Head Kandy LLC v. McNeill
| Docket Number | 23-CV-60345-RAR |
| Decision Date | 07 November 2023 |
| Parties | HEAD KANDY LLC, Plaintiff, v. KAYLA MARIE MCNEILL, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S CORRECTED MOTION TO DISMISS THE AMENDED COMPLAINT
THIS CAUSE comes before the Court on Defendant Kayla McNeill's Corrected Motion to Dismiss the Amended Complaint (“Motion”), [ECF No. 34], filed on May 11, 2023. Plaintiff Head Candy LLC filed a Response to the Motion to Dismiss (“Response”) on May 26, 2023 [ECF No. 41]. Defendant then filed a Reply on June 9, 2023 (“Reply”), [ECF No. 53]. The Court having carefully considered the relevant submissions and applicable law, it is hereby
ORDERED AND ADJUDGED that Defendant's Corrected Motion to Dismiss the Amended Complaint is GRANTED IN PART AND DENIED IN PART.
In 2015, Defendant founded Heady Kandy, a consumer products company that produces, markets, and sells haircare and beauty items. Amended Complaint (“Am. Compl.”), [ECF No 25], ¶¶ 9-10. In 2018, Defendant sold the business to new owners-keeping a 20% ownership share for herself. Am Compl. ¶ 9. In connection with this sale, Defendant executed an Executive Employment Agreement (“EEA”), [ECF No. 1-1], with Plaintiff which designated Defendant as an officer of the company and paid her an annual salary of $200,000. Am. Compl. ¶10. As part of the EEA, Defendant agreed to non-solicitation, non-disparagement, and non-compete provisions (“Restrictive Covenants”). EEA at 6-9. Defendant further agreed to “submit to the exclusive jurisdiction of the state courts located in the state of Florida or to courts of the United States located in the state of Florida” while “waiv[ing]” arguments that “the venue of the action is improper” or that an enforcement action is not “maintainable in such courts.” EEA at 13 (capitalization normalized).
Shortly after the sale, disagreements between the parties began to arise. Plaintiff claims to have discovered that Defendant was engaging in “a years-long scheme to enrich herself at the Company's expense.” Am. Compl. ¶ 13. Plaintiff alleges that Defendant “arranged for unauthorized payroll expenses for employees and contractor's at [Head Kandy's] expenses who were in fact performing personal services for [Defendant] and her family.” Am. Compl. ¶ 17. These payments were allegedly drawn from Plaintiff's “Florida bank account” and were “in excess of $100,000.” Id. Plaintiff also alleges that Defendant charged “a gastro bypass plastic surgery for [Defendant] herself that cost $35,000, substantial personal travel for her and her family, the purchase of personal consumer merchandise, and more than four years' worth of meals at fastfood and other restaurant chains” to her personal credit card before initiating “ACH transfers directly from Head Kandy's Florida bank account” to pay the charges. Am. Compl. ¶ 20. Plaintiff further alleges that Defendant “intentionally issued [] Unauthorized Discount Codes to her personal friends and family solely for her benefit and their benefit and not in furtherance of [Plaintiff]'s business objectives, thereby permanently and/or indefinitely depriving [Plaintiff] of the value of these assets.” Am. Compl. ¶ 87.
In addition to the financial malfeasance allegations, Plaintiff claims that Defendant “made false and defamatory statements” on her Facebook page in violation of the EEA. Am. Compl. ¶¶ 128-135. Defendant allegedly advertised competitor products and stated that Plaintiff utilized images of Defendant's children without her permission. Id. These “false and defamatory statements” allegedly “caused damage in Florida, through the loss of sales revenue received into Head Kandy's Florida bank account, through harm to the assets and good will of Head Kandy, a Florida citizen, and through harm to the value of the investment of Head Kandy Members who are citizens and residents of Florida.” Am. Compl. ¶ 135. Plaintiff also alleges that Defendant “contacted several of Head Kandy's important affiliate influencers with the intent to interfere with Head Kandy's relationship with them . . .” Am. Compl ¶ 121. This conduct allegedly “caused damage in Florida, through the loss of sales revenue received into Head Kandy's Florida bank account, through harm to the assets and good will of Head Kandy, a Florida citizen, and through harm to the value of the investment of Head Kandy Members who are citizens and residents of Florida.” Am. Compl. ¶ 126. Defendant was later terminated. Am. Compl. ¶ 36.
