Rust Consulting, Inc. v. Schneider Wallace Cottrell Konecky Wotkyns LLP
ORDER denying 13 Motion to Dismiss/General; denying 13 Motion to Transfer/Change Venue (Written Opinion) Signed by Senior Judge David S. Doty on 3/9/2018. (DLO)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 17-4981(DSD/FLN)
Rust Consulting, Inc.
Schneider Wallace Cottrell
Konecky Wotkyns, LLP,
Michael R. Cunningham, Esq., Amy E. Erickson, Esq. and Gray
Plant Mooty, 80 South 8th Street, Suite 500, IDS Center,
Minneapolis, MN 55402, counsel for plaintiff.
Kyle G. Bates, Esq. and Schneider Wallace Cottrell Konecky
Wotkyns, LLP, 2000 Powell Street, Suite 1400, Emeryville, CA
94608, counsel for defendant.
Robert K. Shelquist, Esq. and Lockridge Grindal Nauen PLLP,
100 Washington Avenue South, Suite 2200, Minneapolis, MN
55401, counsel for defendant.
This matter is before the court upon the motion to dismiss or
transfer venue by defendant Schneider Wallace Cottrell Konecky
proceedings herein, and for the following reasons, the motion is
Wallace’s alleged failure to pay plaintiff Rust Consulting, Inc.
for rendered services.
In 2011, Schneider Wallace, a law firm
based in California, and Rust, a Minnesota consulting services
company, entered into a Master Services Agreement in which Rust
agreed to perform services for Schneider Wallace relating to
certain mass tort actions.
Compl. ¶¶ 1-3; Blake Aff. Ex. A.1
agreement provides that any claims arising from or in connection to
the agreement are governed by Minnesota law.
Blake Aff. Ex. A
From 2011 to 2013, Rust provided client intake services,
project consulting, call center services, data management, medical
record collection and review, client portal design and maintenance,
forms processing, and reporting services for Schneider Wallace in
connection with nine separate tort cases.
Blake Aff. ¶¶ 5, 16.
Most of this work was performed by Rust’s employees located in
Id. ¶ 17.
Rust claims that, from April 2012 through December 2013, it
sent invoices to Schneider Wallace for its services totaling
$323,756.22 and that Schneider Wallace has failed to pay.
Rust also alleges that it is entitled to a per-claim fee
of $2,500 for each resolved claim in the relevant mass tort
Id. ¶¶ 10-12.
On October 9, 2017, Rust filed suit in Hennepin County court
alleging breach of contract, account stated, quantum meruit, and
Schneider Wallace timely removed and now moves to
Schneider Wallace attempts to call into doubt the
authenticity of the copy of the Master Services Agreement attached
to the Blake affidavit, suggesting that this is not the controlling
agreement. But Schneider Wallace provides no evidence in support
of its assertion, nor does it point to any specific inaccuracies.
dismiss for lack of personal jurisdiction, for failure to state a
claim, and for improper venue and, in the alternative, to transfer
venue to the Northern District of California.
I. Personal Jurisdiction
Standard of Review
jurisdiction, a plaintiff must establish a prima facie case that
the forum state has personal jurisdiction over the defendant.
Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998). In the
absence of an evidentiary hearing, a court “must look at the facts
in the light most favorable to the nonmoving party and resolve all
factual conflicts in favor of that party.”
Dakota Indus., Inc. v.
Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991).
federal court may assume jurisdiction over a nonresident defendant
“only to the extent permitted by the long-arm statute of the forum
state and by the Due Process Clause.”
Romak USA, Inc. v. Rich, 384
F.3d 979, 984 (8th Cir. 2004) (citation and internal quotation
Because the Minnesota long-arm statute “confers
jurisdiction to the fullest extent permitted by the Due Process
Clause,” the court need only consider due process requirements.
Coen v. Coen, 509 F.3d 900, 905 (8th Cir. 2007).
