FENG v. FRONTAGE LABORATORIES, INC. et al

Filing 15

OPINION. Signed by Judge William H. Walls on 8/21/2018. (JB, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

DAVE FENG,
Plaintiff,
OPINION

v.
Civ. No. 2:18-cv-03407 (WHW)
FRONTAGE LABORATORIES, INC., and
SONG LI,
Defendants.

Walls, Senior District Judge

Defendants Frontage Laboratories, Inc. and Song Li move under Fed. R. Civ. P. 12 for
dismissal for lack ofjurisdiction. Alternatively, Defendants move to transfer this action to the
Eastern District of Pennsylvania pursuant to 28 U.S.C.

§

1404(a). Decided without oral argument

under Fed. R. Civ. P. 78, Defendants’ motion is granted in part, denied in part.
PROCEDURAL AND FACTUAL BACKGROUND

Plaintiff Dave Feng (“Feng”) is a financial consultant and resident of Hudson County,
New Jersey. Compi.

JJ 1,6. Defendant Song Li (“Li”) is a Pennsylvania resident, Chief

Economic Officer (“CEO”) of Defendant Frontage Laboratories, Inc. (“Frontage”), and Feng’s
cousin. Id.

¶J 2-5. Feng alleges that in 2013, Li contacted Feng to solicit his advice on a merger

transaction, which Feng worked on for roughly six months and for which he was not
compensated. Id.

¶J 7-9. Feng claims that Li offered him Frontage’s Chief Financial Officer

(“CFO”) position upon completion of the merger, but that Li changed his mind afterwards,
saying Frontage did not require a CFO. Id. Feng alleges that this same gambit took place yet
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again in 2016, this time with more specifics as to the terms of the employment, including

compensation in the form of $1 million in Frontage stock. Id.

¶J 13-27.

Feng filed suit on February 6, 2018, in New Jersey Superior Court, alleging claims of
breach of contract and quantum meruit. Id. Defendants removed the matter to this Court on
March 9, 2018. ECF No. 1. Defendants now move for dismissal, arguing they are not subject to
personal jurisdiction in the forum. Alternatively, Defendants move to transfer this action to the
Eastern District of Pennsylvania pursuant to 28 U.S.C.

§

1404(a).

DISCUSSION
I.

Jurisdiction

Subject Matter Jurisdiction
Though Plaintiff raises the issue of subject matter jurisdiction in his response brief, courts
are required to evaluate the issue sua sponte if necessary, and this form ofjurisdiction can never

be waived or forfeited. Gonzalez v. Thaler, 565 U.S. 134, 141, 132 S. Ct. 641, 648, 181 L. Ed. 2d
619 (2012). In evaluating whether this Court has subject matter jurisdiction, no presumption of
truthfulness attaches to the allegations in the complaint and the court may consider matters
outside the pleadings such as affidavits and other material properly before the court. Anjelino v.
New York Times Co., 200 F.3d 73, 87 (3d Cir. 1999). In deciding subject matter jurisdiction, “the
Court is free to weigh the evidence and satisfy itself whether it has the power to hear the case.”
Carpet Group Intern. v. Oriental Rug Importers Ass ‘n, Inc., 227 F.3d 62, 69 (3d Cir. 2000)
(citing Mortensen v. First Federal Savings & Loan Ass ‘n, 549 F.2d 884, 891 (3d Cir. 1977)).
In order to meet the requirements for diversity jurisdiction, all plaintiffs and all
defendants must be in complete diversity with one another—that is, no plaintiff and no defendant
may be residents of the same forum. See generally Grupo Dataftux v. Atlas Glob. Grp., L.P., 541

