BeoCare Grp., Inc. v. Morrissey, Civil Action No. 5:14–CV–124.

124 F.Supp.3d 696

BEOCARE GROUP, INC., and BeoCare, Inc., Plaintiffs,

v.Michael J. MORRISSEY (individually and in his capacity as manager and/or managing member of EM International, LLC, EM Medical, LLC, MB Health Performance, LLC, and MB Health, LLC); Medical Knitted Structures, Inc. ; Garrett Cooper, (individually and in his capacity as Vice–President of Medical Knitted Structures, Inc. ); EM International, LLC ; EM Medical, LLC ; Suzanne Serl (individually and in her capacity as manager of EM Medical, LLC); MB Health Performance, LLC; MB Health, LLC; William F. Smith; Alliance Labs, LLC ; Amy Powers Valentine (individually and in her capacity as manager and member of Alliance Labs, LLC ); Steven Valentine; Pharmaceutical Sales Solutions, LLC; Robert Thomas (individually and in his capacity as manager and member of Pharmaceutical Sales Solutions, LLC), Defendants.

Civil Action No. 5:14–CV–124.

United States District Court, W.D. North Carolina, Statesville Division.

Signed Aug. 18, 2015.

Filed Aug. 19, 2015.

Calvin Scott Meyers, Jonathan Drew Sasser, Nora Foster Sullivan, Ellis & Winters, L.L.P., Greensboro, NC, Raleigh, NC, Cary, NC, for Plaintiffs.

Grant B. Osborne, Hayley R. Wells, Ward and Smith, P.A., Asheville, NC, for Defendants.

ORDER

RICHARD L. VOORHEES, District Judge.

BEFORE THE COURT are Defendant Alliance Labs, LLC's Motion to Dismiss for Lack of Personal Jurisdiction pursuant to FRCP 12(b)(2), (Doc. 78), and Defendant William F. Smith's Motion to Dismiss for Lack of Personal Jurisdiction pursuant to FRCP 12(b)(2), (Doc. 91).

I. STATEMENT OF FACTS

This action began on June 24, 2014 when Plaintiffs BeoCare Group, Inc. and BeoCare, Inc. (collectively "BeoCare") filed their initial Complaint for Injunctive Relief, Declaratory Relief, and Damages against Defendant Michael J. Morrissey ("Morrissey") in the North Carolina General Court of Justice, Superior Court Division of Caldwell County. (Doc. 1, Ex. B). Morrissey subsequently removed the case to this Court on July 18, 2014. (Doc. 1).

On July 23, 2014, BeoCare filed an Amended Complaint for Injunctive Relief, Declaratory Relief, and Damages ("Complaint"). (Doc. 18). The Complaint included numerous additional defendants, including Alliance Labs, LLC ("Alliance") and William F. Smith ("Smith"). Id.

On September 15, 2014, Alliance filed a Motion to Dismiss for lack of personal jurisdiction pursuant to FRCP 12(b)(2), (Doc. 78), a Memorandum in Support of its Motion, (Doc. 79), and Amy Powers' Affidavit, (Doc. 79, Ex. 1). BeoCare filed a response, (Doc. 85), to which Alliance replied, (Doc. 90).

On November 3, 2014, Smith filed a Motion to Dismiss for lack of personal jurisdiction pursuant to FRCP 12(b)(2), (Doc. 91), a Memorandum in Support of his Motion, (Doc. 93), and Smith's Affidavit, (Doc. 92). BeoCare filed a response, (Doc. 98), to which Smith replied, (Doc. 105).

II. STANDARD OF REVIEW

"A plaintiff bears the burden of proving that the Court has personal jurisdiction over a defendant by a preponderance of the evidence." Am. Auto. Ins. Co. v. Jacobs, No. 1:11CV332, 2012 WL 5185617, at *4 (W.D.N.C. Sept. 27, 2012) (citing New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir.2005) ). However, "[w]hen a district court considers a question of personal jurisdiction based on the contents of a complaint and supporting affidavits, the plaintiff [only] has the burden of making a prima facie showing in support of its assertion of [personal] jurisdiction." Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir.2014). In determining whether BeoCare has met this burden, the 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." Universal Leather, 773 F.3d at 558 (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989) ). If a court does not "conduct an evidentiary hearing, the court [is] required to assume the credibility of [Plaintiff's] version of the facts, and to construe any conflicting facts in the parties' affidavits and declarations in the light most favorable to [jurisdiction]." Id. at 560.

