PLKH Solutions LLC et al v. Shire Leasing PLC, No. 2:2012cv00875 - Document 13 (D. Ariz. 2012)
Court Description: ORDER granting 9 Defendant Shire's Motion to Dismiss for Lack of Personal Jurisdiction. The Clerk of Court is directed to terminate this action. Signed by Judge G Murray Snow on 10/15/12.(TLJ)
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PLKH Solutions LLC et al v. Shire Leasing PLC 1 Doc. 13 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 PLKH Solutions, LLC; ProLink Holdings Corp., ORDER 10 11 12 No. CV-12-00875-PHX-GMS Plaintiffs, v. Shire Leasing PLC, 13 Defendant. 14 15 16 17 Pending before the Court is Defendant Shire Leasing’s Motion to Dismiss Complaint for Lack of Personal Jurisdiction. (Doc. 9.) For the reasons articulated below, the motion is GRANTED.1 18 19 20 21 22 23 24 BACKGROUND Plaintiffs PLKH Solutions, LLC, and ProLink Holdings Corp. (together, “ProLink”) are Arizona entities that operated a business that sold GPS units for golf carts. (Doc. 1 ¶ 2.) These GPS units had a monitor that was placed near the roof of golf carts and, when the golf cart was driven up to the ball, showed the layout of the hole and identified yardages to the pin, as well as various traps to avoid. In October 2004, Kevin Clarke of Elumina Iberica, a UK company, approached ProLink about the possibility of 25 26 1 27 28 Defendant’s request for oral argument is denied because the parties have had an adequate opportunity to discuss the law and evidence and oral argument will not aid the Court’s decision. See Lake at Las Vegas Investors Group v. Pac. Malibu Dev., 933 F.2d 724, 729 (9th Cir. 1991). Dockets.Justia.com 1 distributing the GPS units in Europe. (Id. ¶ 18.) ProLink and Elumina formed a 2 distribution agreement, under which Elumina and Clarke could “purchase, service, 3 support, and sell ProLink’s GPS systems in various European countries.” (Id. ¶ 20.) 4 Elumina, thereafter, purchased $ 4.5 million in GPS units from ProLink on credit. After 5 purchasing the GPS units, Elumina leased them to various golf courses at what are 6 alleged to be inflated prices. Elumina’s sales pitch to the golf courses was that GPS Ads, 7 Ltd. would sell advertising to be displayed on the GPS programs, and return some or all 8 of the revenue received from the advertising to the golf course. That way the golf courses 9 would essentially make up the cost of the lease of the GPS units through the advertising 10 revenue that it would receive back from GPS Ads. (Id. ¶¶ 22, 24-25.) 11 Defendant Shire Leasing, a UK company, was the originator and financer of the 12 leases entered by Elumina and the golf courses. (Id. ¶ 29.) Shire then sold the leases to 13 various European banks. (Id. ¶ 36.) In other words, Shire was allegedly the “financing 14 arm” of the Elumina GPS venture. (Id. ¶ 28.) 15 Elumina, however, allegedly paid golf courses money Elumina represented as 16 being from advertising revenue, but which was really only from leases to other golf 17 courses for GPS units. (Id. ¶ 26.) ProLink alleges that Shire never conducted due 18 diligence regarding Elumina, GP Ads, or the golf courses to determine whether the 19 venture would pay off and whether ProLink had been or would be paid for its GPS units. 20 (Id. ¶¶ 30-32.) ProLink alleges that these failures demonstrate that Shire and its directors 21 were willing participants in and sought to conceal Elumina’s scheme. (Id. ¶¶ 35, 42.) The 22 Elumina lease arrangements eventually collapsed when no ad revenue materialized. 23 ProLink never received the $4.5 million that it was allegedly owed for the GPS units sold 24 to Elumina. (Id. ¶¶ 37, 40.) 