Katz v. Liberty Power Corp., LLC et al

Filing 390

Magistrate Judge Donald L. Cabell: ORDER entered denying 369 MOTION for Leave to File Third Amended Complaint. (Russo, Noreen).

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 1 of 14

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SAMUEL KATZ and LYNNE RHODES,
individually, and on their own
behalf and on behalf of all
others similarly situated,
Plaintiffs,

No. 18-cv-10506-ADB

v.
LIBERTY POWER CORP., LLC and
LIBERTY POWER HOLDINGS, LLC,
Defendants.

ORDER ON PLAINTIFFS’ MOTION FOR LEAVE TO FILE
THIRD AMENDED COMPLAINT
CABELL, U.S.M.J.
I.

INTRODUCTION
Plaintiffs Samuel Katz and Lynne Rhodes are suing defendants

Liberty Power Corp., LLC, (“Corp”) and Liberty Power Holdings,
LLC, (“Holdings”) (collectively, “defendants” or “Liberty Power”)
on behalf of themselves and all others similarly situated for
alleged

violations

of

the

(“TCPA”), 47 U.S.C. § 227.

Telephone

Consumer

Protection

Act

Amid a stay occasioned by Holdings’

pending Chapter 11 bankruptcy, the plaintiffs seek leave to file
a third amended complaint (“TAC”) to add as a defendant David
Hernandez

(“Hernandez”),

an

owner

Officer of both Corp and Holdings.

and

former

Chief

Executive

Hernandez opposes the motion

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 2 of 14

inter alia on the ground that the court lacks personal jurisdiction
over him.

(Dkt Nos. 369; 376).

For the reasons that follow, the

court agrees and thus denies motion to amend.
II.

LEGAL STANDARD
When a party has already amended its pleading at least once,

that party may only further amend the pleading “with the opposing
party’s written consent or the court’s leave.”
15(a)(2).

Fed. R. Civ. P.

The standard for amendment is not burdensome, as “[t]he

court should freely give leave when justice so requires.”

Id.

However, the court should deny leave to amend when the proposed
amendment

“would

intended delay.”

be

futile,

or

reward,

inter

alia,

undue

or

Steir v. Girl Scouts of the USA, 383 F.3d 7, 12

(1st Cir. 2004) (internal quotation marks omitted); see also
Debreceni v. Bru-Jell Leasing Corp., 710 F. Supp. 15, 19 (D. Mass.
1989) (“For a court to grant a motion to amend, only to turn around
and dismiss the claims upon the filing of a properly interposed
motion to dismiss, would be a waste of time for both the court and
counsel.”).
One way in which an amendment can be futile is if it purports
to add a claim against a defendant over whom the court lacks
personal jurisdiction.

In re TelexFree Secs. Litig., Civil Action

No. 4:14-md-02566-TSH, 2021 WL 5771730, at *8 (D. Mass. Dec. 6,
2021); see Crocker v. Hilton Int’l Barbados, Ltd., 976 F.3d 797,
801 (1st Cir. 1992); CR Assoc. L.P. v. Sparefoot, Inc., Civil
2

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 3 of 14

Action No. 17-10551-LTS, 2018 WL 988056, at *1 (D. Mass. Feb. 20,
2018); Theodore v. Hacker Boat Co., Civil Action No. 09-10831-GAO,
2010 WL 1930063, at *2 (D. Mass. May 12, 2010).

Where, as here,

the court evaluates whether a (proposed) complaint adequately
establishes

personal

jurisdiction

without

conducting

an

evidentiary hearing, “the court applies the prima facie standard
and

takes

the

specific

facts

affirmatively

alleged

by

the

plaintiff[s] as true, regardless of whether these facts have been
disputed, and construes them in the light most favorable to the
plaintiff[s].”

Hamilton v. Young Mgmt., LLC, --- F. Supp. 3d ---

, 2022 WL 17736915, at *2 (D. Mass. 2022) (citing TicketmasterNew York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994)).

The

plaintiffs “cannot, however, rely on ‘unsupported allegations’ in
[their proposed] complaint but ‘must put forward evidence of
specific facts to demonstrate that jurisdiction exists.’”

Id.

(quoting A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st
Cir. 2016)).

