Advisors Excel, LLC v. American Retirement Systems, LLC
Filing
55
MEMORANDUM AND ORDER granting 16 Motion to Dismiss for Lack of Jurisdiction. Signed by U.S. District Senior Judge Richard D. Rogers on 10/23/2013. (mb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
ADVISORS EXCEL, L.L.C.,
Plaintiff,
v.
AMERICAN RETIREMENT SYSTEMS, LLC,
Defendant.
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Case No. 12-4019-RDR
MEMORANDUM AND ORDER
This matter is presently before the court upon defendant American
Retirement Systems, LLC=s (ARS) motion to dismiss plaintiff Advisors
Excel, LLC=s amended complaint for lack of personal jurisdiction.
filed this motion on May 21, 2012.
ARS
In its response, Advisors Excel
argued, inter alia, that the court should delay its ruling until it could
conduct some discovery on the personal jurisdiction issues.
allowed Advisors Excel to conduct some discovery.
parties have filed supplemental briefs.
The court
Since that time, the
The court is now prepared to
rule on the pending motion.
I.
In this action, Advisors Excel, a Kansas corporation, asserts
state
law
deceptive
claims
trade
of
defamation,
practices,
unfair
libel,
injurious
competition,
falsehood,
and
tortious
interference; and a federal claim of unfair competition under the
Lanham Act, 15 U.S.C. ' 1125.
In its amended complaint, Advisors
Excel alleges that the parties are competing marketing organizations
serving independent insurance agents and financial advisers in the
life insurance and annuity markets.
Advisors Excel contends that
ARS Alaunched and implemented a scheme to intentionally misrepresent
the characteristics, integrity, and ethics of Advisors Excel.@
This
Ascheme@ was accomplished by sending out a defamatory AProduct Alert@
to one or more of the parties= current or prospective customers,
including William Hull who does business in Overland Park, Kansas.
Advisors Excel further alleges that ARS Aintentionally directed
tortious acts towards Kansas with knowledge that the injury suffered
would be felt in Kansas.@
II.
The standard that governs a motion to dismiss for lack of
personal
jurisdiction
under
Fed.R.Civ.P.
12(b)(2)
is
well
established. The plaintiff bears the burden of establishing personal
jurisdiction over the defendant.
Edison Trust Number One v.
Pattillo, 2010 WL 5093831 at *1 (D.Kan. Dec. 8, 2010).
The extent
of the burden depends on the stage at which the court considers the
jurisdictional issue.
Id.
When personal jurisdiction Ais decided
at a preliminary stage by reference to only the complaint and
affidavits, the plaintiff need only make a prima facie showing of
personal jurisdiction.@
Id.
AThe plaintiff may carry this burden >by demonstrating, via
affidavit or other written materials, facts that if true would
support jurisdiction over the defendant.=@
Id. (quoting TH Agric.
& Nutrition, L.L.C. v. Ace European Grp. Ltd., 488 F.3d 1282, 1286
2
(10th Cir. 2007)).
In determining if it has personal jurisdiction
over a defendant, the court may consider affidavits and other
documentary evidence submitted by the parties. TH Agric. & Nutrition,
488 F.3d at 1286.
To the extent allegations in the complaint are
uncontroverted, the court must accept those allegations.
Memery Crystal, 55 F.3d 1503, 1505 (10th
Cir. 1995).
Wenz v.
If the
jurisdictional allegations are challenged, however, the plaintiff
has a duty to support its jurisdictional allegations by competent
proof of supporting facts.
Payless Shoesource, Inc. v. Shops at
Hancock, LLC, 2012 WL 1344977 at * 1 (D.Kan. Apr. 18, 2012)(citing
Pytlik v. Prof=l Res., Ltd., 887 F.2d 1371, 1376 (10th
Cir. 1989)).
Factual disputes are resolved in plaintiff=s favor. Id.
III.
The facts before the court are generally undisputed.
The court
allowed Advisors Excel to conduct some discovery on ARS= motion but
Advisors Excel has not provided much to controvert any of the facts
understood by the court at the time it issued its original memorandum
and order.
ARS, an Iowa corporation, has its principal of business in Des
Moines, Iowa.
