MAGILL v. ELYSIAN GLOBAL CORPORATION et al
Filing
14
OPINION. Signed by Judge Noel L. Hillman on 4/1/2021. (tf,)
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 1 of 22 PageID: 278
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
KEITH J. MAGILL,
Plaintiff,
v.
1:20-cv-06742-NLH-AMD
OPINION
ELYSIAN GLOBAL CORPORATION,
LEO AMERI, JESSE BRANDENBURG,
and NADINE DOMINIK,
Defendants.
APPEARANCES:
WALTER TOTO
317 FORSGATE DRIVE
MONROE TOWNSHIP, NJ 08831
On behalf of Plaintiff
LOUIS A. RUSSO
RUSSO LAW LLC
276 FIFTH AVENUE
SUITE 704
NEW YORK, NY 10001
On behalf of Defendants
HILLMAN, District Judge
This case concerns Plaintiff’s claims for unpaid
compensation for work related to an initial coin offering
(“ICO”), which is the sale of virtual coins or tokens cryptocurrency - to fund the development of an e-commerce
platform.
Presently before the Court is the motion of
Defendants to dismiss Plaintiff’s complaint on several bases,
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 2 of 22 PageID: 279
including lack of personal jurisdiction, improper venue, and a
valid arbitration provision.
For the reasons expressed below,
Defendants’ motion will be granted, and the action will be
dismissed for lack of personal jurisdiction.
BACKGROUND
Plaintiff, Keith J. Magill, filed the instant action 1 for
breach of contract and other related claims against his former
On June 2, 2020, Plaintiff filed his original complaint. On
September 19, 2020, Defendants moved to dismiss Plaintiff’s
original complaint. In response, on October 5, 2020, Plaintiff
filed an amended complaint. On October 19, 2020, Defendants
moved to dismiss the amended complaint, arguing that the
amendments did not cure the defects in the original complaint,
particularly with regard to personal jurisdiction, and
Defendants incorporated the arguments asserted in their first
motion to dismiss in their second motion to dismiss the amended
complaint. The Court will consider Plaintiff’s amended
complaint, Docket No. 8, as the operative pleading from which
the Court recites the background facts as alleged by Plaintiff.
See Garrett v. Wexford Health, 938 F.3d 69, 82 (3d Cir. 2019)
(“[A]n amended pleading supersedes the original pleading and
renders the original pleading a nullity.”). Additionally,
because the Court will dismiss Plaintiff’s action for lack of
personal jurisdiction, a basis for dismissal argued in
Defendants’ first motion to dismiss, the Court will consider
Defendants’ first motion to dismiss to be directed at the
amended complaint, thus rendering the second motion to be denied
as duplicative. See Brown v. Camden City School District, 2020
WL 6055070, at *4 (D.N.J. 2020) (“[A] defendant should not be
‘required to file a new motion to dismiss simply because an
amended pleading was introduced while its motion was pending. If
some of the defects raised in the original motion remain in the
new pleading, the court may simply consider the motion as being
addressed to the amended pleading. To hold otherwise would be to
exalt form over substance.’”) (citing 6 Wright, Miller & Kane,
Federal Practice & Procedure § 1476 at 558 (2d ed. 1990); Jordan
v. City of Phila., 66 F. Supp. 2d 638, 640 n.1 (E.D. Pa. 1999));
Wilson v. Jacobs, 2014 WL 346588, at *1 (D.N.J. 2014) (quoting 6
Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal
1
2
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 3 of 22 PageID: 280
employer, Defendant Elysian Global Corporation, and Elysian’s
principals, Defendants Leo Ameri, CEO, Jesse Brandenburg, CFO,
and Nadine Dominik, corporate secretary. 2
Beginning in October
2017, Ameri contacted Plaintiff through Facebook Messenger
asking him to invite his “crypto buds” to a Facebook group
called “Cryptocurrency Mastermind.”