To satisfy due process, a defendant must have “sufficient
minimum contacts” with the forum state such that maintaining the
Romak, 384 F.3d at 984.
contacts exist when [a] defendant’s conduct and connection with the
forum state are such that [it] should reasonably anticipate being
haled into court” here.
Coen, 509 F.3d at 905 (citation and
internal quotation marks omitted).
A defendant’s contacts with the forum state can establish
General jurisdiction is present when, regardless of
the cause of action, a defendant’s “affiliations with the [forum]
essentially at home in the forum State.” Daimler AG v. Bauman, 134
S. Ct. 746, 754 (2014) (internal quotation marks omitted)(quoting
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011)). A forum state has specific jurisdiction when the cause of
action “arise[s] out of” or “relate[s] to” a defendant’s activities
within that state and when a defendant “purposefully avails itself
of the privilege of conducting activities within the forum State.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 474-75 (1985)
(citation and internal quotation marks omitted).
Under either analysis, the Eighth Circuit considers five
factors in determining whether personal jurisdiction exists:
the nature and quality of defendant’s contacts with the forum
state; (2) quantity of contacts; (3) source and connection of the
cause of action with those contacts; and to a lesser degree, (4)
the interest of the forum state; and (5) the convenience of the
Wessels, Arnold & Henderson v. Nat’l Med. Waste, Inc.,
65 F.3d 1427, 1432 (8th Cir. 1995).
In breach of contract cases, courts determine whether a
consequences, and terms of the contract, and the parties’ actual
course of dealings.
Morris v. Barkbuster, Inc., 923 F.2d 1277,
1283 (8th Cir. 1991)(quoting Burger King, 471 U.S. at 479)).
In weighing the quality and quantity of a defendant’s contacts
with the forum state, courts have considered whether the defendant
solicited a business relationship with a company incorporated in
the forum state, the frequency of correspondence sent by the
defendant to the forum state, whether the contract contains a
choice-of-law provision that specifies the forum state’s law, and
whether the contract required the defendant to remit payment to an
address in the forum state. See Creative Calling Sols., Inc. v. LF
Beauty LTD, 799 F.3d 975, 980-81 (8th Cir. 2015); K-V Pharm. Co. v.
J. Uriach & CIA, S.A., 648 F.3d 588, 593-95 (8th Cir. 2011); Digi-
Tel Holdings, Inc. v. Proteq Telecomms. (PTE), Ltd., 89 F.3d 519,
523 (8th Cir. 1996); K-Tel Int’l, Inc. v. Tristar Prods., Inc., 169
F. Supp. 2d 1033, 1041 (D. Minn. 2001).
Sufficiency of Contacts
The court agrees with Schneider Wallace that it is not subject
to the court’s general jurisdiction because its contacts with
Minnesota are not so substantial that it would be at home in the
See Daimler, 134 S. Ct. at 761-62 (holding that defendant
was not subject to general personal jurisdiction where it was
neither incorporated in the state or had its principal place of
The court finds, however, that it is subject to
specific personal jurisdiction.
In arguing that the court does not have specific personal
jurisdiction, Schneider Wallace relies heavily on the fact that the
contract was negotiated in California.
See Graham Decl. ¶¶ 3-6
(stating that members of Rust traveled to San Francisco on several
occasions to negotiate the terms of the contract).
appears, however, that some of the negotiations took place by
emails, telephone calls, and faxes to and from Minnesota.
Aff. ¶ 10.
The contract contemplated that Rust would provide a variety of
client intake and data management services related to Schneider
Wallace’s mass tort litigation.
Although the data created by Rust
was accessed via a client portal in California, Graham Decl. ¶ 6,
the performance of the contract - such as client intake and data
management - was physically performed in Minnesota. Blake Aff. Ex.
Indeed, Peter Schneider, on behalf of Schneider Wallace,
Minnesota from January 24 to January 26, 2011, to assist with
implementing the mass tort project and training Rust employees.
