Hood v. American Auto Care, LLC

• Decision Date: 28 December 2021
• Docket Number: No. 20-1157,20-1157
• Citation: 21 F.4th 1216
• Parties: Alexander HOOD, on behalf of himself and all similarly situated persons, Plaintiff - Appellant, v. AMERICAN AUTO CARE, LLC, a Florida limited liability company; Beacon Financial Solutions, LLC, a Florida limited liability company; Jessie Britt, an individual; Kylie Britt, an individual; David Glenwinkel, an individual; Royal Administration Services, Inc., a Florida corporation; Carguard Administration Inc., a Kansas corporation; Matrix Warranty Solutions, Inc., a Nevada corporation, d/b/a Element Protection Plans; EGV Companies, Inc., a Delaware corporation, d/b/a Omega Auto Care, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

21 F.4th 1216

Alexander HOOD, on behalf of himself and all similarly situated persons, Plaintiff - Appellant,

v.AMERICAN AUTO CARE, LLC, a Florida limited liability company; Beacon Financial Solutions, LLC, a Florida limited liability company; Jessie Britt, an individual; Kylie Britt, an individual; David Glenwinkel, an individual; Royal Administration Services, Inc., a Florida corporation; Carguard Administration Inc., a Kansas corporation; Matrix Warranty Solutions, Inc., a Nevada corporation, d/b/a Element Protection Plans; EGV Companies, Inc., a Delaware corporation, d/b/a Omega Auto Care, Defendants - Appellees.

No. 20-1157

United States Court of Appeals, Tenth Circuit.

Filed: December 28, 2021

Jennifer Bennett (Neil K. Sawhney with her on the briefs), Gupta Wessler PLLC, San Francisco, California, for the Appellant.

John L. Skari Jr., Hassan + Cables, LLC, Boulder, Colorado (Brian E. McGovern, McCarthy Leonard & Kaemmerer, L.C., Town & Country, Missouri; Jeff Whitfield, Caitlyn Hubbard, Kelly Hart & Hallman LLP, Fort Worth, Texas, with him on the brief) for Appellees.

Before HARTZ, PHILLIPS, and McHUGH, Circuit Judges.

HARTZ, Circuit Judge

American Auto Care (AAC), a Florida limited liability company whose sole office is in Florida, sells vehicle service contracts that provide vehicle owners with extended warranties after the manufacturer's warranty expires. Alexander Hood, a Colorado resident, appeals the dismissal for lack of personal jurisdiction of his putative class-action claim against AAC in the United States District Court for the District of Colorado.¹ We reverse, following the Supreme Court's recent decision in Ford Motor Co. v. Montana Eighth Judicial District Court , ––– U.S. ––––, 141 S. Ct. 1017, 209 L.Ed.2d 225 (2021), which was handed down after the district-court judgment.

I. BACKGROUND

Mr. Hood's complaint alleges that AAC violated the Telephone Consumer Protection Act (TCPA) and invaded Mr. Hood's and the putative class members' privacy by directing unwanted automated calls to their cell phones without consent. See 47 U.S.C. § 227(b)(1)(A)(iii) ("It shall be unlawful for any person within the United States ... to make any call ... using any automatic telephone dialing system or an artificial or prerecorded voice ... to any telephone number assigned to a ... cellular telephone service ...."); Barr v. Am. Ass'n of Pol. Consultants, Inc. , ––– U.S. ––––, 140 S. Ct. 2335, 2344, 207 L.Ed.2d 784 (2020) (the TCPA protects consumers from "nuisance and privacy invasion" by prohibiting "almost all robocalls to cell phones" (internal quotation marks omitted)).

Shortly after purchasing a used car, Mr. Hood began receiving prerecorded calls to his cell phone claiming that his car warranty was about to expire and offering to sell him an extended warranty. Although he was then residing in Colorado, the calls came from numbers with a Vermont area code. He had previously lived in Vermont, and his cell phone number had a Vermont area code. Mr. Hood was able to trace one such call to AAC. The complaint alleges that AAC "use[s] telemarketing to sell vehicle service contracts ... nationwide, including in Colorado by calling Colorado phone numbers." Aplt. App. at 19.

Several defendants moved to dismiss the case for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). After reviewing the complaint and the parties' arguments and affidavits, the district court granted the motions. Although it determined that Mr. Hood had alleged sufficient facts to establish that AAC purposefully directs telemarketing at Colorado, it held that the call to Mr. Hood's Vermont phone number did not arise out of, or relate to, AAC's calls to Colorado phone numbers. In light of Ford , however, the dismissal cannot stand. So long as AAC's marketing in Colorado was essentially the same as its marketing in Vermont, the telemarketing calls to Mr. Hood related to AAC's marketing in Colorado.

