Rissman Hendricks & Oliverio, LLP v. MIV Therapeutics Inc et al
Filing
79
Chief Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER(Hohler, Daniel)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
RISSMAN HENDRICKS & OLIVERIO,
LLP f.k.a. RISSMAN JOSBE
HENDRICKS & OLIVERIO, LLP
f.k.a. KUDIRKA & JOBSE, LLP,
Plaintiff,
)
)
)
)
)
)
v.
)
)
MIV THERAPEUTICS INC., MIV
)
SCIENTIFIC HOLDINGS, LTD,
)
BIOSYNC SCIENTIFIC PVT, ALAN P. )
LINDSAY a.k.a ALAN LINDSAY,
)
PATRICK MCGOWAN, and CHRIS
)
XUNAN CHEN a.k.a. CHRIS CHEN,
)
Defendants
)
C.A. No. 11-10791-MLW
MEMORANDUM AND ORDER
WOLF, D.J.
September 28, 2012
I. INTRODUCTION
This is an action brought by plaintiff Rissman, Hendricks,
& Oliverio, LLP ("Rissman") against defendants MIV Therapeutics,
Inc. ("MIV"), MIV Scientific Holdings Ltd., Biosync Scientific PVT,
Alan P. Lindsay, Patrick McGowan, and Chris Xunan Chen. Rissman, a
Massachusetts law firm, alleges that defendants owe it $416,309.00
for legal services provided to MIV between May 29, 2008 and
February 7, 2011.
The case was originally brought in the Superior Court of the
Commonwealth of Massachusetts. It was removed to the United States
District Court on May 5, 2011. Plaintiff's Complaint asserted a
variety of state law claims against the defendants, including
breach
of
contract,
fraud,
unjust
1
enrichment,
breach
of
the
covenant
of
good
faith
and
fair
dealing,
intentional
misrepresentation, negligent misrepresentation, and violation of
the Massachusetts Consumer Protection Act, Mass. G. L. c. 93A, as
well as violations of several federal statutes.
In December 2011, separate and final default judgments in the
amount of $542,575.17, including principal and interest, were
entered
against
four
of
the
defendants:
MIV,
MIV
Scientific
Holdings, Biosync Scientific PVT, and Chen (collectively, the
"defaulted defendants"). Plaintiff dismissed all remaining claims
against these defendants except for two counts seeking injunctive
relief to prevent the defaulted defendants from liquidating a
variety of assets until the default judgments were paid. Plaintiff
also dismissed all claims against defendant McGowan.
Lindsay, a former corporate officer and member of the board of
directors of MIV, has filed a Motion to Dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(2) and (5) (the "Motion"). Lindsay
contends that the court lacks personal jurisdiction over him both
under the Massachusetts long-arm statute, Mass. G. L. c. 223A, §3,
and the requirements of Due Process Clause of the United States
Constitution. He also asserts that he was not properly served with
process by the plaintiff. For the reasons set forth in this
Memorandum and Order, the Motion is being denied.
2
II. LEGAL STANDARD
A. Prima Facie Standard.
Once a defense of lack of personal jurisdiction has been
raised, the plaintiff has the burden of showing that the court has
personal jurisdiction over the defendant. See Adams v. Adams, 601
F.3d 1, 4 (1st Cir. 2010); Daynard v. Ness, Motley, Loadholt,
Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002); Newman
v. European Aeronautic Defence & Space Co. Eads N.V., 700 F. Supp.
2d 156, 159 (D. Mass. 2010).
District courts in the First Circuit may require a plaintiff
to satisfy one of three standards in establishing that personal
jurisdiction exists: a prima facie showing of facts essential to
establishing jurisdiction; a likelihood of the existence of each
fact
necessary
to
support
personal
jurisdiction;
or
a
preponderance-of-the-evidence standard. See Foster-Miller, Inc. v.
Babcock & Wilcox Canada, 46 F.3d 138, 145-46 (1st Cir. 1995); Boit
v. Gar-Tec Products, Inc., 967 F.2d 671, 674-78 (1st Cir. 1992);
see also Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007). The
prima facie standard is the most commonly used and is appropriate
where a case does not involve materially conflicting versions of
the facts. See Foster-Miller, 46 F.3d at 145-46; see also Adelson,
510 F.3d at 48. Under the prima facie standard, the district court
considers "only whether the plaintiff has proffered evidence that,
if credited, is enough to support findings of all facts essential
3
to personal jurisdiction." Boit, 967 F.2d at 675. The court does
not act as fact-finder and instead adduces "the facts from the
pleadings
and
the
parties'
supplementary
filings,
including
affidavits, taking facts affirmatively alleged by plaintiff as true
and construing disputed facts in the light most hospitable to
plaintiff." Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203
(1st Cir. 1994); see also Sawtelle v. Farrell, 70 F.3d 1381, 138587 (1st Cir. 1995); Boit, 967 F.2d at 675.
