Amazon.com v. WDC Holdings LLC

1

AMAZON.COM, INC. and AMAZON, DATA SERVICES, INC. Plaintiffs, v. WDC HOLDINGS LLC d/b/a NORTHSTAR COMMERCIAL PARTNERS, et al., Defendants.

800 HOYT LLC, Intervening Interpleader Plaintiff, v. BRIAN WATSON, WDC HOLDING LLC, BW HOLDINGS LLC, PLW CAPITAL I, LLC.AMAZON.COM, INC, and AMAZON DATA SERVICES, INC., Interpleader Defendants.

Civil Action No. 1:20-cv-484 (RDA/IDD)

United States District Court, E.D. Virginia, Alexandria Division

April 6, 2023

MEMORANDUM OPINION AND ORDER

Rossie D. Alston, United States District Judge

This matter comes before the Court on the Nelson Defendants'^[1]Motion for Judgment on the Pleadings (Dkt. 1145),^[2] Defendant Rodney Atherton's Motion for Summary Judgment (Dkt. 1162), Defendant Casey Kirschner's Motion for Summary Judgment (Dkt. 1167), the Watson Defendants'^[3]Motion for Summary Judgment (Dkt 1172), and the Nelson Defendants' Motion for Summary Judgment (Dkt. 1175) (“Summary Judgment Motions”). The Court dispenses with oral argument as it would not aid in the decisional process. See Fed.R.Civ.P. 78(b); E.D. Va. Loc. Civ. R. 7(J). The motions are now ripe for disposition.

Considering the motions together with Defendants' Memoranda in Support (Dkt. Nos. 1146; 1169; 1173; 1174; 1176); Plaintiffs Amazon.com, Inc. and Amazon Data Services' Oppositions (Dkt. Nos. 1200; 1210); and Defendants' Replies (Dkt. Nos. 1206; 1245; 1249; 1252; 1255), it is hereby ORDERED that Defendant Rodney Atherton's Motion for Summary Judgment (Dkt. 1162) is GRANTED, Defendant Casey Kirschner's Motion for Summary Judgment (Dkt. 1167) is GRANTED in part and DENIED in part, the Watson Defendants' Motion for Summary Judgment (Dkt. 1172) is GRANTED in part and DENIED in part, the Nelson Defendants' Motion for Summary Judgment (Dkt. 1175) is GRANTED in Part and DENIED in part, and the Nelson Defendants' Motion for Judgment on the Pleadings (Dkt. 1145) is DENIED as MOOT for the reasons that follow.

I. BACKGROUND

A. Factual Background^[4]

Although the parties dispute certain facts, the following material facts are either undisputed^[5]or considered in the light most favorable to Plaintiffs for the purposes of Defendants' Summary Judgment Motions. See Tolan v. Cotton, 572 U.S. 650, 651 (2014) (noting that courts must view the evidence on summary judgment in the light most favorable to the nonmoving party); see also Dkt. Nos. 1169 at 2-3; 1173 at 3-10; 1174 at 2-17; 1176 at 3-13 (Defendants' statements of undisputed material facts); 1210 at 20-36 (Plaintiffs' response to Defendants' statements of undisputed material facts).^[6]

1. The Parties

Plaintiffs Amazon.com, Inc. and Amazon Data Services, Inc. (“Plaintiffs” or “Amazon”) are Delaware corporations headquartered in Seattle, Washington. Dkt. Nos. 1173 ¶ 1; 1174 ¶ 1. Amazon operates many large facilities in Virginia and other parts of the United States. Dkt. Nos. 1173 ¶ 1; 1174 ¶ 1. Defendants Carleton Nelson and Casey Kirschner are former real estate transaction managers for Amazon. Dkt. Nos. 1173 ¶ 2; 1174 ¶ 4. Amazon terminated Casey Kirschner's employment in April 2020. Dkt. Nos. 1173 ¶ 2; 1174 ¶ 5. Amazon later terminated Carleton Nelson's employment in June 2019 based on matters unrelated to the instant litigation. Dkt. Nos. 1173 ¶ 2; 1174 ¶ 6. Defendant Brian Watson is the founder and Chief Executive Officer of Northstar, a full-service real estate investment, development, and asset management company that Amazon entered into leases with for commercial properties in Northern Virginia. Dkt. Nos. 1173 ¶ 3; 1174 ¶ 2.^[7]Non-party Christian Kirschner is the brother of Casey Kirschner. Dkt. Nos. 1173 ¶ 6; 1174 ¶ 9. Beginning in 2016, he served as a referral partner for Northstar. Dkt. 1174 ¶ 54. Defendant Rodney Atherton is a Colorado-licensed attorney who operated the firm Ergo Law, LLC during all relevant times-from 2016 through 2021. Dkt. 1173 ¶ 5. He created trusts and corporate entities on behalf of Casey Kirschner, Christian Kirschner, and Nelson. Dkt 1174 ¶ 7.

statement of undisputed facts and the nonmovant's response that a district court determines whether genuine issues of fact are disputed.” Immunogen, Inc. v. lancu, 523 F.Supp.3d 773, 77778 (E.D. Va. 2021) (refusing to consider a plaintiff's separate enumerated statement of facts opposing summary judgment), vacated and remanded on other grounds sub nom. ImmunoGen, Inc. v. Hirshfeld, No. 2021-1939, 2022 WL 885774 (Fed. Cir. Mar. 25, 2022).

