Orange Leaf Holdings LLC v. Patel et al
Filing
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ORDER granting in part and denied in part 12 Defendants' MOTION to Dismiss, Transfer and/or Stay filed by Chintu Patel, Dain Pool, Dan Pool., Dain Pool and Dan Pool dismissed. Signed by Honorable Robin J. Cauthron on 4/3/15. (lg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ORANGE LEAF HOLDINGS, LLC,
Plaintiff,
vs.
CHINTU PATEL; DAN POOL; and
DAIN POOL,
Defendants.
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Case Number CIV-15-8-C
MEMORANDUM OPINION AND ORDER
Plaintiff brought this action alleging Defendants interfered with certain contracts,
misappropriated trade secrets, breached a fiduciary duty, and interfered with prospective
economic advantage. Plaintiff also seeks an Order enjoining the disclosure of confidential
information by Defendants. After removing the action from state court, Defendants filed the
present Motion to Dismiss. According to Defendants, the Court lacks personal jurisdiction
or in the alternative this matter should be dismissed or transferred pursuant to the first-to-file
rule. Plaintiff responds arguing that at a minimum personal jurisdiction is proper here, as
sufficient minimum contacts exist to warrant the exercise of specific jurisdiction.
A.
Personal Jurisdiction
Defendants argue jurisdiction in this Court is improper as Plaintiff has failed to
demonstrate sufficient minimum contacts with Oklahoma and any such exercise of
jurisdiction would offend “‘traditional notions of fair play and substantial justice.’” Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). Plaintiff argues that
minimum contacts do exist and that Oklahoma is the reasonable and appropriate forum to
litigate the matter.
The standard of review for motions under Fed. R. Civ. P. 12(b)(2) is well established:
Generally, plaintiffs bear the burden of proof to establish that jurisdiction over
the parties is proper. In the context of pre-trial motions to dismiss decided
without a hearing, plaintiffs must make only a prima facie showing as to the
propriety of personal jurisdiction.
In ruling on motions under Rule 12(b)(2), the Court considers the
averments of the complaint, and the affidavits and other evidentiary materials
submitted by the parties. The well pled factual averments of the complaint are
accepted as true, unless controverted by defendants’ evidentiary materials.
Factual disputes arising from the evidentiary materials are resolved in favor of
plaintiffs.
McClelland v. Watling Ladder Co., 729 F.Supp. 1316, 1317-18 (W.D. Okla. 1990) (internal
citations and footnote omitted).
“‘To obtain personal jurisdiction over a nonresident defendant in a diversity action,
a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that
the exercise of jurisdiction does not offend the due process clause of the Fourteenth
Amendment.’” Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir. 2004) (citation
omitted). In Oklahoma that test becomes a single inquiry, as Oklahoma’s long-arm statute
reaches to the full extent of due process. 12 Okla. Stat. § 2004(F); Rambo v. Am. S. Ins. Co.,
839 F.2d 1415, 1416 (10th Cir. 1988).
The federal due process analysis involves a two-step inquiry. First, a “‘court may
exercise personal jurisdiction over a nonresident defendant only so long as there exist
minimum contacts between the defendant and the forum State.’” Pro Axess, Inc., v. Orlux
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Distrib., Inc., 428 F.3d 1270, 1276 (10th Cir. 2005) (quoting World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 291 (1980)).
The Court must determine whether “‘the
defendant’s conduct and connection with the forum State are such that he should reasonably
anticipate being haled into court there.’” Id. (quoting World-Wide Volkswagen, 444 U.S.
at 297). Second, if sufficient minimum contacts do exist, the Court “‘must then consider
whether the exercise of personal jurisdiction over the defendant offends traditional notions
of fair play and substantial justice.’” Pro Axess, 428 F.3d at 1276-77 (quoting OMI
Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998)).
1.
Minimum Contacts
“In determining whether a defendant has established sufficient minimum contacts with
the forum state, we examine whether the defendant ‘purposefully avail[ed] itself of the
privilege of conducting activities within the forum State.’” Pro Axess 428 F.3d at 1277
(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). “A defendant’s contacts are
sufficient if ‘the defendant purposefully directed its activities at residents of the forum,
and . . . the plaintiff’s claim arises out of or results from actions by the defendant himself that
create a substantial connection with the forum state.’” Id. at 1277 (quoting OMI, 149 F.3d
at 1091).
a.