As defendant agrees, the prima facie standard is appropriate
in the instant case. There is conflicting evidence, but the record
is not so rife with contradictions that a standard higher than
prima facie should apply. See General Contracting & Trading Co. v.
Interpole, Inc., 899 F.2d 109, 115 (1st Cir. 1990); see also
Landmark Bank v. Machera, 736 F. Supp. 375, 380 n.7 (D. Mass.
1990).
Accordingly,
the
court
is
utilizing
the
prima
facie
standard. See Daynard, 290 F.3d at 51.
Under
the
prima
facie
standard,
"to
establish
personal
jurisdiction [a] plaintiff must go beyond the pleadings and make
affirmative proof." Chlebda v. H.E. Fortna & Bro., Inc., 609 F.2d
1022, 1024 (1st Cir. 1979). Such an affirmative showing must be
based on documents and affidavits. They must indicate that the
defendant is subject to the jurisdiction of the court under the
long-arm statute of the state in which the court sits, as "a
federal court exercising diversity jurisdiction 'is the functional
4
equivalent of a state court sitting in the forum state.'" Sawtelle,
70 F.3d at 1387 (quoting Ticketmaster-New York, 26 F.3d at 204).
The court must also determine whether exercising jurisdiction
comports with the Fourteenth Amendment's Due Process Clause. See
id.
B. Long-Arm Statute and Due Process
Because Lindsay is not alleged to have been a resident of
Massachusetts, to own property here, or to have otherwise consented
to
this
court's
appropriate
long-arm
if
jurisdiction,
the
statute,
defendant
Mass.
G.
personal
falls
L.
c.
jurisdiction
within
223A,
the
§3,
is
only
Massachusetts
and
exercising
jurisdiction comports with the requirements of the Due Process
Clause. See Evans Cabinet Corp. v. Kitchen Int'l, Inc., 593 F.3d
135, 146 (1st Cir. 2010); Nowak v. Tak How Inv., Ltd., 94 F.3d 708,
712 (1st Cir. 1996);
Newman, 700 F. Supp. 2d at 162-63.
The Massachusetts long-arm statute provides that a "court may
exercise personal jurisdiction over a person, who acts directly or
by an agent, as to a cause of action in law or equity arising from
the
person's
.
.
.
transacting
any
business
in
this
commonwealth[.]" Mass. G. L. c. 223A, §3(a). "For jurisdiction to
exist under Section 3(a), the facts must satisfy two requirements
- the defendant must have transacted business in Massachusetts, and
the plaintiff's claim must have arisen from the transaction of
business by the defendant." Tatro v. Manor Care, Inc., 416 Mass.
5
763, 767 (1994) (citing Good Hope Indus., Inc. v. Ryder Scott Co.,
378 Mass. 1, 10 n.17 (1979)). "[G]enerally the purposeful and
successful
solicitation
of
business
from
residents
of
the
Commonwealth, by a defendant or its agent, will suffice to satisfy
this requirement." Id. at 767. The defendant need not have had any
physical presence in Massachusetts. See Energy Capital & Services
LP, II v. Hill Refrigeration, Inc., 989 F. Supp. 353, 355 (D. Mass.
1997);
Burger
King
Corp.
v.
Rudzewicz,
471
U.S.
462
(1985)
(jurisdiction "may not be avoided merely because the defendant did
not physically enter the forum State"); see also Tatro, 416 Mass.
at 768. Section 3(a) also "does not require that the business
transacted have taken place within the physical bounds of the
commonwealth[.]" Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d
928, 932 (1st Cir. 1985) (citing Good Hope Indus., 378 Mass. at
10).
Because
the
Massachusetts
Supreme
Judicial
Court
has
interpreted the state's long-arm statute to extend to the limits
permitted
by
sidestep
the
the
United
statutory
States
inquiry
Constitution,
and
proceed
the
court
directly
to
"may
the
constitutional analysis." Evans Cabinet Corp., 593 F.3d at 146
(quoting Daynard, 290 F.3d at 52); Newman, 700 F. Supp. 2d at 163.
The "transacting business" requirement of the Massachusetts longarm
statute
analysis.
thus
See
merges
Cambridge
with
the
Literary
6
constitutional
Props.,
Ltd.
due
v.
W.
process
Goebel
Porzellanfabrik G.m.b.H., 295 F.3d 59, 63 (1st Cir. 2002).