In a series of
conversations through Facebook messenger, Ameri asked Plaintiff
to join a team of eight individuals to participate in an “ICO
project,” which stands for “initial coin offering,” and is
almost identical to an initial public offering (“IPO”), but
depending on the circumstances of the offering may be outside of
the purview of the Securities and Exchange Commission (“SEC”). 3
Practice and Procedure § 1476 (3d ed. 2012)) (explaining that
even though the defendants’ motion to dismiss was addressed to
the plaintiff’s original complaint, “the court simply may
consider the motion as being addressed to the amended
pleading”).
Previously, along with two other employees of Defendants,
Plaintiff filed an almost identical complaint in the District of
Massachusetts, which complaint was dismissed for lack of
personal jurisdiction over Defendants.
2
3
The SEC explains:
Virtual coins or tokens are created and disseminated
using distributed ledger or blockchain technology. A
blockchain is an electronic distributed ledger or list of
entries – much like a stock ledger – that is maintained by
various participants in a network of computers.
Blockchains use cryptography to process and verify
transactions on the ledger, providing comfort to users and
potential users of the blockchain that entries are secure.
Some examples of blockchain are the Bitcoin and Ethereum
3
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 4 of 22 PageID: 281
Through additional conversations online via Slack, 4 Ameri
offered Plaintiff $200,000 worth of Ethereum 5 if the ICO was
successful in exchange for Plaintiff doing business development
for Defendants.
Plaintiff agreed and began working for
blockchains, which are used to create and track
transactions in bitcoin and ether, respectively. A virtual
currency is a digital representation of value that can be
digitally traded and functions as a medium of exchange,
unit of account, or store of value. Virtual tokens or
coins may represent other rights as well.
Recently promoters have been selling virtual coins or
tokens in ICOs. Purchasers may use fiat currency (e.g.,
U.S. dollars) or virtual currencies to buy these virtual
coins or tokens. Promoters may tell purchasers that the
capital raised from the sales will be used to fund
development of a digital platform, software, or other
projects and that the virtual tokens or coins may be used
to access the platform, use the software, or otherwise
participate in the project. Some promoters and initial
sellers may lead buyers of the virtual coins or tokens to
expect a return on their investment or to participate in a
share of the returns provided by the project. After they
are issued, the virtual coins or tokens may be resold to
others in a secondary market on virtual currency exchanges
or other platforms. Depending on the facts and
circumstances of each individual ICO, the virtual coins or
tokens that are offered or sold may be securities. If they
are securities, the offer and sale of these virtual coins
or tokens in an ICO are subject to the federal securities
laws.
See https://www.sec.gov/oiea/investor-alerts-andbulletins/ib_coinofferings.
Slack offers internet relay chat (“IRC”) features, including
chat rooms (channels) organized by topic, private groups, and
direct messaging. https://en.wikipedia.org/wiki/Slack_(software).
4
5
See, supra, note 2 for an explanation of Ethereum.
4
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 5 of 22 PageID: 282
Defendants approximately 50 hours a week.
One of Plaintiff’s
primary responsibilities was speaking with potential investors
all over the world to convince them to purchase Elysian’s ELY
tokens during the ICO.
Plaintiff also worked on partnerships,
investments, marketing materials, and graphic design.
Plaintiff
managed Defendants’ social media, including Facebook, Twitter,
and Telegram. 6
During his employment, Plaintiff repeatedly asked for a
written employment contract, but he was rebuffed for numerous
reasons.
Defendants’ ICO occurred between April 2018 and July
2018, and raised $7 million.
Defendants never paid Plaintiff
the agreed-upon $200,000 worth of Ethereum.
Plaintiff
terminated his employment with Defendants in July 2018.
On September 7, 2018, Defendants sent Plaintiff a Token
Compensation Agreement.
In that agreement, Plaintiff was “not
allowed to talk publicly about Elysian to anyone after the
signing of this contract.
private chats.”
This also includes screenshots of
The agreement provided that if Plaintiff did
“Telegram provides end-to-end encrypted voice and video calls
and optional end-to-end encrypted ‘secret’ chats. Cloud chats
and groups are encrypted between the app and the server, so that
ISPs and other third-parties on the network can’t access data,
but the Telegram server is in possession of the decryption key.
