Goodbye Vanilla, LLC v. Aimia Proprietary Loyalty U.S. Inc.

• Decision Date: 12 July 2016
• Docket Number: Case No. 16-cv-0013 (WMW/SER)
• Citation: 196 F.Supp.3d 985
• Parties: GOODBYE VANILLA, LLC, Plaintiff, v. AIMIA PROPRIETARY LOYALTY U.S. INC., and Aimia Inc., Defendants.
• Court: U.S. District Court — District of Minnesota

196 F.Supp.3d 985

GOODBYE VANILLA, LLC, Plaintiff,

v.AIMIA PROPRIETARY LOYALTY U.S. INC., and Aimia Inc., Defendants.

Case No. 16-cv-0013 (WMW/SER)

United States District Court, D. Minnesota.

Signed July 12, 2016

Elizabeth C. Henry, Erin F. Musland, Francis J. Rondoni, Chestnut Cambronne, PA, Minneapolis, MN, for Plaintiff.

Heather J. Kaiser, Shannon M. McDonough, Fafinski Mark & Johnson, PA, Eden Prairie, MN, William E. Corum, Husch Blackwell LLP, Kansas City, MO, for Defendants.

ORDER GRANTING DEFENDANT AIMIA INC.'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Wilhelmina M. Wright, United States District Judge

This case arises from a business dispute between Plaintiff Goodbye Vanilla, LLC and Defendants Aimia Proprietary Loyalty U.S. ("Aimia U.S.") and Aimia Inc. regarding an alleged joint venture between the parties to create a customer loyalty program for Wheel of Fortune, a television show owned by Sony Pictures Entertainment. After Sony awarded a contract to create the program to Defendants, Goodbye Vanilla sued for various unfair competition violations, including a Lanham Act violation. Aimia Inc., the Canadian parent company of Aimia U.S., now moves the court to dismiss the case against it, alleging that the Court lacks personal jurisdiction over it. Because Goodbye Vanilla has not made a prima facie showing that the Court's exercise of jurisdiction would comport with due process, the Court grants Aimia Inc.'s motion to dismiss. See Fed. R. Civ. P. 12(b)(2).

BACKGROUND

Defendants Aimia U.S. and Aimia Inc. are related companies that manage "customer loyalty" programs for their clients. According to the Complaint,¹ Defendants sought to submit a proposal to Sony, which was hiring a company to manage a customer loyalty program for its Wheel of Fortune television show. Defendants needed Goodbye Vanilla's help because of its "expertise in the entertainment, media, and television industries," so the parties entered into a joint venture to pursue the Sony contract. This joint venture eventually went awry, and Goodbye Vanilla sued.

Aimia Inc. is a Canadian corporation that owns and controls 100 percent of the voting stock of Aimia U.S. Aimia Inc. has no offices, business operations or bank accounts in Minnesota. It owns no property in Minnesota, nor does it use Aimia U.S.'s property. And Aimia Inc. is not registered to do business in Minnesota. By contrast, Aimia U.S. is a Delaware corporation. It is registered to do business in Minnesota and has offices in Minneapolis. The direct parent company of Aimia U.S. is Aimia Foreign Holdings UK Ltd. But its ultimate, indirect parent company is Aimia Inc. In 2015, Aimia U.S. had gross revenues of approximately $150 million, and it currently has approximately 650 employees. Aimia Inc. and Aimia U.S. have no corporate directors or officers in common.

Goodbye Vanilla alleges that Aimia Inc. controls Aimia U.S. Aimia Inc.'s 2014 Annual Report indicated that Aimia U.S. is a wholly owned subsidiary of Aimia Inc. The report defines the term "subsidiaries" as "entities over which [Aimia Inc.] has control" and indicates that "[s]ubsidiaries' accounting policies have been changed, when necessary, to align with the policies adopted by Aimia." Aimia Inc. and Aimia U.S. share the same website—www.aimia.com—and appear to use a common logo in marketing materials. Aimia U.S.'s Minneapolis office is listed as one of Aimia Inc.'s "Global Offices" on the shared website, and in May 2015, Aimia Inc. issued a press release (and updated its Facebook page) to announce that it had chosen downtown Minneapolis for its U.S. headquarters. On the same website, an "Aimia" executive is listed as overseeing, among other things, "the Channels and Events business across North America."