ARS has no other office locations.
or own property in Kansas.
ARS does not lease
It has never incurred or paid any tax
liability to the state of Kansas.
ARS is not licensed or authorized
to transact business in Kansas.
3
ARS is an insurance marketing organization.
Its business focus
is the recruitment of independent insurance agents to contract with
certain
insurance
carriers
with
whom
ARS
has
a
contractual
relationship with the goal that such agents will facilitate their
clients= purchase of the carriers= life insurance and annuity
products.
These purchases generate the payment of commissions by
the carriers to ARS and the independent agent.
Two independent insurance agents, one located in Maryland and
the other located in California, contacted ARS Vice-President Russ
Wagner in Iowa by e-mail and sought information about a specific
product being marketed by Advisors Excel.
issued a AProduct Alert E-Mail.@
In response, Wagner
ARS had never authorized such a
transmission in the past, and did not authorize this one.
The
Product Alert E-Mail was sent to 177 addresses in 31 states from the
addresses on Wagner=s bulk independent agent-advisor e-mail address
list.
All of these agent-advisors were located outside of Kansas
except for one, William Hull.
Wagner did not know that Hull=s e-mail
address was still on his bulk agent e-mail address list when he
transmitted the Product Alert, and he did not know that he was sending
it to anyone in Kansas.
Wagner did not have any producing agents
in Kansas assigned to him at that time.
Hull was no longer an active
producing agent at the time that Wagner sent the e-mails.
Wagner=s
last contact with Hull for any reason was on December 16, 2010, over
4
one year before the transmission of the Product Alert e-mail.
IV.
The court previously set forth the applicable law on personal
jurisdiction in its prior order.
The court will simply summarize
most of what was stated in that order.
Here, based on diversity jurisdiction and federal question
jurisdiction
nationwide
where
service
the
federal
of
process,
statute
does
not
provide
jurisdiction
Apersonal
for
over
a
nonresident defendant is determined by the law of the forum state.@
CaldwellBBaker Co. v. S. Ill. Railcar Co., 225 F.Supp.2d 1243, 1259
(D.Kan.2002). AThe proper inquiry is, therefore, whether the exercise
of jurisdiction is sanctioned by the long-arm statute of the forum
state
and
comports
Constitution.@
with
due
process
requirements
of
the
Federated Rural Elec. Ins. Corp. v. Kootenai Elec.
Coop., 17 F.3d 1302, 1304B05 (10th Cir. 1994).
The Kansas long-arm
statute extends the personal jurisdiction analysis to the extent of
the United States Constitution; thus, this court may proceed to the
due process analysis.
Id. at 1305.1
The due process analysis consists of two steps: (1) whether the
1
ARS has used part of its supplemental brief to raise arguments
concerning the applicability of several provisions of the Kansas
long-arm statute. The court finds it unnecessary to engage in any
discussion of these provisions because we find that the due process
analysis is dispositive of the pending motion.
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defendant has such minimum contacts with the forum state that it
should reasonably anticipate being haled into court there; and (2)
if the defendant has minimum contacts with the forum state, whether
exercising personal jurisdiction over them would offend traditional
notions of fair play and substantial justice. AST Sports Sci., Inc.
v. CLF Distribution Ltd., 514 F.3d 1054, 1061 (10th Cir. 2008).
Minimum
contacts
can
be
established
jurisdiction or specific jurisdiction.
by
either
general
Previously, the court
stated that Advisors Excel had not challenged ARS= contention that
general jurisdiction over it was not present here.
The supplemental
memorandum filed by Advisors Excel again makes no claim that the court
may exercise general personal jurisdiction over ARS.
Accordingly,
the court again finds no reason to consider this aspect of personal
jurisdiction.
In its prior order, the court set forth the law on specific
jurisdiction as it relates to this case as follows:
The inquiry on specific jurisdiction is two-fold.
First, the court must determine whether the defendant has
such minimum contacts with the forum state "that he should
reasonably anticipate being haled into court there."
WorldBWide Volkswagen v. Woodson, 444 U.S. 280, 297 (1980).
