Reed v. Beverly Hills Porsche

• Decision Date: 08 February 2018
• Docket Number: Case No. 6:17–cv–00059
• Citation: 307 F.Supp.3d 494
• Parties: Eugene L. REED, Plaintiff, v. BEVERLY HILLS PORSCHE, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

307 F.Supp.3d 494

Eugene L. REED, Plaintiff,

v.BEVERLY HILLS PORSCHE, et al., Defendants.

Case No. 6:17–cv–00059

United States District Court, W.D. Virginia, Lynchburg Division.

Signed February 8, 2018

James Ben Feinman, James B. Feinman, Attorney at Law, Lynchburg, VA, for Plaintiff.

Amy Miles Kowalski, John Ernest Falcone, Petty Livingston Dawson & Richards, Lynchburg, VA, Theresa J. Macellaro, The Macellaro Firm, Venice, CA, James Hall Revere, III, Kalbaugh Pfund & Messersmith PC, Richmond, VA, for Defendants.

MEMORANDUM OPINION

NORMAN K. MOON, SENIOR UNITED STATES DISTRICT JUDGE

This diversity case is before the Court on the question of personal jurisdiction over Defendant Beverly Hills Porsche (Beverly Hills).¹ Plaintiff Eugene Reed alleges claims of breach of contract, violation of Virginia's Consumer Protection Act, and fraud stemming from his purchase of a Porsche from Beverly Hills. Plaintiff initially contacted Beverly Hills through its website, kicking off remote negotiations by phone, email, and text message. Beverly Hills sent an agreement to Plaintiff in Virginia, which he signed. The contract calls for the application of California law, and Plaintiff's agent picked up the car directly from the dealership in California. Beverly Hills only rarely sells cars to Virginia residents, it has no physical presence in the Commonwealth, it does not advertise specifically there, and both its dealership agreement and website indicate that California is its primary area of responsibility. Based on these and other facts, personal jurisdiction is lacking, so the Beverly Hills' motion to dismiss will be granted.

STANDARD OF REVIEW

The standard of review for personal jurisdiction issues "varies according to the posture of the case and the evidence that has been presented to the court." Grayson v. Anderson , 816 F.3d 262, 268 (4th Cir. 2016). "When a district court considers a question of personal jurisdiction based on the contents of a complaint and supporting affidavits, the plaintiff has the burden of making a prima facie showing in support of its assertion of jurisdiction." Universal Leather, LLC v. Koro AR, S.A. , 773 F.3d 553, 558 (4th Cir. 2014) ; see id. at 560. In conducting its analysis, "the district court must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction." Id. at 558. The parties presume that this standard governs here, but it does not.

A plaintiff has the ultimate burden to "establish facts supporting jurisdiction over the defendant by a preponderance of the evidence." Grayson , 816 F.3d at 268. When "the parties engaged in full discovery on the jurisdictional issue and fully presented the relevant evidence to the district court," the court uses the preponderance of the evidence standard. Id. at 265. This process requires an "evidentiary hearing," but the Fourth Circuit has explained that such a "hearing":

requires only that the district court afford the parties a fair opportunity to present both the relevant jurisdictional evidence and their legal arguments. Once the court has provided that opportunity, it must hold the plaintiff to its burden of proving facts, by a preponderance of the evidence, that demonstrate the court's personal jurisdiction over the defendant.

Id. The district court has "broad discretion" to determine how to structure the hearing and may consider evidence through depositions, interrogatories, answers, admissions, exhibits, and other appropriate methods. Id. at 269. There is no "hard and fast rule" about the proceeding's contours. Id. But once this process has run its course, the district sits as finder of fact unless there are disputes of fact overlapping with the substantive issues. See id. at 267.

In this case, the parties sought and received permission to engage in jurisdictional discovery, which lasted three months and included document productions, interrogatories, and depositions. They then filed supplemental briefs in which they presented their arguments and evidence to the Court. Lastly, the Court afforded the parties an opportunity to be heard at oral argument. Given this procedural history, the Grayson preponderance of the evidence standard applies. Moreover, neither party suggests that there are any material jurisdictional facts both in dispute and intertwined with the merits, so the Court itself sits as finder of the jurisdictional facts. The Court thus finds the following jurisdictional facts by a preponderance of the evidence.

FINDINGS OF FACT

Plaintiff began searching for a car in the fall of 2016; he sought a used car with a certified pre-owned warranty. (Dkt. 15–1 ¶ 3). He had purchased Porsche vehicles previously, and from his experience was aware of the "Porsche Approved Certified Pre–Owned Vehicle warranty." (Id. ¶ 2). He accessed the website of Defendant Porsche Cars North America, Inc. (PCNA) and entered specifications for the kind of car he desired. (Id. ¶ 3). Over time, PCNA would then generate emails to Plaintiff informing him of Porsche dealerships possessing vehicles that met his specifications. (Id. ). PCNA's emails invited Plaintiff to contact the relevant dealership(s) and provided contact information for them. (Id. ). It was through this process Plaintiff learned of the car owned by Defendant Beverly Hills, a PCNA dealership. When Beverly Hills has a car, it uploads the car's specifications into PCNA's database, which then "populates" the information on both PCNA's and Beverly Hills' websites, both of which are designed by PCNA. (Dkt. 41 at 23–24).