Any additional “facts put forward by the defendant

‘become

of

part

the

mix

only

to

uncontradicted’” by the plaintiffs.

the

extent

that

they

are

Astro-Med, Inc. v. Nihon

Kohden Am., Inc., 591 F.3d 1, 8 (1st Cir. 2009) (quoting Adelson
v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)).
III. RELEVANT BACKGROUND
The following facts are drawn from the proposed TAC, see
Hamilton, 2022 WL 17736915, at *2, and from Hernandez’s declaration
3

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 4 of 14

(Dkt. No. 376-1) to the extent the declaration does not conflict
with the allegations in the TAC, see Astro-Med, 591 F.3d at 8.
The facts are presented “in the light most favorable to the
plaintiff.”

Hamilton, 2022 WL 17736915, at *2.

As its name suggests, Liberty Power is a retail electric
provider

servicing

customers

in

Massachusetts

(Dkt. No. 369-1, proposed TAC, ¶ 8).

and

elsewhere.

Specifically, Holdings is

licensed as a retail electric provider in Massachusetts and Corp
funds Holdings and runs its day-to-day business.
10).

(Id. at ¶¶ 8-

Hernandez is an owner and former Chief Executive Officer of

both Corp and Holdings.

(Dkt. No. 376-1, ¶¶ 2-3).

Corp and

Holdings are both limited liability companies “duly organized
under the laws of the State of Delaware” with a principal place of
business in Fort Lauderdale, Florida.

(Dkt. No. 369-1, ¶¶ 4-5).

Hernandez currently resides in Florida, where he has lived for 20
years.

(Dkt. No. 376-1, ¶ 13).

Liberty

Power

uses

third-party

telemarketers

to

solicit

potential customers in several states, including Massachusetts.
(Dkt.

No.

369-1,

¶¶

12,

32).

These

telemarketers

allegedly

violated the TCPA by, inter alia, using pre-recorded and artificial
voices to make calls to consumers, making “repeated and unwanted”
calls to numbers listed on the National Do Not Call Registry and
Liberty Power’s own internal Do Not Call List, and using “spoofed”
phone numbers when making unsolicited calls.
4

(Id. at ¶¶ 33-40).

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 5 of 14

Liberty

Power

“controls

the

manner

and

method

of

[these]

telemarketing campaigns,” in part by providing the telemarketers
with “lead lists” of prospective customers to call and a set of
instructions and requirements for making calls.
52).

(Id. at ¶¶ 42-

According to the plaintiffs, Liberty Power knew or should

have known that the telemarketers were violating the TCPA on its
behalf,

both

because

it

had

the

ability

to

monitor

the

telemarketers and because it received complaints to that effect.
(Id. at ¶¶ 53-61). Instead of stopping the telemarketers’ conduct,
Liberty Power ignored or even ratified it.

(Id. at ¶¶ 62-63).

In his role as CEO of Corp and Holdings, Hernandez was
personally involved in Liberty Power’s telemarketing campaign.
“knew

which

telemarketers

Liberty

Power

used,

was

He

personally

involved in the management of those telemarketers, and knew that
the telemarketers were making telephone calls to residents of
Massachusetts (and Liberty Power’s other markets) to secure more
(Id. at ¶ 12).

customers for Liberty Power.” 1

Specifically,

Hernandez was involved in formulating compensation plans for the
telemarketers,
Liberty

approving

Power’s

the

payment

relationships

with

of
the

commissions,

managing

telemarketers,

and

developing telemarketing scripts, analytics, and lead recording

The proposed TAC also asserts that Hernandez “knew that these telemarketing
practices were tortious.”
(Dkt. No. 369-1, ¶ 12).
This is the sort of
unsupported, conclusory allegation that does not help to establish jurisdiction.
See Hamilton, 2022 WL 17736915, at *2.

1

5

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 6 of 14

systems.
reviewed

(Id. at ¶ 13).
reporting

performance.

on

Hernandez also regularly sought and

the

telemarketers’

(Id. at ¶¶ 13-15).

activity

and

sales

The plaintiffs further assert,

based on information allegedly relayed by Liberty Power’s in-house
counsel, that Liberty Power’s revenues flow directly to Hernandez
as an owner.

(Id. at ¶ 81).

Hernandez has never resided in or owned any real estate in
Massachusetts, nor has he ever maintained an office or a bank
account here.

(Dkt. No. 376-1, ¶¶ 14-17).

Massachusetts

twice

during

Liberty

He traveled to

Power’s

violations, both times for personal reasons.

alleged

TCPA

(Id. at ¶ 18).

Hernandez avers that he did not personally make or direct anyone
else to make any allegedly unlawful calls to the plaintiffs.
at ¶¶ 20-21).
personally.

(Id.