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U.s. 567, 124 S. Ct. 1920, 1925, 158 L. Ed. 2d 866 (2004). Plaintiff claims that diversity
jurisdiction—the basis for Defendants’ removal to this Court—is lacking because Frontage is a
resident of New Jersey. Resp. Br. at 5. Defendants counter that frontage is not a resident of New
Jersey, but instead is incorporated in Pennsylvania and has its principal place of business there.
Reply Br. at 3. Defendants attach Frontage’s Long form Certificate from the State of New
Jersey, which states that Frontage’s charter to operate as a New Jersey domestic for-profit
corporation expired on November 16, 2007. Id. at Ex. A.
Based on the above, Frontage is neither incorporated nor has its principal place of
business in New Jersey. The contrary evidence Plaintiff cites—three offices affiliated with
Frontage—simply indicates that frontage does either direct or ancillary business in the forum,
not that it is a citizen of it for purposes of subject matter jurisdiction. See Daimler AG v.
Bauman, 571 U.S. 117, 134 S. Ct. 746, 187 L. Ed. 2d 624 (2014) (noting that regional offices are
not enough to establish a corporation is a resident of the forum). This Court has subject matter
jurisdiction because the Plaintiff is diverse from both Defendants.
General Jurisdiction
Plaintiff goes to great length to argue that Frontage is subject to jurisdiction in this forum
because it is a New Jersey corporation. Resp. Br. at 3-4. However, Plaintiff appears to be
mistaken based on the above facts, and his admonition that Defendants “further confuse the
concepts of personal jurisdiction [and] long arm-jurisdiction [sic],” id., is especially misguided.
frontage, not being a citizen of New Jersey and not maintaining its principal place of business
there, is only subject to general jurisdiction if its “affiliations with the State are so ‘continuous
and systematic’ as to render them essentially at home in the forum State.” Goodyear Dunlop
Tires Operations, LA. v. Brown, 564 U.S. 915, 919, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796

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(U.s. 2011) (quoting Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. &
Placement, 326 U.s. 310, 66 5. Ct. 154, 90 L. Ed. 95 (1945)). Plaintiff alleges no contacts by
frontage that would amount to it being essentially “at home” in New Jersey. Frontage is not
subject to general jurisdiction in the forum.
Spectfic Jurisdiction
As opposed to general jurisdiction, specific jurisdiction permits a State to “authorize its
courts to exercise personal jurisdiction over an out-of-state defendant if the defendant has
‘certain minimum contacts with [the State] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.” Goodyear, 564 U.S. at 923 (quoting
Int’l Shoe, 326 U.S. at 310). Under the minimum contacts test, the Supreme Court has recently
articulated that a defendant must have “purposefully availed itself of the forum.”
Daimler, 571 U.S. 117 (2014). This is consistent with the Court’s general concerns regarding
constitutional due process, upon which mt ‘1 Shoe and its progenies lie, in order to ensure
defendants always have “a reason to expect to be haled into this Court.” Minerva Marine, Inc. v
Spitiotes,, No. CIV. 02-25 17 (WHW), 2006 WL 680988, at *8 (D.N.J. Mar. 13, 2006).
Regarding frontage, Plaintiff makes no effort to establish any allegations that would
permit specific jurisdiction to attach. By hanging his hat on general jurisdiction alone, Plaintiff
fails to establish any minimum contacts between Frontage and the forum. “Plaintiff has the
burden to prove, by a preponderance of the evidence, facts sufficient to establish personal
jurisdiction.” VP Intellectual Properties, LLC v. IMTEC Corp., No. CIV A 99-3 136 (WHW),
1999 WL 1125204, at *6 (D.N.J. Dec. 9, 1999). Plaintiff has not done so, and it “is not the role

of this Court to make legal arguments for the parties.” Natreon, Inc. v. Ixoreal Biomed, Inc., No.
CV164735FLWDEA, 2017 WL 3131975, at *9 (D.N.J. July 21, 2017).

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Plaintiff does argue that Defendant Li is subject to specific jurisdiction in New Jersey.
Resp. Br. at 2. He points to the following in an attempt to establish minimum contacts: “all
telephone conversations, emails, and important events as set forth in the Complaint took place in
the State of New Jersey;” “only one face to face meeting

