AYM Technologies, LLC v. Rodgers

2018 NCBC 14

AYM TECHNOLOGIES, LLC, Plaintiff, v. GENE RODGERS; SCOPIA CAPITAL MANAGEMENT LP; SCOPIA HCM PARTNERS, LLC; and COMMUNITY BASED CARE, LLC, Defendants.

No. 16 CVS 21788

Superior Court of North Carolina, Mecklenburg

February 9, 2018

Terpening Wilder Moors PLLC, by Raboteau T. Wilder Jr. and William R. Terpening, for Plaintiff Aym Technologies, LLC.

Ogletree, Deakins, Nash, Smoak & Stewart, P.C., by Benjamin R. Holland and Lia A. Lesner, and Pollack Solomon Duffy LLP, by Barry S. Pollack, for Defendants Scopia Capital Management LP, Scopia HCM Partners, LLC, and Community Based Care, LLC.

Bell Davis & Pitt, P.A., by Jason B. James and Edward B Davis, for Defendant Gene Rodgers.

ORDER AND OPINION ON DEFENDANTS' MOTIONS TO DISMISS

Louis A. Bledsoe, III Special Superior Court Judge.

1. THIS MATTER is before the Court on the following motions in the above captioned case: (i) Defendants Scopia Capital Management LP ("Scopia") and Scopia HCM Partners, LLC's ("Scopia HCM") (collectively, the "Scopia Defendants") motion to dismiss under Rule 12(b)(2) of the North Carolina Rules of Civil Procedure for lack of personal jurisdiction (the "Scopia Defendants' 12(b)(2) Motion") and motion to dismiss under Rule 12(b)(5) for inadequate service of process (the "Scopia Defendants' 12(b)(5) Motion"); (ii) the Scopia Defendants and Defendant Community Based Care, LLC's^[1] ("CBC") (collectively, the "Corporate Defendants") motion to dismiss under Rule 12(b)(6) (the "Corporate Defendants' Motion to Dismiss"); and (iii) Defendant Gene Rodgers's ("Rodgers") motion to dismiss under Rule 12(b)(6) ("Rodgers's Motion to Dismiss") (collectively with the Corporate Defendants' Motion to Dismiss, the "12(b)(6) Motions"). The 12(b)(6) Motions, the Scopia Defendants' 12(b)(2) Motion, and the Scopia Defendants' 12(b)(5) Motion shall be referenced collectively hereafter as the "Motions."

2. Having considered the Motions, the parties' briefs and related submissions in support of and in opposition to the Motions, the Complaint, the appropriate evidence of record on the Scopia Defendants' 12(b)(2) and 12(b)(5) Motions, and the arguments of counsel at the May 17, 2017 hearing on the 12(b)(6) Motions and the May 17, 2017 and October 3, 2017 hearings on the Scopia Defendants' 12(b)(2) and 12(b)(5) Motions, the Court hereby GRANTS in part and DENIES in part each of Defendants' Motions.

I. PROCEDURAL BACKGROUND

3. Aym Technologies, LLC ("Aym" or "Plaintiff") filed this action on December 5, 2016 against Defendants, asserting claims against Rodgers for breach of contract and against all Defendants for misappropriation of trade secrets, conversion, unfair or deceptive trade practices under N.C. Gen. Stat. § 75-1.1, and tortious interference with prospective economic advantage. Aym seeks both monetary damages and injunctive relief on its claims.

4. On February 20, 2017, Scopia and Scopia HCM moved to dismiss Aym's Complaint for lack of personal jurisdiction under Rule 12(b)(2) and for inadequate service of process under Rule 12(b)(5). On the same day, Scopia, Scopia HCM, and CBC moved to dismiss Aym's Complaint for failure to state a claim under Rule 12(b)(6).

5. On March 31, 2017, Rodgers filed an answer to the Complaint and also moved to dismiss the Complaint for failure to state a claim under Rule 12(b)(6).^[2]

6. The Court held a hearing on the Motions on May 17, 2017, at which all parties were represented by counsel. At the hearing, Aym's counsel reiterated a request made in Aym's briefing on the Motions that the parties be permitted to conduct jurisdictional discovery prior to the Court's determination of the Scopia Defendants' 12(b)(2) Motion.

7. On May 19, 2017, the Court entered an order directing the parties to engage in jurisdictional discovery concerning the Scopia Defendants' 12(b)(2) Motion and staying all other discovery in the case pending the Court's resolution of the Motions. Jurisdictional discovery concluded on August 31, 2017, and the Court held a further hearing on the Scopia Defendants' 12(b)(2) and 12(b)(5) Motions on October 3, 2017. All parties were represented by counsel at the hearing.

8. The Court elected to delay resolution of the 12(b)(6) Motions until jurisdictional discovery and supplemental briefing and argument had been received on the Scopia Defendants12(b)(2) and 12(b)(5) Motions.