2. The Real Estate Transactions

At the center of this litigation is an alleged kickback scheme orchestrated by Nelson and Casey Kirschner involving eleven commercial real estate transactions-nine leases and two direct purchases-that Amazon executed in anticipation of building data centers in Northern Virginia. Dkt. 1176 ¶ 18.

a. The Lease Transactions

In July 2017, Northstar's referral partner, Christian Kirschner connected Northstar with his brother, Casey Kirschner, to discuss possible real estate work between Northstar and Amazon. Dkt. Nos. 1173 ¶¶ 9-10; 1174 ¶ 54. Later that year, Northstar received a Request for Proposal (“RFP”) from Amazon pertaining to the development of build-to-suit (“BTS”) (i.e., new, custom-built) constructions for Amazon in Northern Virginia. Dkt. Nos. 1173 ¶ 11; 1174 ¶ 19.^[8]In September 2017, Northstar responded to the RFP with a proposal for BTS construction of multiple buildings. Dkt. 1174 ¶ 20. Amazon subsequently selected Northstar as the developer for a total of nine buildings (the “Lease Transactions”). Dkt. 1174 ¶ 21. Northstar and its joint venture partner would purchase and develop four land sites over a two-year period and lease them to Amazon upon completion of each building. Id. Amazon does not claim any damages based on its rent being above-market. Dkt. 1174, Ex. 17 at 10-14 (Amazon.com, Inc.'s and Amazon Data Services, Inc.'s Responses to WDC Holdings, LLC's First Set of Interrogatories to Plaintiffs).^[9] Nor has Amazon asked its damages expert, Richard Lee, to assess if the lease fees and rates reflected a fair market price. Id., Ex. 20 at 75:7-25 (Lee Deposition). On February 19, 2020, after Northstar had been removed from the Lease Transactions, Amazon entered into a Lease Continuity Agreement, thereby affirming the lease contracts with various landlord entities. Id. ¶ 43. To date, Amazon occupies all nine of the data centers developed by Northstar pursuant to the Lease Transactions. Id. ¶ 50.

b. The White Peaks Transaction

In the summer of 2019, Amazon identified a parcel of land in Chantilly, Virginia (the “White Peaks Parcel”) to be used for a new Amazon development. Id. ¶ 61. On January 16, 2019, two Northstar employees, Kyle Ramstetter and Will Camenson, formed a business called White Peaks Capital, LLC. Id. ¶ 64. Acting on behalf of White Peaks, Ramstetter negotiated the purchase of the White Peaks Property from a Virginia real estate entrepreneur Charles Kuhn, doing business as 41992 John Mosby Highway LLC. Id. ¶ 65, Ex. 29 at 40:19-22 (Kuhn Tr.). On April 22, 2019, White Peaks Capital, LLC, purchased the White Peaks Parcel for $98.67 million. Dkt. 1174 ¶ 67. This contract was then assumed by a Special Purpose Ownership entity wholly owned by White Peaks Capital LLC called NOVA WPC, LLC (“NOVA”). Id. On July 29, 2019, NOVA closed on the purchase of the property. Id. ¶ 68. That same day, Amazon purchased the White Peaks Parcel for $116.4 million from NOVA. Id. This price equated to $1.3 million per acre, which an independent group at Amazon determined was “equal to market rate.” Id., Ex. 33 (Andrew Jassy Email Approving IAD 170). In discovery, Amazon has produced no evidence concerning the market price of the White Peaks property at the time of the transaction. Id. ¶ 70.

Although Ramstetter and Camenson were employees of Northstar at the time of the acquisition, they did not pursue the White Peaks transaction on behalf of Northstar-in fact, they purposefully cut Northstar and Watson out of the deal. Dkt. 1174 ¶ 66, Ex. 19 at 393:21-394:5 (Vonderhaar 30(b)(6) Tr.) (“I don't recall evidence that [Ramstetter] engaged on behalf of Northstar. In fact, I think he - he - he engaged directly and independently to some degree.”); id., Ex. 29 at 40:19-22 (Kuhn Tr.) (“My understanding of White Peaks is Kyle Ramstetter left Northstar, formed White Peaks and White Peaks was the group that approached us to acquire the property.”); id., Ex. 29 at 47:6-13 (“Q: And what did they tell you, if you can recall specifically about [Camenson and Ramstetter's], kind of, current business venture? A: “They said that they were going to go out on their own. They were going to approach Amazon and other hyperscalers about doing development on their behalf.”).^[10] Indeed, the Watson Defendants maintain that they played no role in the White Peaks transaction and did not even know of its existence until after Amazon had purchased the property. Dkt. 1174 ¶¶ 71-73, Ex. 38 at 3 (Defendants' Second Supplemental Answers to Plaintiffs' First Set of Interrogatories).

After learning of the transaction, Watson threatened to sue Ramstetter and Camenson for “usurpation of corporate opportunity” due to their intentional exclusion of their employer, Northstar, from the White Peaks Transaction. Dkt. 1174 ¶ 76, Ex. 39 (Demand Letter (Oct. 2, 2019)). Northstar terminated both Ramstetter's and Camenson employment soon thereafter. Dkt 1174 ¶ 77, Ex. 40 at 74:14-76:22 (Lorman Tr.); id., Ex. 41 at 1 (White Peaks Confidential Settlement Agreement). Subsequently, Northstar, Ramstetter, and Camenson engaged in mediation to settle the dispute, which was overseen by former Chief Justice of the Colorado Supreme Court, Nancy Rice. Id. ¶ 78. The parties settled the matter with Ramstetter and Camenson paying $5 million pursuant to a written settlement agreement. Id., Ex....