The Due Process Clause requires that the defendant have
sufficient "minimum contacts" with a forum so that subjecting him
to that forum's jurisdiction will not offend the "traditional
notions of fair play and substantial justice." United Elec. Workers
v. 163 Pleasant St. Corp., 960 F.2d 1080, 1087 (1st Cir. 1992)
("Pleasant Street I") (quoting Int'l Shoe Co. v. Washington, 325
U.S. 310, 316 (1945)). Under the "minimum contacts" analysis, the
two recognized types of personal jurisdiction are "general" and
"specific" jurisdiction:
General jurisdiction exists when the litigation is not
directly founded on the defendant's forum-based contacts,
but the defendant has nevertheless engaged in continuous
and systematic activity, unrelated to the suit, in the
forum state. . . . Specific personal jurisdiction may be
asserted where the cause of action arises directly out
of, or relates to, the defendant's forum-based contacts.
Id. at 1088-89. It is undisputed that the court does not have
general jurisdiction over Lindsay.
There are three distinct inquiries necessary to establish
specific personal jurisdiction:
First, the claim underlying the litigation must directly
arise out of, or relate to, the defendant's forum-state
activities. Second, the defendant's in-state contacts
must represent a purposeful availment of the privilege of
conducting activities in the forum state, thereby
invoking the benefits and protections of that state's
laws and making the defendant's involuntary presence
before the state's courts foreseeable. Third, the
exercise of jurisdiction must, in light of the Gestalt
factors, be reasonable.
Id.
at
1089.
The
"gestalt
factors"
7
address
the
fairness
of
subjecting the defendant to the jurisdiction of the forum state by
evaluating:
(1) the defendant's burden of appearing, (2) the forum
state's interest in adjudicating the dispute, (3) the
plaintiff's interest in obtaining convenient and
effective relief, (4) the judicial system's interest in
obtaining the most effective resolution of the
controversy, and (5) the common interests of all
sovereigns in promoting substantive social policies.
Nowak, 94 F.3d at 717.
III. FACTS
Based on the documents and affidavits submitted by plaintiff,
the relevant facts, construed in the light most hospitable to the
plaintiff, are as follows. See Ticketmaster-New York, 26 F.3d at
203.
Lindsay was an officer and director of MIV from 1999 until at
least 2010. See Aff. of Alan P. Lindsay ¶¶9-10 ("Lindsay Aff."). He
was president, chairman of the board and chief executive officer
("CEO") from approximately October 2001 until December 31, 2007,
and remained on the board as a non-executive chairman until
February 2010. See id. According to the plaintiff, even after
stepping down as an officer of MIV, Lindsay retained pervasive
control
of
MIV's
operations,
with
ultimate
decision-making
authority over matters such as intellectual property, licensing,
business development, financing and general operational management.
See Aff. No. 2 of John A. Rissman, ¶25 ("Rissman Aff.").
Rissman is a law firm based in Massachusetts. Its primary
8
offices are in Massachusetts, and its attorneys are licensed to
practice law in that state. See Compl. ¶¶1, 8; Rissman Aff. ¶3(a).
Rissman
attorneys
were
invited
to
meet
with
MIV
representatives in Paris, France on May 18, 2006, to discuss MIV's
possible engagement of the firm. See Rissman Aff. ¶¶3(c), 4, 4(c).
This meeting occurred when Lindsay was president, CEO, and chairman
of the board at MIV, and Lindsay personally attended and actively
participated in the entire initial meeting. See id. ¶3(c), 4(b);
see
also
Lindsay
Aff.
¶9.1
At
this
meeting,
Rissman's
qualifications and terms of engagement were discussed, as was the
fact that most of Rissman's legal services would be performed in
Massachusetts. See Rissman Aff. ¶¶1, 3(c), 3(d). Rissman was
formally engaged by McGowan, MIV's executive vice president and
chief financial officer, on June 27, 2006. See id. ¶5; Compl.
Ex. A.
During the course Rissman's work for MIV, Lindsay discussed
various legal matters with Rissman attorneys, and also instructed
Rissman attorneys to perform a variety of legal services for MIV.
See Rissman Aff. ¶¶3(a), 9-11, 14-15. Lindsay requested that
Rissman attorneys attend dozens of meetings, either by telephone or
1
Lindsay denies that he was at this meeting. See Lindsay Aff.
¶15. For the purposes of a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(2), however, properly supported facts
alleged by plaintiff are taken as true and disputed facts are
construed
in
the
"light
most
hospitable
to
plaintiff."
Ticketmaster-New York, 26 F.3d at 203; see also Sawtelle, 70 F.3d
at 1385-87; Boit, 967 F.2d at 675.
9
in-person at locations besides Rissman's offices. See id. ¶¶3(a),
9-11, 14-15, Exs. C-D. The defendant also emailed with attorneys at
the firm multiple times on a variety of business matters. See id.
¶25 & Exs. C-D, H. Many of these communications were made to
lawyers in Rissman's Massachusetts office. See id. ¶¶9-10. Lindsay
was also primarily responsible for requesting the intellectual
property services provided by Rissman to MIV. See id. ¶¶3(b), 12.
More than fifty percent of the unpaid fees and disbursements at
issue were incurred at the specific request and authorization of
Lindsay.