25 On April 26, 2012, ProLink filed its Complaint against Shire, alleging that Shire 26 aided and abetted fraud and conversion of ProLink’s property, and engaged in fraudulent 27 concealment and civil conspiracy with Elumina. (Id. ¶¶ 13-65.) On June 7, 2012, Shire 28 moved to dismiss the complaint for lack of personal jurisdiction. (Doc. 9.) -2- DISCUSSION 1 2 I. LEGAL STANDARD 3 The plaintiff bears the burden of establishing personal jurisdiction. See, e.g., 4 Ziegler v. Indian River Cnty., 64 F.3d 470, 473 (9th Cir. 1995). Once a defendant has 5 moved to dismiss, “the plaintiff is obligated to come forward with facts, by affidavit or 6 otherwise, supporting personal jurisdiction” over the defendant. Cummings v. W. Trial 7 Lawyers Assoc., 133 F. Supp. 2d 1144, 1151 (D. Ariz. 2001) (internal quotations 8 omitted). “[M]ere allegations of a complaint, when contradicted by affidavits, are not 9 enough to confer personal jurisdiction over a non-resident defendant.” Chem Lab 10 Products, Inc. v. Stepanek, 554 F.2d 371, 372 (9th Cir. 1977); Data Disc, Inc. v. Sys. 11 Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977) (“[W]e may not assume the truth of 12 allegations in a pleading which are contradicted by affidavit.”) The court may look to 13 affidavits submitted by the parties in its determination. Doe v. Unocal Corp., 248 F.3d 14 915, 922 (9th Cir. 2001). However, “conflicts between the facts contained in the parties’ 15 affidavits must be resolved in [plaintiffs’] favor for purposes of deciding whether a prima 16 facie case for personal jurisdiction exists.” AT&T v. Compagnie Bruxelles Lambert, 94 17 F.3d 586, 588 (9th Cir. 1996). 18 Because no statutory method for resolving the personal jurisdiction issue exists, 19 the district court determines the method of its resolution. See Data Disc, Inc. v. Sys. Tech. 20 Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977) (citing Gibbs v. Buck, 307 U.S. 66, 71-72 21 (1939)). A district court may, but is not required to, allow discovery to help determine 22 whether it has personal jurisdiction over a defendant. See id. at 1285 n.1. In addition, a 23 district court may, but is not required to, hear evidence at a preliminary hearing to 24 determine its jurisdiction. See id. at 1285 n.2. If the district court does not hear testimony 25 or make findings of fact and permits the parties to submit only written materials, then the 26 plaintiff must make only a prima facie showing of jurisdictional facts to defeat the 27 defendant’s motion to dismiss. See Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 28 267, 268 (9th Cir. 1995). Under this prima facie burden of proof, the plaintiff need only -3- 1 establish facts, through admissible evidence, that if true would support personal 2 jurisdiction over the defendant. See Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 3 1995). The Court has determined to proceed on the written materials submitted by the 4 Parties. Accordingly, ProLink’s request for discovery is denied. 5 II. ANALYSIS 6 A. The Test 7 To establish personal jurisdiction over Shire, ProLink must demonstrate that (1) 8 Arizona's long arm statute confers jurisdiction, and (2) that “the exercise of jurisdiction 9 comports with the constitutional principles of Due Process.” See Rio Props. v. Rio Int’l 10 Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002) (citation omitted). Because Arizona's long- 11 arm statute extends jurisdiction “to the maximum extent permitted by the . . . Constitution 12 of the United States,” the personal jurisdiction inquiry largely collapses into a Due 13 Process analysis. See Ariz. R. Civ. P. 4.2(a); Davis v. Metro Prod., Inc., 885 F.2d 515, 14 520 (9th Cir. 1989); Williams v. Lakeview Co., 199 Ariz. 1, 5, 13 P.3d 280, 282 (2000). 15 Absent traditional bases for personal jurisdiction (i.e., physical presence, domicile, and 16 consent) the Due Process Clause requires that nonresident defendants have certain 17 “minimum contacts” with the forum state such that the exercise of personal jurisdiction 18 does not offend traditional notions of fair play and substantial justice. See Int’l Shoe 19 Co. v. Washington, 326 U.S. 310, 316 (1945). 