Indeed, Hernandez never made any calls to consumers
(Id. at ¶ 19).

Hernandez denies directly supervising

the day-to-day operations of the telemarketers or the Liberty Power
Sales Managers assigned to the telemarketers.
IV.

(Id. at ¶¶ 22-23).

DISCUSSION
A.

Jurisdictional Framework

The

proposed

TAC

invokes

the

court’s

federal

question

jurisdiction where it alleges that Hernandez violated the TCPA.
See

28

U.S.C.

§

1331.

In

federal

question

cases,

“the

constitutional limits of the court's personal jurisdiction are
fixed, in the first instance, not by the Fourteenth Amendment but
6

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 7 of 14

by the Due Process Clause of the Fifth Amendment.”

United Elec.

Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d
1080,

1085

(1st

Cir.

1992).

“In

such

circumstances,

the

Constitution requires only that the defendant have the requisite
‘minimum contacts’ with the United States, rather than with the
particular forum state (as would be required in a diversity case).”
Id.
Before a federal court may exercise personal jurisdiction
over a defendant, however, the defendant must be subject to service
of process.

Pike v. Clinton Fishpacking, Inc., 143 F. Supp. 2d

162, 166 (D. Mass. 2001).

Federal Rule of Civil Procedure 4

“constitutes the principal mechanism for service of process in the
federal courts,” and provides that service or waiver of process
establishes personal jurisdiction over a defendant who among other
things “is subject to the jurisdiction of a court of general
jurisdiction in the state where the district court is located
(4(k)(1)(A)) [here, Massachusetts],” or “when authorized by a
federal statute (4(k)(1)(C)).”

See United Elec. Radio & Mach.

Workers of Am., 960 F.3d at 1085–86; Fed. R. Civ. P. 4(k)(1)(A)
and (C). 2
Because the TCPA does not authorize nationwide service of
process in

private

actions,

see

47

U.S.C.

§

227(b)(3),

Rule

Federal Rule of Civil Procedure 4(k)(1)(B) provides an additional mechanism
for establishing personal jurisdiction over “a party joined under Rule 14 or
19,” which does not apply to Hernandez.

2

7

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 8 of 14

4(k)(1)(A) applies here and “imposes ‘the same long-arm statute
plus minimum contacts with the forum state analysis that applies
to cases in state courts or diversity cases in federal courts.’”
Tassinari v. Salvation Army Nat’l Corp., 610 F. Supp. 3d 343, 352
(D. Mass. 2022) (quoting Nahigian v. Leonard, 233 F. Supp. 2d 151,
158 (D. Mass. 2002)); see also Waters v. Day & Zimmerman NPS, Inc.,
23 F.4th 84, 94 (1st Cir. 2022) (“To be sure, Rule 4(k)(1)(A) does
make

the

due

process

standard

of

the

Fourteenth

Amendment

applicable to federal-question claims in federal court when a
plaintiff relies on a state long-arm statute for service of the
summons.”).

As such, to satisfy Rule 4(k)(1)(A), exercising

jurisdiction

over

Hernandez

must

comport

with

both

the

Massachusetts long-arm statute, M.G.L. c. 223A, § 3, and the Due
Process

Clause

of

the

Fourteenth

Following

Amendment. 3

the

guidance of the Massachusetts Supreme Judicial Court, this court
considers the applicability of the long-arm statute first.

See

SCVNGR, Inc. v. Punchh, Inc., 85 N.E.3d 50, 52 (Mass. 2017) (“a
determination

under

the

long-arm

statute

is

to

precede

consideration of the constitutional question”).

3 Hernandez was previously named as a defendant in the original complaint as to
certain non-TCPA claims before being voluntarily dismissed. (Dkt. No. 1; Dkt.
No. 25). Before his dismissal, Hernandez executed a waiver of service. (Dkt.
No. 13). That waiver did not satisfy Rule 4(k)(1)(A) (and thus need not detain
us here) because, as discussed below, Hernandez’s contacts with Massachusetts
have been tenuous at all times relevant to this suit.

8

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 9 of 14

B.

Massachusetts Long-Arm Statute

The proposed TAC asserts that the court can exercise personal
jurisdiction over the defendants (including Hernandez) “because
they do business in the Commonwealth of Massachusetts . . . and
because the wrongful acts alleged in this Complaint were committed
in and/or caused injury in the Commonwealth of Massachusetts.”
(Dkt. No. 369-1, ¶ 24).