II. DISCUSSION

"When, as here, personal jurisdiction is found wanting on the basis of the complaint and affidavits, our review of the district court's dismissal is de novo, taking as true all [well-pleaded] ... facts alleged in plaintiffs' complaint." Dudnikov v. Chalk & Vermilion Fine Arts, Inc. , 514 F.3d 1063, 1070 (10th Cir. 2008) (citation omitted). At this stage of litigation, plaintiffs need only make a prima facie showing of personal jurisdiction. See id. We resolve in the plaintiff's favor any factual disputes arising from the complaint and the parties' affidavits. See id.

Personal jurisdiction over nonresident defendants is proper if an applicable statute authorizes service of process and if the exercise of jurisdiction comports with constitutional due process. See id. As the parties agree, the TCPA does not address service of process but the Federal Rules of Civil Procedure incorporate the Colorado long-arm statute, see Fed. R. Civ. P. 4(k)(1)(A) (service of process establishes personal jurisdiction in federal courts over defendants "subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located"), which confers personal jurisdiction to the extent permitted by the United States Constitution, see Dudnikov , 514 F.3d at 1070. Thus, the statutory and constitutional requirements merge and we must assess only whether Colorado jurisdiction over this claim would be consistent with due process. See id.

The Fourteenth Amendment's Due Process Clause limits the jurisdiction of a state court over a nonresident defendant by requiring that it have "certain minimum contacts" with the forum State to assure "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 quotation marks omitted). Put another way, the contacts with the forum State must be sufficient to "make it reasonable, in the context of our federal system of government, to require the [defendant] to defend the particular suit which is brought there." Id. at 317, 66 S.Ct. 154.

The Supreme Court has distinguished between two types of personal jurisdiction: general and specific. See Daimler AG v. Bauman , 571 U.S. 117, 126–27, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). A state court can exercise general jurisdiction over any claims against defendants who are "essentially at home" there, id. at 127, 134 S.Ct. 746 (internal quotation marks omitted), as when an individual is domiciled in the State or a corporation is incorporated or has its principal place of business there, see Ford , 141 S. Ct. at 1024. The parties agree that general jurisdiction in Colorado is not at issue because AAC is a Florida company. But specific jurisdiction is proper if there is "an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Bristol-Myers Squibb Co. v. Superior Ct. of Cal., S.F. Cnty. , ––– U.S. ––––, 137 S. Ct. 1773, 1780, 198 L.Ed.2d 395 (2017) (brackets and internal quotation marks omitted).

The requirements for specific jurisdiction "derive from and reflect two sets of values—treating defendants fairly and protecting ‘interstate federalism,’ " which is the component of federalism doctrine that concerns the relative powers of the several States. Ford , 141 S. Ct. at 1025 (quoting World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 293, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) ). First, fairness to defendants requires that a State exercise jurisdiction over a company only if the company "exercises the privilege of conducting activities within a state—thus enjoying the benefits and protection of its laws." Id. (brackets and internal quotation marks omitted). The contours of the doctrine promote fairness by "provid[ing] [a] defendant[ ] with fair warning—knowledge that a particular activity may subject it to the jurisdiction of a foreign sovereign," id. (original brackets and internal quotation marks omitted), so it can take protective measures, such as charging more to customers in a State, procuring insurance, or avoiding certain activities in a State, see World-Wide Volkswagen Corp. , 444 U.S. at 297, 100 S.Ct. 559 ). Second, principles of interstate federalism, which recognize that "[t]he sovereignty of each State implies a limitation on the sovereignty of all its sister States," protect defendants from "the coercive power of a State that may have little legitimate interest in the claims in question." Bristol-Myers Squibb , 137 S. Ct. at 1780–81 (ellipsis, original brackets, and internal quotation marks omitted).

To determine when specific jurisdiction is properly exercised, courts are to assess two requirements: (1) that the defendant has "purposefully directed [its] activities at residents of the forum," and (2) that the suit "arise out of or relate to those activities." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal quotation marks omitted); see Bristol-Myers , 137 S. Ct. at 1780.² But even when both requirements are satisfied, the Supreme Court has indicated that the defendant can still escape jurisdiction by establishing that it would be incompatible with traditional notions of fair play and substantial justice. See Burger King, 471 U.S. at 476–77, 105 S.Ct. 2174 (noting that a defendant "must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable").

AAC argues (1) that purposeful direction must be shown by suit-related contacts—so its calls to Colorado residents at Colorado phone numbers cannot support personal jurisdiction for Mr. Hood's claim based on a call to a Vermont phone number; (2) that the second requirement contemplates a causal connection between a defendant's forum contacts and the suit—but its calls to Colorado phone numbers did not...