Peters v. C21 Invs., Inc.

• Citation: 322 Or.App. 462,520 P.3d 920
• Decision Date: 26 October 2022
• Docket Number: A174918
• Parties: Jesse PETERS, an individual, and Kate Guptill, an individual, Plaintiffs-Appellants, v. C21 INVESTMENTS, INC., a corporation incorporated under the laws of British Columbia; 320204 US Holdings Corp., a Delaware corporation; Phantom Brands LLC, an Oregon limited liability company, dba Phantom Farms; Swell Companies Limited, an Oregon corporation; Robert Cheney, an individual; Skyler Pinnick, an individual; Eric Shoemaker, an individual; Leonard Werden, an individual; and Eco Firma Farms, LLC, an Oregon limited liability company, Defendants-Respondents, and Clinton Harris, Defendant.
• Court: Oregon Court of Appeals

322 Or.App. 462

520 P.3d 920

Jesse PETERS, an individual, and Kate Guptill, an individual, Plaintiffs-Appellants,

v.C21 INVESTMENTS, INC., a corporation incorporated under the laws of British Columbia; 320204 US Holdings Corp., a Delaware corporation; Phantom Brands LLC, an Oregon limited liability company, dba Phantom Farms; Swell Companies Limited, an Oregon corporation; Robert Cheney, an individual; Skyler Pinnick, an individual; Eric Shoemaker, an individual; Leonard Werden, an individual; and Eco Firma Farms, LLC, an Oregon limited liability company, Defendants-Respondents,andClinton Harris, Defendant.

A174918

Court of Appeals of Oregon.

Argued and Submitted September 28, 2022

October 26, 2022

Matthew A. Goldberg, Portland, argued the cause for appellants. Also on the opening brief were Allison C. Bizzano and Lotus Law Group, LLC. Also on the reply brief were Nicole C. Gossett-Roxbury and Lotus Law Group, LLC.

Julie A. Smith, Portland, argued the cause for respondents. Also on the brief was Cosgrave Vergeer Kester LLP.

Before Tookey, Presiding Judge, and Egan, Judge, and Kamins, Judge.

TOOKEY, P. J.

In this civil action, plaintiffs Jesse Peters and Kate Guptill appeal from general and supplemental judgments for defendants after the trial court dismissed for lack of subject-matter jurisdiction their amended complaint alleging tort claims for intentional interference with business relations and intentional interference with employment relations.

As explained in more detail below, plaintiffs’ claims arise out of a transaction in which plaintiffs agreed to sell their interests in Eco Firma Farms LLC (EFF), an Oregon-licensed recreational marijuana growing operation, to C21 Investments, Inc. (C21), a publicly traded Canadian corporation incorporated under the laws of the Province of British Columbia, through its United States subsidiary, 320204 US Holdings, Corp (USH), a Delaware corporation. The agreements memorializing the sale were subject to a share-purchase agreement (SPA) that included a forum-selection clause stating that the parties agreed that the courts of the Province of British Columbia were the "exclusive forum" for any litigation "in respect of the subject matter" of the agreement.

Plaintiffs’ original complaint, filed in the Clackamas County Circuit Court, named as defendants the above entities as well as the current defendants—Phantom Brands LLC, d/b/a Phantom Farms, an Oregon limited liability company (Phantom), Phantom CEO Skyler Pinnick (Pinnick), Swell Companies Limited, an Oregon corporation (Swell), Swell CEO Eric Shoemaker (Shoemaker), Clinton Harris, an employee of EFF, and other individuals not pertinent to this appeal.

The trial court granted defendants’ motion to make the original complaint more definite and certain and allowed plaintiffs to replead. Plaintiffs then filed an amended complaint, on which this appeal is based, naming only the current defendants—Oregon entities Phantom and Swell, and Oregon residents Shoemaker, Pinnick, and Harris—none of whom were parties to the SPA that includes the forum-selection clause.

Nonetheless, on the current defendants’ motion, the trial court dismissed the complaint for lack of subject-matter jurisdiction, based on the forum-selection clause. Plaintiffs appeal from the general judgment dismissing their claims and a supplemental judgment awarding attorney fees. We conclude that the trial court erred in dismissing plaintiffs’ claims based on a lack of subject-matter jurisdiction and therefore reverse both judgments.

Whether a court has subject-matter jurisdiction over a particular proceeding is a question of law that we review for legal error. State v. Hill , 277 Or App 751, 763, 373 P.3d 162, rev. den. , 360 Or. 568, 385 P.3d 82 (2016). In reviewing the trial court's ruling granting defendants’ motion to dismiss for lack of subject-matter jurisdiction under ORCP 21 A(1),¹ we draw our summary of the relevant facts from the pleadings and affidavits and assume the truth of all well-pleaded facts alleged in plaintiffs’ amended complaint as supplemented by the record, construing the pleadings and affidavits liberally in favor of jurisdiction. See O'Neil v. Martin , 258 Or App 819, 828, 312 P.3d 538 (2013) (in reviewing a trial court's grant of a motion to dismiss for lack of personal jurisdiction, we assume the truth of all well-pleaded allegations in the record and construe the pleadings liberally in support of jurisdiction).