20 “In determining whether a defendant had minimum contacts with the forum state 21 such that the exercise of jurisdiction over the defendant would not offend the Due Process 22 Clause, courts focus on ‘the relationship among the defendant, the forum, and the 23 litigation.’” Brink v. First Credit Resources, 57 F. Supp. 2d 848, 860 (D. Ariz. 1999) 24 (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). If a defendant’s contacts with the 25 forum state are sufficient to satisfy the Due Process Clause, then the Court must exercise 26 either “general” or “specific” jurisdiction over the defendant. See Helicopteros 27 Nacionales de Colombia v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984); Ziegler, 64 F.3d at 28 473. The nature of a defendant’s contacts with the forum state will determine whether the -4- 1 Court exercises general or specific jurisdiction over him. Helicopteros Nacionales, 466 2 U.S. at 414-15 nn.8-9. No party contends that the Court has general jurisdiction over 3 Shire. 4 The Ninth Circuit applies a three-part test to determine whether a defendant’s 5 contacts with the forum state are sufficient to subject him to the state’s specific 6 jurisdiction. Under this three-part test, specific jurisdiction exists only if: (1) the 7 defendant purposefully availed himself of the privileges of conducting activities in the 8 forum, thereby invoking the benefits and protections of its laws, or purposely directs 9 conduct at the forum that has effects in the forum; (2) the claim arises out of the 10 defendant’s forum-related activities; and (3) the exercise of jurisdiction comports with 11 fair play and substantial justice, i.e., it is reasonable. See, e.g., Bancroft & Masters, Inc. 12 v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citing Cybersell, Inc. v. 13 Cybersell, Inc., 130 F.3d 414, 417 (9th Cir. 1997)); Burger King Corp. v. Rudzewicz, 471 14 U.S. 462, 472-76 (1985). 15 Specific jurisdiction over a tort defendant like Shire exists where the intended 16 effects of the defendant’s non-forum conduct were purposely directed at and caused harm 17 in the forum state. Calder v. Jones, 465 U.S. 783, 788-90 (1984); see Sinatra v. Nat’l 18 Enquirer, 854 F.2d 1191, 1195 (9th Cir. 1988) (“[T]he decisions of this court have 19 interpreted the holdings of Calder and Burger King as modifying the purposeful 20 availment rubric to allow ‘the exercise of jurisdiction over a defendant whose only 21 ‘contact’ with the forum is the ‘purposeful direction’ of a foreign act having effect in the 22 forum state.’”) (quoting Haisten v. Grass Valley medical Reimbursement Fund, Ltd., 784 23 F.2d 1392, 1397 (9th Cir. 1986)) (emphasis in original); Caruth v. Int’l Psychoanalytical 24 Ass’n, 59 F.3d 126, 128 n.1 (9th Cir. 1995) (applying effects test to defamation, tortious 25 interference with business relations, and intentional infliction of emotional distress 26 claims). Thus with respect to tort claims, the effects test requires that the defendant have 27 “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing 28 harm that the defendant knows is likely to be suffered in the forum state.” Dole Food Co., -5- 1 Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). 2 B. Application 3 In essence, ProLink alleges that Shire knew Elumina and Clarke were running a 4 fraudulent operation in Europe, that Shire negligently investigated the operation, and that 5 Shire enabled the fraud by originating and selling the allegedly bad leases. (Doc. 1 ¶¶ 23, 6 28-35.) All of this undisputedly occurred in the UK. Indeed, the only agreement to which 7 Shire was party was its agreement with Elumina to originate and sell the leases. (Id. ¶ 8 29.) According to the uncontradicted affidavit of John Worton, director and joint 9 chairman of Shire, at no time did Shire ever have any contact with ProLink or conduct 10 any business in Arizona. (Doc. 9-1 ¶¶ 16-23.) ProLink does not contest that Shire’s sole 11 connection to ProLink and Arizona was through its relationship with Elumina. 12 Nevertheless, ProLink seeks to establish an Arizona connection by alleging that Shire 13 knew ProLink had not been paid for the GPS units it sold to Elumina and that Shire’s 14 facilitation of the fraud resulted in ProLink not receiving payment. (Id. ¶¶ 32, 40, 49, 63.) 