Beverly Hills does not have offices, agents, or employees in Virginia, has never owned or leased property in Virginia, and does not advertise specifically within Virginia. (Dkt. 8–1 ¶ 4). Relatedly, the standard provisions of PCNA's dealership agreement provide that a dealership has a "Primary Area of Responsibility," i.e. , a geographical area determined solely by PCNA. (Dkt. 41 at 48–49; dkt. 42 at ECF 37). A dealership, though, "may" sell products outside of that area provided that (1) it satisfies other best-practice-type requirements and (2) "such sales are within the 50 United States." (Dkt. 42 at ECF 12).

Beverly Hills' primary area of responsibility is the greater Los Angeles area. (Dkt. 81; dkt. 42–1 at 2). This affects, among other things, where Beverly Hills is permitted to advertise. For instance, the "2017 Porsche Dealer Marketing Covenant & PDMS Guidelines," which are issued by PCNA and applicable to Beverly Hills, provide that "[d]ealers are to place their marketing, irrespective of the message, only within their Primary Area of Responsibility." (Dkt. 43–1 at ECF 9). The Guidelines state that "[a]dvertising language promoting nationwide delivery ... is not permitted." (Id. at ECF 8). Furthermore, the Guidelines apply to Internet advertising, "including [the observance of] rules of Geographic Market Areas and Primary Areas of Representation." (Id. at ECF 10–11).

Through one of PCNA's emails, Plaintiff learned that Beverly Hills had a car fitting his desired specifications. (Dkt. 15–1 ¶ 4). PCNA's email directed Plaintiff to contact Beverly Hills if he was interested in the car, which he did by filling out a form on the dealership's website. (Dkt. 8–1 ¶ 8; dkt. 41 at 39). Beverly Hills' website is www.beverlyhillsporsche.com. The website contains information about cars and can be used to initiate contact with Beverly Hills, but it cannot be used to transact business. (Dkt. 8–1 ¶ 7). On the whole, the website conveys an emphasis on serving the greater Los Angeles area. The bottom left-hand side of the webpage states that Beverly Hills is a "local source" for Porsche products and is "centrally located" to Los Angeles. The parties have not directed the Court to any portion of the website that refers to Virginia or any other state besides California.

A mainstay tab in the upper right-hand corner has an "email" link, which then generates fields for entry. Plaintiff used this form, providing his name, email address, and phone number, and indicating he was "interested in further details" about the car in question. (8–1 ¶ 8.). Submission of the online form generated a notification to Beverly Hills, who then assigned a salesman to Plaintiff's inquiry. (dkt. 8–1 ¶ 8; dkt. 8–2 ¶ 2).

The salesman responded to Plaintiff email on May 1, 2017, thanking Plaintiff for his interest. (Dkt. 8–2 ¶¶ 2–3; dkt. 15–1 at ECF 8–9). The two men then began negotiating—exchanging phone calls, text messages, and approximately 20 emails—but they never met in person. (Dkt. 8–2 ¶ 3; dkt. 15–1 at ECF 8–19). Indeed, Plaintiff informed the salesman early in their negotiations that he could not visit the dealership because he lived in central Virginia.

On May 2, 2017, the salesman had Beverly Hills prepare the sales contract and overnight it to Plaintiff in Virginia. (Dkt 8–2 ¶ 4). Plaintiff signed the contract in Virginia and sent it back, at which point Beverly Hills signed it. (Id. ). The contract states that "[f]ederal law and California law apply to this contract." (Dkt. 8–2 at ECF 7).

The salesman, at Plaintiff's request, provided Plaintiff with instructions on how to wire funds to Beverly Hills' bank. (Dkt. 8–2 ¶ 5). Despite being told that Beverly Hills could deliver across the country, (dkt. 15–1 ¶ 4), Plaintiff made independent arrangements with a local California towing company to transport the car; the company picked up the vehicle from Beverly Hills and delivered it to Plaintiff in Virginia. (Id. ¶ 6; dkt. 8–1 ¶ 9). After the salesman and Plaintiff had reached an understanding regarding the purchase, Plaintiff wrote to request a "Beverly Hills Porsche lic[ense] plate frame" and "a mug or cup" because the car was "gonna b[e] a big deal in Forest[,] VA." (Dkt. 15–1 at ECF 18). When the car arrived in Virginia, it allegedly did not meet the promised specifications, so Plaintiff's wife contacted...