See
id.
¶¶3(b),
3(e),
Exs.
C-D.
Most
of
Rissman's
intellectual property services, besides attending remote meetings,
were performed at Rissman's offices in Massachusetts. See id. ¶8.
Rissman is owed $416,309.00 for legal fees and expenses
provided to MIV between May 29, 2008 and February 7, 2011. See
Compl.
¶19.
Rissman
repeatedly
contacted
MIV
representatives
between 2008 and 2011 seeking payment, and Lindsay and other MIV
officials represented that payment would be forthcoming, both by
telephone and email. See Rissman Aff. ¶¶24, 26.
IV. ANALYSIS
A. Jurisdiction Over Officers, Directors and Employees
It is undisputed that the contacts involved in this case are
sufficient to establish personal jurisdiction over defendant MIV.
MIV's contacts in soliciting Rissman's business, engaging it to
provide legal services for MIV, and repeatedly reaching into the
10
state to request services be performed there are sufficient to
establish personal jurisdiction under the Massachusetts long-arm
statute and the Due Process Clause. See Nowak, 94 F.3d at 715;
Tatro, 416 Mass. at 767.
However, as the Supreme Court has stated, "[j]urisdiction over
an employee does not automatically follow from jurisdiction over
the corporation which employs him[.]" Keeton v. Hustler Magazine,
Inc., 465 U.S. 770, 781 n.13 (1984). On the other hand, "status as
[an] employee[] does not somehow insulate [that individual] from
jurisdiction. Each defendant's contacts with the forum State must
be assessed individually." Calder v. Jones, 465 U.S. 783, 790
(1984). The question of personal jurisdiction over an individual,
therefore, rests on whether there is an independent basis for
jurisdiction based on an individual's actions, regardless of the
capacity in which those actions were taken. See Keeton, 465 U.S. at
781 n.13; Calder, 465 U.S. at 790; M-R Logistic, LLC v. Riverside
Rail, LLC, 537 F. Supp. 2d 269, 279-80 (D. Mass. 2008); Interface
Group-Mass., LLC v. Rosen, 256 F. Supp. 2d 103, 105 (D. Mass.
2003); Yankee Group, Inc. v. Yamashita, 678 F. Supp. 20, 22 (D.
Mass. 1988); see also Pettengill v. Curtis, 584 F. Supp. 2d 348,
358 (D. Mass. 2008).
Lindsay nevertheless contends that this court cannot exercise
personal jurisdiction over him because any actions that would
otherwise confer personal jurisdiction were undertaken solely in
11
his role as a MIV board member. This argument is commonly referred
to as the "fiduciary shield" doctrine, which "holds that acts
performed by a person in his capacity as a corporate fiduciary may
not form the predicate for the exercise of jurisdiction over him in
his individual capacity." Johnson Creative Arts, Inc. v. Wool
Masters, Inc., 573 F. Supp. 1106, 1111 (D. Mass. 1983); see also
LaForest v. Ameriquest Mortg. Co., 383 F. Supp. 2d 278, 284-85 (D.
Mass. 2005); LaVallee v. Parrot-Ice Drink Prods. of America, Inc.,
193 F. Supp. 2d 296, 301 (D. Mass. 2002). The doctrine is not
constitutionally
based,
but
rather
is
a
judicially-created
equitable principle based on "judicial inference as to the intended
scope of state long-arm statutes." Johnson Creative Arts, 573 F.
Supp. at 1111; see also LaForest, 383 F. Supp. 2d at 284-85;
LaVallee, 193 F. Supp. 2d at 301.
No
Massachusetts
court
has
adopted
the
fiduciary
shield
doctrine, and courts in the First Circuit do not recognize the
doctrine as a limitation on the Massachusetts long-arm statute. See
LaForest, 383 F. Supp. 2d at 284-85; Interface Group-Mass., 256 F.
Supp. 2d at 105; Trans Nat'l Travel, Inc. v. Sun Pac. Int'l Inc.,
10 F. Supp. 2d 79, 83 (D. Mass. 1998); Yankee Group, 678 F. Supp.
at 22; Johnson Creative Arts, 573 F. Supp. at 1111; Morris v. UNUM
Life Ins. Co. of America, 66 Mass. App. Ct. 716, 720 n.7 (2006);
cf. M-R Logistic, 537 F. Supp. 2d at 279-80; LaVallee, 193 F. Supp.
2d at 300-02; Haddad v. Taylor, 32 Mass. App. Ct. 332, 335-37
12
(1992); Kleinerman v. Morse, 26 Mass. App. Ct. 819, 824 (1989).
In view of the foregoing, the court finds that Lindsay's
status as a corporate officer and director does not insulate him
from personal jurisdiction. Rather, the court must analyze the
question of jurisdiction based on Lindsay's personal contacts with
Massachusetts.
