Klinge v. KBL Assocs.
| Decision Date | 19 June 2020 |
| Docket Number | Civil Action No. SA-20-CV-470-XR |
| Parties | BRAD KLINGE Plaintiff, v. KBL ASSOCIATES, LLC and KIMBERLY LEATHERWOOD, Defendants. |
| Court | U.S. District Court — Western District of Texas |
On this date, the Court considered Defendant Kimberly Leatherwood's Motion to Dismiss Plaintiff's Complaint for Lack of Personal Jurisdiction (docket no. 5), and the response and reply thereto. After careful consideration, the Court will grant the motion.
This is an action under the Fair Labor Standards Act ("FLSA") for failure to pay overtime. Plaintiff Brad Klinge sues his former employer KBL Associates, LLC and Kimberly Leatherwood, "the owner, principal, officer and/or director of KBL." Compl. ¶ 14. Plaintiff alleges that KBL is a Tennessee LLC not registered to do business in Texas, and that Leatherwood resides in Tennessee. Id. ¶ 7-8, 10. KBL provides consulting services for other businesses, and Plaintiff alleges he was employed as a Business Consultant. Id. ¶ 13, 19. Plaintiff alleges that he was employed as an hourly employee from August 2019 until March 2020 and regularly worked in excess of forty hours per week, but was not paid an overtime rate for hours worked over forty. Plaintiff alleges that "Leatherwood manages and controls the day-to-day operations of KBL, including but not limited to the decision to not pay Plaintiff an overtime premium." Id. ¶ 15.
Plaintiff filed this lawsuit on April 15, 2020 and served both Defendants. Defendant KBL has conceded personal jurisdiction. Defendant Leatherwood has moved to dismiss for lack of personal jurisdiction. She asserts there is neither specific nor general personal jurisdiction over her, and submits an Affidavit in which she states: (1) she is the Managing Partner of KBL; (2) she has never traveled to Texas for reasons related to KBL business or Plaintiff's employment with KBL; (3) she has not traveled to Texas for any purpose since KBL has existed as an entity; (4) KBL has only had three employees based in Texas in its history, including Plaintiff, and currently has one; (5) KBL has no facility in Texas and its Texas-based employees work from home; (6) KBL's employees based in Texas (including Plaintiff) did not and do not service customers in Texas; (7) she spends no more than five percent of her working time on matters related to Texas customers and/or employees; (8) she had minimal interaction with Plaintiff during his employment and would contact him only when initially assigning customers to him or when some customer-related issue needed to be addressed, which was not frequent; (9) she did not direct the day-to-day functions of Plaintiff's work at KBL and did not communicate with him regarding the day-to-day functions of his employment; (10) she never communicated with Plaintiff about KBL's payroll practices or her role in KBL's payroll practices as applied to his pay; (11) her involvement with KBL's payroll practices as they related to Plaintiff were periodically reviewing and approving his time he entered into KBL's time-tracking software, which she did in Tennessee; and (12) traveling to Texas to defend herself in this lawsuit would be burdensome.
There is personal jurisdiction if the state's long-arm statute extends to the defendant and exercise of such jurisdiction is consistent with due process. Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 101 (5th Cir. 2018). "Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis." Id.1 Due process requires that the defendant have "minimum contacts" with the forum state (i.e., that the defendant has purposely availed himself of the privilege of conducting activities within the forum state) and that exercising jurisdiction is consistent with "traditional notions of fair play and substantial justice." Id.
"Minimum contacts" can give rise to either specific jurisdiction or general jurisdiction. In this case, Plaintiff relies on specific personal jurisdiction. Specific jurisdiction may exist "over a nonresident defendant whose contacts with the forum state are singular or sporadic only if the cause of action asserted arises out of or is related to those contacts." Id. In other words, such jurisdiction exists "when a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities." Id. "[S]pecific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction." Id.
The inquiry whether a forum state may assert specific jurisdiction over a nonresident defendant "focuses on the relationship among the defendant, the forum, and the litigation." Walden v. Fiore, 571 U.S. 277, 283-84 (2014). The relationship must arise out of contacts that the defendant herself creates with the forum state, not contacts between the plaintiff or third parties and the forum state and not the contacts the defendant makes by interacting with other persons affiliated with the state. Id. at 284. Thus, the minimum contacts analysis looks to the defendant's contacts with the forum state itself, not the defendant's contacts with persons who reside there. Id. The plaintiff cannot be the only link between the defendant and the forum. Id.