In order for a federal district court to exercise personal jurisdiction over a nonresident defendant, or a foreign corporation, such jurisdiction must be authorized by (1) the long-arm statute of the state in which the district court sits; and (2) the Due Process Clause of the Fourteenth Amendment. Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir.2003) ; Universal Leather, 773 F.3d at 558. "The North Carolina Supreme Court has held that N.C.G.S. § 1–75.4(1)(d) permits the exercise of personal jurisdiction over a defendant to the outer limits allowable under federal due process." Universal Leather, 773 F.3d at 558 (citing Dillon v. Numismatic Funding Corp., 291 N.C. 674, 231 S.E.2d 629, 630 (1977) ). Further, both Alliance and Smith, the parties opposing jurisdiction, concede that "North Carolina's Long–Arm Statute asserts personal jurisdiction to the limit of the Due Process Clause." (Doc. 79, p. 6); (Doc. 93, p. 6). Since the Complaint asserts personal jurisdiction over Defendants under N.C.G.S. § 1–75.4(1)(d), the traditional two-step analysis collapses into one question: is the Court's assertion of personal jurisdiction over Defendants consistent with the Due Process Clause of the Fourteenth Amendment? See Universal Leather, 773 F.3d at 558.

The Due Process Clause of the Fourteenth Amendment is satisfied for personal jurisdiction purposes if a defendant "purposefully availed itself of the privilege of conducting business in the forum state" by establishing sufficient "minimum contacts such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–76, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ; see also International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The purpose of this analysis is to ensure that defendants have fair warning that their activities can subject them to the jurisdiction of a foreign state. Burger King, 471 U.S. at 472, 105 S.Ct. 2174. Additionally, this requirement protects defendants from the "binding judgments of a forum with which [they have] no meaningful ‘contacts, ties, or relations.’ " Id. at 471–72, 105 S.Ct. 2174 (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. 154 ).

A court can find that the Due Process Clause of the Fourteenth Amendment is satisfied through either general or specific jurisdiction over a defendant. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011). Regardless of which type of jurisdiction is analyzed, "[f]airness is the touchstone of the jurisdictional inquiry, and the minimum contacts test is premised on the concept that a [defendant] that enjoys the privilege of conducting business within a state bears the reciprocal obligation of answering to legal proceedings there." Tire Eng'g & Distribution, LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 301 (4th Cir.2012).

"A court may assert general jurisdiction ... when [the defendant's] affiliations with the State are so ‘continuous and systematic’ as to render [the defendant] essentially at home in the forum State." Goodyear, 131 S.Ct. at 2851 (quoting International Shoe, 326 U.S., at 317, 66 S.Ct. 154 ). BeoCare merely argues for jurisdictional discovery to explore whether Defendants have sufficient contacts in North Carolina to establish general jurisdiction.

(Doc. 85, p. 12); (Doc. 98, p. 12). Therefore, BeoCare has not made a prima facie showing of general jurisdiction and the Court will initially limit its analysis to whether specific jurisdiction exists.

A court may assert specific jurisdiction over a non-resident defendant if the action arises out of the defendant's minimum contacts with the forum state. Tire Eng'g, 682 F.3d at 301. A court has specific jurisdiction over a non-resident defendant when that defendant's conduct relevant to the suit bears "such a connection with the forum state that it is fair for the defendant to defend itself in that state." Id. (quoting CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292 (4th Cir.2009) ). The specific jurisdiction analysis does not require a specific number of contacts with the forum state to establish the requisite minimum contacts. Id. Instead, the Court considers the "qualitative nature of each of the defendant's connections to the forum state." Id. This test is so flexible that one act or contact within the forum state may be enough to satisfy the required "quality and nature" for minimum contacts under specific jurisdiction. Id. However, the contact in question must be one that the " ‘defendant himself ’ creates with the forum state." Walden v. Fiore, –––U.S. ––––, 134 S.Ct. 1115, 1122, 188 L.Ed.2d 12 (2014) (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). The Fourth Circuit looks to a three factor test in deciding whether specific jurisdiction arises out of defendant's minimum contacts with the forum state: "(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable." Unspam Technologies, Inc. v. Chernuk, 716 F.3d 322, 328 (4th Cir.2013).

III. Alliance Lab's Motion to Dismiss: BeoCare has made a prima facie showing that Alliance established minimum contacts with North Carolina via the conspiracy theory of personal jurisdiction and via Alliance's own actions targeted at the forum state

A. BeoCare has made a prima facie showing that Alliance purposefully availed itself of the privilege of conducting...