B. Lindsay's Contacts with Massachusetts
It is undisputed that Lindsay was never physically present in
Massachusetts.
However,
Lindsay
was
an
active
participant
in
soliciting and engaging Rissman to perform legal services for MIV.
He was president, CEO, and chairman of the board of MIV when
Rissman's contract with MIV was drafted and signed. See Rissman
Aff. ¶5; Lindsay Aff. ¶¶9-10; Compl. Ex. A. In these capacities, he
was present at and helped evaluate Rissman's qualifications at the
initial meeting in France, and he participated in discussing the
financial terms of Rissman's engagement. Lindsay also knew that the
firm was based in Massachusetts. See Rissman Aff. ¶¶1, 3(c)-3(d),
4(b)-(c).
In
addition,
Lindsay
initiated
and
participated
in
many
discussions with Rissman attorneys who were in Massachusetts while
Lindsay was elsewhere. See id. ¶¶3(a), 3(e), 9. Lindsay directed
that services be provided by Rissman which foreseeably were to be
performed in Massachusetts, the location of the firm's offices. See
id.
¶¶8-9. Lindsay also sent emails to Rissman attorneys in
13
Massachusetts. See id. ¶9. In addition, Lindsay requested that
Rissman
attorneys
in
Massachusetts
attend
meetings
at
MIV
facilities in other states either in person or by telephone. See
id. ¶¶7, 10, 13, 15.
C. Due Process
As
explained
establish
specific
earlier,
personal
the
three
inquiries
jurisdiction
under
necessary
the
to
"minimum
contacts" analysis are: (1) whether the claim underlying the
litigation directly arises out of or relates to the defendant's
forum-state activities; (2) whether the defendant purposefully
availed himself of the privilege of conducting activities in the
forum state; and (3) whether the exercise of jurisdiction is
reasonable in light of the "gestalt factors." See Pleasant Street
I, 960 F.2d at 1087, 1089.
1. Relatedness
The standard enumerated by the First Circuit for determining
whether a claim "arises out of" or is "related to" the defendant's
activities within the forum state lies somewhere between a "but
for" and a "proximate cause" test. Nowak, 94 F.3d at 713. Plaintiff
has presented a prima facie case that Lindsay's alleged actions
were a but-for or proximate cause of the plaintiff's injury. Had
Rissman not been hired to provide legal services for MIV, a
decision that Lindsay was directly involved in as CEO, president
and chairman of the board of MIV, it would not have been injured by
14
the eventual failure to be paid for the services it rendered.
Similarly, many of the of the legal services that Rissman provided
to MIV were performed at the request or authorization of Lindsay.
Moreover, Rissman's claims are most fundamentally for breach
of contract. The Supreme Court has held that "[i]t is sufficient
for purposes of due process that the suit was based on a contract
which had substantial connection with [the forum] State." McGee v.
Int'l Life Ins. Co., 355 U.S. 220, 223 (1957); see also Burger
King, 471 U.S. at 478-79 (for purpose of minimum contacts analysis
in contract cases, "prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties'
actual course of dealing" are factors be considered); Phillips
Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284, 290 (1st
Cir. 1999) (same). Rissman was hired to perform legal services for
MIV following a meeting where Lindsay was told that the firm was
located in Massachusetts and that legal services would be provided
there. Much of the work requested by Lindsay under the contract was
performed in Massachusetts at Rissman's offices, including legal
services relating to intellectual property, and attending meetings
and
conferences
by
telephone.
These
facts
are
sufficient
to
establish a prima facie case that the contract between Rissman and
MIV, as negotiated by Lindsay, had a "substantial connection" with
Massachusetts. See id. Accordingly, plaintiff has satisfied the
relatedness requirement of due process.
15
ii. Purposeful Availment
The second requirement for satisfying due process for the
purpose of establishing personal jurisdiction is a showing that a
defendant
purposefully
availed
himself
"of
the
privilege
of
conducting activities in the forum state, thereby invoking the
benefits and protections of that state's laws and making the
defendant's
involuntary
presence
before
the
state's
court
foreseeable." Nowak, 94 F.3d at 712-13. In assessing purposeful
availment, the "focus is on whether a defendant has 'engaged in any
purposeful activity related to the forum that would make the
exercise of jurisdiction fair, just, or reasonable.'" Sawtelle, 70
F.3d at 1391 (quoting Rush v. Savchuk, 444 U.S. 320, 329 (1980)).
The court looks to the voluntariness of the defendant's contacts
with the forum and the foreseeability that he would be subject to
a
lawsuit
there.
Id.
at
1391-94.
"The
purposeful
availment
requirement ensures that jurisdiction is not premised on 'random,
isolated, or fortuitous' contacts with the forum state[.]" Nowak,
94 F.3d at 716 (quoting Sawtelle, 70 F.3d at 1391).
Lindsay asserts that the legal business his company solicited
from Rissman could have been completed anywhere and, therefore,
that he did not purposefully avail himself of the privilege of
conducting
business
in
Massachusetts.