Users can send text and voice messages, animated stickers, make
voice and video calls, and share an unlimited number of images,
documents (2 GB per file), user locations, contacts, and music.”
https://en.wikipedia.org/wiki/Telegram_(software).
6
5
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 6 of 22 PageID: 283
not violate this one provision, he would be paid an additional
$175,000 in ELY tokens.
arbitration provision.
This agreement also contained an
Plaintiff claims that this agreement was
separate from his oral employment agreement with Defendants and
the arbitration provision only applies to the non-disclosure
provision.
To date, Plaintiff has not been paid for his work on the
Elysian ICO and has only been paid $12,500 of ELY Tokens
pursuant to the token agreement.
As a result, Plaintiff claims
that Defendants’ actions breached their employment contract and
violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201,
et seq.
Plaintiff also seeks relief under the legal theories of
quantum meruit, unjust enrichment, fraudulent inducement, and
“accounts stated.”
Defendants have moved to dismiss Plaintiff’s complaint for
lack of personal jurisdiction over them and improper venue.
Defendants alternatively argue that Plaintiff’s complaint must
be dismissed because all of his claims are subject to the
arbitration provision in the Token Compensation Agreement, and
they otherwise fail to meet the proper pleading standards.
Plaintiff has opposed Defendants’ motion, arguing that
Defendants purposefully availed themselves to New Jersey by
contracting and communicating with Plaintiff, who is a New
Jersey citizen and lived in New Jersey while he worked for
6
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 7 of 22 PageID: 284
Defendants.
Plaintiff further argues that the arbitration
provision does not apply to his employment dispute, and he has
properly pleaded his claims.
DISCUSSION
A.
Subject Matter Jurisdiction
This Court has jurisdiction over Plaintiff’s federal claim
under 28 U.S.C. § 1331, and supplemental jurisdiction under 28
U.S.C. § 1367 for Plaintiff’s state law claims.
B.
Analysis
Because the issue of whether this Court may exercise
personal jurisdiction over Defendants is dispositive to the
viability of the entire suit, that issue must be addressed
first.
Federal Rule of Civil Procedure 12(b)(2) provides for
dismissal of an action when the Court does not have personal
jurisdiction over a defendant.
“Once challenged, the plaintiff
bears the burden of establishing personal jurisdiction.”
O’Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d
Cir. 2007) (citing Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150
(3d Cir. 2001)).
In deciding a motion to dismiss for lack of
personal jurisdiction, the Court must “accept all of the
plaintiff’s allegations as true and construe disputed facts in
favor of the plaintiff.”
Carteret Sav. Bank v. Shushan, 954
F.2d 141, 142 n.1 (3d Cir.), cert. denied, 506 U.S. 817 (1992)
7
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 8 of 22 PageID: 285
(citations omitted). 7
A defendant is subject to the jurisdiction of a United
States district court if the defendant “is subject to the
jurisdiction of a court of general jurisdiction in the state
where the district court is located[.]”
4(k)(1)(A).
Fed. R. Civ. P.
“A federal court sitting in New Jersey has
jurisdiction over parties to the extent provided under New
Jersey state law.”
Miller Yacht Sales, Inc. v. Smith, 384 F.3d
93, 96 (3d Cir. 2004)(citations omitted).
The New Jersey long-
arm statute “permits the exercise of personal jurisdiction to
the fullest limits of due process.”
IMO Indus., Inc. v. Kiekert
AG, 155 F.3d 254, 259 (3d Cir. 1998) (citing DeJames v.
Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981)).
Under the Due Process clause, the exercise of personal
There is a “significant procedural distinction” between a
motion pursuant to Rule 12(b)(2) and a motion pursuant to Rule
12(b)(6). Time Share Vacation Club v. Atlantic Resorts, Ltd.,
735 F.2d 61, 66 n.9 (3d Cir. 1984). “A Rule 12(b)(2) motion,
such as the motion made by the defendants here, is inherently a
matter which requires resolution of factual issues outside the
pleadings, i.e. whether in personam jurisdiction actually lies.
