HEK, LLC v. Akstrom Imports, Inc.

• Court: U.S. District Court — District of Minnesota
• Writing for the Court: Nancy E. Brasel United States District Judge
• Decision Date: 22 February 2021
• Docket Number: Case No. 20-CV-1881 (NEB/LIB)
• Citation: HEK, LLC v. Akstrom Imports, Inc., Case No. 20-CV-1881 (NEB/LIB) (D. Minn. Feb 22, 2021)
• Parties: HEK, LLC, d/b/a Kinneberg Management Group, Plaintiff, v. AKSTROM IMPORTS, INC., Defendant.

HEK, LLC, d/b/a Kinneberg Management Group, Plaintiff, v. AKSTROM IMPORTS, INC., Defendant.

Case No. 20-CV-1881 (NEB/LIB)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

February 22, 2021

ORDER ON MOTION TO DISMISS

Defendant Akstrom Imports, Inc. ("Akstrom") contracted with Plaintiff HEK, LLC, doing business as Kinneberg Management Group ("KMG"), for KMG to act as an intermediary between Akstrom and several retail corporations. KMG alleges that it earned commissions that Akstrom now refuses to pay. This matter is before the Court on Akstrom's Motion to Dismiss. (ECF No. 7.) For the reasons that follow, Akstrom's motion is denied.

BACKGROUND

KMG is a Minnesota company that acts as a sales representative for independent manufacturers. (ECF No. 1-1 at 4-13 ("Compl.") ¶ 2.) Akstrom is a Canadian company that distributes products to retail stores. (Id. ¶ 3.) In March 2020, Akstrom entered into a contract with KMG for KMG to act as a sales representative for Akstrom with Sam's Club and Walmart. (Id. ¶ 6; ECF No. 1-1 at 14 (the "Agreement").) The Agreement provided that "Jennifer Olivero & the [KMG] team will work to develop and increase Akstrom's sales to Sam's Club and Walmart." (Agreement.) The Agreement also required KMG to "get new commitments, increase purchase agreements and purchase orders," and to provide Akstrom with feedback on orders. (Id. (cleaned up).) In return, Akstrom would pay KMG a commission of one percent of all sales to Walmart and Sam's Club. (Id.) Under the Agreement, any disputes were to be governed by law of Quebec, Canada. (Id.)

In the following weeks, KMG began performing under the Agreement—it represented Akstrom, and Akstrom made tens of millions of dollars in sales to Walmart and Sam's Club. (Compl. ¶¶ 7, 9.) In May, KMG sent Akstrom an invoice for $221,082.40, the commission that KMG alleges Akstrom owed. (Id. ¶ 13.) Akstrom refused to pay, instead sending a letter to KMG purporting to terminate the Agreement. (Id. ¶¶ 14-15.) The reasoning Akstrom gave for this action was that it discovered that Jennifer Olivero, whose services Akstrom had initially sought, was not permitted to represent Akstrom with Walmart and Sam's Club. (Id. ¶ 16; ECF No. 11 ¶¶ 10, 19.)

In June 2020, KMG sent a demand letter to Akstrom. (ECF No. 17-1, Ex. A.) Counsel for KMG and Akstrom discussed settlement, but roughly three weeks after KMG sent the demand letter, Akstrom filed suit in a Quebec court, seeking a declaratory judgment that the Agreement is null and void ("Quebec Action"). (ECF No. 17 ("Hall Decl.") ¶¶ 3-10; ECF No. 11-1, Ex. B.) Though it was initially unaware of the Quebec Action, when it discovered it, KMG filed this suit in Minnesota state court the followingday. (Compl.) The Complaint includes claims for violation of the Minnesota Termination of Sales Representative Act ("MTSRA"), breach of contract, violation of Minnesota Statutes Section 181.145 for failure to provide prompt payment of commission to salespeople, and unjust enrichment. (Compl. ¶¶ 25-51.) Akstrom removed the case to federal court. (ECF No. 1.)

Akstrom now moves to dismiss KMG's Complaint. (ECF No. 7.) Akstrom claims that: the Court does not have personal jurisdiction over it; the Court should dismiss the suit under the international comity doctrine; this is not the correct forum for this action based on forum non conveniens; and, in the alternative, the Complaint does not state a claim upon which relief may be granted. (Id.) Because the Court finds Akstrom's arguments unavailing, it denies Akstorm's motion to dismiss.

ANALYSIS

I. Personal Jurisdiction

The Court will not dismiss KMG's claims for lack of personal jurisdiction so long as the pleadings, viewed in the light most favorable to KMG, are sufficient to support the exercise of jurisdiction over Akstrom. Creative Calling Sols., Inc. v. LF Beauty Ltd., 799 F.3d 975, 979 (8th Cir. 2015). The Court is not limited to the pleadings, and it may "inquire . . . into the facts as they exist." Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998). "A federal court in a diversity action may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due ProcessClause." Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1073 (8th Cir. 2004) (quotation omitted). Because Minnesota's long-arm statute permits the Court to exercise personal jurisdiction to the full extent of due process, the two prongs of the analysis collapse into a single inquiry: whether exercising personal jurisdiction over Akstrom offends due process. Pederson v. Frost, 951 F.3d 977, 980 (8th Cir. 2020). To comport with due process, a non-resident defendant must have "minimum contacts" with the forum state such that exercising jurisdiction over the defendant does not offend traditional notions of fair play and substantial justice. Wells Dairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir. 2010).