15 Worton’s affidavit expressly denies knowing about any fraudulent activity or that 16 Elumina had not yet paid ProLink. (Doc. 9-1 ¶¶ 8, 11-12.) 17 To combat this evidence, ProLink submitted affidavits from several individuals, 18 who claim that John Flounders, a director of Shire, worked closely with Clarke of 19 Elumina throughout this process. (Doc. 11-1 ¶¶ 4-6; 11-2, O’Keefe Affidavit ¶¶ 4-9.) 20 ProLink contends that the close relationship between Flounders and Clarke means that 21 Flounders must have known the Elumina scheme was fraudulent. And as evidence that 22 Flounders conspired with Clarke to conceal this fraud, ProLink attached a series of emails 23 between Flounders and Clarke which appear to detail difficulties in securing ad revenues. 24 (Doc. 11-2, Ex. D at 16-22.) Finally, ProLink attached an affidavit from one of Clarke’s 25 employees who stated that in March 2008, Clarke received a telephone call from John 26 Flounders in which Flounders apparently told Clarke that he had opened a bank account 27 in Thailand for him. (Doc. 11-3 ¶ 4.) Clarke exclaimed “Well done mate, this is f---king 28 great news” and “Now let those b---tards try and get my money.” (Id. ¶¶ 3, 5.) Clarke’s -6- 1 employee thought Clarke was referring to “various people and creditors who were 2 chasing him for payment” (Id. ¶ 6.) It is not made clear which creditors these are. 3 None of this evidence, however, creates a prima facie case for jurisdiction over 4 Shire in an Arizona court. Even assuming, despite Worton’s affidavit to the contrary, that 5 Shire realized Elumina’s marketing of the GPS units to European golf courses was 6 fraudulent, that does not amount to Shire purposefully directing a foreign act to have an 7 effect in Arizona or “expressly aiming” an act towards an Arizona entity. 8 Admittedly, the words “expressly aimed,” standing alone, provide little guidance. 9 “Express aiming is a concept that in the jurisdictional context hardly defines itself. From 10 the available cases, we deduce that the requirement is satisfied when the defendant is 11 alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant 12 knows to be a resident of the forum state.” Bancroft, 223 F.3d at 1087 (emphasis added). 13 ProLink alleges that Shire entered into an agreement with Elumina to facilitate a 14 fraudulent arrangement (Doc. 1 ¶¶ 32, 40, 49, 63.) But the target of this allegedly 15 fraudulent program was the golf courses and banks who bought the leases. Not paying 16 ProLink for the GPS units it sold Elumina on credit may, presumably, have been part of 17 Elumina’s overall plan, but the Complaint does not allege at any length just what 18 Elumina did or said to ProLink in procuring the sale on credit of the $4.5 million in GPS 19 units that was fraudulent. That ProLink entered a bad bargain with Elumina is insufficient 20 to provide a basis to recover in fraud against Shire, absent some allegation supported by 21 fact that Elumina defrauded ProLink and that Shire was a part of that fraud. Elumina is 22 not the Defendant that ProLink has named, but is a third party to this action. Thus, even 23 assuming the Complaint seeks to allege that Elumina knew it would not pay for the units 24 when it procured them, and misrepresented to ProLink its intent to pay for the units at 25 that time, that still does not allege any act by Shire against ProLink. 