In 2018, plaintiffs sold their shares in EFF to C21 through C21's United States subsidiary USH. The terms and conditions of the sale were first set forth in a "term sheet" and then memorialized in the SPA between plaintiffs, C21, and USH.

Under a separate agreement incorporated into the SPA, plaintiffs were to continue working for EFF after the sale, with Peters serving as "Director of Oregon Operations" and Guptill serving as EFF's chief executive officer.

The SPA further included a forum-selection clause that provided:

"Each of the Parties hereto irrevocably attorns [(consents)] and submits to the exclusive jurisdiction of the courts of the Province of British Columbia in respect of the subject matter of this Agreement."

Plaintiffs alleged in their amended complaint that Peters's role with EFF was to include recruiting other Oregon cannabis businesses to join C21, and that a portion of his compensation would be based on that success. Plaintiffs alleged that Peters introduced C21 to other Oregon-licensed recreational marijuana growing operations, including defendants Phantom and Swell. Plaintiffs alleged that, shortly before and after C21's acquisition of EFF, defendants began to exclude plaintiffs from the Oregon operations as well as negotiations concerning C21's acquisition of Oregon entities, and to interfere with Peters's efforts to attract entities to C21. C21 removed Peters as manager of EFF, and replaced him with Shoemaker, who plaintiffs had initially introduced to C21.

Peters resigned from his position with EFF over disputes concerning compensation and plaintiffs’ belief that they were being excluded from the business, and Guptill was fired from her position as CEO of EFF, allegedly as a result of defendants’ interference. Plaintiffs then made a demand on C21 to pay plaintiffs wages they believed were owed under the various agreements. C21 rejected the demand, and plaintiffs brought this action.

As previously noted, plaintiffs’ original complaint had named as defendants C21, USH, and EFF, defendants Phantom and Swell, defendants Harris, Pinnick, and Shoemaker, and other individuals not involved in this appeal. Those defendants moved to dismiss the complaint for lack of subject-matter jurisdiction, based on the forum-selection clause, or to make the complaint more definite and certain. The trial court granted the motion to make the complaint more definite and certain and allowed plaintiffs to replead.

Also as noted, plaintiffs’ amended complaint names as defendants only Phantom, Swell, Pinnick, Shoemaker, and Clinton Harris. Those entities and individuals were not parties to the SPA and associated agreements between plaintiffs, C21, and EFF. For their first claim, plaintiffs allege that Phantom, Swell, Pinnick, and Shoemaker intentionally interfered with plaintiffs’ economic relations with C21 and EFF:

"Phantom, Swell, Mr. Pinnick, and Mr. Shoemaker intentionally interfered with Plaintiffs’ contracts, professional relationships, and business expectancies for the improper purposes of, among others (i) ousting Plaintiffs from their senior management roles within C21 and (ii) conspiring to ensure that the acquisition of EFF by C21 would turn into a colossal tragedy and failure for Plaintiffs.

"Phantom, Swell, Mr. Pinnick, and Mr. Shoemaker intentionally interfered with Plaintiffs’ contracts, professional relationships, and business expectancies through improper means by: (i) repeatedly disparaging Peters behind his back within his professional network and within C21; (ii) working actively to exclude Peters from company and industry happenings to the greatest possible extent; (iii) misrepresenting to third-parties the true nature of C21's interest in Phantom and Swell; and (iv) knowingly violating OLCC regulations."

Based on the same underlying facts, for their second claim, plaintiffs allege that defendants Phantom, Swell, Pinnick, and Shoemaker interfered with plaintiffs’ employment relationships with C21.

Defendants Phantom, Swell, Pinnick, and Shoemaker filed a new motion to dismiss under ORCP 21 A(1), for a lack of subject-matter jurisdiction, asserting that all of the claims depend on the existence of and arise "in respect of the subject matter" of plaintiffs’ agreements with C21 and EFF and, thus, that the forum-selection clause of the SPA requires that the claims be brought in a court of the Province of British Columbia.

The trial court granted the motion to dismiss and entered a general judgment dismissing all defendants except Harris,² and subsequently awarded defendants their attorney fees in a supplemental judgment. Plaintiffs appeal from the general judgment and from the supplemental judgment awarding attorney fees.

Plaintiffs contend in their first and second assignments of error that the trial court erred in dismissing their claims against Phantom, Swell, Pinnick, and Shoemaker based on the forum-selection clause of the SPA and associated agreements between plaintiffs and C21, USH, and EFF. Plaintiffs contend that their claims do not fall within the forum-selection clause, because they are not contract claims based on the agreements and because Phantom, Swell, Pinnick, and Shoemaker were not parties to those agreements nor are they intended beneficiaries. Phantom, Swell, Pinnick, and Shoemaker respond that plaintiffs’ claims fall within the forum-selection provision, because the alleged interference depends on the existence of plaintiffs’ agreements with C21, USH, and EFF.³

The court's ruling relates to...