Within this inquiry the court must determine (1) whether
the defendant purposefully directed its activities at
residents of the forum, Burger King Corp. v. Rudzewicz,
471 U.S. 462, 472 (1985); and (2) whether the plaintiff's
claim arises out of or results from Aactions by the
defendant himself that create a substantial connection
with the forum state,@
Asahi Metal Industry Co., Ltd. v.
Superior Court of California, 480 U.S. 102, 109 (1987).
6
Second, if the defendant's actions create sufficient
minimum contacts, we must then consider whether the
exercise of personal jurisdiction over the defendant
offends Atraditional notions of fair play and substantial
justice.@ Id. at 113.
This latter inquiry requires a
determination of whether a district court=s exercise of
personal jurisdiction over a defendant with minimum
contacts is "reasonable" in light of the circumstances
surrounding the case. Id.
In the context of tort claims, Athe mere allegation
that an out-of-state defendant has tortiously interfered
with contractual rights or has committed other business
torts that have allegedly injured a forum resident does
not necessarily establish that the defendant possesses the
constitutionally required minimum contacts.@ Far West
Capital, Inc. v. Towne, 46 F.3d 1071, 1079 (10th Cir.
1995). Instead, to exercise specific jurisdiction over a
defendant, the court must conduct a particularized inquiry
into whether the defendant has Apurposefully directed his
activities at residents of the forum, and [whether] the
litigation results from alleged injuries that arise out
of or relate to those activities.@ Intercon,[Inc. v. Bell
Atl. Internet Solutions, Inc.],
205 F.3d [1244] at 1247
[(10th Cir. 2000)](quoting Burger King Corp., 471 U.S. at
472).
The purposeful direction requirement is designed to
protect an out-of-state defendant from being brought into
court for merely Arandom, fortuitous, or attenuated
contacts@ with the forum state. Burger King, 471 U.S. at
475. In considering tort claims, purposeful direction may
exist when defendant engaged in A(a) an intentional action.
. .(b) expressly aimed at the forum state. . . with (c)
knowledge that the brunt of the injury would be felt in
the forum state.@ Dudnikov [v. Chalk & Vermmillion fine
Arts, Inc., 514 F.3d [1063] at 1072 [(10th Cir.
2008)](interpreting Calder v. Jones, 465 U.S. 783 (1984)).
Advisors Excel, LLC v. American Retirement Systems, LLC, No. 124019, slip op. at pp. 5-7 (D.Kan. Dec. 11, 2012).
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V.
Advisors Excel contends that ARS has a Aconnection@ to Kansas
in the following ways: (1) regularly solicits agents in Kansas; (2)
sends marketing materials, contracts, and other business information
to its agents in Kansas; (3) has independent agents operating in
Kansas; (4) derives revenue from insurance policies sold in Kansas;
(5) created a Product Alert that was one of a kind aimed at disparaging
a known competitor in Kansas; (6) sent the Product Alert to an agent
located in Kansas; and (7) knew that Advisors Excel would be harmed
in Kansas.
With the aforementioned standards in mind, the court shall
proceed to consider the record before the court and the arguments
of the parties.
The key issue is whether ARS purposely directed or
expressly aimed at Kansas the specific activity allegedly giving rise
to Advisor Excel=s claims.
In order to meet the purposeful availment
prong, the court must examine whether ARS should have reasonably
anticipated being haled into court in Kansas.
The court here has to consider the impact of an e-mail sent to
the forum state.
The court must further consider whether the e-mail
was intentionally sent.
The Tenth Circuit has likened e-mails to
Aphone calls, faxes, and letters made or sent by out-of-state
defendants to forum residents.@
1247 (10th Cir. 2011).
Shrader v. Biddinger, 633 F.3d 1235,
The Court further noted that these methods
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of transmission have been found sufficient to support specific
personal jurisdiction when they directly give rise to the cause of
action.
Id.
Nevertheless, the Tenth Circuit recognized a
distinguishing characteristic of e-mail:
Although e-mail is directed to particular recipients,
e-mail addresses typically do not reveal anything about
the geographic location of the addressee. Thus, if the
plaintiff does not show that the defendant otherwise knew
where the recipient was located, the e-mail itself does
not demonstrate purposeful direction of the message to the
forum state, even if that happens to be where the recipient
lived.
Id. at 1247-48(citation omitted).