Id. ¶ 13.
Over the course of the project, Rebecca Blake, the
senior project administrator at the time, was in frequent contact
with individuals at Schneider Wallace.
Id. ¶ 15.
contract contains a choice-of-law provision specifying Minnesota
law and requires Schneider Wallace to send payment to Rust at a
Blake Aff. Ex. A, at A8-A9.
contract at issue, they are directly related to the causes of
action alleged in the complaint.2
Schneider Wallace should have “reasonably anticipate[d] out-ofstate
Burger King, 471 U.S. at 474-75 (citations and
internal quotation marks omitted).
As a result, Schneider Wallace
Schneider Wallace argues that the breach-of-contract action
is unconnected to Minnesota because the alleged decision to breach
any contract with Rust would have been made in California. This
argument is wholly without merit. If true, any defendant could
avoid out-of-state litigation by simply making the decision to
breach a contract in their home state.
is subject to the court’s personal jurisdiction.
III. Improper Venue
Schneider Wallace also argues that Minnesota is an improper
venue under 28 U.S.C. § 1391.
But it is well established that
§ 1391 does not apply to removed actions - it only applies to
actions originally filed in federal court.
Rather, the venue of
removed actions is governed by 28 U.S.C. § 1441(a). See Polizzi v.
Cowles Magazines, Inc., 345 U.S. 663, 665-66 (1953) (“[Section]
1391 has no application to this case because this is a removed
The venue of removed actions is governed by 28 U.S.C.
§ 1441(a).”); see also Toomey v. Dahl, 63 F. Supp. 3d. 982, 988 (D.
Minn. 2014) (collecting cases). Section 1441(a) expressly provides
that venue is proper in the “district court of the United States
for the district ... embracing the place where such action is
Because the action was removed from Hennepin County,
venue in the District of Minnesota is proper.
Failure to State a Claim
Schneider Wallace also moves to dismiss the complaint for
failure to state a claim.
Standard of Review
To survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
has facial plausibility when the plaintiff [has pleaded] factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
Although a complaint need not contain detailed factual
allegations, it must raise a right to relief above the speculative
Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a
formulaic recitation of the elements of a cause of action” are not
sufficient to state a claim.
Iqbal, 556 U.S. at 678 (citation and
internal quotation marks omitted).
Sufficiency of Allegations
Schneider Wallace first argues that the allegations in the
complaint are not sufficiently detailed to give rise to a plausible
The court disagrees.
The complaint alleges that Rust and
Schneider Wallace entered into a contract in March 2011, under
which Schneider Wallace agreed to pay Rust for consulting services,
call center services, data management services, claims intake,
reporting services for Schneider Wallace’s mass tort litigation.
Compl. ¶¶ 3-4.
It further alleges that Rust performed these
services for Schneider Wallace from April 2011 to November 2013 and
sent Schneider Wallace invoices totaling $323,756.22.
Id. ¶¶ 5-6.
Finally, it claims that Schneider Wallace failed to pay Rust for
the services performed as agreed to under the contract.
Id. ¶ 8.
The court finds that these allegations are sufficiently detailed to
give rise a plausible claim for breach of contract, account stated,
quantum meruit, and
Schneider Wallace next contends that Rust has failed to plead
an essential element of its breach of contract claim, namely, that
Rust satisfied any conditions precedent.
See Lyon Fin. Servs.,
Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543 (Minn. 2014)
(citation and internal quotations marks omitted) (“[In Minnesota,]
the elements of a breach of contract claim are (1) formation of a
contract, (2) performance by plaintiff of any conditions precedent
to his right to demand performance by the defendant, and (3) breach
of the contract by defendant.”).
argument is without merit.
Again, Schneider Wallace’s
As pleaded in the complaint, the
contract requires Schneider Wallace to pay Rust for work Rust
The complaint sufficiently alleges that Rust completed
the work, but Schneider Wallace failed to pay.4
required to plead a breach of contract claim.