This assertion tracks certain subsections

of the Massachusetts long-arm statute, as follows:
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
(a) transacting any business in this commonwealth;
. . .
(c) causing tortious injury by an act or omission in
this commonwealth; [or]
(d) causing tortious injury in this commonwealth by an
act or omission outside this commonwealth if he
regularly does or solicits business, or engages in any
other
persistent
course
of
conduct,
or
derives
substantial revenue from goods used or consumed or
services rendered, in this commonwealth[.]
M.G.L. c. 223A, § 3(a), (c)-(d).

Unfortunately, the proposed TAC

does not specify which subsections purportedly apply to Hernandez
specifically.

The court thus considers each of them.

Beginning with subsection (a), the proposed TAC does not
allege

that

Hernandez

Massachusetts.

To

be

personally
sure,

transacted

Holdings

any

business

in

transacted

business

in

Massachusetts, and Hernandez was the CEO of Holdings during the
9

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 10 of 14

relevant period.

However, “it is axiomatic that jurisdiction over

the individual officers of a corporation may not be based on
jurisdiction

over

the

corporation.”

M-R

Logistics,

LLC

v.

Riverside Rail, LLC, 537 F. Supp. 2d 269, 279 (D. Mass. 2008)
(internal quotation marks omitted); see also Calder v. Jones, 465
U.S. 783, 790 (1984) (“Each defendant’s contacts with the forum
State must be assessed individually.”).

Although a corporate

officer’s official acts are relevant to personal jurisdiction,
something

“more

than

mere

participation

in

the

corporation’s

affairs is required.”

M-R Logistics, 537 F. Supp. 2d at 280.

appropriate

considers

“inquiry

whether

the

individual

The

was

a

‘primary participant’ in the alleged wrongdoing as it relates to
the forum.”

Sensitech Inc. v. LimeStone FZE, 548 F. Supp. 3d 244,

254 (D. Mass. 2021) (quoting Calder, 465 U.S. at 790).

There are

no allegations in the proposed TAC suggesting that Hernandez was
a “primary participant” in any business Holdings or Corp transacted
in Massachusetts, so this subsection does not apply.
Similarly,

nothing

in

the

proposed

TAC

suggests

that

Hernandez committed an act or made an omission within Massachusetts
that

caused

plaintiffs

a
do

tortious
not

injury.

dispute,

Hernandez

that

he

asserts,

has

only

and

traveled

the
to

Massachusetts for personal reasons wholly unrelated to this case.
Consequently,

anything

unrelated

any

to

he

tortious

may

have

injury
10

done
alleged

in

Massachusetts

here,

meaning

is
the

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 11 of 14

plaintiffs’ “cause of action” does not “aris[e] from” Hernandez’s
in-forum activity.

See M.G.L. c. 223A, § 3.

This leaves the possibility that Hernandez “caus[ed] tortious
injury

in

[Massachusetts]

[Massachusetts].”

by

an

act

or

M.G.L. c. 223A, § 3(d).

omission

outside

There is certainly no

allegation that Hernandez did so “directly,” but the long-arm
statute also covers acts “by an agent.”

M.G.L. c. 223A, § 3.

Reading the proposed TAC in the light most favorable to the
plaintiffs,

it

plausibly

alleges

that

the

third-party

telemarketers caused tortious injury in Massachusetts by making
unsolicited
plausibly

calls
sets

to
out

plaintiffs
an

from

agency

other

states.

relationship

It

also

between

the

telemarketers and Liberty Power. There is much more room for doubt
whether the proposed TAC sets out an agency relationship between
the telemarketers and Hernandez individually.

Ultimately, though,

the court need not decide this issue because subsection (d) does
not cover Hernandez in any case.
In

addition

to

the

causing

tortious

injury

requirement,

subsection (d) (unlike subsection (c)) only allows the court to
exercise personal jurisdiction over a person “if he regularly does
or solicits business, or engages in any other persistent course of
conduct, or derives substantial revenue from goods used or consumed
or services rendered, in [Massachusetts].” M.G.L. c. 223A, § 3(d).
This

is

akin

to

general

jurisdiction,
11

which

applies

when

a

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 12 of 14

defendant is “at home” in the forum state.

See Krua v. Sirleaf,

Civil Action No. 18-10574-DJC, 2019 WL 1936733, at *4 (D. Mass.
May

1,

2019)

(“general

jurisdiction

.

.

