Fed. Trade Comm'n v. Bint Operations LLC

Decision Date31 March 2022
Docket NumberCase No. 4:21-cv-00518-KGB
Citation595 F.Supp.3d 740
Parties FEDERAL TRADE COMMISSION et al. and State of Arkansas, ex rel. Leslie Rutledge, Attorney General, Plaintiffs v. BINT OPERATIONS LLC, a limited liability company; Lashonda Moore, individually and as an officer of BINT Operations LLC; and Marlon Deandre Moore, formerly known as Marlon Deandre Maiden, individually and as an officer of BINT Operations LLC, Defendants
CourtU.S. District Court — Eastern District of Arkansas

Luis H. Gallegos, Reid Abram Tepfer, Federal Trade Commission, Dallas, TX, for Plaintiff Federal Trade Commission.

David A.F. McCoy, Shannon L. Halijan, Amanda Denise Land, Arkansas Attorney General's Office, Little Rock, AR, for Plaintiff Arkansas, State of.

Donald E. Godwin, Stefanie Major McGregor, Godwin Bowman PC, Dallas, TX, Justin N. Bryan, Pro Hac Vice, McCathern Shokouhi Evans & Grinke, LLP, Dallas, TX, for Defendants.

ORDER

Kristine G. Baker, United States District Judge Before the Court is defendants BINT Operations, LLC ("BINT LLC"), Lashonda Moore, and Marlon Deandre Moore's motion to dismiss for lack of personal jurisdiction and improper venue, or, in the alternative, motion to transfer venue (Dkt. No. 10). Plaintiffs Federal Trade Commission ("FTC") and the State of Arkansas have responded in opposition to the motion (Dkt. No. 12). Defendants also submitted a reply to plaintiffs’ response (Dkt. No. 16). For the following reasons, the Court concludes that it has personal jurisdiction over defendants, that venue in the Eastern District of Arkansas is proper, and that the controlling factors do not counsel a transfer of venue. Therefore, the Court denies defendants’ motion (Dkt. No. 10).

I. Background

The FTC brings this action under §§ 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b), 57b, and the Consumer Review Fairness Act of 2016 ("CRFA"), 15 U.S.C. § 45b, which authorize the FTC to seek, and the Court to order, preliminary and permanent injunctive relief, monetary relief, and other relief for defendants’ acts or practices allegedly in violation of § 5(a) of the FTC Act, 15 U.S.C. § 45(a), and § 2(d) of the CRFA, 15 U.S.C. § 45b (Dkt. No. 1, ¶ 1). The State of Arkansas brings this action to redress and restrain alleged violations of the Arkansas Deceptive Trade Practices Act ("Arkansas DTPA"), Ark. Code § 4-88-101 et seq. (Id. , ¶ 2). Plaintiffs represent that they bring this lawsuit because defendants operated a "blessings loom" pyramid scheme which targeted Arkansans in violation of federal and state law (Id. , ¶¶ 1-4).

The following facts are taken from plaintiffs’ complaint and other evidence submitted in plaintiffs’ response to defendants’ motion (Dkt. Nos. 1; 12; 12-1). Defendants operate "Blessings in No Time" ("BINT") which they claim to be a safe, lucrative, and legal moneymaking membership program (Dkt. No. 1, ¶ 3). According to plaintiffs, BINT is an illegal pyramid scheme that solicits money from consumers by promising them investment returns as high as 800 percent (Id. , ¶ 4). Plaintiffs indicate that defendants have taken funds from new members to pay other members, leading to most members losing money instead of earning any returns from the funds they have paid to participate in BINT (Id. ). Plaintiffs also allege that defendants also prohibit members from posting anything concerning BINT online or on social media (Id. ). Further, plaintiffs allege that, according to defendants, members who violate this rule risk forfeiting the funds formerly paid into BINT (Id. ). Plaintiffs claim that this prohibition has prevented aggrieved consumers from alerting other consumers that BINT has not been a legitimate enterprise (Id. ). According to plaintiffs, defendants through their BINT program have caused thousands of consumers tens of millions of dollars in losses (Id. ).