Once the defense has been raised, then the plaintiff must
sustain its burden of proof in establishing jurisdictional facts
through sworn affidavits or other competent evidence. . . . [A]t
no point may a plaintiff rely on the bare pleadings alone in
order to withstand a defendant's Rule 12(b)(2) motion to dismiss
for lack of in personam jurisdiction. Once the motion is made,
plaintiff must respond with actual proofs, not mere
allegations.” Id. (citation omitted).
7
8
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 9 of 22 PageID: 286
jurisdiction over a non-resident defendant is appropriate when
the defendant has “certain minimum contacts with [the forum
state] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)), cited in Ford
Motor Company v. Montana Eighth Judicial District Court, --- S.
Ct. ---, 2021 WL 1132515, at *4 (U.S. March 25, 2021) (stating
that International Shoe is the “canonical decision in this
area”).
A defendant establishes minimum contacts by “‘purposefully
avail[ing] itself of the privilege of conducting activities
within the forum State,’” thereby invoking “‘the benefits and
protections of [the forum State’s] laws.’”
Asahi Metal Indus.
Co., Ltd. v. Sup. Ct. of California, 480 U.S. 102, 109 (1987)
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985)).
This “purposeful availment” requirement assures that
the defendant could reasonably anticipate being haled into court
in the forum and is not haled into a forum as a result of
“random,” “fortuitous” or “attenuated” contacts with the forum
state.
See World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980); see also Burger King Corp., 471 U.S. at 472,
475 (internal citations omitted).
In deciding whether a defendant’s contacts with a forum are
9
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 10 of 22 PageID: 287
sufficient to confer personal jurisdiction over that party, the
Court must consider whether such contacts are related to or
arise out of the cause of action at issue in the case.
The
Court may exercise specific personal jurisdiction over a
defendant where the cause of action is related to or arises out
of activities by the defendant that took place within the forum
state.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 414 n.8 (1984).
If the cause of action has no
relationship to a defendant’s contacts with a forum state, the
Court may nonetheless exercise general personal jurisdiction if
the defendant has conducted “continuous and systematic” business
activities in the forum state. 8
Id. at 416.
Once the Court determines that the defendant has minimum
contacts with the forum state, it must also consider whether the
assertion of personal jurisdiction over the defendant
“comport[s] with ‘fair play and substantial justice’” to satisfy
“‘A corporation that operates in many places can scarcely be
deemed at home in all of them.’” Malik v. Cabot Oil & Gas
Corporation, 710 F. App’x 561, 564 (3d Cir. 2017) (quoting
Daimler AG v. Bauman, 571 U.S. 117, 139 n.20 (2014)) (further
explaining that “[o]therwise, ‘at home’ would be synonymous with
‘doing business’ tests framed before specific jurisdiction
evolved in the United States”). As the Third Circuit has
recognized, it is “‘incredibly difficult to establish general
jurisdiction [over a corporation] in a forum other than the
place of incorporation or principal place of business.’” Malik,
710 F. App’x at 564 (quoting Chavez v. Dole Food Company, Inc.,
836 F.3d 205, 223 (3d Cir. 2016) (quoting Monkton Ins. Servs.,
Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014)).
8
10
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 11 of 22 PageID: 288
the due process test.
Burger King Corp., 471 U.S. at 476
(quoting Int’l Shoe, 326 U.S. at 320).
In this regard, it must
be reasonable to require the defendant to litigate the suit in
the forum state, and a court may consider the following factors
to determine reasonableness: the burden on the defendant, the
forum state’s interest in adjudicating the dispute, the
plaintiff’s interest in obtaining convenient and effective
relief, the interstate judicial system’s interest in obtaining
an efficient resolution of controversies, and the shared
interest of the several States in furthering fundamental
substantive social policies.
Id. at 477 (citing World Wide
Volkswagen, 444 U.S. at 292).
In the case of an intentional tort, the “effects test” is
applied. 9
The Calder “effects test” requires the plaintiff to
show the following:
(1) The defendant committed an intentional tort;
(2) The plaintiff felt the brunt of the harm in the forum
such that the forum can be said to be the focal point of
the harm suffered by the plaintiff as a result of that
tort;
(3) The defendant expressly aimed his tortious conduct at
the forum such that the forum can be said to be the focal
point of the tortious activity.
