Rust Consulting, Inc. v. Schneider Wallace Cottrell Konecky Wotkyns LLP

Filing 27

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.
Plaintiff,
v.

ORDER

Schneider Wallace Cottrell
Konecky Wotkyns, LLP,
Defendant.
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
Wotkyns

LLP.

Based

on

a

review

of

the

file,

record,

and

proceedings herein, and for the following reasons, the motion is
denied.

BACKGROUND
This

contract

dispute

arises

out

of

defendant

Schneider

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

The

agreement provides that any claims arising from or in connection to
the agreement are governed by Minnesota law.
¶ 11.

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
Minnesota.

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.
¶¶ 8-9.

Compl.

Rust also alleges that it is entitled to a per-claim fee

of $2,500 for each resolved claim in the relevant mass tort
actions.

Id. ¶¶ 10-12.

On October 9, 2017, Rust filed suit in Hennepin County court
alleging breach of contract, account stated, quantum meruit, and
accounting.

Schneider Wallace timely removed and now moves to

1

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.
2

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.

DISCUSSION
I. Personal Jurisdiction
A.

Standard of Review

To

survive

a

motion

to

dismiss

for

lack

of

personal

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).

A

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
marks omitted).

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).

3

To satisfy due process, a defendant must have “sufficient
minimum contacts” with the forum state such that maintaining the
suit

“does

not

offend

substantial justice.”

traditional

notions

of

fair

Romak, 384 F.3d at 984.

play

and

“Sufficient

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
personal

jurisdiction

jurisdiction.

under

either

general

or

specific

General jurisdiction is present when, regardless of

the cause of action, a defendant’s “affiliations with the [forum]
State

are

so

continuous

and

systematic

as

to

render

[it]

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).

4

Under either analysis, the Eighth Circuit considers five
factors in determining whether personal jurisdiction exists:

“(1)

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
parties.”

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
defendant

purposefully

considering

the

availed

prior

itself

of

negotiations,

the

forum

contemplated

state

by

future

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-

5

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).
B.

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
state.

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
business there).

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).

It also

appears, however, that some of the negotiations took place by
emails, telephone calls, and faxes to and from Minnesota.

Blake

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,

6

the performance of the contract - such as client intake and data
management - was physically performed in Minnesota. Blake Aff. Ex.
¶ 17.
along

Indeed, Peter Schneider, on behalf of Schneider Wallace,
with

representatives

of

other

law

firms,

traveled

to

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.

Further, the

contract contains a choice-of-law provision specifying Minnesota
law and requires Schneider Wallace to send payment to Rust at a
Minnesota address.
these

contacts

Blake Aff. Ex. A, at A8-A9.

concern

the

formation

and

Finally, because

performance

of

the

contract at issue, they are directly related to the causes of
action alleged in the complaint.2
These

contacts

are

substantive

and

purposeful

such

that

Schneider Wallace should have “reasonably anticipate[d] out-ofstate

litigation”;

attenuated.”

they

are

not

“random,

fortuitous,

or

Burger King, 471 U.S. at 474-75 (citations and

internal quotation marks omitted).

2

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.
7

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
action.

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
pending.”

Because the action was removed from Hennepin County,

venue in the District of Minnesota is proper.
V.

Failure to State a Claim
Schneider Wallace also moves to dismiss the complaint for

failure to state a claim.
A.

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)
8

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

“A claim

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.”

Iqbal, 556

U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)).

Although a complaint need not contain detailed factual

allegations, it must raise a right to relief above the speculative
level.

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).
B.

Sufficiency of Allegations

Schneider Wallace first argues that the allegations in the
complaint are not sufficiently detailed to give rise to a plausible
claim.

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,
client

portal

design

and

maintenance,

forms

processing,

and

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

9

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

accounting.3

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
performed.

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

3

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
action.
4

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
complaint.
10

court denies the motion to dismiss on this basis.
VI.

Venue
A.

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.

As discussed

above, venue in this district is proper. Therefore, the court will
not dismiss or transfer the case under § 1406.
B.

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.

In

determining whether transfer is appropriate, a court considers “(1)
the

convenience

of

the

parties,

(2)

the

convenience

of

the

witnesses, and (3) the interests of justice.” Terra Int’l, Inc. v.
Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997).

These

factors, however, are not exhaustive, and courts must make a “caseby-case evaluation of the particular circumstances at hand.”

Id.

Schneider Wallace bears the burden of showing that Rust’s choice of
forum

is

inconvenient

because

federal

courts

generally

“considerable deference to a plaintiff’s choice of forum.”
11

give

Id. at

695.
1. Convenience of Parties and Witnesses
Schneider
California

Wallace

is

a

argues

more

that

convenient

the

Northern

forum

because

District
the

of

actual

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.

Def.’s

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.”

Graff v.

Quest Commc’ns Corp., 33 F. Supp. 2d 1117, 1122 (D. Minn. 1999);
see

also

Walen

1991)(“[T]he
importance

v.

Hansen,

district

of

the

933

court

must

anticipate

F.2d

1390,

examine

witnesses’

the

1396

(8th

materiality

testimony

and

Cir.
and
them

determine their accessibility and convenience to the forum. ... The
burden

is

on

the

defendants

to

12

provide

these

facts

....”).

Schneider Wallace has provided no such information.

Accordingly,

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
Minnesota.

As a result, the convenience of the parties and

witnesses weighs against transfer.
2.

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.”

Terra

Int'l, Inc., 119 F.3d at 696.
In support, Schneider Wallace only argues that “the interests
of justice generally support transfer.”
Again,

the

court

insufficient.

finds

that

such

Def.’s Supp. Mem. at 23.

conclusory

statements

are

The court agrees with Rust that the plaintiff’s

choice of forum and the advantage of having a court in Minnesota

13

determine questions of Minnesota law weigh against transfer.5

As

a result, the court will deny the motion to transfer.

CONCLUSION
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

5

The other factors are either neutral, inapplicable, or were
not addressed by either party.
14