BEACH (CARLA) VS. CAESAR'S RIVERBOAT CASINO, LLC , ET AL.
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RENDERED: SEPTEMBER 4, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
SUPREME COURT GRANTED DISCRETIONARY REVIEW:
JANUARY 13, 2010
(FILE NO. 2009-SC-0634-D)
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000402-MR
CARLA BEACH
v.
APPELLANT
APPEAL FROM SHELBY CIRCUIT COURT
HONORABLE CHARLES R. HICKMAN, JUDGE
ACTION NO. 07-CI-00641
CAESARS RIVERBOAT
CASINO, LLC; AND HARRAH'S
ENTERTAINMENT, INC.
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: MOORE, TAYLOR, AND VANMETER, JUDGES.
TAYLOR, JUDGE: Carla Beach appeals from the Shelby Circuit Court’s order
dismissing her action for lack of personal jurisdiction over appellees, Caesars
Riverboat Casino, LLC, (Caesars) and Harrah’s Entertainment, Inc.1 Beach argues
1
Caesars Riverboat Casino, LLC, is a limited liability company formed under Indiana law;
Harrah’s Entertainment, Inc. is a Delaware corporation.
on appeal that the circuit court erred by dismissing her complaint for lack of
personal jurisdiction over appellees. For the following reasons, we reverse and
remand.
Beach alleges in her complaint that appellees own and operate a
riverboat casino located just across the Kentucky state line in Elizabeth, Indiana,
near Louisville, Kentucky.2 Appellees’ facilities include a casino, hotel, retail
stores, and several restaurants. Beach alleges that on October 20, 2006, while
dining at a buffet restaurant on appellees’ property, she “slipped on butter that had
been allowed to remain on the floor and fell violently to the floor, causing [her] to
sustain serious injuries and damages.” At the time of the incident, Beach was a
resident of Shelby County, Kentucky. She also was a “frequent patron” of
appellees’ casino and a member of their player’s club.3
Appellees immediately moved to dismiss Beach’s complaint under
Kentucky Rules of Civil Procedure (CR) 12.02, arguing that the Shelby Circuit
Court lacked personal jurisdiction over them as neither entity owned or maintained
property in Kentucky, nor had any employees or agents operating or conducting
business in Kentucky. Beach argued, in response, that appellees had sufficient
2
The riverboat casino is located in the Ohio River, a few feet from the Kentucky state line. In
Kentucky v. Indiana, 474 U.S. 1, 106 S. Ct. 304, 88 L. Ed. 2d 1 (1985), Kentucky conceded that
its border extended only to the low water mark of the Ohio River as it existed in 1792 (Joint
Exhibit 50 to Special Master’s Report), which arguably means that Kentucky does not own all of
the Ohio River, just most of it. However, Kentucky and Indiana have concurrent jurisdiction
over the Ohio River. Id. There are no allegations in this case that the riverboat casino is actually
located in Kentucky.
3
The record reflects that Carla Beach was the holder of a Total Rewards gold card, which
appears to be a rewards program sponsored by appellees to promote player participation and
loyalty at the casino and related premises.
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contacts with Kentucky for the court’s exercise of personal jurisdiction over them.
Specifically, Beach cited solicitations appellees sent directly to her, as well as
more general advertising directed towards Kentucky residents. There was no
discovery taken in this case regarding appellees’ contacts in Kentucky.
Notwithstanding, the circuit court found that it lacked personal jurisdiction over
appellees, holding that while there was “a strong argument to be made” that
appellees purposefully availed themselves of the forum state, Beach’s cause of
action “did not arise from the direct mailings she received, the advertisements
Caesar’s directs toward Kentucky consumers, or any other contacts between
Caesar’s and Kentucky.” This appeal follows.
Beach’s sole argument on appeal is that the circuit court erred by
dismissing her complaint for lack of personal jurisdiction over appellees. We
agree.
It is well settled when considering a motion to dismiss under CR
12.02, the pleadings should be liberally construed in a light most favorable to the
plaintiff and all allegations in the complaint are taken to be true. Mims v. WesternSouthern Agency, Inc., 226 S.W.3d 833 (Ky.App. 2007). The issues raised look
solely to questions of law based upon the conclusions reached by the circuit court.
The circuit court’s conclusions of law are reviewed de novo. Gosney v. Glenn, 163
S.W.3d 894 (Ky.App. 2005), and Revenue Cabinet v. Hubbard, 37 S.W.3d 717
(Ky. 2000). Thus, our review will proceed de novo on the sole legal issue raised in
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this appeal as to whether the trial court erred in dismissing this action for lack of
personal jurisdiction over appellees.