26 The Complaint tries to avoid this by alleging that “Shire purposely directed its 27 activities to Arizona and availed itself of the benefit of doing business with an entity 28 (ProLink) that Shire knew to be headquartered in Arizona. Shire knew that Clarke -7- 1 acquired GPS products from ProLink and that all of those products originated in 2 Arizona.” (Compl. at ¶ 9.) It then goes on to allege that Shire knew that the fraudulent 3 scheme that it “deliberately facilitated” would and did cause substantial harm to ProLink 4 in Arizona. (Id. at ¶ 10.) But, even assuming that Shire had knowledge that Elumina 5 bought products that were manufactured in Arizona and leased by Elumina through Shire 6 to European golf courses, that knowledge does not mean Shire “targeted” ProLink in any 7 way sufficient for an Arizona court to obtain jurisdiction over Shire. Further, even 8 assuming—despite the Worton affidavit—that Shire was aware of fraudulent 9 representations made by Elumina to European golf courses, that general awareness does 10 not constitute sufficient knowledge to make a prima facie case that Shire wanted to target 11 ProLink. 12 The affidavits and emails submitted by ProLink in response to the Worrell 13 affidavit show that Flounders and Clarke had a close relationship and that Flounders 14 knew that Clarke received the GPS units from ProLink. None of these documents, 15 however, establish that Flounders and Shire were actively trying to harm ProLink. 16 Indeed, one of the emails in September 2008 from Flounders states that “Kevin [Clarke] . 17 . . has the knowledge of all deals the customer and the equipment” and “a statement of 18 account from Prolink which I believe was dated March 07 . . . stated at that date Eluminas 19 balance with prolink was Zero.” (Doc. 11, Ex. 2, Ex. D at 17.) 20 Moreover, there is no evidence directly refuting Worton’s statement that Shire did 21 not know about any fraud or remaining obligation to pay ProLink. ProLink assembled a 22 variety of inferences and innuendo that it contends adds up to evidence that Shire knew 23 of the fraud on the golf courses and banks (which it may), but this circumstantial 24 evidence is insufficient to carry ProLink’s burden that Shire knew of any fraud directed 25 towards ProLink. ProLink must establish facts, through admissible evidence, that if true 26 would support personal jurisdiction over Shire. See Ballard v. Savage, 65 F.3d 1495, 27 1498 (9th Cir. 1995). Evidence from which inferences might be drawn about Elumina’s 28 marketing of the GPS units to European golf courses, and Shire’s knowledge of that -8- 1 marketing scheme, do not sufficiently support any allegations of intentional targeting by 2 Shire of ProLink sufficient to support jurisdiction here. There is no direct conflict 3 between the affidavits. ProLink’s submissions show only a close relationship between 4 Shire’s directors and Elumina. ProLink asks the Court to infer that the relationship means 5 Shire must have known about some unspecified fraud perpetrated by Elumina against 6 ProLink. The evidence, such as it is, fails to carry ProLink’s burden at this stage to create 7 a prima facie case for jurisdiction over Shire. 8 Other than bare conclusions in the Complaint—which the Court cannot credit in 9 light of the affidavits submitted by both parties—ProLink has not presented any evidence 10 that Shire intentionally sought to ensure that ProLink was not paid. In every case where 11 express aiming has been found, there has been some direct “targeting” by the defendant 12 toward the plaintiff—emails, letters, phone calls, publications, and the like. See, e.g., 13 Bancroft, 223 F.3d at 1087 (9th Cir. 2000) (describing cases). In all those cases, 14 including the cases cited by ProLink in their Response, the defendants had the plaintiffs 15 in their crosshairs when they acted. Based upon the Complaint and the evidence 16 presented in the affidavits, that is simply not the case here. Accordingly, ProLink has 17 failed to establish sufficient contacts between Shire and Arizona. CONCLUSION 18 19 There are insufficient contacts between Shire and Arizona to justify the exercise of 20 this Court’s jurisdiction over Shire. Accordingly, Shire’s Motion to Dismiss for Lack of 21 Personal Jurisdiction is granted. 22 IT IS HEREBY ORDERED that Defendant Shire’s Motion to Dismiss for Lack 23 of Personal Jurisdiction (Doc. 9) is GRANTED. The Clerk of Court is direct to terminate 24 this action. 25 Dated this 15th day of October, 2012. 26 27 28 -9-
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