[] took place in Pennsylvania;” “Li

knew that the work he requested Plaintiff perform would be performed in New Jersey;” and Li
would expect to be “hailed” [sic] into New Jersey because Frontage conducts business in the
state. Id. At this stage of the litigation, the Court must “accept as true all allegations in the
complaint and all reasonable inferences that can be drawn therefrom, and view them in the light
most favorable to the plaintiff.” Kanter v. Baretla, 429 F.3d 170, 177 (3d Cir. 2007).
These allegations are sufficient to establish specific jurisdiction over Li. In Minerva, this
Court declined to apply personal jurisdiction over a defendant whose contacts consisted nearly
entirely of the “firing of [a] New Jersey resident,” reasoning that the “alleged firing.. .is more
appropriately described as an act aimed at a party who is located in New Jersey, rather than as an
act aimed at New Jersey.” No. 2006 WL 68098$ at *5.7• That is not the case here. In his
complaint, the Plaintiff alleges that Defendant Li first contacted Plaintiff to help with a merger
acquisition that resulted in six months of work and a profit of $50 million for Li’s company,
followed by a similar experience in 2016 again initiated by Li. “Mail and telephone
communications sent by the defendant into the forum may count toward the minimum contacts
that support jurisdiction.” O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 317 (3d Cir. 2007).
Also, Li allegedly soliciting Feng is an important fact that goes to his purposeful availment of the
forum. See, e.g., Columbia Metal Culvert Co. v. Kaiser Indus. Corp., 526 F.2d 724, 730 (3d Cir.
1975) (considering “soliciting business and negotiating a contract” in the forum to be
contributing factors “to constitute the minimum contacts necessary for due process”).

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Likewise, Plaintiff alleges that Defendant Li entered into a contract with him, at least
once, while he was in the forum. While a contract alone is insufficient to establish minimum
contacts, “prior negotiations and contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing. must be evaluated in determining whether the
. .

defendant purposefully established minimum contacts within the forum.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 479, 105 S. Ct. 2174, 2185, $5 L. Ed. 2d 528 (1985). According to the
complaint, the business relationship between Plaintiff and Li ran upwards of three years, over the
course of which the two entered into a contract that would grant Plaintiff a high-level executive
position, along with $1 million in equity from Defendant’s company. Defendant Li should not be
surprised to be brought into this Court.
II.

Venue

Under 2$ U.S.C.

§ 139 1(b), venue is proper

in (1) a judicial district in which any defendant resides, if all defendants
are residents of State in which the district is located; (2) a judicial district
in which a substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the subject of the
action is situated; or (3) if there is no district in which an action may
otherwise be brought as provided in this section, any judicial district in
which any defendant is subject to the court’s personal jurisdiction with
respect to such action.
“In this circuit, a plaintiffs choice of forum is a paramount consideration in a transfer analysis.”
Cosmopolitan Shipping Co. v. Cont’l Ins. Co., No. CV 17-4933 (WHW-CLW), 201$ WL
1617701, at *3 (D.N.J. Apr. 3, 2018). However, “[j]udges in the District of New Jersey
have.. .accorded less weight to a plaintiffs decision to litigate here where the central facts of
their case occurred outside the chosen forum’ or the plaintiffs choice of forum has little
connection with the operative facts of the lawsuit.” Id. (internal quotations omitted).

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In this case we have an alleged bilateral contractual relationship that took place mostly
over the phone and in person, with the out-of-state Defendant, Mr. Li, contacting the Plaintiff
within the forum. This is not a litigation with such rigorous physical evidence across far away
forums that a change in venue is necessary. This Court does not find there to be “a significant
hardship for [Defendant Li] to produce records and witnesses in New Jersey, especially as the
two states are neighboring.” Sky Sots., LLC v. Cendant Mobility Servs. Corp., No.
2:07CV02456(DMC), 2008 WL 577285, at *3 (D.N.J. Feb. 29, 2008). The request to change
venues is denied.
CONCLUSION
Defendants’ motion to dismiss is granted in part, denied in part. Defendant Frontage is
dismissed from the suit for lack ofjurisdiction, while Defendant Li remains. Defendants’ request
for a venue transfer is denied. An appropriate order follows.

DATE/

District Court Judge

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NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

DAVE FENG,
Plaintiff,
ORDER
v.
Civ. No. 2:18-cv-03407 (WHW)
FRONTAGE LABORATORIES, INC., and
SONG LI,
Defendants.

The matter having come before the Court on Defendants’ Motion to Dismiss, ECF No. 4,
it is hereby ORDERED that Defendants’ motion is granted as to Defendant Frontage
Laboratories, Inc., claims against which are dismissed without prejudice; and it is further
ORDERED that Defendants’ Motion to Dismiss is denied as to Defendant Song Li; and it
is further
ORDERED that Defendants’ request to transfer this matter to the Eastern District of
Pennsylvania is denied.

DATE:

Senior Un

1

States District Court Judge