Tafaro v. Innovative Discovery, LLC, Civil Action No. 14–1651.

• Decision Date: 24 February 2015
• Docket Number: Civil Action No. 14–1651.
• Citation: 89 F.Supp.3d 867
• Parties: Christopher J. TAFARO, et al. v. INNOVATIVE DISCOVERY, LLC, et al.
• Court: U.S. District Court — Eastern District of Louisiana

89 F.Supp.3d 867

Christopher J. TAFARO, et al.

v.INNOVATIVE DISCOVERY, LLC, et al.

Civil Action No. 14–1651.

United States District Court, E.D. Louisiana.

Signed Feb. 24, 2015.

Stephen Michael Wiles, Law Offices of Stephen M. Wiles, LLC, New Orleans, LA, for Christopher J. Tafaro, et al.

Leopold Z. Sher, James M. Garner, Ryan O'Neil Luminais, Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC, Timothy R. Richardson, USRY, Weeks & Matthews, New Orleans, LA, for Innovative Discovery, LLC, et al.

ORDER AND REASONS

JAY C. ZAINEY, District Judge.

Before the Court is a Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and, Alternatively, To Transfer to an Alternate Venue (Rec. Doc. 20) filed by defendant Innovative Discovery, LLC and a Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and, Alternatively, To Transfer to an Alternate Venue (Rec. Doc. 24) filed by defendant Allen C. Outlaw. Plaintiffs Christopher J. Tafaro and Brian C. Combe oppose the motions.

The motions, set for submission on October 8, 2014, are before the Court on the briefs without oral argument.¹ For the reasons that follow the motions are GRANTED.

I. Background

Plaintiffs Christopher J. Tafaro and Brian J. Combe (collectively “Plaintiffs”) became “economic interest owners” of Innovative Discovery, LLC (“Innovative Discovery”) in 2006.² (Rec. Doc. 27–1, at 1). Innovative Discovery provides a wide range of options for “litigation document solution services.” (Rec. Doc. 20–2, at 1). As economic interest owners, Plaintiffs allege that they “regularly received distributions ... until Defendant Outlaw (“Outlaw”) installed himself (putatively) as the sole Member—and Managing Member—of the Company” in February 2012. (Rec. Doc. 1–1, at 2). In addition to the alleged unlawful cessation of the distribution of dividends (in spite of continued tax liability for Plaintiffs arising from their ownership interests) and the alleged breach of fiduciary duty by Outlaw, Plaintiffs claim that Innovative Discovery and Outlaw have failed to adequately respond to requests made in June 2014 to produce books and records to which Plaintiffs claim to be entitled. (Rec. Doc. 1–1, at 3–4). As a result of these alleged grievances, Plaintiffs brought an action in Louisiana state court on July 11, 2014 seeking writs of quo warranto and mandamus and an order for the production of books and records, as well as bringing claims under the Louisiana Unfair Trade Practices Act and for breach of contract. (Rec. Doc. 1–1). Both Outlaw and Innovative Discovery were made defendants to this action. The case was removed to this Court on July 17, 2014.

Plaintiffs are both residents of Louisiana. (Rec. Doc. 1–1. at 1). Innovative Discovery is registered in Delaware and has its principal place of business in Arlington, Virginia. Id. Outlaw is a resident of Virginia. Id.

Defendants now move to dismiss the Complaint for lack of personal jurisdiction and improper venue. Defendants argue that there is no factual basis for this Court to exercise either specific or general personal jurisdiction over them. They claim that any connection to Louisiana arises only from the mere fortuity that Plaintiffs reside in the forum and that no other Louisiana contacts relate to the present action. Alternatively, Defendants argue for a transfer of venue.

II. Discussion

Plaintiffs contend that the Court can find personal jurisdiction over the defendants on either a basis of specific jurisdiction or general jurisdiction.

A federal court sitting in diversity must satisfy two requirements to exercise personal jurisdiction over a nonresident defendant. Pervasive Software Inc. v. Lexware GmbH & Co. Kg, 688 F.3d 214, 220 (5th Cir.2012). First, the forum state's long-arm statute must confer personal jurisdiction. Second, the exercise of jurisdiction must not exceed the boundaries of the Due Process Clause of the Fourteenth Amendment. Id. (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir.1999) ). The limits of the Louisiana long-arm statute are coextensive with constitutional due process limits. Jackson v. Tanfoglio Giuseppe, SRL, 615 F.3d 579, 584 (5th Cir.2010) (citing Walk Haydel & Assocs. v. Coastal Power Prod. Co., 517 F.3d 235, 242–43 (5th Cir.2008) ). Therefore, the inquiry is whether jurisdiction comports with federal constitutional guarantees. Id.

