Sherwood v. Cook Out, Inc.

Filing 26

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

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
JUSTIN SHERWOOD,
On behalf of himself & all
others similarly situated, et
al.,
Plaintiff,
v.

COOK OUT, INC.,
Defendant.

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Action No.
5:16-cv-92-JMH
MEMORANDUM OPINION
AND ORDER

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This matter is before the Court upon the Motion to Dismiss
for Lack of Jurisdiction filed by Defendant, Cook Out, Inc. [DE
16].

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.
I.

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].

Plaintiff further

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
1

as required by federal and state laws [Id. at ¶12, 22].

Plaintiff

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”)
[Id.].
Defendant filed a Motion to Dismiss Plaintiff’s Complaint,
primarily

arguing

that

this

Court

cannot

exercise

personal

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
Decl.].

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.].

McCormick

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
2

employed

Plaintiff,

nor

is

Defendant

involved

operations of Cook Out–Richmond KY, Inc.

[Id.].

in

the

daily

McCormick also

states that Defendant does not operate any restaurants in Kentucky,
does not own any real property in Kentucky, does not conduct any
regular

business

in

Kentucky,

does

not

sell

any

products

in

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.].
In

response

to

Defendant’s

Motion

to

Dismiss,

Plaintiff

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’s

LinkedIn

profile

[Id.]

Plaintiff

concedes

that

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
policies

and

practices

which

are

dictated

by

Defendant.

Essentially, Plaintiff argues that Defendant has held itself out
3

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.
II.

Standard of Review

On a motion to dismiss for lack of personal jurisdiction under
Fed.

R.

Civ.

P.

12(b)(2),

Plaintiff

establishing that jurisdiction exists.

bears

the

burden

of

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
citations omitted)).

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).

“Presented

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.”
1214).

Id. (citing Serras, 875 F.2d at

District courts are afforded discretion to select which

4

alternative it will choose.

Id. (citing Michigan Nat. Bank v.

Quality Dinette, Inc., 888 F.2d 462, 466 (6th Cir. 1989)).
III.

Analysis

After
limited

careful

consideration,

jurisdictional

discovery

the
is

Court

determines

warranted

in

this

that
case.

Plaintiff’s evidence, while thin, demonstrates that there may be
some

connections

Defendant’s

between

Kentucky

Defendant

contacts

are

and

Kentucky.

sufficient

jurisdiction purposes remains to be seen.

for

Whether
personal

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
respect

to

Defendant’s

contacts

with

Kentucky,

including

the

relationship between Defendant and Cook Out-Richmond KY, Inc.
In the alternative to its personal jurisdiction argument,
Defendant

also

argues

that

dismissal

is

warranted

because

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
sufficiently

plead

individual

claims

for

violations

of

the

overtime provisions of the FLSA and the Kentucky wage and hour
5

statute [Id.].

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).

However, because

it is unclear whether the Court may properly exercise personal
jurisdiction over Defendant, it is inappropriate to address these
arguments at this time.
IV.

Conclusion

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
jurisdiction
contacts

with

over

Defendant,

Kentucky

and

specifically

the

Defendant’s

relationship,

if

any,

between Defendant and Cook Out-Richmond, KY, Inc.;
3) That

the

parties

SHALL

COMPLETE

ALL

JURISDICTIONAL

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

6

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
resolution

pursuant

to

28

U.S.C.

§

636(b)(1)(A).

No

motions to compel, nor any other motions relating to a
discovery

dispute,

shall

be

filed

unless

all

counsel

involved in such dispute have first conferred as directed
by Fed. R. Civ. P. 37(a)(1), and said counsel have then
conferred

with

the

magistrate

judge,

by

telephone

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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