ABC Phones of N.C., Inc. v. Yahyavi, 5:20-CV-0090-BR

CourtUnited States District Courts. 4th Circuit. Eastern District of North Carolina
Writing for the CourtW. Earl Britt Senior U.S. District Judge
Docket NumberNo. 5:20-CV-0090-BR,5:20-CV-0090-BR
Decision Date22 July 2020

LLC d/b/a EXPERTS CHOICE, Defendants.

No. 5:20-CV-0090-BR


July 22, 2020


This matter is before the court on Wireless World, LLC d/b/a Experts Choice ("Experts Choice" or "Wireless World"), and Ali Yahyavi's ("Yahyavi") (collectively "defendants") motion to dismiss ABC Phones of North Carolina, Inc., d/b/a Victra's ("Victra") claims. (DE # 25.) Victra filed a response in opposition. (DE # 29.) Thereafter, defendants filed a reply, (DE # 30). Also before the court is Victra's motion for a preliminary injunction, (DE # 19), to which defendants responded, (DE # 22), and Victra replied, (DE # 23). These matters have been fully briefed and are ripe for adjudication.


The statement of facts, taken from the court's previous order, is as follows:

"Victra operates stores as an authorized retailer for Verizon[,]" and "has been in the Wireless Retail Business since 1996." It employs "more than 4,500 people in over 1,000 locations across 46 states, including North Carolina and California." "In 2017, Yahyavi was employed by Victra as its Area Vice President of Sales in Victra's West Territory[.]"

"On or about May 30, 2019, Yahyavi resigned his employment from Victra[.]" "In exchange for monetary and other valuable consideration, Yahyavi executed an Agreement [("the Agreement")] including certain restrictive covenants with Victra on or about May 30, 2019[.]" One such covenant, hereinafter the "Non-Solicitation Clause," states in relevant part:

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Employee agrees that for twelve (12) months after the Effective Termination Date, Employee shall not, directly or indirectly, on Employee's own behalf or on behalf of or in conjunction with any person or legal entity. . . (c) recruit, solicit, or induce, or attempt to recruit, solicit, or induce, any employee of the Company or its related Parties to terminate their employment relationship with the Company for any reason whatsoever. . . .

On or around June 2019, Yahyavi joined Experts Choice as the Chief Sales Officer. He became the Chief Executive Officer of Experts Choice in February 2020 and currently serves in that role.

In the meantime, "[o]n or about June 4, 2019, Aaron Alaniz (Regional Director, Southern California) [] resigned from Victra." Other employees followed: Marco Bright (District Manager, Sacramento, California) on or around February 15, 2020, Nicholas Alexander (District Manager, Pacific-East, Washington) on or about March 1, 2020, and Michael Heuer (Regional Director, Pacific Northwest) on or about March 1, 2020. Additionally, "Yahyavi recently contacted Antonio Herrera, Regional Director of the Northern California territory for Victra," telling Herrera, "'If you ever need anything, I'll take care of you[,]'" Herrera "understood the purpose of his call was to encourage [him] to seek employment with Wireless World." Yahyavi disputes that the statement was made in an effort to recruit Herrera.

In total, Herrera states, "[w]ithin the last seven to ten days, 8 employees, including 5 Managers, have resigned their employment with Victra to begin working for Wireless World." "Only 3 managers remain employed by Victra to cover its Sacramento stores." Further, "[i]n February and March of 2020, at least three (3) District Managers have informed [Herrera] that [] Yahyavi, CEO of Wireless World, contacted them multiple times to recruit, induce, solicit and/or encourage them to leave Victra and work for Wireless World."

As a result, Victra purportedly has suffered irreparable harm, including the outlay of "additional resources to recruit, hire, and train new managers and to temporarily reassign employees which is outside the usual course of business," as well as "negatively impacted morale among Victra employees and [] a significant decrease in Victra's sales." Victra brings claims for breach of contract against Yahyavi, and tortious interference with the contract against Experts Choice, as well as a claim under the Unfair and Deceptive Trade Practices Act ("UDTPA") pursuant to N.C. Gen. Stat. § 75-1.1 against both defendants.

(Order, DE # 24, 1-4 (internal citations omitted).)

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A. Motion to Dismiss

Defendants move to dismiss Victra's amended complaint for lack of personal jurisdiction over Experts Choice and failure to state a claim against either defendant.1 (See Defs.' Mem., DE # 26, at 2.)