This
argument
is
unpersuasive. Although the legal services contract between MIV and
Rissman was not negotiated or executed in Massachusetts, the
16
plaintiff's legal practice was located in Massachusetts, a fact
that was known to Lindsay when he participated in MIV's engagement
of Rissman. Moreover, Lindsay repeatedly sought advice and legal
services from Rissman attorneys in Massachusetts throughout the
course of Rissman's retention by MIV. These contacts were not
"random, isolated or fortuitous." Id. Accordingly, Rissman has made
a prima facie showing that Lindsay purposefully availed himself of
the forum state and should have foreseen that he would be subject
to suit in Massachusetts.
iii. The Gestalt Factors
The final prong of the personal jurisdiction inquiry involves
consideration of the fairness of subjecting the defendant to
jurisdiction in light of the "gestalt factors," which are:
(1) the defendant's burden of appearing, (2) the forum
state's interest in adjudicating the dispute, (3) the
plaintiff's interest in obtaining convenient and
effective relief, (4) the judicial system's interest in
obtaining the most effective resolution of the
controversy, and (5) the common interests of all
sovereigns in promoting substantive social policies.
Nowak, 94 F.3d at 717 (citing Pleasant Street I, 960 F.2d at 1088);
see also Burger King, 471 U.S. at 474-75. The gestalt factors "aid
the court in achieving substantial justice, particularly where the
minimum contacts question is very close." Nowak, 94 F.3d at 717.
The court uses a sliding scale when assessing these factors:
"[T]he weaker the plaintiff's showing on the first two
prongs (relatedness and purposeful availment), the less
a defendant need show in terms of unreasonableness to
defeat jurisdiction." The reverse is equally true: a
17
strong showing of reasonableness may serve to fortify a
more marginal showing of relatedness and purposefulness.
Nowak, 94 F.3d at 717 (quoting and citing Ticketmaster-New York, 26
F.3d at 210).
With regard to the first factor, burden, "jurisdictional rules
may not be employed in such a way as to make litigation 'so gravely
difficult and inconvenient' that a party unfairly is at a 'severe
disadvantage' in comparison to his opponent." Burger King, 471 U.S.
at 479 (quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18
(1972)). The Supreme Court has explained that "[t]he unique burdens
placed upon one who must defend oneself in a foreign legal system
should have significant weight in assessing the reasonableness of
stretching the long arm of personal jurisdiction over national
borders." Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S.
102, 114 (1987). If the plaintiff establishes minimum contacts,
however, this "will justify even the serious burdens placed on the
alien defendant." Id.
Lindsay contends that defending this suit in Massachusetts
would place significant financial and logistical burdens on him, as
he is a resident of the Cayman Islands and has no connection to
Massachusetts. See Lindsay Aff. ¶1. However, Lindsay has lived in
California and Canada, has been able to move to the Cayman Islands,
and did business on behalf of MIV in various areas of the United
States and other countries. See Cohen Aff. ¶¶4, 7; Lindsay Aff.
¶¶1-3; Rissman Aff. ¶¶3(c), 7, 10, 13(a). Therefore, the court is
18
not persuaded that litigation in Massachusetts would be so "gravely
difficult and inconvenient" that it would put Lindsay at a "severe
disadvantage" in comparison to his opponent. Burger King, 471 U.S.
at 478. The first gestalt factor thus weighs slightly in favor of
jurisdiction.
The second factor involves determining the forum state's
interest in adjudicating the dispute. See Nowak, 94 F.3d at 717. "A
State
generally
has
a
'manifest
interest'
in
providing
its
residents with a convenient forum for redressing injuries inflicted
by out-of-state actors." Burger King, 471 U.S. at 473 (quoting
McGee, 355 U.S. at 223). Massachusetts has a strong interest in
seeing that its citizens get paid for services performed in the
Commonwealth for citizens of other states or nations.
The third factor gives deference to the plaintiff's choice of
forum. See Nowak, 94 F.3d at 717. Rissman sued in Massachusetts,
where it is based and where it engages in the practice of law.
The
fourth
factor,
"the
judicial
system's
interest
in
obtaining the most effective resolution of the controversy" is
usually "a wash." Id. at 717-18. However, as Lindsay now lives in
the Cayman Islands, it is not clear that there is a feasible
alternative to litigating this dispute in Massachusetts. This fact
weighs in favor of exercising jurisdiction.
The final gestalt factor requires consideration of "the common
interests
of
all
sovereigns
in
19
promoting
substantive
social
policies." Sawtelle, 70 F.3d at 1394. In the instant case, "the
most prominent policy implicated is the ability of a state to
provide a convenient forum for its residents to redress injuries
inflicted by out-of-forum actors," which takes on "added importance
in our age of advanced telecommunications" when a firm can easily
represent "geographically distant clients" without meeting them in
person or traveling outside the state. Id. at 1395. This factor,
too, weighs in favor of exercising jurisdiction in Massachusetts.
