)). Significantly, to transact business “a defendant need not physically enter
the state” to subject himself to the long-arm statute. Diamond Crystal, 593 F.3d at
1264. And courts may further consider the nonresident’s mail, telephone calls, and
other intangible acts that occur while the defendant is outside of Georgia. Id. The
question is whether, upon analysis of all the defendant’s tangible and intangible
conduct, “it can fairly be said that the nonresident [defendant] has transacted any
business within Georgia.” Id. (emphasis added).4
Raven Hill argues that the Georgia long-arm statute is satisfied because BASF
Nederland entered into negotiations to divest property as a part of the sale of the Palau
Operations, and BASF Nederland acted in concert with and through the same agents as
the other Defendants. It is unclear what property Raven Hills alleges BASF Netherland
was going to divest in the sale or why BASF Nederland was included in the draft
agreements. Although BASF Nederland is identified as a potential seller or assignor in
the draft agreements, there is no evidence that BASF Nederland had any ownership of
the Palau Operations. Ownership of the Palau Operations located in this forum is the
jurisdictional hook for exercising personal jurisdiction over the remaining Defendants,
and BASF Nederland appears to lack this connection.
Further, Raven Hill has not identified an officer or employee of BASF Nederland
who engaged in any negotiations or communications with Raven Hill. Nor has Raven

4

In Diamond Crystal the court adopted a literal definition of the words in the statute, such that “any”
means “to any extent” or “in any degree.” 593 F.3d at 1264 n.18. “‘Transact’ means ‘to prosecute
negotiations,’ to ‘carry on business,’ ‘to carry out,’ or ‘to carry on.’” Id.
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Hill alleged any other facts that would suggest BASF Nederland did any act directed
toward the forum state. While Raven Hill contends that Dr. Liebelt acted as BASF
Nederland’s agent when he sent Raven Hill a counterproposal, the letter references
BMO but contains no mention of BASF Nederland. Thus, Raven Hill also argues that
BMO is the alter ego of BASF Nederland, and any actions that form the basis for
personal jurisdiction over BMO may also be used to assert personal jurisdiction over
BASF Nederland.
“[F]ederal courts have consistently acknowledged that it is compatible with due
process for a court to exercise personal jurisdiction over an individual or a corporation
that would not ordinarily be subject to personal jurisdiction in that court when the
individual or corporation is an alter ego or successor of a corporation that would be
subject to personal jurisdiction in that court.” RMS Titanic, Inc. v. Zaller, 2013 WL
5675523, at *17 (N.D. Ga.) (quoting Patin v. Thoroughbred Power Boats, 294 F.3d 640,
653 (5th Cir. 2002)). “An alter ego theory of personal jurisdiction generally ‘provides
that a non-resident parent corporation is amenable to suit in the forum state if the parent
company exerts so much control over the subsidiary that the two do not exist as
separate entities but are one and the same for purposes of jurisdiction.’” Id. (quoting
Estate of Thomson v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 362 (6th Cir.
2008)).
To establish the alter ego doctrine under Georgia law, “it must be shown (1) that
the stockholders' disregard of the corporate entity made it a mere instrumentality for the
transaction of their own affairs; (2) that there is such unity of interest and ownership that
the separate personalities of the corporation and the owners no longer exist; and (3) to
adhere to the doctrine of corporate entity would promote injustice or protect fraud.”
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McLean v. Cont'l Wingate Co., 212 Ga. App. 356, 359, 442 S.E.2d 276, 279 (1994)
(citations omitted).
Even assuming the divestiture of BMO’s Finland assets and productions facilities
as a part of the Palau Operations transaction would somehow render BMO subject to
the personal jurisdiction of this Court, Raven Hill has not sufficiently alleged that BMO is
BASF Nederland’s alter ego. Raven Hill argues that BASF Nederland and BMO’s alter
ego relationship is exemplified by the draft agreements because those entities were
referenced interchangeably. The fact that the draft asset purchase agreement included
BASF Nederland as a seller while a signature line was provided for BMO rather than
BASF Nederland is not sufficient to show BASF Nederland used BMO as a mere
instrumentality to transact its affairs or that such a unity of interest and ownership
existed that the two entities did not have separate personalities. The Defendants have
submitted affidavit evidence to show BASF Nederland and BMO are two separate
entities. The affidavit states that BASF Nederland and BMO: (1) do not share any
operations, corporate function, or department; (2) maintain employees and officers on
separate payrolls; (3) do not share any overlapping officers or directors; and (4) do not
exercise any day-to-day control over or direct the activities of one another. (Doc. 56-2
at ¶¶ 47-50). Raven Hill has the burden to produce evidence supporting jurisdiction and
rebutting the Defendants’ evidence, and Raven Hill has failed to produce such
evidence. Accordingly, BASF Nederland is not subject to personal jurisdiction under
Georgia’s long-arm statute.
(2)