Defendants argue that the Calder test is applicable because of
Plaintiff’s fraudulent inducement count against them. Plaintiff
contests that the Calder test applies, but even if it did,
Plaintiff argues that the elements are satisfied. As discussed
below, even if the Calder test were to apply, the Court finds
that Defendants did not expressly aim their alleged tortious
conduct at New Jersey such that New Jersey could be considered
the focal point of that alleged tortious activity.
9
11
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 12 of 22 PageID: 289
IMO Industries, Inc. v. Kiekert AG, 155 F.3d 254, 265–66 (3d
Cir. 1998) (discussing Calder v. Jones, 465 U.S. 783 (1984))).
“[I]n order to make out the third prong of this test, the
plaintiff must show that the defendant knew that the plaintiff
would suffer the brunt of the harm caused by the tortious
conduct in the forum, and point to specific activity indicating
that the defendant expressly aimed its tortious conduct at the
forum.”
Id.
In this case, Defendants argue that neither specific nor
general jurisdiction may be exercised over them. 10
Defendants
state that Elysian is a Belize corporation, incorporated in May
2018, and is located in Belize City, Belize.
Defendants explain
that Elysian is an internet company that creates and implements
an e-commerce platform using blockchain technology.
Defendants
Plaintiff’s complaint avers that Ameri resides out of the
country, but formerly lived in Los Angeles, California.
Brandenburg and Dominik reside in Scottsdale, Arizona. Other
than their position as principals of Elysian, Plaintiff has not
alleged claims against these Defendants separate from those
alleged against Elysian. See Cedric Kushner Promotions, Ltd. v.
King, 533 U.S. 158 (2011) (explaining that the “corporate
owner/employee, a natural person, is distinct from the
corporation itself, a legally different entity with different
rights and responsibilities due to its different legal
status.”). Even if he did, however, Plaintiff argues the same
basis for personal jurisdiction over Elysian as to the
individual Defendants. Because the Court finds that personal
jurisdiction is lacking over Elysian, the same analysis requires
the finding that personal jurisdiction is lacking over the
individual defendants as well. For ease of reference, the Court
will refer to Defendants collectively.
10
12
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 13 of 22 PageID: 290
aver that Elysian is not registered to do business in New
Jersey, it does not have an office in New Jersey, it does not
solicit business in New Jersey, it does not have any employees
in New Jersey, it has never paid any tax in New Jersey, it has
never owned or leased real property in New Jersey, and it does
not have a mailing address, telephone number, or bank account in
New Jersey.
Additionally, none of the Defendants and no one
from Elysian has ever entered New Jersey in order to perform
business-related activities on behalf of Elysian.
Defendants construe Plaintiff as an independent contractor
who performed work on his own schedule.
Defendants point out
that Plaintiff traveled to California on one occasion to meet
with Defendants about Elysian, and most of their other
communications occurred through internet platforms.
Defendants
argue that Plaintiff living in New Jersey is merely happenstance
because nothing in the parties’ relationship had anything to do
with New Jersey.
Plaintiff, who is a citizen of New Jersey and resided in
New Jersey during his tenure with Defendants, argues that
Defendants knew they were contracting with a person who lives in
New Jersey, and all the work which he performed for Defendants
and for which he seeks the compensation he is owed, was
performed in New Jersey at their direction.
Thus, Plaintiff
contends that Defendants purposefully availed themselves to New
13
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 14 of 22 PageID: 291
Jersey by virtue of employing and communicating with Plaintiff
in New Jersey.
The Court finds that Plaintiff has not met his burden of
showing that Defendants had the requisite contacts with New
Jersey to exercise personal jurisdiction over them.
As a
primary matter, Plaintiff does not argue that personal
jurisdiction may be premised on general jurisdiction.
Thus, the
focus must be on Defendants’ activities within New Jersey or
were directed to New Jersey that serve the basis for Plaintiff’s
claims against Defendants.