Plaintiffs represent that Arkansas has been hit especially hard (Dkt. No. 12, at 1). FTC investigator Brent McPeek explains in his declaration submitted to the Court that the FTC received 828 consumer complaints concerning BINT (Dkt. No. 12-1, ¶ 8). Of those complaints, 274 or 33% came from Arkansas (Id. ). Plaintiffs maintain that this number of complaints from Arkansas is by far the largest amount from any state, including complaints from Texas and in fact is more than the combined total of the complaints received from the next three states (Dkt. Nos. 12, at 5; 12-1, ¶ 8). Of the Arkansas complaints, the majority came from three metropolitan areas: Little Rock/North Little Rock, Conway, and Pine Bluff (Dkt. No. 12-1, ¶ 9). Plaintiffs assert that defendants actively recruited hundreds of Arkansas consumers, including many in the Eastern District of Arkansas, through live, interactive video calls (Dkt. Nos. 1, ¶¶ 24, 27, 28, 31, 34-38, 41, 42; 12, at 8 n.26). The record before the Court indicates that defendants, as individuals and acting in concert, held online Zoom meetings during which interactive chats occurred whereby questions could be asked and answered, sent email messages, sent mass text messages, and encouraged word-of-mouth recruiting to solicit Arkansas residents to go into Arkansas communities to recruit Arkansans to join BINT; joining BINT required the payment of fees, along with the payment of a monthly fee, and more fees could be paid "to advance" in BINT in lieu of recruiting new members to join (Dkt. Nos. 1, ¶¶ 19-23; 12-4, ¶¶ 2, 3, 5, 7-8).

II. Personal Jurisdiction

Defendants seek dismissal based on their claim that the Court does not have personal jurisdiction over them because, according to defendants: (1) they lack the necessary minimum contacts with Arkansas for the Court to assert personal jurisdiction, and (2) the Court asserting personal jurisdiction would "offend traditional notions of fair play and substantial justice" (Dkt. No. 11, ¶ 9).

A. Standard Of Review

Plaintiffs "survive a motion to dismiss for lack of personal jurisdiction ... when [they] make a prima facie showing of personal jurisdiction over the defendant." Digi-Tel Holdings v. Proteq Telecoms. , 89 F.3d 519, 522 (8th Cir. 1996). Such a prima facie showing "must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and in opposition thereto." Dever v. Hentzen Coatings, Inc. , 380 F.3d 1070, 1072 (8th Cir. 2004).

The party seeking to establish personal jurisdiction carries the burden of proof. Laseraim Tools, Inc. v. SDA Mfg., LLC , 624 F.Supp.2d 1027, 1029 (E.D. Ark. 2008). However, personal jurisdiction over defendant need not be proved by a preponderance of the evidence until trial or until the Court holds an evidentiary hearing. Dakota Indus. v. Dakota Sportswear, Inc. , 946 F.2d 1384, 1387 (8th Cir. 1991). "If the district court does not hold a hearing and instead relies on pleadings and affidavits ... the court must look at the facts in the light most favorable to the nonmoving party and resolve all factual conflicts in favor of that party." Id.

In a federal question case, a federal court has personal jurisdiction over defendant if either federal law or the law of the forum state authorizes service of process upon that defendant. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd. , 484 U.S. 97, 104-05, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987). Federal laws authorizing service of process must accord with the Fifth Amendment's Due Process Clause, and state laws authorizing service of process must not offend the Due Process Clause of the Fourteenth Amendment. Dakota Indus., Inc. , 946 F.2d at 1389 n.2 ; see also Daimler AG v. Bauman , 571 U.S. 117, 120-22, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). Due process in the context of personal jurisdiction requires that defendant have the necessary "minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotations omitted). When a defendant is haled into a federal court under a federal statute, the Eighth Circuit Court of Appeals directs courts to analyze the nature and the extent of contacts with the United States as a whole to determine if any federal court situated in the United States can exercise jurisdiction over a defendant. In re Federal Fountain, Inc. , 165 F. 3d 600 (8th Cir. 1999) (holding that due process under the Fifth Amendment requires a party to have "sufficient contacts with the United States" as a whole).

When determining if a party maintains the necessary minimum contacts with a forum to assert personal jurisdiction, Courts must consider the "quality and nature" of the party's activities. Int'l Shoe Co. , 326 U.S. at 319, 66 S.Ct. 154. Personal jurisdiction does not exist when the forum "has no contacts, ties, or relations" to the defendant. Id. The Supreme Court has held that "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum ... thus invoking the benefits and protections of its laws." Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). In World-Wide Volkswagen Corp. v. Woodson , the Supreme Court concluded that "the defendant's conduct and connection with the forum State" were such that he could "reasonably anticipate being haled into court there." 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). "This ‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated,’ contacts." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citations omitted).

When deciding a personal jurisdiction issue, this Court considers five factors to determine the sufficiency of a defendant's contacts, with "the first three factors being of primary importance." Burlington Indus.,...

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