Defendant has since filed a claim in state court in Colorado for unpaid wages under Colorado's Wage Claim Act, C.R.S. § 8-4-101, et seq., styled as Kayla M. McNeill v. Head Kandy, LLC, Chaffee County District Court, Case No. 2023CV30007 (the “Colorado Action”). Shortly after Defendant brought the Colorado Action, Plaintiff filed the present case. In the Amended Complaint, Plaintiff brings claims for: Breaches of Contract (Count I), Fraud (Count II), Conversion (Count III), Civil Theft (Count IV), Unjust Enrichment (Count V), Breach of Fiduciary Duty (Count VI), Intentional Interference with Business Relationship (Count VII), Defamation (Count VIII), and Declaratory Relief (Count IX). See generally Am. Compl.
Defendant now moves this Court to dismiss the Amended Complaint based on lack of personal jurisdiction, improper venue, failure to join indispensable parties, and pleading insufficiency. Mot. at 1. The Court will address each of these arguments in turn.
To determine whether personal jurisdiction exists, a federal court sitting in diversity undertakes a two-step inquiry: “the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.” AcryliCon USA, LLC v. Silikal GmbH, 985 F.3d 1350, 1363-64 (11th Cir. 2021) (quoting Diamond Crystal Brands, Inc. v. Food Movers Intern., Inc., 593 F.3d 1249, 1257-58 (11th Cir. 2010)). “There are two types of personal jurisdiction: specific and general.” Madara v. Hall, 916 F.2d 1510, 1516 n.7 (11th Cir. 1990). “General personal jurisdiction is based on a defendant's substantial activity in [a state] without regard to where the cause of action arose,” whereas “specific personal jurisdiction authorizes jurisdiction over causes of action arising from or related to the defendant's actions within [a state].” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1352 (11th Cir. 2013) (citations omitted). To determine whether a cause of action “arises out of” or “is related to” a defendant's actions in a state, the court need not require “proof of causation-i.e., proof that the plaintiff 's claim came about because of the defendant's in-state conduct.” Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S.Ct. 1017, 1026 (2021). However, “the phrase ‘relate to' incorporates real limits, as it must to adequately protect defendants foreign to a forum.” Id.
Where no evidentiary hearing is held on a motion to dismiss, “[a] plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). “A prima facie case is established if the plaintiff presents affidavits or deposition testimony sufficient to defeat a motion for judgment as a matter of law.” PVC Windoors, Inc. v. Babbitbay Beach Const., N.V., 598 F.3d 802, 810 (11th Cir. 2010) (citation omitted). “Where the evidence presented by the parties' affidavits and deposition testimony conflicts, the court must construe all reasonable inferences in favor of the non-movant plaintiff.” Id. When “such inferences are sufficient to defeat a motion for judgment as a matter of law, the court must rule for the plaintiff, finding that jurisdiction exists.” Id. A defendant challenging personal jurisdiction must present evidence to counter the plaintiffs' allegations. See Internet Sols. Corp. v. Marshall, 557 F.3d 1293, 1295 (11th Cir. 2009) (). Once the defendant has presented sufficient evidence, “the burden shifts to the plaintiff to prove jurisdiction by affidavits, testimony or documents.” Id.
On a motion to dismiss based upon improper venue, the plaintiff has the burden of showing that venue in the forum is proper. Tuuci Worldwide, LLC v. S. Frankford & Sons, Inc., No. 2320615, 2023 WL 5275187, at *7 (S.D. Fla. Aug. 16, 2023). In its analysis under Rule 12(b)(3), “a court must accept the facts in a plaintiff's complaint as true.” Walker v. Hallmark Bank & Trust, Ltd., 707 F.Supp.2d 1322, 1325 (S.D. Fla. 2010) (citing Wai v. Rainbow Holdings, 315 F.Supp.2d 1261, 1268 (S.D. Fla. 2004)). A court may also “consider matters outside the pleadings if presented in proper form by the parties.” Id. (quoting MGC Commc'ns, Inc. v. BellSouth Telecomms., Inc., 146 F.Supp.2d 1344, 1349 (S.D. Fla. 2001)). “Where conflicts exist between allegations in the complaint and evidence outside the pleadings, the court ‘must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff.'” Id. (quoting Wai, 315 F.Supp.2d at 1268). Title 28 U.S.C. section 1391(b) governs venue in actions alleging jurisdiction in federal court based on violations of federal law or the U.S. Constitution and provides that those actions may be brought only in:
(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2)...
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