Nothing more is
As a result, the
The fact that Rust did not attach a copy of the contract to
its complaint is not fatal. Schneider Wallace cites to no case,
and the court can find none, that requires the plaintiff to attach
a copy of the contract to the complaint in a breach-of-contract
Schneider Wallace seems to suggest that Rust is not entitled
to payment because Rust did not fully perform under the contract.
But, even if true, it does not alter the court’s analysis because
the court must accept as true the facts as alleged in the
court denies the motion to dismiss on this basis.
28 U.S.C. § 1406
Schneider Wallace argues that the court should dismiss or
transfer the case to the North District of California under 28
U.S.C. § 1406.
Section 1406 requires the court to dismiss or
transfer a case if it was filed in the wrong venue.
above, venue in this district is proper. Therefore, the court will
not dismiss or transfer the case under § 1406.
28 U.S.C. § 1404
Alternatively, Schneider Wallace contends that the case should
be transferred to the Northern District of California under 28
U.S.C. § 1404.
Under § 1404(a), a court may at its discretion transfer a case
to any other district where the case could have been brought.
determining whether transfer is appropriate, a court considers “(1)
witnesses, and (3) the interests of justice.” Terra Int’l, Inc. v.
Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997).
factors, however, are not exhaustive, and courts must make a “caseby-case evaluation of the particular circumstances at hand.”
Schneider Wallace bears the burden of showing that Rust’s choice of
“considerable deference to a plaintiff’s choice of forum.”
1. Convenience of Parties and Witnesses
performance or non-performance of the contract occurred there. The
court is not persuaded.
Other than accessing the client portal
form California, it appears that the performance of the contract
largely occurred in Minnesota.
Employees, located in Minnesota,
contacted potential plaintiffs, obtained HIPPA release forms,
designed and maintained a web-based portal, and provided call
center services. Moreover, the work was supervised and coordinated
by Rust in Minnesota.
Schneider Wallace next argues, without specificity, that “the
majority of key witnesses are ... located in California.”
Supp. Mem. at 23.
But Schneider Wallace cannot simply rely on
vague assertions to meets its burden, rather it must “clearly
specify the essential witnesses to be called and must make a
general statement of what their testimony will cover.”
Quest Commc’ns Corp., 33 F. Supp. 2d 1117, 1122 (D. Minn. 1999);
determine their accessibility and convenience to the forum. ... The
Schneider Wallace has provided no such information.
it has failed to show that transfer would be in the interest of the
parties or the witnesses.
Because the underlying facts of this dispute, namely, whether
Rust fully performed under the contract and is entitled to payment,
largely occurred in Minnesota, the court finds that the resolution
of this case will depend on evidence and witnesses located in
As a result, the convenience of the parties and
witnesses weighs against transfer.
Interests of Justice
The interests of justice typically involve considerations of
“(1) judicial economy, (2) the plaintiff's choice of forum, (3) the
comparative costs to the parties of litigating in each forum, (4)
each party's ability to enforce a judgment, (5) obstacles to a fair
trial, (6) conflict of law[s] issues, and (7) the advantages of
having a local court determine questions of local law.”
Int'l, Inc., 119 F.3d at 696.
In support, Schneider Wallace only argues that “the interests
of justice generally support transfer.”
Def.’s Supp. Mem. at 23.
The court agrees with Rust that the plaintiff’s
choice of forum and the advantage of having a court in Minnesota
determine questions of Minnesota law weigh against transfer.5
a result, the court will deny the motion to transfer.
Accordingly, IT IS HEREBY ORDERED that defendant’s motion to
dismiss or transfer [ECF No. 13] is denied.
Dated: March 9, 2018
s/David S. Doty
David S. Doty, Judge
United States District Court
The other factors are either neutral, inapplicable, or were
not addressed by either party.
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