Chintu Patel
Applying this authority, it is clear that Defendant Patel has sufficient contacts with
Oklahoma. As Plaintiff asserts in its Response brief, Mr. Patel had a contractual relationship
with Plaintiff. Mr. Patel directed his activities at Plaintiff in agreeing to the franchise
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contract and the claims in this action arise from that relationship. Further, Plaintiff has
offered uncontroverted evidence that Mr. Patel has on several occasions traveled to
Oklahoma to conduct business related to the franchise agreements he entered into with
Plaintiff. For these reasons the Court finds that Plaintiff has established Defendant Patel had
sufficient minimum contacts with Oklahoma.
b.
Dan Pool
Plaintiff offers three factual statements which it asserts are sufficient to establish
Defendant Dan Pool had the required minimum contacts with Oklahoma. Those facts are:
12.
In the summer of 2014 Orange Leaf was advised Dan Pool had
recently become a co-CEO of CCreations, LLC, an umbrella company that
runs Patel’s franchise operations.”
13.
Orange Leaf understood that Dan Pool and Patel were business
partners and were attempting to turn Patel’s failing franchise business around.
14.
Thereafter, Orange Leaf was contacted by Dan Pool and Patel
on numerous occasions in Oklahoma in an attempt to negotiate or renegotiate
issues related to the agreements between Orange Leaf and Patel.
(Pl.’s Rsp., Dkt. No. 17, p. 5). Countering these facts is the affidavit from Dan Pool wherein
he states he was never a member of CCreations, was never a business partner of Patel, and
that he was only asked by Patel to participate as an advisor during Patel’s telephone
conversations with Orange Leaf.
The Court is mindful that it must resolve factual disputes in favor of Plaintiff. See
Behagen v. Amateur Basketball Ass’n of U.S.A., 744 F.2d 731, 733 (10th Cir. 1984).
However, these factual statements are not in dispute. Rather, Plaintiff offers statements
based on belief or understanding while Defendant Dan Pool offers averments based on
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personal knowledge. Consequently, the Court finds that Plaintiff has failed to establish that
Defendant Dan Pool had sufficient minimum contacts with Oklahoma.
c.
Dain Pool
Plaintiff’s evidence regarding Defendant Dain Pool consists of an email that was
allegedly received by two of Plaintiff’s Oklahoma franchise locations.
Certainly, telephone calls and letters may provide sufficient contacts for
the exercise of personal jurisdiction. In proper circumstances, even a single
letter or telephone call to the forum state may meet due process standards.
However, the exercise of jurisdiction depends on the nature of those contacts.
The existence of letters or telephone calls to the forum state related to the
plaintiff’s action will not necessarily meet due process standards.
Rambo, 839 F.2d at 1418 (citations omitted). Rather than focus on the quantity of contacts,
the Court is directed to review the efforts of the Defendant and whether he sought to act in
Oklahoma. “‘Purposeful availment analysis turns upon whether the defendant’s contacts are
attributable to his own actions or solely to the actions of the plaintiff . . . [and generally]
requires . . . affirmative conduct by the defendant which allows or promotes the transaction
of business within the forum state.’”
Id. at 1420 (quoting Decker Coal Co. v.
Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir. 1986)). Applying this authority to
the acts of Defendant Dain Pool, the Court finds that Plaintiff has failed to establish
minimum contacts. Rather than providing an example of purposeful availment, the letters
are at most an invitation to future communication or a solicitation. As such, the emails,
standing alone, are insufficient. See Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1076 (10th
Cir. 1995).
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2.
Traditional Notions of Fair Play and Substantial Justice
The second step in the inquiry, then, is whether a court’s exercise of personal
jurisdiction offends “‘traditional notions of fair play and substantial justice.’” Pro Axess,
428 F.3d at 1279 (citation omitted). This step requires the Court to determine whether
exercising personal jurisdiction over a defendant with minimum contacts is “‘reasonable in
light of the circumstances surrounding the case.’” Id. (citation omitted). The Court considers
the following factors:
“(1) the burden on the defendant, (2) the forum state’s interest in resolving the
dispute, (3) the plaintiff’s interest in receiving convenient and effective relief,
(4) the interstate judicial system’s interest in obtaining the most efficient
resolution of controversies, and (5) the shared interest of the several states in
furthering fundamental social policies.”