Accordingly, the court finds that the "gestalt factors" weigh
in favor of Massachusetts as a fair forum. Viewed in conjunction
with the plaintiff's showings as to relatedness and purposeful
availment, the court concludes that the exercise of jurisdiction in
Massachusetts "is reasonable and does not offend the notions of
fair play and substantial justice." Nowak, 94 F.3d at 719.
The facts of the instant case are analogous to others in which
personal jurisdiction has been found to exist over corporate
officers. For example, in Trans National Travel, Inc. v. Sun
Pacific International, Inc., the district court determined that
jurisdiction existed over the president of a company where the
corporate defendant had negotiated a contract with the plaintiff
and had failed to perform the contract, and where the president's
contacts with the forum were comprised solely of telephone calls,
letters, and facsimiles "made and sent on behalf" of the corporate
defendant. 10 F. Supp. 2d at 83-84. Similarly, in Johnson Creative
20
Arts, Inc. v. Wool Masters, Inc., the district court concluded that
jurisdiction existed over the president and CEO of a company in New
York
where
the
individual
composed
and
mailed
business
solicitations into Massachusetts, and also accepted telephone
orders from Massachusetts. See 573 F. Supp. at 1111-12. The court
concludes, therefore, that plaintiff has established that personal
jurisdiction over Lindsay exists based on his personal actions.
Defendant's Motion to Dismiss for lack of personal jurisdiction is,
therefore, being denied.
V. SERVICE
Defendant also asserts that plaintiff's claims should be
dismissed for insufficient service of process. See Fed. R. Civ. P.
12(b)(5). Faced with a Rule 12(b)(5) challenge, the burden of proof
to establish proper service rests on the plaintiff. See Saez Rivera
v. Nissan Mfg. Co., 788 F.2d 819, 822 n.2 (1st Cir. 1986).
Federal Rule of Civil Procedure 4(e)(1) provides that an
individual "may be served in a judicial district of the United
States by . . . following state law for serving a summons in an
action brought in courts of general jurisdiction in the state where
the district court is located or where service is made." See also
Blair v. City of Worcester, 522 F.3d 105, 110 (1st Cir. 2005).
Massachusetts Rule of Civil Procedure 4(e) applies to service
outside of Massachusetts, and permits service upon an individual
"as directed by order of the court." Mass. R. Civ. P. (4)(e)(5).
21
In the instant case, prior to removal to this court, plaintiff
sought state court approval to serve the defendant by alternative
means.
Specifically,
plaintiff
sought
approval
of
service
by
Federal Express ("FedEx") to Lindsay's last known address and/or by
email with a receipt confirmation. See Aff. of Alan M. Cohen ¶3 &
Ex. A ("Cohen Aff."). The motion specifically referenced Lindsay's
last known address in Canada, which Lindsay describes in his
affidavit as his residence until October 2010. See id. Ex. A ¶3;
Lindsay Aff. ¶2. On April 13, 2011, the Superior Court allowed the
motion, ordering that service be made by both FedEx and email (the
"State Court Order"). See Cohen Aff. Ex. A; State Court Record at
132.
The record indicates that plaintiff satisfied the service
requirements set forth in the State Court Order. On April 8, 2011,
plaintiff served defendant by FedEx at his last known address in
Canada. See Cohen Aff. ¶4, Ex. B; State Court Record at 160-61. On
April 11, 2011, the FedEx package was accepted and signed for at
that address. See Cohen Aff. ¶4, Ex. B; State Court Record at 162.
On April 11, 2011, plaintiff also served the defendant by email and
received confirmation of receipt. See Cohen Aff. ¶5, Exs. C-D;
State Court Record at 163-64. As service was properly effectuated
pursuant to the State Court Order, the plaintiff has met its burden
of establishing that service of process was proper. See Mass. R.
22
Civ. P. 4(e)(5); Fed. R. Civ. P. 4(e)(1); see also Blair, 522 F.3d
at 110.
In addition to complying with the State Court Order, on April
12, 2011, plaintiff had a process server serve the defendant at his
last known address in California. See Cohen Aff. ¶¶7-8, Ex. E. In
view of the fact that proper service was made pursuant to the State
Court
Order,
it
does
not
matter
whether
this
service
was
sufficient. It does, however, represent a good faith effort by the
plaintiff to provide notice to the defendant as due process
requires. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
306, 314 (1950) ("An elementary and fundamental requirement of due
process in any proceeding which is to be accorded finality is
notice reasonably calculated, under all circumstances, to apprise
interested parties of the pendency of the action and afford them an
opportunity to present their objections."); Jones v. Flowers, 547
U.S.