The issue here concerning the transmission of e-mail is slightly
different because of this case=s unique circumstances.
This is not
the typical situation envisioned by the Tenth Circuit in Shrader
where an e-mail is transmitted and the sender has no idea where the
e-mails are being sent.
Here, Wagner had some idea to whom he was
transmitting the e-mails, i.e., agents of ARS.
He, however, did not
specifically know that William Hull remained on his list because Hull
was no longer a producing agent for ARS.
The record further shows
that Wagner had no producing agents in Kansas at the time he sent
the e-mail and that he did not intend to send any e-mail into Kansas.
Advisors Excel has provided nothing to counter this evidence.
The unique circumstances of this case indicate that ARS did
not Apurposely direct@ its conduct at Kansas.
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Advisors Excel has not
demonstrated that ARS expressly aimed its tortious conduct at Kansas.
AAiming@ requires knowledge of where the Atarget@ geographically
exists.
Advisors Excel has made an insufficient showing of
knowledge by Wagner.
The evidence is simply insufficient to
demonstrate that ARS should have reasonably anticipated being haled
into court in Kansas.
The other issues raised by Advisors Excel also do not suggest
purposeful availment by ARS.
Advisors Excel has attempted to
broaden its theory of personal jurisdiction.
Initially, Advisors
Excel had suggested that its cause of action arose solely from the
transmission of the Product Alert e-mail to a Kansas recipient.
Now,
Advisors Excel contends that the Product Alert was a Asmall part of
a larger initiative to solicit and develop agents [by ARS] and do
business in the State of Kansas.@
Thus, Advisors Excel appears to
contend that the Product Alert was simply a part of ARS= business
efforts in the state of Kansas.
The court, however, fails to find
support for Advisor Excel=s argument.
The record before the court
fails to support any substantial efforts by ARS to do business in
Kansas.
There have some isolated responses by Kansas agents to ARS
advertisements in national publications.
But, there is no evidence
to support Advisor Excel=s contention that ARS was engaged in an
Aoverall business strategy to acquire, develop and train agents@ in
Kansas.
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The record before the court shows that ARS does not directly
solicit agents in Kansas.
Rather, it advertises in industry media.
If an independent agent responds to these advertisements, the agent
is placed in the ARS database.
If there is a contact made thereafter
by ARS with the independent agent, that contact is placed in the
database.
ARS does not contract with an individual agent.
The
independent agent completes an appointment form for one of the
carriers that ARS represents.
agent to the carrier.
ARS then presents the independent
If the carrier contracts with the agent, then
ARS receives a small override from the carrier based on the agent=s
production.
The record fails to support Advisor Excel=s contention that ARS
has had 400 contacts with Kansas for the period January 2011 to
February 2012 or that ARS has 97 agents or potential agents in Kansas.
The record does show that for the period between January 2011 and
February 2012, ARS facilitated only three contacts between insurers
and independent agents in Kansas.
None of these agents made sales
for these insurers on which ARS received any override commission.
Advisors Excel has also argued that ARS= tortious conduct was
expressly
directed
at
Kansas
because
it
was
aware
headquarters for Advisors Excel was located in Kansas.
that
the
Under the
Calder analysis, a court may consider a company=s headquarters as the
location in which it would feel the brunt of the injury.
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Thus,
Advisors Excel would have felt the brunt of the injury in Kansas.
However, Advisors Excel has not demonstrated that ARS expressly aimed
its tortious conduct at Kansas.
There was only one e-mail sent to
Kansas and the record shows that e-mail was not sent intentionally.
The nature and degree of the other contacts ARS has had with Kansas
were limited and have no relationship to the Product Alert that is
subject of Advisors Excel=s claims.
In sum, the court concludes that personal jurisdiction over ARS
is lacking here due to absence of purposeful availment.
The court
shall grant ARS= motion to dismiss for lack of personal jurisdiction.
IT IS THEREFORE ORDERED that defendant American Retirement
Systems, LLC=s motion to dismiss for lack of personal jurisdiction
(Doc. # 16) be hereby granted.
IT IS SO ORDERED.
Dated this 23rd day of October, 2013, at Topeka, Kansas.
s/Richard D. Rogers
United States District Judge
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