As the party seeking to invoke the power of the court, Plaintiff "bears the burden of establishing jurisdiction, but is required to present only prima facie evidence." Pervasive Software, Inc. v. Lexware GmbH & Co., 688 F.3d 214, 219 (5th Cir. 2012) (quoting Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 270 (5th Cir. 2006)). "In determining whether a prima facie case exists, this Court must accept as true [Plaintiff's] uncontroverted allegations, and resolve in [his] favor all conflicts between the [jurisdictional] facts contained in the parties' affidavits and other documentation." Pervasive Software, 688 F.3d at 219-20.
Plaintiff does not provide his own evidence or seek discovery on jurisdiction, and instead rests on his pleadings to establish his prima facie case. He contends that his allegations that Leatherwood is a joint employer with KBL, which conducts business in Texas, and that Leatherwood specifically made the pay policies (including the decision to not pay Plaintiff an overtime premium) that led to the alleged FLSA violations are sufficient to support the inference that Leatherwood is subject to personal jurisdiction in Texas. Plaintiff asserts that, as managingpartner, Defendant Leatherwood has her hand in the day-to-day operations of KBL, including its pay structure and policies that affect all employees, including Plaintiff, a Texas employee. Plaintiff argues that Leatherwood "directed unlawful activity at Texas in the form of an FLSA violation, and the brunt of the injury of that activity was felt by a Texas resident." Docket no. 9 at 6. Plaintiff contends that Leatherwood cannot purposefully avail herself of the benefits and protections of the forum state by hiring employees to work in Texas, without reasonably anticipating being haled into court here. Plaintiff asserts that "Leatherwood hired Plaintiff in Texas to work in Texas, and subsequently improperly paid him in Texas." Id. at 7.
Leatherwood contends that Plaintiff focuses on her relationship with Plaintiff and his relationship to Texas, rather than her relationship with Texas, as is required. Leatherwood notes that whether KBL does some business in Texas (albeit minimal) is not relevant to whether Leatherwood, a separate individual defendant, is subject to personal jurisdiction in Texas. And even if Leatherwood controls the day-to-day operations of KBL, Plaintiff does not allege that she does so in a manner that requires any action deliberately aimed at Texas, much less any action giving rise to the claims in this lawsuit. According to her Affidavit, Leatherwood did not direct Plaintiff's day-to-day work and merely periodically reviewed (in Tennessee) his time, which he submitted in the time-tracking software. After she approved his time entries, she was no longer directly involved in the process of paying Plaintiff. Leatherwood contends that Plaintiff shows only incidental effects in Texas from Leatherwood's conduct in Tennessee.
Plaintiff worked for KBL from August 2019 until March 2020 as a Business Consultant, he worked from home, and he did not have Texas clients. Leatherwood is the Managing Partner, and Plaintiff alleges she manages and controls the day-to-day operations of KBL. There is noallegation that Leatherwood recruited Plaintiff in Texas or that Leatherwood entered into a contract with him to be performed in Texas (even if KBL did). Although Leatherwood did not supervise Plaintiff's day-to-day activities, she did assign him some clients and communicate with him about work, and she reviewed and approved his time sheets in Tennessee. There is no allegation that Leatherwood directed Plaintiff to live or work in Texas or that Leatherwood in any way cared whether Plaintiff lived or worked in Texas. Leatherwood did not pay Plaintiff; KBL did.2 Although Plaintiff lived and worked in Texas while he was employed by KBL, he apparently did not serve any Texas customers and could have performed his work from any state.
Courts have held that a company's long-standing employment relationship with an employee in another state who works from home may be sufficient to confer personal jurisdiction.3 In Wood v. Kinetic Systems, Inc., No. CV 09-579-S-CWD, 2010 WL 893647 (D. Idaho Mar. 9, 2010), the court found personal jurisdiction for an employee's FLSA wage claim when the company knew it was hiring an Idaho resident as its employee, the plaintiff signed theemployment agreement at his home in Idaho, the plaintiff used his home office to perform work on behalf of...
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