Kentucky Revised Statutes (KRS) 454.210, Kentucky’s long-arm
statute, governs when Kentucky courts may exercise personal jurisdiction over
nonresidents. The Kentucky Supreme Court has noted that this statute authorizes
in personam jurisdiction:
[T]o reach the outer limits of the due process clause of
the Fifth and Fourteenth Amendments to the United
States Constitution, and because of this breadth, our
statutory requirements have merged into the federal due
process analysis. For this reason, we “need only
determine whether the assertion of personal jurisdiction
violates constitutional due process.”
Cummings v. Pitman, 239 S.W.3d 77, 84-85 (Ky. 2007)(footnotes omitted).
Among the seminal cases discussing the due process clause and
personal jurisdiction are International Shoe Co. v. State of Wash., Office of
Unemployment Compensation and Placement, 326 U.S. 310, 66 S. Ct. 154, 90 L.
Ed. 95 (1945), and World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100
S. Ct. 559, 62 L. Ed. 2d 490 (1980). The cumulative interpretation of these
precedents provides for a three-prong test to determine the minimum contacts with
the forum necessary for a court to exercise personal jurisdiction over a nonresident.
The Kentucky Supreme Court approved this three-prong test in Wilson v. Case, 85
S.W.3d 589 (Ky. 2002). Although this “minimum contacts” test was not applied
by the Kentucky Supreme Court until Wilson in 2002, various panels of the
Kentucky Court of Appeals had been utilizing the test since 1978. See Tube Turns
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Division of Chemetron Corp. v. Patterson Co., Inc., 562 S.W.2d 99 (Ky.App.
1978).
In Cummings, 239 S.W.3d at 85, the Kentucky Supreme Court
summarized the three-prong minimum contacts test as follows:
The first prong of the test asks whether the defendant
purposefully availed himself of the privilege of acting
within the forum state or causing a consequence in the
forum state. The second prong considers whether the
cause of action arises from the defendant’s activities in
the forum. The final prong requires the defendant to
have a substantial enough connection to the forum state
to make exercise of jurisdiction over the defendant
reasonable. Each of these criteria represents a separate
requirement, and jurisdiction will lie only where all three
are satisfied. (Footnote omitted.)
This appeal centers upon the circuit court’s interpretation and
application of the second prong in this case. The circuit court concluded that the
first prong had been satisfied and did not address the third prong since the court
determined that the cause of action did not arise out of appellees’ contacts in
Kentucky as required in the second prong of the test. Thus, the focus of our review
looks to whether the cause of action asserted by Beach in her complaint arises from
appellees’ activities in Kentucky.
Unfortunately, no discovery was taken in this case. The motion to
dismiss was filed by appellees shortly after service of the complaint and no answer
was filed. The case was immediately taken under submission by the circuit court.
To say that the record on appeal is meager would be an overstatement. The entire
record below consists of a total of fifty-eight pages.
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However, Beach relies heavily upon the opinion recently rendered by
the United States District Court for the Western District of Kentucky in Ford v.
RDI/Caesars Riverboat Casino, LLC, 503 F. Supp. 2d 839 (W.D. Ky. 2007). In
Ford, the U.S. District Court, sitting in diversity, concluded that the federal court
did have personal jurisdiction over Caesars in a wrongful death action that arose
from an automobile accident in Floyd County, Indiana. Unlike this case, Judge
Heyburn in Ford, permitted discovery on the personal jurisdiction issue and made
substantial findings regarding Caesars’ contacts in Kentucky that warranted
personal jurisdiction in that action. The circuit court in this case discussed Ford at
length in an attempt to distinguish Ford from this case. While we agree with the
circuit court that a federal court’s interpretation of Kentucky law is persuasive
authority at best, in this case, we believe the federal court is correct in its analysis
of Kentucky law which is directly on point and applicable to this case. See
Benningfield v. Pettit Envtl. Inc., 183 S.W.3d 567 (Ky.App. 2005).
The Ford decision is of particular importance for our case because it
involves Caesars, which is one of the same parties to this appeal, as well as the
same gambling facilities and premises operated by Caesars in Elizabeth, Indiana.
In Ford, Carla Burkhead, a Kentucky resident, was driving home from Caesars
when she crossed the centerline of State Road 111 in Floyd County, Indiana, and
hit the car of Charles Jayne, also a Kentucky resident. Jayne sustained fatal
injuries from the accident. Burkhead was intoxicated at the time of the accident
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and had been drinking at Caesars immediately prior to the accident. The
administrator of Jayne’s estate filed suit in Kentucky in federal court, alleging that:
Caesars served Burkhead alcohol when its employees
knew or should have known that she was actually or
apparently under the influence of alcohol and knew there
was a reasonable likelihood that upon leaving the casino
she would operate a motor vehicle.
