Shotton v. Pitkin et al
Filing
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ORDER granting 12 defendants' motion to dismiss; see order for specifics; this case is dismissed without prejudice. Signed by Honorable Joe Heaton on 08/28/2015. (lam)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
JOHN R. SHOTTON,
Plaintiff,
vs.
HOWARD F. PITKIN, former
Commissioner of the Department of
Banking, and BRUCE ADAMS, current
Commissioner of the Department of
Banking,
Defendants.
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NO. CIV-15-0241-HE
ORDER
In this case, plaintiff John R. Shotton asserts claims pursuant to 42 U.S.C. § 1983
against current and former officials of the Department of Banking of the State of Connecticut
(the “Department”). According to the complaint, Mr. Shotton is the Chairman of the Tribal
Council of the Otoe-Missouria Tribe of Indians (“the Tribe”), a federally recognized Indian
tribe headquartered in this district. He is also the Secretary and Treasurer of Great Plains
Lending, LLC (“Great Plains”), and Clear Creek Lending, d/b/a American Web Loan, Inc.
(“Clear Creek”), which are “wholly owned and operated by, and formed and regulated under
the laws of, the Otoe-Missouria Tribe.” Complaint [Doc. #1] at ¶ 5. The defendant officials
of the Department are sued in both their individual and official capacities.
The complaint discusses at length plaintiff’s view of the application of principles of
tribal sovereignty, but is limited in its description of the companies’ business activities either
generally or in the State of Connecticut. However, the parties’ submissions indicate the
primary business activity of these companies is lending small sums to consumers over the
internet. Some of these loans were made to consumers in Connecticut and, in the view of the
Department, were at interest rates substantially in excess of those permitted by the usury laws
of Connecticut. According to the complaint, the Department advised Great Plains by letter
that it appeared to be violating Connecticut law as to a particular consumer loan. After some
contact between Great Plains’ counsel and the Department, the Department later (on October
24, 2014), through defendant Pitkin (the then Commissioner), issued a temporary cease-anddesist order directing plaintiff and the companies to cease violating Connecticut law and to
stop any efforts to collect any illegal loans already made to Connecticut residents. It further
directed them to provide a list of Connecticut residents who had applied for, or who had been
granted, loans carrying an interest rate of over 12%, and to make restitution of the excess
interest to the (by then) three Connecticut residents identified in the order. The temporary
order gave notice of the Commissioner’s intention to issue a permanent cease-and-desist
order and to impose monetary penalties unless otherwise ordered after a hearing. The order
advised plaintiff and the companies of their right to a hearing and set out the procedure for
requesting a hearing.
It appears the companies and plaintiff did not request a hearing as contemplated by
the temporary order, but instead responded by moving to dismiss the enforcement proceeding
based on principles of sovereign immunity. Ultimately, the Commissioner denied the motion
to dismiss and entered an order making permanent the cease-and-desist directive and
imposing the civil penalties. This suit followed.
Here, plaintiff asserts claims against defendant Pitkin, the Commissioner who issued
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the various orders but who has since retired. He also asserts claims against defendant
Adams, who is alleged to be the current acting Commissioner and who was the Presiding
Officer in “certain” cases. Adams is also alleged to have been personally involved in this
matter. The complaint asserts claims alleging that defendants violated his Due Process rights
and his entitlement to tribal sovereign immunity. Defendants have moved to dismiss on
numerous grounds, including lack of personal jurisdiction. Because the court concludes that
personal jurisdiction is lacking, it is unnecessary to address the other potential grounds for
dismissal.
The burden of establishing personal jurisdiction is on the plaintiff. Dudnikov v. Chalk
& Vermillion Fine Arts, Inc., 514 F.3d 1063, 1069 (10th Cir. 2008). Where, as here, a
motion to dismiss is resolved based on the complaint and affidavits or other written materials,
the plaintiff need only make a prima facie showing of personal jurisdiction. Id. at 1070.
In determining whether a federal court has jurisdiction over a defendant, the court
must determine whether an applicable statute confers jurisdiction by authorizing service of
process on the defendant and, if so, whether the exercise of jurisdiction is consistent with
principles of due process. Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209
(10th Cir. 2000). As 42 U.S.C. § 1983, which is the basis of this suit, does not include any
provision authorizing nationwide service of process or otherwise conferring jurisdiction on
this court, a federal court looks to the long-arm statute of the state in which its sits for the
necessary statutory authorization. Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir.
2006). Oklahoma’s long-arm statute authorizes a court to exercise jurisdiction to the fullest
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extent consistent with the U.S. Constitution, so the inquiry becomes a question of whether
the exercise of jurisdiction over the defendants here is consistent with principles of due
process. Newsome v. Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013) (citing 12 Okla. Stat.
§ 2004(F)).
In order to satisfy due process requirements, defendants must have sufficient
“minimum contacts” with the forum state such that litigating there does not offend
“traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945). Those contacts may give rise to either general jurisdiction, sufficient
to support a claim against the non-resident defendant for any lawsuit, or specific jurisdiction,
sufficient to support a lawsuit arising out of the particular forum-state activities. Melea, Ltd.
v. Jawer SA, 511 F.3d 1060, 1065–66 (10th Cir. 2007)
There is no suggestion here that a basis for general jurisdiction exists at to these
defendants. Rather, plaintiff argues that specific jurisdiction is present. For specific
jurisdiction to exist (1) defendants must have “purposefully directed” their activities at
Oklahoma, (2) plaintiff’s claims must “arise out of” defendants’ forum-related activities, and
(3) exercising personal jurisdiction must not “offend traditional notions of fair play and
substantial justice.” Id. Those standards of fair play and substantial justice are met if the
court’s exercise of jurisdiction over the defendant is “reasonable in light of the circumstances
surrounding the case.” AST Sports Sci. Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1061 (10th
Cir. 2008).
