Ohio Valley Bank v. MetaBank
| Decision Date | 20 September 2019 |
| Docket Number | Case No. 2:19-cv-191 |
| Parties | THE OHIO VALLEY BANK COMPANY, Plaintiff, v. METABANK, dba REFUND ADVANTAGE, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court on Defendant's Motion to Dismiss for Lack of Personal Jurisdiction. (ECF No. 8). Plaintiff, The Ohio Valley Bank Company, filed a response in Opposition to Defendant's Motion. (ECF No. 12). For the following reasons, Defendant's Motion to Dismiss is DENIED.
This dispute arises out of an agreement between Plaintiff, Ohio Valley Bank Company, and Fort Knox Financial Services Corporation ("Fort Knox"). (ECF No. 4 at ¶ 1). In 2014, Ohio Valley Bank, an Ohio corporation, and Fort Knox Financial Services, a Kentucky corporation, entered into an Agreement ("Agreement") for processing tax refunds. (ECF Nos. 8-1 at 2; 12 at 2). The Defendant, MetaBank, doing business as Refund Advantage, acquired Fort Knox in 2015 and assumed Fort Knox's agreement with Ohio Valley Bank. (ECF No. 4 at ¶ 2). MetaBank has its headquarters and principal place of business in South Dakota. (ECF No. 4 at ¶ 3).
MetaBank provides software to Electronic Return Originators ("EROs") who use that software to electronically submit tax returns to the IRS and state tax agencies. MetaBank's software allows individuals to choose a "refund transfer" or a "refund advance." With a refund transfer, the taxpayer's tax preparation fees are "deducted from their tax refund." (ECF No. 12 at 3). With a refund advance, MetaBank essentially loans money to the taxpayer based on their refund amount. (Id.). This is where Ohio Valley Bank comes in. Under the Agreement, MetaBank keeps two accounts with Ohio Valley Bank. (Id.). Both a refund advance and a refund transfer "require taxpayer customers to direct the IRS and state taxing authorities to send his/her tax refunds to MetaBank's accounts at Ohio Valley Bank." (Id.). Ohio Valley Bank holds the refund money in the accounts while it processes payments to the relevant parties. In return for these services, "MetaBank pays Ohio Valley Bank a fixed fee per refund." (ECF No. 4 at ¶ 14).
On June 6, 2016, MetaBank reached out to Ohio Valley Bank to amend the fee arrangement in their Agreement. . The amendment left all other "terms and conditions of the Agreement" unchanged. (ECF No. 12-6 at 4). Particularly of note for the purposes of jurisdiction, the Agreement contains an Ohio choice of law provision. (ECF No. 8-2 at 7). The Agreement also provided that MetaBank would process all tax refunds with Ohio Valley Bank. (ECF No. 8-2 at 2, Agreement Section 2.1). The Agreement was set to end on December 31, 2019. (ECF No. 8-2 at ¶ 9).
Also in June 2016, the General Counsel of MetaBank contacted Ohio Valley Bank about the refund transfer documents. (ECF No. 12-1 at 3, Miller Decl. ¶ 12, Exs. G, H). MetaBank and Ohio Valley Bank amended the refund agreements "to ensure that the agreements comply with federal and Ohio regulations to which Ohio Valley Bank was subject." (Id.). Additionally, "MetaBank requested that the agreements include Ohio Valley Bank's privacy policy—inaddition to MetaBank's privacy policy, which was already in the agreements—and that the agreements include an arbitration provision." (ECF No. 12-1 at 3, Miller Decl. ¶ 13).
Ohio Valley Bank alleges that, during tax season, MetaBank and Ohio Valley Bank were in contact daily. MetaBank would direct Ohio Valley Bank on how to disburse the refunds, "including reconciliation and clearing of checks, as well as posting refunds to the accounts of taxpayer customers." (ECF No. 12-1 at 4, Miller Decl. ¶ 16). MetaBank would send a daily automated email. (Id.).
MetaBank's filings with the Securities and Exchange Commission suggested that MetaBank was processing tax returns through one of its own divisions, EPS Financial, rather than through Ohio Valley Bank. (ECF No. 4 at ¶ 22). Ohio Valley Bank asked for an accounting of these tax refunds in September and October of 2018, but MetaBank did not comply with these requests. (ECF No. 4 at ¶¶ 26-27).