Ford, 503 F. Supp. 2d at 841. Caesars filed a motion to dismiss for lack of
personal jurisdiction like it did in the Shelby Circuit Court action filed by Beach.
As noted, the federal court allowed discovery on the issue of personal jurisdiction.
As a result of this discovery, the federal court made findings of fact in Ford that
are most pertinent to this action. Specifically, the federal court found as follows:
Some part of Caesars' business is undeniably
connected to and carried out in Kentucky. As Plaintiff's
discovery has demonstrated, a large portion of Caesars'
revenue comes from Kentucky. Various studies and
reports have concluded that somewhere around fifty
percent of Caesars' customers are from Kentucky.
During discovery, Caesars provided forty-three pages of
newspaper and billboard ads that appeared in Kentucky
during the year leading up to the accident. The
advertisements provided are not “exhaustive” and clearly
Caesars has undertaken a comprehensive advertising
campaign in Kentucky. Caesars earned at least $109
million from Kentucky residents in 2000, demonstrating
the financial significance of Kentucky residents to
Caesars.
Caesars is also active in Kentucky as sponsor of
events and donor of charitable contributions. In the
twenty-four months preceding the accident, Caesars
donated $478,000 to such causes. The largest
contribution by far was $400,000 to the Kentucky Derby
Festival. Finally, Caesars has an active direct mail
marketing campaign to Kentucky residents. Both
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Burkhead and Jayne received direct mail advertising
from Caesars, both were regular patrons of Caesars, both
were members of its Rewards Club for several years prior
to the accident, and both were holder of Players Cards.
In the twelve months prior to the accident, Burkhead
visited the casino on average 13.5 times per month; in the
same period, Jayne visited on average 1.5 times per
month. Jayne's personal effects at his death included a
Caesars “Certificate of Achievement” for completing a
gaming instruction course, Caesars hotel receipts, and a
wide variety of Caesars merchandise, including T-shirts,
a key chain, drinking mugs, an umbrella, a fanny pack, a
barbeque tool set, a watch, and a hat.
Ford, 503 F. Supp. 2d at 841-842.
In the case sub judice, the circuit court discusses these extensive
findings of fact made in Ford regarding Caesars’ contacts with Kentucky. The
circuit court also notes that Beach states in her complaint that she is a “member of
Caesar’s [sic] Champions Club and receives direct mailings at her residence in
Kentucky from Caesar’s [sic] soliciting business.” The circuit court further states
that Beach alleges that Caesars “advertises throughout Kentucky to solicit residents
of Kentucky to travel to Caesar’s [sic] casino in Indiana.” As noted previously, for
purposes of the motion to dismiss, these allegations must be taken as true,
especially since there is nothing in the record to refute these allegations and
further, the findings by the federal court in Ford clearly support these allegations.
For our purposes in this case, this Court can take judicial notice of the
adjudicated facts set out in Ford which are applicable to this case. Kentucky Rules
of Evidence (KRE) 201. See also Doe v. Golden & Walters, PLLC, 173 S.W.3d
260 (Ky.App. 2005). KRE 201(f) specifically provides that judicial notice may be
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taken in any stage of the judicial proceeding. Adjudicated facts which this Court
may take judicial notice of are specifically provided for in KRE 201(b), which
reads as follows:
(b) Kinds of facts. A judicially noticed fact must be one
not subject to reasonable dispute in that it is either:
(1) Generally known within the county from which
the jurors are drawn, or, in a nonjury matter, the county
in which the venue of the action is fixed; or
(2) Capable of accurate and ready determination by
resort to sources whose accuracy cannot reasonably be
questioned.
The adjudicative facts determined by the federal court in Ford as
pertains to Caesars’ contacts in Kentucky cannot be reasonably questioned in our
opinion. These facts, coupled with the unrefuted allegations in Beach’s complaint,
provide this Court with a sufficient factual background to analyze appellees’
contacts with Kentucky under the long-arm statute.
While the circuit court considered both the facts from Ford as well as
those alleged by Beach in this case in considering Caesars’ contacts with
Kentucky, it nonetheless concluded that the cause of action set forth by Beach did
not arise out of Caesars’ contacts with Kentucky. The circuit court essentially
concluded that Kentucky courts cannot obtain personal jurisdiction over
nonresidents where the alleged tort occurs outside of Kentucky’s borders. We
believe that the circuit court erred in its interpretation of applicable Kentucky law
on this issue for the reasons that follow.