Plaintiff hinges personal
jurisdiction over Defendants on two main facts: (1) Plaintiff’s
New Jersey residence, and (2) that Defendants communicated and
contracted with Plaintiff who they knew lived in New Jersey.
These contacts are not enough under the circumstances of this
case.
The “fact that a non-resident has contracted with a
resident of the forum state is not, by itself, sufficient to
justify personal jurisdiction over the nonresident.”
Mellon
Bank (East) PSFS, Nat. Ass'n v. Farino, 960 F.2d 1217, 1223 (3d
Cir. 1992).
“A contract may provide a basis for the exercise of
personal jurisdiction that meets due process standards, but a
contract alone does not ‘automatically establish sufficient
minimum contacts in the other party’s home forum.’”
Grand
Entm't Grp., Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 482
14
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 15 of 22 PageID: 292
(3d Cir. 1993) (quoting Burger King, 471 U.S. at 478).
In
deciding whether to exercise personal jurisdiction in a breach
of contract dispute, a district court must consider “the
totality of the circumstances, including the location and
character of the contract negotiations, the terms of the
contract, and the parties’ actual course of dealing.”
Remick v.
Manfredy, 238 F.3d 248, 256 (3d Cir. 2001).
With regard to the other circumstances beyond the formation
of the purported employment contract itself, such as the
parties’ course of dealing, Defendants contend that Plaintiff
worked independently of his own volition.
But even when
accepting as true Plaintiff’s claim that Defendants controlled
Plaintiff’s day-to-day activities, such actions did not result
in Defendants’ contact with New Jersey in any meaningful way.
Plaintiff alleges that from his New Jersey home he communicated
with Defendants and potential investors all over the world to
invest in a virtual ICO for an internet company based in Belize.
Other than New Jersey being part of “the world,” nothing in
those communications implicated any specific interest of New
Jersey.
See Isaacs v. Arizona Bd. of Regents, 608 F. App’x 70,
74 (3d Cir. 2015) (quoting Burger King, 471 U.S. at 475)
(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958) (explaining
that to exercise personal jurisdiction over a non-forum
defendant, the plaintiff must show “some act by which the
15
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 16 of 22 PageID: 293
defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the
benefits and protections of its laws”)); see also Ford Motor
Company, --- S. St. ---, 2021 WL 1132515, at *4 (citing BristolMyers Squibb Co. v. Superior Court of Cal., San Francisco Cty.,
582 U.S. ––––, ––––, 137 S. Ct. 1773, 1780 (2017) (other
citation omitted)) (“[T]here must be ‘an affiliation between the
forum and the underlying controversy, principally, [an] activity
or an occurrence that takes place in the forum State and is
therefore subject to the State’s regulation.’”).
Plaintiff argues that New Jersey has an interest in
protecting its citizens as employees who work for out-of-state
employers.
To support that proposition, Plaintiff cites to
Chadwick v. St. James Smokehouse, Inc., 2015 WL 1399121, at *1
(D.N.J. 2015).
In Chadwick, a New Jersey citizen worked from
her home as a fish buyer for a smoked salmon manufacturer
located in Florida.
The plaintiff would engage distributors of
salmon from Europe and South America to procure salmon for her
employer’s business.
The plaintiff claimed she was wrongfully
discharged when she questioned her employer’s practice of
labeling lesser quality salmon as higher quality salmon in its
smoked salmon products.
The plaintiff brought suit in New
Jersey district court against her employer and the company’s
owner for the defendants’ alleged violation of New Jersey’s
16
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 17 of 22 PageID: 294
Conscientious Employee Protection Act and for wrongful
discharge, and the defendants moved to dismiss for lack of
personal jurisdiction.
The court found that the exercise of personal jurisdiction
over the Florida defendants was proper.
The court noted in its
“fair play and substantial justice” analysis that even though
Florida would be a more convenient forum for the defendants, New
Jersey “has a strong interest in protecting its residents from
retaliatory actions,” and “[t]his need for protection is all the
more true for New Jersey citizens working remotely for out-ofstate employers.”
Chadwick, 2015 WL 1399121 at *6 (citation
omitted).