In May 2018, MetaBank notified Ohio Valley Bank that it intended to terminate the Agreement on December 31, 2018. (ECF No. 4 at ¶ 16). The Agreement contained a provision that allowed for early termination under certain circumstances, none of which MetaBank satisfied. (ECF No. 4 at ¶ 19). As a result of the breach, Ohio Valley Bank lost revenue it would have collected during the last year of the Agreement. (Id. at ¶ 20).
Ohio Valley Bank sued MetaBank in Ohio state court in December 2018 alleging breach of contract based on the request for early termination and the violation of the exclusivity clause. (ECF No. 8). MetaBank then removed the case to federal court on the basis of diversity jurisdiction. Id. MetaBank moved to dismiss for lack of personal jurisdiction. (ECF No. 8).
The plaintiff bears the burden of proving that the court has personal jurisdiction over the defendant. CompuServe Inc. v. Patterson, 89 F.3d 1257, 1262-63 (6th Cir.1996). When a defendant has filed "a properly supported motion for dismissal, the plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction." Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir.1974)). A court evaluating a motion to dismiss for lack of personal jurisdiction has three options: "it may decide the motion upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions." Theunissen, 935 F.2d at 1458.
The affidavits and documentary evidence submitted in this case are sufficient, without a hearing or additional discovery, to decide this Motion. A hearing is not required "in the absence of complex legal or factual questions." Rutofske v. Norman, No. 95-2038, 1997 WL 299382, at *3 (6th Cir. June 4, 1997). Although Ohio Valley Bank requested oral argument, it did not request additional discovery or an evidentiary hearing. The parties agree on the vast majority of facts in this case, and this Court does not find a hearing necessary. When the court rules on a motion to dismiss pursuant to Rule 12(b)(2) without an evidentiary hearing, the plaintiff "need only make a prima facie showing of jurisdiction." Bird v. Parsons, 289 F.3d 865, 871 (6th Cir.2002) (quoting Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir.2002)) (internal citation omitted). The plaintiff can make this prima facie showing by "establishing with reasonable particularity sufficient contacts between [the Defendants] and the forum state to support jurisdiction." Neogen Corp., 282 F.3d at 887 (quoting Provident Nat'l Bank v. California Savings & Loan Ass'n, 819 F.2d 434, 437 (3d Cir.1987)).
A court ruling on a Rule 12(b)(2) motion to dismiss without a hearing or additional discovery "construe[s] the facts in the light most favorable to the nonmoving party." Neogen Corp., 282 F.3d 883, 887 (6th Cir. 2002). Significantly, "this [C]ourt will not consider facts proffered by the defendant that conflict with those offered by the plaintiff." Id. But it "may consider the defendant's undisputed factual assertions." Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012). This rule "prevent[s] non-resident defendants from regularly avoiding personal jurisdiction simply by filing an affidavit denying all jurisdictional facts." Theunissen, 935 F.2d at 1459.
A federal court sitting in diversity jurisdiction has personal jurisdiction over a defendant if jurisdiction is "(1) authorized by the law of the state in which it sits, and (2) in accordance with the Due Process Clause of the Fourteenth Amendment." Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 888 (6th Cir.2002) (citing Reynolds v. Int'l Amateur Athletic Fed'n, 23 F.3d 1110, 1115 (6th Cir. 1994)). The Sixth Circuit has "recognized that Ohio's long-arm statute is not coterminous with federal constitutional limits," and has "consistently focused on whether there are sufficient minimum contacts between the nonresident defendant and the forum state so as not to offend 'traditional notions of fair play and substantial justice.'" Bird, 289 F.3d at 871 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Although the Ohio long-arm statute does not extend jurisdiction to the full reach of the Fourteenth Amendment Due Process Clause, a finding that jurisdiction is authorized under the Ohio long-arm statute does not obviate the need for a Due Process Clause analysis. See Brunner v. Hampson, 441 F.3d 457, 467 (6th Cir. 2006) (citing Hall v. Tucker, 161 Ohio App.3d 245, 829 N.E.2d 1259, 1266 (2005)).
Personal jurisdiction can be general or specific. For purposes of federal law, a court has general jurisdiction if a defendant's "affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)). Specific jurisdiction, on the other hand, acknowledges that "'the commission of some single or occasional acts of the corporate agent in a state' may sometimes be enough to subject the corporation to jurisdiction in that State's tribunals with respect to suits relating to that in-state activity." Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting International Shoe, 326 U.S. at 318).
Although "courts within the Sixth Circuit have come to inconsistent, and in some cases directly contradictory, conclusions on whether Ohio law recognizes general jurisdiction," Conn, 667...
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