220,
226
(2006)
(stating
notice
deemed
constitutionally
sufficient if it was reasonably calculated to reach the intended
recipient when sent).
In any event, because Rissman complied with the State Court
Order and served the defendant both by email and at his last known
addresses in Canada, this court finds that service was proper.
VI. ORDER
In view of the foregoing, it is hereby ORDERED that:
23
1.
Defendant's
Motion
to
Dismiss
for
Lack
of
Personal
Jurisdiction and Improper Service (Docket No. 25) is DENIED.
2. Plaintiff's Motion to Stay the Time to Respond to Defendant
Alan Lindsay's Motion to Dismiss Until After Plaintiff Has Had the
Opportunity to Conduct Limited Discovery On the Issue of Personal
Jurisdiction Over Defendant Alan P. Lindsay (Docket No. 33) is
MOOT.
3. Lindsay shall answer the Complaint by October 31, 2012.
4. A Scheduling Conference shall be held on November 19, 2012,
at 4:00 p.m. The parties shall respond to the attached Notice of
Scheduling Conference.
/s/ Mark L. Wolf
UNITED STATES DISTRICT JUDGE
24
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
RISSMAN HENDRICKS & OLIVERIO,
LLP,
Plaintiff,
CIVIL ACTION
NO. 11-10791-MLW
V
MIV THERAPEUTICS INC., et al.,
Defendants,
NOTICE OF SCHEDULING CONFERENCE
An initial scheduling conference will be held in Courtroom No. 10
on the 5th floor at 4:00 p.m. on November 19, 2012
in accordance with Fed. R. Civ. P. 16(b) and Local Rule 16.1. The court considers attendance of the senior lawyers ultimately
1
responsible for the case and compliance with sections (B), (C), and (D) of Local Rule 16.1 to be of the utmost importance. Counsel
may be given a continuance only if actually engaged on trial. Failure to comply fully with this notice and with sections (B), (C), and
(D) of Local Rule 16.1 may result in sanctions under Local Rule 1.3. Counsel for the plaintiff is responsible for ensuring that all parties
and/or their attorneys, who have not filed an answer or appearance with the court, are notified of the scheduling conference date.
September 28, 2012
Date
By:
1
/s/ Mark L. Wolf
United States District Judge
/s/ Daniel C. Hohler
These sections of Local Rule 16.1 provide:
(B) Obligation of counsel to confer. Unless otherwise ordered by the judge, counsel for the parties shall, pursuant to
Fed.R.Civ.P. 26(f), confer no later than twenty-one (21) days before the date for the scheduling conference for the purpose of:
(1) preparing an agenda of matters to be discussed at the scheduling conference,
(2) preparing a proposed pretrial schedule for the case that includes a plan for discovery, and
(3) considering whether they will consent to trial by magistrate judge.
(C) Settlement proposals. Unless otherwise ordered by the judge, the plaintiff shall present written settlement proposals
to all defendants no later than twenty-one (21) days before the date for the scheduling conference. Defense counsel shall have
conferred with their clients on the subject of settlement before the scheduling conference and be prepared to respond to the
proposals at the scheduling conference.
(D) Joint statement. Unless otherwise ordered by the judge, the parties are required to file, no later than five (5) business
days before the scheduling conference and after consideration of the topics contemplated by Fed.R.Civ.P. 16(b) and 26(f), a joint
statement containing a proposed pretrial schedule, which shall include:
(1) a joint discovery plan scheduling the time and length for all discovery events, that shall
(a) conform to the obligation to limit discovery set forth in Fed. R. Civ. P. 26(b), and
(b) take into account the desirability of conducting phased discovery in which the first phase
is limited to developing information needed for a realistic assessment of the case and, if the
case does not terminate, the second phase is directed at information needed to prepare for
trial; and
(2) a proposed schedule for the filing of motions; and
(3) certifications signed by counsel and by an authorized representative of each party affirming that each party and that
party's counsel have conferred:
(a) with a view to establishing a budget for the costs of conducting the full course--and
various alternative courses--of the litigation; and
(b) to consider the resolution of the litigation through the use of alternative dispute resolution
programs such as those outlined in Local Rule 16.4.
To the extent that all parties are able to reach agreement on a proposed pretrial schedule, they shall so indicate. To the extent
that the parties differ on what the pretrial schedule should be, they shall set forth separately the items on which they differ and indicate
the nature of that difference. The purpose of the parties' proposed pretrial schedule or schedules shall be to advise the judge of the
parties' best estimates of the amounts of time they will need to accomplish specified pretrial steps. The parties' proposed agenda for
the scheduling conference, and their proposed pretrial schedule or schedules, shall be considered by the judge as advisory only.
(16b-notice-1.wpd - 12/00)
[ntchrgcnf. schedcnfddl.]
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