Goodbye Vanilla CEO Drew Pearson alleges that his encounters with Defendants demonstrate close ties between the two Aimia companies. He attended the parties' in-person pitch to Sony in Los Angeles, during which Aimia U.S. employees "boasted about their ‘Smart Button’ technology that would be used as a software solution for the Wheel of Fortune loyalty program." Pearson said the technology was "acquired and continues to be owned" by Aimia Inc., and Aimia Inc.'s press release says it purchased the technology as part of " ‘Aimia's global growth strategy, strengthening its presence in the high potential U.S. retail loyalty market.’ " According to Pearson, Aimia U.S. employees pitched certain Aimia Inc. products to Sony from Aimia Inc.'s product catalog as possible upsell items "as if they were their own."

Pearson also alleges that "Aimia U.S. executives are flown to Aimia Inc.'s headquarters in Canada for one to two weeks of training when they are first hired," and that on at least one occasion while he worked with a vice president of Aimia U.S., the executive was "called away to Aimia Inc.'s headquarters in Canada on business."

ANALYSIS

To survive a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a "plaintiff must make a prima facie showing that personal jurisdiction exists," which requires "pleading sufficient facts to support a reasonable inference that the defendant can be subjected to jurisdiction within the state." K – V Pharm. Co. v. J. Uriach & CIA, S.A. , 648 F.3d 588, 591–92 (8th Cir.2011) (internal quotation and alteration omitted). In its prima facie showing, the plaintiff is obliged to establish that "the exercise of personal jurisdiction comports with due process."² Fastpath, Inc. v. Arbela Techs. Corp. , 760 F.3d 816, 820 (8th Cir.2014) (quotation omitted). Although the evidentiary showing required at this stage is "minimal," it must be tested "by the affidavits and exhibits supporting or opposing the motion." K – V Pharm. Co. , 648 F.3d at 592 (internal quotations and citations omitted). When the Court does not hold an evidentiary hearing on the motion, it views the evidence in the light most favorable to the plaintiff and resolves factual conflicts in the plaintiff's favor; but the party seeking to establish the court's jurisdiction bears the burden of proof, which does not shift to the party challenging jurisdiction. Fastpath, Inc. , 760 F.3d at 820.

Both Goodbye Vanilla and Aimia Inc. agree that the only relevant inquiry here is whether the Court's exercise of personal jurisdiction over Aimia Inc. would comport with due process.³ A court may assert general personal jurisdiction over a foreign corporation to hear any and all claims against it when the foreign corporation's affiliation with the forum state is so continuous and systematic as to render the foreign corporation essentially at home in the forum state.⁴ Daimler AG v. Bauman , ––– U.S. ––––, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014). Due process requires sufficient minimum contacts between the defendant and the forum state so that 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). The "minimum contacts" requirement is based on the notion that "those who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts as a general matter." J. McIntyre Mach., Ltd. v. Nicastro , 564 U.S. 873, 881, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011). A nonresident defendant's contacts with the forum state must be sufficient to cause the defendant to "reasonably anticipate being haled into court there." World – Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

When assessing general personal jurisdiction, the Eighth Circuit considers five factors to determine the sufficiency of a defendant's contacts: (1) the nature and quality of contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts;⁵ (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. See Epps v. Stewart Info. Servs. Corp. , 327 F.3d 642, 648 (8th Cir.2003). The first three factors are the most important. Id.

I. Eighth Circuit Case Law on the Parent/Subsidiary Relationship

The parties rely on three Eighth Circuit cases that address whether a court can exercise personal jurisdiction over the nonresident parent company of a local subsidiary. These cases establish two central principles to guide the Court here. First, for a court to have personal jurisdiction over the nonresident parent company based solely on the actions of its local subsidiary, the plaintiff must be able to show it could pierce the subsidiary's corporate veil by establishing that the local subsidiary is the "alter ego" of the nonresident parent company. See Epps , 327 F.3d at 649. Second, even without the ability to pierce the subsidiary's corporate veil, a court may be able to assert personal jurisdiction over a nonresident parent corporation based on the parent corporation's own actions in the forum state. See Anderson v. Dassault Aviation , 361 F.3d 449, 452–53 (8th Cir.2004). When considering the nonresident parent corporation's actions in the forum state, one factor to consider is whether the parent and subsidiary have a "close, synergistic" relationship that goes beyond "mere ownership." Id. at 453–54.

The first principle—the "alter ego" principle—comes from Epps .See 327 F.3d at 649. Epps 's "alter ego" principle refines the traditional five-factor "minimum contacts" test when the defendant is a nonresident parent corporation:

In that situation, personal jurisdiction can be based on the activities of the nonresident corporation's in-state subsidiary, but only if the parent so controlled and dominated the affairs of the subsidiary that the latter's corporate existence was disregarded so as to cause the residential corporation to act as the nonresidential corporate defendant's alter ego. If the resident subsidiary corporation is the alter ego of the nonresident corporate defendant,

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