Id. at 1279-80 (quoting OMI, 149 F.3d at 1095). Where a defendant seeks to defeat
jurisdiction under the second step of the inquiry, it “must present a compelling case that the
presence of some other considerations would render jurisdiction unreasonable.” Pro Axess,
428 F.3d at 1280 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
a.
Burden on Defendant Patel
Given the facts noted above which establish that Defendant Patel has made numerous
trips to Oklahoma during his dealings with Plainitff, the Court finds that forcing Defendant
Patel to litigate this dispute in Oklahoma is not “‘gravely difficult and inconvenient.’” Id.
(quoting Burger King, 471 U.S. at 478). Accordingly, this factor weighs in favor of
exercising jurisdiction.
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b.
Oklahoma’s Interest
Second, “‘States have an important interest in providing a forum in which their
residents can seek redress for injuries caused by out-of-state actors. . . . The state’s interest
is also implicated where resolution of the dispute requires a general application of the forum
state’s laws.’” Id. at 1280 (quoting OMI, 149 F.3d at 1096). Plaintiff is an Oklahoma entity
and Oklahoma has an interest in providing it with a forum for its suit.
c.
Plaintiff’s Interest
Third, the Plaintiff’s interest in convenient and effective relief:
“hinges on whether the Plaintiff may receive convenient and effective relief
in another forum. This factor may weigh heavily in cases where a Plaintiff’s
chances of recovery will be greatly diminished by forcing him to litigate in
another forum because of that forum’s laws or because the burden may be so
overwhelming as to practically foreclose pursuit of the lawsuit.”
Id. at 1281 (quoting OMI, 149 F.3d at 1097). Plaintiff’s argument on this factor notes the
difficulty in obtaining complete relief outside this forum as Defendant Patel resides in a
different state than the Pool Defendants. However, because the Court has determined
Plaintiff failed to establish the Pool Defendants had minimum contacts with Oklahoma they
do not weigh in the equation. This factor is neutral.
d.
Judicial System’s Interest
Fourth, the interstate judicial system’s interest in obtaining efficient resolution asks
“‘whether the forum state is the most efficient place to litigate the dispute. . . . Key to this
inquiry are the location of witnesses, where the wrong underlying the lawsuit occurred, what
forum’s substantive law governs the case, and whether jurisdiction is necessary to prevent
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piecemeal litigation.’” Pro Axess, 428 F.3d at 1281 (quoting OMI, 149 F.3d at 1097)).
Plaintiff argues, and no Defendant disputes, that a large portion of the witnesses of this
dispute are located Oklahoma. Plaintiff also offers the undisputed argument that Oklahoma
law governs the parties’s dispute. This factor weighs in favor of exercising jurisdiction over
Defendant Patel.
e.
Reasonableness
Finally, the fifth factor of the reasonableness inquiry “‘focuses on whether the
exercise of personal jurisdiction by [the forum] affects the substantive social policy interests
of other states or foreign nations. . . . [G]reat care and reserve should be exercised when
extending our notions of personal jurisdiction into the international field.’” Id. (quoting
OMI, 149 F.3d at 1097-98). No party has offered any evidence or argument that this factor
is implicated in the present case.
In sum, none of the five factors weighs in Defendant Patel’s favor. Accordingly, he
has failed to establish a “‘compelling case’” that exercise of jurisdiction by an Oklahoma
court would be unreasonable. Id. at 1281 (citation omitted). Therefore, as to Defendant
Patel, Plaintiff has made a prima facie showing of both prongs of the federal due process
analysis and the Court’s exercise of personal jurisdiction over Defendant Patel would not
offend traditional notions of fair play and substantial justice.
B.
First to File
Defendant Patel argues that if the Court finds he is subject to personal jurisdiction, it
should nonetheless dismiss or transfer this action to the United States District Court for the
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Southern District of Indiana as a case involving similar issues and parties was previously
filed in that court. Fatal to Defendant’s argument is the fact that on March 18, 2015, the
Indiana Court transferred its action to this Court. Thus, transfer would be improper.
CONCLUSION
For the reasons set forth herein, Defendants’ Motion to Dismiss, Transfer and/or Stay
(Dkt. No. 12) is GRANTED in part and DENIED in part. Plaintiff’s claims against
Defendants Dan and Dain Pool are DISMISSED without prejudice as the Court lacks
personal jurisdiction over those individuals. In all other respects, Defendants’ Motion is
denied.
IT IS SO ORDERED this 3rd day of April, 2015.
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