Sherwood v. Cook Out, Inc.
MEMORANDUM OPINION AND ORDER: 1) 16 MOTION to Dismiss for Lack of Jurisdiction is DENIED WITHOUT PREJUDICE. 2) Parties SHALL CONDUCT DISCOVERY limited to issue of this Court's exercise of personal jurisdiction over Dft. 3) COMPLETE ALL JURISDICTIONAL DISCOVERY by 5/30/2017. 4) All discovery disputes are REFERRED to the magistrate judge assigned (Magistrate Judge Robert E. Wier randomly drawn). Signed by Judge Joseph M. Hood on 3/29/2017.(SCD)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
On behalf of himself & all
others similarly situated, et
COOK OUT, INC.,
This matter is before the Court upon the Motion to Dismiss
for Lack of Jurisdiction filed by Defendant, Cook Out, Inc. [DE
Plaintiff Justin Sherwood has filed a Response [DE 20] and
Defendant has filed a Reply [DE 23]. Thus, the matter is fully
briefed and ripe for review.
Factual and Procedural Background
In his Complaint, Plaintiff alleges that he was employed by
Defendant, Cook Out, Inc., from approximately September 15, 2014
to November 21, 2014 as a MIT at “Defendant’s store located in
Richmond, Kentucky” [DE 1, Complaint at ¶11].
alleges that he and similarly situated employees worked in excess
of 40 hours per workweek, without receiving wages from Defendant
for all hours worked, nor overtime compensation in a timely manner
as required by federal and state laws [Id. at ¶12, 22].
filed his Complaint in this action individually and on behalf of
all others similarly situated, seeking all available relief under
the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. §§ 201,
et seq., K.R.S. § 337.020 (“Kentucky’s Wage Payment Collection
Law” or “KWPCL”), and, in the alternative to the KWPCL claim for
the class, K.R.S. § 446.070 (“Kentucky Remedies Law” or “KRL”)
Defendant filed a Motion to Dismiss Plaintiff’s Complaint,
jurisdiction over it, thus this case should be dismissed pursuant
to Fed. R. Civ. P. 12(b)(2) [DE 16].
Defendant has submitted a
Declaration of Rich McCormick, an insurance administrator at Cook
Out, Inc., who purports to have familiarity with Defendant’s
business operations and access to its records [DE 16-2, McCormick
According to McCormick, Defendant Cook Out, Inc. is a
North Carolina corporation with a principal place of business at
15 Laura Lane, STE 300, Thomasville, NC 27360 [Id.].
also states that Defendant conducts its business in North Carolina
and operates a Cook Out Restaurant in North Carolina [Id.].
McCormick further states that Defendant is a separate legal
entity from the entity that employed Plaintiff, which would have
been Cook Out-Richmond KY, Inc. [Id.].
According to McCormick,
Defendant is neither a parent, nor subsidiary of the entity that
operations of Cook Out–Richmond KY, Inc.
states that Defendant does not operate any restaurants in Kentucky,
does not own any real property in Kentucky, does not conduct any
Kentucky, does not advertise itself in Kentucky, has never sought
a license to do business in Kentucky, has no agent for the service
of process in Kentucky, and has never registered to do business
with the Kentucky Secretary of State [Id.].
submits a declaration from their own counsel, Jason S. Rathod, in
which he describes Defendant’s alleged “significant contacts with
Kentucky and employment of Kentucky citizens, including Plaintiff
Sherwood” [DE 20-1, Rathod Decl.].
Rathod details his internet
searches regarding Defendant and its connections to Kentucky and
attaches several news articles and features of Defendant’s website
(which allegedly shows that it has locations in Kentucky) and
Defendant separately incorporates the individual restaurants that
are part of its chain, but argues that the information submitted
in the declaration shows that the individual restaurants do not
operate as autonomous entities but instead pursuant to centralized
Essentially, Plaintiff argues that Defendant has held itself out
as having a presence in Kentucky, such that it should not be
surprised to be sued here.
In the alternative to dismissal, Plaintiff requests that the
Court permit Plaintiff to take limited jurisdictional discovery
with respect to the relationship between Defendant and Cook Out –
Richmond KY, Inc., as well as Defendant’s operations in Kentucky.
Standard of Review
On a motion to dismiss for lack of personal jurisdiction under
establishing that jurisdiction exists.
Serras v. First Tennessee
Bank Nat. Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989)(citing McNutt
v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)(other
When faced with a properly supported motion
for dismissal, “the plaintiff may not stand on his pleadings but
must, by affidavit or otherwise, set forth specific facts showing
that the court has jurisdiction.”
Theunissen v. Matthews, 935
F.2d 1454, 1458 (6th Cir. 1991)(citation omitted).
with a properly supported 12(b)(2) motion and opposition, the court
has three procedural alternatives:
it may decide the motion upon
the affidavits alone; it may permit discovery in aid of deciding
the motion; or it may conduct an evidentiary hearing to resolve
any apparent factual questions.”
Id. (citing Serras, 875 F.2d at
District courts are afforded discretion to select which
alternative it will choose.
Id. (citing Michigan Nat. Bank v.
Quality Dinette, Inc., 888 F.2d 462, 466 (6th Cir. 1989)).
Plaintiff’s evidence, while thin, demonstrates that there may be
jurisdiction purposes remains to be seen.
However, out of an
abundance of caution, the Court will provide Plaintiff with a short
period of time within which to take some limited discovery with
relationship between Defendant and Cook Out-Richmond KY, Inc.
In the alternative to its personal jurisdiction argument,
Plaintiff fails to name the correct entity as Defendant in the
caption of his Complaint (specifically, that Plaintiff failed to
name the entity that actually employed him) in violation of Fed.
R. Civ. P. 10 [Id.].
Defendant further argues that Plaintiff’s
Complaint is subject to dismissal pursuant to Fed. R. Civ. P.
12(b)(6) because wage and hour claims are not viable class actions
under Kentucky law and also because Plaintiff’s Complaint fails to
overtime provisions of the FLSA and the Kentucky wage and hour
Defendant also argues that, as a former employee,
Plaintiff lacks standing to seek the injunctive or declaratory
relief requested in the Complaint, thus these claims should be
dismissed pursuant to Fed. R. Civ. P. 12(b)(1).
it is unclear whether the Court may properly exercise personal
jurisdiction over Defendant, it is inappropriate to address these
arguments at this time.
For all of the foregoing reasons, and the Court being fully
and sufficiently advised, IT IS HEREBY ORDERED as follows:
1) Defendant’s Motion to Dismiss for Lack of Jurisdiction [DE
16] is DENIED WITHOUT PREJUDICE to the right to re-file
after the completion of limited discovery regarding this
Court’s exercise of personal jurisdiction over Defendant;
2) The parties SHALL, in good faith, CONDUCT DISCOVERY limited
only to the issue of this Court’s exercise of personal
between Defendant and Cook Out-Richmond, KY, Inc.;
DISCOVERY, by TUESDAY, MAY 30, 2017, which means that a
party using a form of discovery that allows a response time
under the rules shall calculate and account for appropriate
response time, within the discovery deadline, in serving
that method of discovery.
4) That all discovery disputes are hereby REFERRED to the
magistrate judge assigned to this matter for appropriate
motions to compel, nor any other motions relating to a
involved in such dispute have first conferred as directed
by Fed. R. Civ. P. 37(a)(1), and said counsel have then
conference call, and received his permission to file such
motion, with such briefing thereupon as he or she shall
direct by appropriate order.
This the 29th day of March, 2017.
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