1. Personal Jurisdiction

Defendants contend Victra "cannot establish specific jurisdiction because none of the activity that forms the basis for the action occurred in North Carolina" and "there are no allegations that Experts Choice 'purposefully availed itself'" of business in North Carolina to establish a nexus sufficient for specific personal jurisdiction.2 (Defs.' Mem., DE # 26, at 5-6.) Victra contends Experts Choice "waived any challenge it may have had to personal jurisdiction by failing to present the issue to the court at the first possibility" and by actively participating in the litigation as it filed a notice of removal, response to Victra's motion for a temporary restraining order, and response to Victra's motion for expedited review, before filing this motion. (Pl.'s Resp. Opp'n, DE # 29, at 7.) Even if personal jurisdiction was not waived, Victra contends, "the Court has specific jurisdiction over Experts Choice based on Yahyavi's Agreement with Victra and Experts Choice's tortious interference with the Agreement." (Id. at 9.)

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i. Waiver

A party waives its personal jurisdiction defense if it does not raise it at the time it files a Rule 12 motion or an answer, whichever is first. Fed. R. Civ. P. 12(h)(1); see e.g., Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir. 2002) ("Rule 12(h) contemplates an implied waiver of a personal jurisdiction defense by defendants who appear before a court to deny the allegations of a complaint, but who fail to make personal jurisdiction objections at the time of their appearance."); Bethlehem Steel Corp. v. Devers, 389 F.2d 44, 46 (4th Cir. 1968) (finding waiver when an attorney entered appearance but did not raise an "attack on personal jurisdiction" in either "a pre-answer motion or in the answer itself"); Convergence Techs. (USA), LLC v. Microloops Corp., 711 F. Supp. 2d 626, 632 (E.D. Va. 2010) ("[I]t is well-established that objections to personal jurisdiction must be raised at the time the first significant defensive move is made—whether it be by way of a Rule 12 motion or in a responsive pleading." (internal citation and quotation marks omitted)).

Furthermore, "in some circumstances, the actions of [a] defendant may amount to a legal submission to the jurisdiction of the court, whether voluntary or not." SAS Inst. Inc. v. World Programming Ltd., No. 5:10-CV-25-FL, 2011 WL 322408, at *2 (E.D.N.C. Jan. 28, 2011) (internal quotation marks and citation omitted); see Smith v. Am. Exp., No. CIV.A. 1:13-3014, 2014 WL 1338537, at *3 (S.D.W. Va. Mar. 31, 2014) ("[A] party can be held to have waived a defense listed in Rule 12(h)(1) through conduct, such as extensive participation in the discovery process or other aspects of the litigation of the case even if the literal requirements of Rule 12(h)(1) have been met[.]" (citing 5C Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1391 (3d ed.) (updated Apr. 2020)). In those circumstances, courts consider the degree of defense participation in the litigation, such as "entering an appearance, filing motions

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and requesting relief, or participating in hearings or discovery." U.S. to Use of Combustion Sys. Sales, Inc. v. E. Metal Prod. & Fabricators, Inc., 112 F.R.D. 685, 687 (M.D.N.C. 1986) (collecting cases); see Bel-Ray Co. v. Chemrite Ltd., 181 F.3d 435, 443 (3d Cir. 1999) (finding waiver of personal jurisdiction when defense moved for summary judgment and, after the motion was denied, moved to dismiss for lack of personal jurisdiction); Wyrough & Loser, Inc. v. Pelmor Labs., Inc., 376 F.2d 543, 547 (3d Cir. 1967) (finding waiver of personal jurisdiction when defense did not raise the question of personal jurisdiction until after participating in a hearing on a motion for preliminary injunction).

Defendants raise a timely personal jurisdiction defense in their first Rule 12(b) motion. Further, in the filings defendants made prior to their Rule 12(b) motion, they specifically preserved the objection to personal jurisdiction over Experts Choice. (See DE # 1, at 2 n.1; DE # 17, at 1 n.1.) Therefore, Experts Choice's participation in the litigation—filing a notice of appearance, a notice of removal, and response to plaintiff's motion for a temporary restraining order with objections to personal jurisdiction before being served—does not constitute waiver by active participation in litigation. See SAS Inst. Inc., 2011 WL 322408, at *2 (distinguishing between cases with active participation in court-ordered hearings and discovery from cases which involve minimal participation in pre-trial, injunctive motions for purposes of waiver).

ii. Application

Under Rule 12(b)(2), a defendant "must affirmatively raise a personal jurisdiction challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage following such a challenge." Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). The plaintiff must establish personal jurisdiction by a preponderance of the evidence but need only make a prima facie showing. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). In considering whether a plaintiff has met this burden, a court may look beyond the complaint to affidavits and exhibits in order to assure itself of personal jurisdiction. Grayson, 816 F.3d at 269. A court must also "construe all relevant pleading allegations in the light most

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favorable to the plaintiff, assume credibility, and draw the most favorable

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