Specific jurisdiction requires a plaintiff to show that 1) there are sufficient, i.e., not random, fortuitous, or attenuated, pre-litigation connections between the non-resident defendant and the forum; 2) the connection has been purposefully established by the defendant; and, 3) the plaintiff's cause of action arises out of or is related to the defendant's forum contacts. Pervasive Software, 688 F.3d at 221. It is well-settled that an individual's contract with an out-of-state party alone cannot automatically establish sufficient minimum contacts in the other party's home forum. Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). The “minimum contacts” inquiry is fact intensive and no one element is decisive. McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir.2009). The touchstone is whether the defendant's conduct shows that he could “reasonably anticipate being haled into court.” Id. (quoting Luv N' Care, Ltd. v. Insta–Mix, Inc., 438 F.3d 465, 470 (5th Cir.2006) ). The defendant must not be “haled into a jurisdiction solely as a result of ‘random, fortuitous, or attenuated’ contacts, or of the ‘unilateral activity of another party or third person.’ ” Id. (quoting Electrosource, Inc. v. Horizon Battery Techs., Ltd., 176 F.3d 867, 871–72 (5th Cir.1999) ).

General jurisdiction, on the other hand, does not require a showing of contacts out of which the cause of action arose. Religious Tech. Ctr. v. Liebreich, 339 F.3d 369, 374 (5th Cir.2003) (quoting Cent. Freight Lines v. APA Transport Corp., 322 F.3d 376, 381 (5th Cir.2003) ). However, it does require a showing of substantial, “ ‘continuous[,]’ and ‘systematic’ contacts ... between a defendant and a forum.” Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th Cir.2008) ; Bowles v. Ranger Land Systems, Inc., 527 Fed.Appx. 319, 321 (5th Cir.2013). In the context of a company, these contacts must be such as to “render [it] essentially at home in the forum state.” Daimler AG v. Bauman, ––– U.S. ––––, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) ). The Fifth Circuit, noting the “reduced role” played by general jurisdiction, has warned that the general jurisdiction standard is “a difficult one to meet.” Id. at 755 (quoting Goodyear Dunlop Tires Operations, S.A., 131 S.Ct. at 2854 ); Johnston, 523 F.3d at 609 (citing Submersible Systems, Inc. v. Perforadora Central, S.A. de C.V.,

249 F.3d 413, 419 (5th Cir.2001) ).

At this stage a plaintiff need only establish a prima facie case of personal jurisdiction. See Walk Haydel & Assocs., Inc., 517 F.3d at 241. The Court must also construe all disputed facts in the plaintiff's favor. Id.

A. General Jurisdiction over Innovative Discovery

Plaintiffs argue that the following factual allegations are sufficient to establish personal jurisdiction over the defendants: Innovative Discovery did business with a Louisiana company owned in part by Plaintiffs (Digital Legal Services) on a number of occasions between 2006 and 2011;³ Innovative Discovery at some point in this period undertook specific projects for five other Louisiana companies;⁴ Outlaw and two other owners of Innovative Discovery, including plaintiff Tafaro, gave a sales presentation at a law firm in New Orleans;⁵ and, defendant Outlaw and two other owners of Innovative Discovery, including plaintiff Tafaro, gave a presentation at the 2009 Association of Legal Administrators meeting in New Orleans.⁶ Plaintiffs also claim that Innovative Discovery “tasked” them “with seeking business for [Innovative Discovery]—in [their] capacity as Louisiana owners of [Innovative Discovery]—from Louisiana businesses.”⁷ Relatedly, they attach the following emails: an email exchange in 2009 with an officer of Innovative Discovery exhorting them to obtain business in Louisiana;⁸ another 2009 email exchange, including a purported officer of Innovative Discovery, Outlaw, and Plaintiffs, about trying to get some business out of the Chinese drywall litigation in Louisiana;⁹ a 2010 email in which plaintiff Tafaro is asking a purported officer of Innovative Discovery for some information that he can pass on to a prospective client;¹⁰ an email exchange in 2009 between Innovative Discovery and Digital Legal Services about rates for a client where Digital Legal Services appears to be acting as a middle-man;¹¹ and finally, email exchanges in 2010 regarding a project with one of the Louisiana clients mentioned above.¹² The Plaintiffs further allege that they acted at all relevant times as agents of Innovative Discovery in Louisiana. They also claim that “other Members of IDL [Innovative Discovery][including Bruce Duff,] ... traveled to Louisiana to seek—and obtain—business for IDL [Innovative Discovery].” (Rec. Doc. 27–1, at 4).

As there is no allegation that any of the claims in the present lawsuit arose out of these contacts, the Court assumes that Plaintiffs offer these in an attempt to make out a prima facie case for general personal jurisdiction over Innovative Discovery. Three cases help to illustrate the threshold showing of contacts necessary to establish a prima facie case of general personal jurisdiction.

First, this Court examines a case in which the Fifth Circuit found general jurisdiction to exist, albeit as to an individual.

In Holt Oil & Gas Corp. v. Harvey, the defendant had the following contacts with the forum state, Texas: “(1) [Defendant] attended college and was formerly employed in Texas; (2) [Defendant] owns real estate in Texas,...