.

is

necessary

for

jurisdiction under [M.G.L. c. 223A,] § 3(d)”); Pettengill v.
Curtis, 584 F. Supp. 2d 348, 357 (D. Mass. 2008) (Ҥ 3(d) would
only apply if general jurisdiction existed over the Individual
Defendants”); Conn. Nat’l Bank v. Hoover Treated Wood Prods., Inc.,
638 N.E.2d 942, 944 n.6 (Mass. App. Ct. 1994) (“[M.G.L.] c. 223A,
§ 3(d) is predicated on general jurisdiction.”).
As discussed, there is no dispute that Hernandez does not
regularly conduct or solicit business in Massachusetts, nor does
he engage in any persistent course of conduct here.

The closest

the proposed TAC comes to establishing that Hernandez derives
substantial

revenue

from

goods

used

or

services

rendered

in

Massachusetts is the allegation that “every dollar that goes into
Liberty Power goes into [Hernandez’s] wallet[].”
1, ¶ 81).

(Dkt. No. 369-

This is hardly sufficient to overcome the “strong

presumption
Massachusetts

of

corporate
law

and

separateness”

attribute

all

that
of

Massachusetts-derived revenue to Hernandez.

exists

Liberty

under
Power’s

Hamilton, 2022 WL

17736915, at *4; see Evans v. Multicon Constr. Corp., 574 N.E.2d
395, 398 (Mass. App. Ct. 1991) (citing Pepsi-Cola Metro. Bottling
Co. v. Checkers, Inc., 754 F.2d 10, 14-16 (1st Cir. 1985)) (setting
forth 12 factors to analyze in determining whether to pierce the
12

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 13 of 14

corporate veil).

Such an attribution would be especially inapt

here, in the personal jurisdiction context, given the lack of any
indication that Hernandez personally and directly participated in
the sale of goods or rendition of services in Massachusetts.

See

Sensitech, 548 F. Supp. 3d at 254; see also M-R Logistics, 537 F.
Supp. 2d at 280 (“more than mere participation in the corporation’s
affairs is required”). Accordingly, subsection (d) does not confer
jurisdiction over Hernandez.
In sum, the plaintiffs have not identified any provision of
the

Massachusetts

long-arm

statute

that

establishes

personal

jurisdiction over Hernandez based on the facts alleged in the
proposed TAC.

Because “the Massachusetts long-arm statute imposes

limits

the

upon

exercise

of

jurisdiction

[that

are]

more

restrictive than the demands of constitutional due process,” Azumi
LLC v. Lott & Fischer, PL, 621 F. Supp. 3d 219, 223 (D. Mass. 2022)
(citing SCVNGR, Inc., 85 N.E.3d at 52), the court need not and
thus

does

not

go

on

to

consider

whether

exercising

personal

jurisdiction would comport with due process under the Fourteenth
Amendment.

See Azumi LLC, 621 F. Supp. 3d at 223 (“Only if the

statutory requirements are satisfied should the court consider
whether its exercise of [personal] jurisdiction is permitted by
the Constitution.”).
Because no provision of the Massachusetts long-arm statute
applies to Hernandez, he is not “subject to the jurisdiction of a
13

Case 1:18-cv-10506-ADB Document 390 Filed 09/22/23 Page 14 of 14

court of general jurisdiction in the state where the district court
is located.”

Fed. R. Civ. P. 4(k)(1)(A).

This, in turn, means

that this court cannot exercise jurisdiction over him. See Waters,
23 F.4th at 96 (“serving a summons in accordance with state or
federal law is necessary to establish jurisdiction over a defendant
in

the

first

instance”);

Tassinari,

610

F.

Supp.

3d

at

357

(dismissing all claims against defendant in federal question suit
due to plaintiffs’ failure to “establish personal jurisdiction .
. . under the Massachusetts long-arm statute or the Fourteenth
Amendment standard”).

This lack of jurisdiction renders the

proposed TAC futile and thus warrants a denial of the motion for
leave to amend.
V.

See In re TelexFree, 2021 WL 5771730, at *8.

CONCLUSION
For the foregoing reasons, the plaintiffs’ motion for leave

to file a third amended complaint (Dkt. No. 369) is DENIED. 4

/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.
DATED:

September 22, 2023

This order will not disturb the stay that is in place since the denial of the
motion to amend leaves the status quo intact. The court notes the plaintiffs’
contention in the parties’ most recent status report that the stay should now
be lifted based on recent activity in Holdings’ bankruptcy proceeding. (Dkt.
No. 389). If the plaintiffs believe that the court should lift the stay at
this time, they may file a motion to that effect so that the court can decide
the issue with the benefit of briefing from all parties.
4

14