Due Process

For the Court to exercise jurisdiction over nonresident defendants, it is not
enough that the long-arm statute is satisfied. Personal jurisdiction must also adhere to
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the Due Process Clause of the Fourteenth Amendment. “The Due Process Clause
protects an individual's liberty interest in not being subject to the binding judgments of a
forum with which he has established no meaningful ‘contacts, ties, or relations.’” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (quoting Int’l Shoe Co. v.
Washington, 326 U.S. 310, 319 (1945)). “The heart of this protection is fair warning –
the Due Process Clause requires ‘that the defendant's conduct and connection with the
forum State [be] such that he should reasonably anticipate being haled into court
there.’” Diamond Crystal, 593 F.3d at 1267 (quoting Burger King, 471 U.S. at 474).
“Therefore, states may exercise jurisdiction over only those who have established
‘certain minimum contacts with [the forum] such that the maintenance of the suit does
not offend “traditional notions of fair play and substantial justice.”’” Id. (quoting
Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984)).
Two types of personal jurisdiction exist: general and specific. General jurisdiction
arises from a defendant’s contacts with the forum state that “are unrelated to the cause
of action being litigated.” Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1292 (11th
Cir. 2000). General jurisdiction further requires continuous and systematic contacts
between the defendant and the forum state. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d
1264, 1274 (11th Cir. 2002). Here, general jurisdiction does not exist. Raven Hill has
not alleged facts to suggest BASF Nederland has continuous and systematic contacts
with Georgia.
Meeting specific jurisdiction requirements is less onerous: “[T]he fair warning
requirement is satisfied if the defendant has purposefully directed his activities at
residents of the forum … and the litigation results from alleged injuries that arise out of
or relate to those activities.” Diamond Crystal, 593 F.3d at 1267 (internal quotation
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marks and citation omitted). “Put differently, the defendant must have ‘purposefully
availed’ itself of the privilege of conducting activities – that is, purposefully establishing
contacts – in the forum state and there must be a sufficient nexus between those
contacts and the litigation.” Id. Once the plaintiff makes this showing, “a defendant
must make a ‘compelling case’ that the exercise of jurisdiction would violate traditional
notions of fair play and substantial justice.” Id. (citations omitted).
Even if Raven Hill could establish that the requirements of Georgia’s long-arm
statute were satisfied, it has not established that minimum contacts exist to support
jurisdiction under the Due Process Clause. BASF Nederland does not conduct and has
never conducted business in Georgia. (Doc. 56-2 at ¶ 7). None of its officers, directors,
or employees are employed or reside in Georgia. (Doc. 56-2 at ¶ 12). BASF Nederland
does not have any physical presence in Georgia nor does it own any real property or
other assets in the state. (Doc. 56-2 at ¶¶ 9-10). It has never advertised or solicited
any business in Georgia, and it has never directed any advertisement to Georgia
residents. (Doc. 56-2 at ¶¶ 16-17). BASF Nederland has never purchased or sold any
products in Georgia, and it has never entered into any contract with any individuals or
companies located in Georgia. (Doc. 56-2 at ¶¶ 18, 20). Raven Hill has not produced
any evidence to rebut the Defendants’ affidavit regarding minimum contacts.
Accordingly, the Court cannot exercise personal jurisdiction over BASF Nederland
because it does not have sufficient minimum contacts with Georgia.5

5

Because the Court has determined that it lacks personal jurisdiction over BASF Nederland, the Court
need not address whether Raven Hill’s second amended complaint fails to state a claim or whether it
satisfies Fed. R. Civ. P. 9(b) as to BASF Nederland.
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III. CONCLUSION
In the alternative, Raven Hill has requested an opportunity to conduct
jurisdictional discovery. The Court does not believe the known facts warrant subjecting
BASF Nederland to that expense. Nevertheless, given the circumstances, the Court
believes it appropriate that BASF Nederland counsel file a pleading confirming their
authority to acknowledge service on behalf of BASF Nederland in the event further
developments warrant the rejoinder of BASF Nederland. Upon the filing of that
authorization, BASF Nederland shall be dismissed.

SO ORDERED, this the 13th day of March, 2014.

S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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