There are two types of personal jurisdiction: general and specific. Bristol-Myers Squibb Co. v. Sup. Ct. of Cal., S.F. Cnty., 137 S. Ct. 1773, 1779-80 (2017). For a corporation, general jurisdiction exists where the corporation is at home—usually where it is incorporated and where it is has its principal place of business. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). KMG does not argue that the Court has general jurisdiction over Akstrom, nor could it—Akstrom is a Canadian corporation with its principal place of business in Montreal, Canada. (Compl. ¶ 3.)

Thus, specific jurisdiction is the inquiry, and the Court must determine if Akstrom has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Wessels, Arnold & Henderson v. Nat'l Med. Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995) (quoting Int'l ShoeCo. v. Washington, 326 U.S. 310, 316 (1945) (alteration original)). To assess whether a defendant has minimum contacts with the forum state, the Eighth Circuit uses a five-factor test—it looks to "(1) the nature and quality of defendant's contacts with the forum state; (2) quantity of contacts; (3) source and connection of the cause of action with those contacts; and to a lesser degree, (4) the interest of the forum state; and (5) the convenience of the parties." Id. at 1432 (footnote omitted).

Akstrom has had sufficient contacts with Minnesota to establish specific jurisdiction over it. First, Akstrom negotiated and entered into a contract with a Minnesota company. (Compl. ¶ 6; ECF No. 16 ¶¶ 3-4.) Reaching out and contracting with a party in the forum state can be a sufficient contact to establish specific jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479-80 (1985). That is exactly what Akstrom did here—it negotiated with KMG in Minnesota via phone and email. (ECF No. 16-1, Ex. B; id. ¶ 3.) Thus, the "quality and nature" of the Akstrom's contacts with Minnesota were not "random," "fortuitous," or "attenuated." Burger King Corp., 471 U.S. at 480. (citations omitted).

Akstrom argues that it was only contracting for the services of Jennifer Olivero, a KMG employee and Arkansas resident. (ECF No. 9 at 10.) While this may have been Akstrom's primary motivation for contracting with KMG, the fact remains that it negotiated with and entered into a contract with KMG as a company, rather than with Olivero herself. In fact, when Akstrom reached out to Olivero directly, she told Akstromthat any contract for her services would have to go through KMG. (Id.; ECF No. 11 ¶ 11.) After executing the Agreement, Michel Fischer, Akstrom's CEO, told Kinneberg that he was looking forward to working with "you [Kinneberg] an[d] Jennifer [Olivero] on this new collaboration." (ECF No. 16-1, Ex. A at 1.) Akstrom contemplated not only working with Olivero, but also Kinneberg and KMG.

Akstrom also argues that although it negotiated with KMG, there is no guarantee that the KMG personnel with whom it negotiated were located in Minnesota during negotiations. Although Kinneberg had a Minnesota area code and an email signature with a Minnesota address, he could have been negotiating with Akstrom from anywhere, such as, as Akstrom's counsel suggested at the hearing, a beach in Florida. Such speculation about where a party may have been located during negotiations is not an aspect of the Eighth Circuit's personal jurisdiction analysis. See Wessels, Arnold & Henderson, 65 F.3d at 1432. Even if the Court were to indulge this speculation, Akstrom cannot so easily escape its negotiations and contract with a Minnesota company.

Aside from negotiating and entering into the contract, performance was also due in Minnesota. Akstrom was required to pay a one percent commission to KMG, and this money, if it had been paid, would have gone to a bank account located in Minnesota. (ECF No. 16-1, Ex. C.) Further, the event on which this suit is largely based—Akstrom's termination of the Agreement—occurred in Minnesota. Akstrom purported to terminate the Agreement in a letter addressed to KMG, and this letter was sent, via email, toMinnesota. (ECF No. 16-1, Ex. D.) In sum, Akstrom's contacts with Minnesota were not "random, fortuitous, or attenuated" and requiring Akstrom to defend itself in Minnesota does not offend (and in fact, supports) "traditional notions of fair play and substantial justice." Creative Calling Sols., 799 F.3d at 980-82.

II. International Comity and the First-Filed Rule

Akstrom next argues that the Court should dismiss or stay this case pending resolution of the Quebec Action. (ECF No. 9 at 12-27.) Even assuming the international comity doctrine would justify staying or dismissing this case, Akstrom's apparent bad faith in filing the Quebec Action renders the doctrine inapplicable.

Deference based on international comity is fact-specific, so "a precise definition remains elusive." J.Y.C.C. v. Doe Run Res., Corp., 370 F. Supp. 3d...