Plaintiff in this case focuses on that part of the decision
in Chadwick, but the court there did not solely rest its holding
on that observation.
Earlier in the decision, the Chadwick
court found:
Defendants have many contacts with New Jersey demonstrating
that they have purposefully availed themselves of the
privileges of doing business there, and the instant case
arises out of one of those contacts.
St. James has on numerous occasions, done business with the
following New Jersey businesses:
•
•
•
•
•
•
Cold Spring Fish and Supply (Cape May, New Jersey)
Madison Seafood, Inc. (Newark, New Jersey)
P & G Trading Co Inc. (Trenton, New Jersey)
Metropolitan Seafood NJ (Lebanon, New Jersey)
Wegman's (seven locations in New Jersey)
Whole Foods (twelve locations in New Jersey)
17
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 18 of 22 PageID: 295
Maher even admits that he once had to appear in a small
claims proceeding in New Jersey on behalf of St. James in
order to resolve an unpaid debt with a New Jersey customer.
Most critically, Defendants “purposefully availed”
themselves of the New Jersey forum when they hired
Plaintiff to be St. James's principal buyer and
continuously relied on Plaintiff to perform essential
functions of its business from a remote office located in
New Jersey. In the course of their dealings with
Plaintiff, St. James and Maher offered to purchase and ship
St. James's office equipment to Plaintiff in New Jersey,
and they engaged in continuous business phone and email
interactions with Plaintiff for almost two years.
Moreover, Maher made the phone call to the forum state to
terminate Plaintiff.
Chadwick, 2015 WL 1399121, at *4.
The Chadwick court further
noted that New Jersey also had an interest in protecting its
consumers from the allegedly mislabeled fish that the defendants
sold in New Jersey.
Id. at *6.
This case is very different from Chadwick.
Plaintiff’s
physical location in New Jersey is the only factor that connects
this dispute to New Jersey.
Plaintiff’s claims against
Defendants would be identical if he lived anywhere else in the
world.
All of Plaintiff’s work and the entire nature of
Defendants’ business was performed online with world-wide scope.
The only in-person connection between Plaintiff and Defendants
occurred when Plaintiff traveled to Los Angeles, California to
meet with Defendants.
As this Court has observed in a case where a New Jersey
plaintiff filed suit against an Alabama company for breach of a
18
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 19 of 22 PageID: 296
contract to purchase reclaimed coal at a defunct Mississippi
power plant:
[I]n this day and age, those communications [between the
plaintiff and defendant] could have been with someone
physically located anywhere in the world. That
negotiations occurred between the parties via email and
telephone is not only not unusual but expected. So too
would it be reasonable to assume, as actually happened
here, that given the ubiquitous tools of the internet,
negotiations over a substantial proposal like his one would
span a dozen or more email exchanges and inspire a like
number of telephone calls with ease. But these are
communications not so much to New Jersey as they are into
the electronic ether. And if this is how contracts are
negotiated and if those contacts are deemed to satisfy the
minimum contacts requirement, then every contract
negotiated by email and telephone would justify personal
jurisdiction over a non-forum defendant. And yet that is
clearly not the law.
Exporting Commodities International, LLC v. Southern Minerals
Processing, LLC, 2017 WL 5513682, *8-*9 (D.N.J. 2017) (citing
Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products
Co., 75 F.3d 147, 152 (3d Cir. 1996)).
This case is literally about the “electronic ether” and a
dispute over “Ethereum.”
The virtual nature of Plaintiff’s
dispute does not leave him without a brick and mortar forum in
which to bring his claims against Defendants, but New Jersey is
not that forum.
In short, there is no indication that Defendants availed
themselves of the privileges of conducting business in New
Jersey, and New Jersey has little interest in this case.
Thus,
the Court finds that the exercise of personal jurisdiction over
19
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 20 of 22 PageID: 297
Defendants in this Court does not satisfy the requirements of
due process, because Plaintiff has not established that
Defendants have sufficient contacts to New Jersey, or that
Defendants’ presence in this Court would comport with fair play
and substantial justice.