9. The Motions are now ripe for resolution.

II. SCOPIA DEFENDANTS' 12(b)(2) MOTION

10. A North Carolina court has jurisdiction over a nonresident defendant if (i) statutory authority for the exercise of jurisdiction under the State's long-arm statute, N.C. Gen. Stat. § 1-75.4, exists and (ii) the exercise of jurisdiction comports with due process under federal law. See, e.g., Skinner v. Preferred Credit, 361 N.C. 114, 119, 638 S.E.2d 203, 208 (2006). The Court need not consider the long-arm statute here, however, as our courts have made clear that "the question of statutory authority collapses into one inquiry-whether defendant has the minimum contacts necessary to meet the requirements of due process." Cambridge Homes of N.C., L.P. v. Hyundai Constr., Inc., 194 N.C.App. 407, 412, 670 S.E.2d 290, 295 (2008) (quoting Filmar Racing, Inc. v. Stewart, 141 N.C.App. 668, 671, 541 S.E.2d 733, 736 (2001)).

11. "To satisfy the due process prong of the personal jurisdiction analysis, there must be sufficient 'minimum contacts' between the nonresident defendant and our state such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Skinner, 361 N.C. at 122, 638 S.E.2d at 210 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "In determining whether a defendant has sufficient minimum contacts, North Carolina courts consider '(1) the quantity of the contacts, (2) the nature and quality of the contacts, (3) the source and connection of the cause of action to the contacts, (4) the interest of the forum state, and (5) the convenience to the parties.'" Worley v. Moore, 2017 NCBC LEXIS 15, at *20-21 (N.C. Super. Ct. Feb. 28, 2017) (quoting Banc of Am. Sec. LLC v. Evergreen Int'l Aviation, Inc., 169 N.C.App. 690, 696, 611 S.E.2d 179, 184 (2005)).

12. A court may exercise personal jurisdiction through either general jurisdiction or specific jurisdiction. Skinner, 361 N.C. at 122, 638 S.E.2d at 210. General jurisdiction "may be asserted over [a] defendant even if the cause of action is unrelated to [the] defendant's activities in the forum as long as there are sufficient 'continuous and systematic' contacts between [the] defendant and the forum state, " Replacements, Ltd. v. Midwesterling, 133 N.C.App. 139, 145, 515 S.E.2d 46, 51 (1999) (citation omitted), "[so] as to render [defendant] essentially at home in the forum state, " Worley, 2017 NCBC LEXIS 15, at *54 (quoting Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014) (quotation marks omitted)).

13. In contrast, "[s]pecific jurisdiction exists when 'the controversy arises out of the defendant's contacts with the forum state.'" Lab. Corp. of Am. Holdings v. Caccuro, 212 N.C.App. 564, 569, 712 S.E.2d 696, 701 (2011) (quoting Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361, 366, 348 S.E.2d 782, 786 (1986)); see also Walden v. Fiore, 134 S.Ct. 1115, 1121-22 (2014). Those contacts must not be based solely on "random, fortuitous, or unilateral activity of another party or a third person, " Cambridge Homes, 194 N.C.App. at 413, 670 S.E.2d at 296, and the exercise of specific jurisdiction requires that "a defendant ha[ve] 'fair warning' that he may be sued in a state for injuries arising from activities that he 'purposefully directed' toward that state's residents, " Tom Togs, 318 N.C. at 366, 348 S.E.2d at 786 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). The Court's focus should be "upon the relationship among the defendant, this State, and the cause of action." Id. "Therefore, the trial court must carefully scrutinize the facts of each case to determine if a defendant's dispute-related contacts with the forum state constitute sufficient minimum contacts to exercise personal jurisdiction over the defendant in the forum state." Soma Tech., Inc. v. Dalamagas, 2017 NCBC LEXIS 26, at *11-12 (N.C. Super. Ct. Mar. 24, 2017) (citing Deer Corp. v. Carter, 177 N.C.App. 314, 327, 629 S.E.2d 159, 169 (2006)).

14. When a defendant challenges the court's jurisdiction under Rule 12(b)(2), the burden falls on the plaintiff to establish that grounds for asserting jurisdiction exist. Williams v. Inst. for Computational Studies at Colo. State Univ., 85 N.C.App. 421, 424, 355 S.E.2d 177, 179 (1987); see also Mannise v. Harrell, 791 S.E.2d 653, 659 (N.C. Ct. App. 2016) (reversing finding of personal jurisdiction where plaintiff failed to rebut defendant's affidavit stating that he had no contacts with North Carolina).

15. Where, as here, both parties submit competing affidavits and depositions, and the trial court holds a hearing on personal jurisdiction, the trial court should consider the matter as if an evidentiary hearing had occurred. See, e.g., Deer Corp., 177 N.C.App. at 322, 629 S.E.2d at 166 (where trial court held hearing and considered deposition testimony, the "case had moved beyond the procedural standpoint of competing affidavits to an evidentiary hearing"). In such circumstances, the Court must "act as fact-finder and decide the question of personal jurisdiction by a preponderance of the evidence, " id. (internal citation omitted), with the plaintiff bearing the "ultimate burden of proving jurisdiction, " see, e.g., Parker v. Town of Erwin, 243 N.C.App. 84, 97, 776 S.E.2d 710, 721 (2015).

16. Accordingly, based on the Court's review of the verified Amended Complaint, the parties' exhibits, the submitted...