In determining whether the defendants purposefully directed their activities toward
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Oklahoma, the court must consider both the quantity and quality of those contacts. OMI
Holdings Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1092 (10th Cir. 1998). So far as
plaintiff’s submissions indicate, the totality of defendants’ contacts with the State of
Oklahoma involve sending the initial allegation letter to Great Plains and the subsequent
cease-and-desist orders to plaintiffs at their headquarters in Oklahoma. Plaintiff says these
are sufficient under Calder v. Jones, 465 U.S. 783 (1984), arguing that they satisfy the
“effects” test identified there.1 Under Calder, purposeful direction is shown where the
defendant (1) commits an intentional action, (2) that is “expressly aimed at the forum state”
and (3) is taken “with the knowledge that the brunt of the injury would be felt in the forum
state.” Dudnikov, 514 F.3d at 1072. Plaintiff’s submissions arguably make out a prima facie
showing as to elements 1 and 3, in that sending the letters and orders was intentional,
defendants plainly knew where plaintiff and the companies resided or were headquartered,
and they would presumably have known that a civil penalty imposed on an Oklahoma
resident would be paid from there and presumably have its principal financial impact there.2
However, they do not make out a prima facie showing that defendants’ actions were
1
The “effects” test is ordinarily employed in connection with alleged torts. Here, the court
assumes, without deciding, that plaintiff’s theory—that he has sovereign immunity rights which were
violated, that the violation gives rise to a claim against these defendants, and that the violation is
in the nature of a tort—is valid.
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In light of the court’s conclusion that sufficient contacts have not been shown to subject Mr.
Pitkin to jurisdiction here, it is unnecessary to separately consider whether jurisdiction exists as to
Mr. Adams, who had even fewer arguable contacts with Oklahoma—apparently limited to knowing
about what Mr. Pitkin, who was the Commissioner at the time of the various departmental actions,
was doing.
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“expressly aimed at the forum state.” As the description of the underlying circumstances
makes clear, defendants’ actions were plainly not aimed at the State of Oklahoma. Rather,
they were directed to plaintiff’s (and the companies’) actions in the State of Connecticut and
their alleged violations of Connecticut law. That the alleged violators lived in, or were based
in, Oklahoma was incidental. The “focal point” of defendants’ efforts was Connecticut, not
Oklahoma. See Dudnikov, 514 F.3d at 1074 n.9 (noting that “[s]ome courts have held that
the ‘expressly aimed’ portion of Calder is satisfied when the defendant ‘individually targets
a known forum resident,’” but that “[w]e have taken a somewhat more restrictive approach,
holding that the forum state itself must be the ‘focal point’ of the tort”); see also, Newsome
v. Gallacher, 722 F.3d at 1268 (“The express aiming element requires Oklahoma to have
been the ‘focal point’ of the tort.”). The defendants’ efforts were directed to stopping the
alleged violations in Connecticut, involving the companies’ dealings with Connecticut
residents, rather than to any other activity that might have been originating from their
operations in Oklahoma generally. In these circumstances, the court concludes plaintiffs
have not shown the necessary “purposeful direction” of activities by the defendants to
Oklahoma.
This conclusion is consistent with the decisions of other federal courts addressing
substantially similar circumstances. In Stroman Realty Inc. v. Wercinski, 513 F.3d 476 (5th
Cir. 2008), the Fifth Circuit concluded that the Arizona Department of Real Estate did not
expressly aim at the forum in Texas by sole virtue of sending two cease-and-desist orders to
a Texas-based business which sold timeshares to Arizona consumers, because the
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defendant’s intent was merely to uphold and enforce the laws of Arizona. Similarly, in
United States v. Ferrara, 54 F.3d 825 (D.C. Cir. 1995), the court concluded the chief counsel
of the disciplinary board of the New Mexico Supreme Court could not properly be sued in
the District of Columbia for disciplinary action she took against an attorney licensed by the
board, even though the attorney’s alleged misconduct had occurred in the District, because
the chief counsel was merely seeking to enforce New Mexico’s ethical standards. It appears
a majority of courts have reached substantially the same conclusion for circumstances where,
as here, the contacts urged as the sole basis for jurisdiction were “cease-and-desist” letters
or notices issued by regulators or others. See Tuteur v. Crosley-Corcoran, 961 F. Supp. 2d
333, 338–39 (D. Mass. 2013) (collecting cases); Wise v. Lindamood, 89 F.Supp.2d 1187,
1191–92 (D.Colo.1999) (same).
In any event, the court concludes plaintiff has not made the necessary showing that
defendants’ actions were “purposefully directed” at Oklahoma, within the meaning of the
applicable authorities.
In light of that conclusion, it is unnecessary to resolve the additional and substantial
questions presented as to whether plaintiff has met the requirement to show his claims have
arisen out of defendants’ forum-related activities, or whether subjecting a state regulator to
suit here in these circumstances would “offend traditional notions of fair play and substantial
justice.”
Given the nature and “direction” of defendants’ actions, their contacts with
Oklahoma were not such that they “should reasonably anticipate being haled into court
there,” World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297 (1980).
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Defendants’ motion to dismiss [Doc. #12] is GRANTED. This case is DISMISSED
without prejudice.3
IT IS SO ORDERED.
Dated this 28th day of August, 2015.
3
The court concludes there is no reason to transfer, rather than dismiss, the case in these
circumstances. See Trujillo, 465 F.3d at 1222–23. Neither party has requested that relief and, as
another proceeding is apparently under way in state court directed to the same issues, as set out in
the parties’ discussion of Younger abstention, there appears to be no compelling reason to transfer
this case.
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