Therefore, the action must be
dismissed for lack of personal jurisdiction over Defendants. 11
At this point, the Court must decide whether to dismiss
Plaintiff’s complaint or transfer it to another court that can
exercise personal jurisdiction over Defendants.
The applicable
statutory provision is 28 U.S.C. § 1631, which governs transfer
when there is “a want of jurisdiction.”
See Chavez v. Dole Food
Company, Inc., 836 F.3d 205, 224 (3d Cir. 2016) (explaining that
where a court determines that personal jurisdiction over the
defendants is lacking, the determination of whether to dismiss
or transfer is governed by 28 U.S.C. § 1631 and not 28 U.S.C. §
1406(a), which concerns improper venue).
Section 1631 provides
in relevant part:
[Where a] court finds that there is a want of jurisdiction,
the court shall, if it is in the interest of justice,
transfer such action or appeal to any other such court . .
Because the Court will dismiss Plaintiff’s complaint for lack
of personal jurisdiction over Defendants, the Court need not
consider Defendants’ other arguments for dismissal - improper
venue, a valid arbitration clause, and failure to comply with
the proper pleading standards. Similarly, the Court will not
consider Defendants’ request for the reimbursement of attorney’s
fees and costs associated with their defense of this action
because Defendants assert that request in the context of
dismissing the action in favor of arbitration.
11
20
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 21 of 22 PageID: 298
. in which the action or appeal could have been brought at
the time it was filed or noticed, and the action or appeal
shall proceed as if it had been filed in or noticed for the
court to which it is transferred on the date upon which it
was actually filed in or noticed for the court from which
it is transferred.
28 U.S.C. § 1631 (“Transfer to cure want of jurisdiction”).
In opposition to Defendants’ motion to dismiss, Plaintiff
argues that Defendants have not identified a different forum in
which Plaintiff may maintain his claims against Defendants.
It
is not Defendants’ obligation to do so in seeking to dismiss
Plaintiff’s claims for lack of personal jurisdiction.
O’Connor,
496 F.3d at 316 (“Once challenged, the plaintiff bears the
burden of establishing personal jurisdiction.”); cf. Onishi v.
Chapleau, 2021 WL 651161, at *2 (D.N.J. 2021) (citing Myers v.
Am. Dental Ass'n, 695 F.2d 716, 724 (3d Cir. 1982) (“The burden
of proof on venue under 28 U.S.C. § 1392(b) falls upon the
defendant who challenges it.”); Myers, 695 F.2d at 724 (“The
venue issue[], unlike the [personal] jurisdictional issue, is
not whether the court has authority to hear the case but simply
where the case may be tried.”).
Additionally, even though the
Court will not opine on the validity and scope of the
arbitration provision in the Token Compensation Agreement
because the Court lacks subject matter jurisdiction over
Defendants to consider the substance of the parties’ dispute, it
is Defendants’ position that no court is the proper forum.
21
Case 1:20-cv-06742-NLH-AMD Document 14 Filed 04/01/21 Page 22 of 22 PageID: 299
Moreover, Plaintiff himself has not identified any other
court in which his complaint could have been brought.
Arguably,
California, Arizona, or Belize could be alternative forums, but
the Court will not sua sponte consider whether those are forums
“in which the action . . . could have been brought at the time
it was filed.”
See Kim v. Korean Air Lines Co., Ltd., --- F.
Supp. 3d. ---, 2021 WL 129083, at *5 (D.N.J. 2021) (citing
D'Jamoos ex rel. Estate of Weingeroff v. Pilatus Aircraft Ltd.,
566 F.3d 94, 107 (3d Cir. 2009)) (explaining that § 1631
requires a court to decide (1) whether the transferee court
would have personal jurisdiction, and (2) whether a transfer is
in the interests of justice).
Consequently, the Court is unable to transfer the action
and will instead dismiss it for want of jurisdiction.
CONCLUSION
For the reasons expressed above, Defendants’ motion to
dismiss Plaintiff’s amended complaint for lack of personal
jurisdiction will be granted.
An appropriate Order will be
entered.
Date:
April 1, 2021
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
22
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?