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We begin our analysis with Mohler v. Dorado Wings, Inc., 675
S.W.2d 404 (Ky.App. 1984). Mohler is the first Kentucky case that we can locate
that addresses the application of personal jurisdiction by a Kentucky court over a
nonresident where the tort was committed outside of the state’s boundaries. In
Mohler, an action was asserted against Dorado for compensatory and punitive
damages arising from the loss of jewelry in Mohler’s luggage while it was being
transported on Dorado’s airline to the Virgin Islands. The circuit court dismissed
the complaint for lack of personal jurisdiction. In reversing the circuit court, the
Court of Appeals addressed the issue regarding the location of the tortious conduct
for purposes of obtaining personal jurisdiction as follows:
Although the appellee argues that even if it is
determined that it transacted business within the
Commonwealth, there must be a determination that it
caused some tortious injury in the Commonwealth for the
court to acquire jurisdiction. We disagree. The statute
does not provide for a two-fold test as to whether a court
can acquire long-arm jurisdiction. If a defendant is
transacting business within the Commonwealth, it is not
necessary that a tort be committed herein. . . .
Mohler, 675 S.W.2d at 407. Mohler clearly holds that where a party is transacting
business in Kentucky, it is not necessary for a tort claim to have arisen in Kentucky
for the court to obtain personal jurisdiction over that party. In Wilson, the
Kentucky Supreme Court, in discussing Mohler, strongly suggests that personal
jurisdiction may be had over nonresidents for torts committed outside of Kentucky
where the nonresident “repeatedly and systematically did business with Kentucky
companies and consumers.” Wilson, 85 S.W.3d at 595.
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The personal jurisdiction rules set out in Mohler were recently
amplified by the Kentucky Supreme Court in Cummings v. Pitman, 239 S.W.3d 77
(Ky. 2007). In Cummings, the Kentucky Supreme Court concluded that a lawyer
acting as trustee for a New York trust that was created in New York and
administered in New York under New York law, who otherwise had no contact
with Kentucky other than executing the trust agreement during one short visit to
Kentucky, constituted sufficient minimum contacts within Kentucky to satisfy the
second prong of the minimum contacts test to warrant personal jurisdiction over
the trustee for an alleged breach of fiduciary duty in Kentucky. The Supreme
Court specifically made the following observation:
The second prong of the minimum contacts test
requires the court to decide whether the cause of action
arises from the defendant's activities in the state.
Interpreting this criterion, the United States Court of
Appeals for the Sixth Circuit has recognized, “Only when
the operative facts of the controversy are not related to
the defendant's contact with the state can it be said that
the cause of action does not arise from that contact.”
(Citing Southern Mach. Co. v. Mohasco Industries, Inc.,
401 F. 2d 374, 384 (6th Cir.1968)).
Cummings, 239 S.W.3d at 88. Like in the Ford case, Caesars’ contact with
Kentucky did not “cause” the accident in the traditional meaning of that word.
However, the systematic and continuous nature of the contacts by Caesars most
clearly contributed to Beach’s presence on Caesars’ premises in Elizabeth, Indiana,
on October 20, 2006, when Beach suffered her injuries at Caesars restaurant.
Based upon the authority cited, we believe the circuit court clearly erred in
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concluding that the cause of action did not arise from Caesars’ contacts with
Kentucky. If we were to agree with the circuit court’s reasoning, arguably a
Kentucky court could never assert long-arm personal jurisdiction over an out-ofstate defendant for a negligence action that arose outside of Kentucky’s border. In
other words, if a Kentucky resident is targeted and induced by Caesars to utilize
Caesars’ gambling facilities, including its restaurants, and is then injured as a result
of Caesars’ negligence, the Kentucky resident would have no redress in Kentucky
courts for his injuries. This is contrary to the law of Kentucky in our opinion.
The operative facts underlying Beach’s cause of action are clearly
related to Caesars’ contact within the state of Kentucky. There can simply be no
dispute that Caesars transacts substantial business in Kentucky and also maintains
continuous and systematic contacts within Kentucky especially through the
promotions, solicitations and inducement of Kentucky residents to utilize its
facilities located a few feet from Kentucky’s border. We believe these are
precisely the type of contacts contemplated under Kentucky’s long-arm statute to
trigger personal jurisdiction. To conclude otherwise would mean that in personam
jurisdiction in Kentucky under KRS 454.210 would not extend to the outer limits
of the due process clause of the Fifth and Fourteenth Amendments to the United
States Constitution in this case or in any similar factual situation, but rather be
limited to the banks (or the low water mark of 1792) of the Ohio River.
Accordingly, the assertion of personal jurisdiction over appellees in this case does
not violate constitutional due process and is otherwise reasonable.
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For the foregoing reasons, we reverse the Shelby Circuit Court’s
dismissal of this action for lack of personal jurisdiction over appellees herein and
remand for proceedings consistent with this opinion.
MOORE, JUDGE, CONCURS.
VANMETER, JUDGE, DISSENTS.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Jeremy A. Winton
Louisville, Kentucky
James L. Fischer, Jr.
New Albany, Indiana
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