O'Quin v. Fin. Servs. Online, Inc., CIVIL ACTION NO. 18-36-JWD-RLB

OTIS WILLIAM O'QUIN v. FINANCIAL SERVICES ONLINE, INC.

CIVIL ACTION NO. 18-36-JWD-RLB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

October 26, 2018

RULING AND ORDER

This matter comes before the Court on the Motion to Dismiss for Lack of Personal Jurisdiction, Alternative Motion to Transfer Venue, and Alternative Motion for Abstention (Doc. 26) filed by Defendant Financial Services Online, Inc. ("FSO" or "Defendant"). Plaintiff Otis O'Quin ("O'Quin" or "Plaintiff") opposes the motion. (Doc. 28.) Defendant has filed a reply memorandum. (Doc. 29.) Oral argument is not necessary. The Court has carefully considered the law, the record, and the arguments of the parties and is prepared to rule. For the following reasons, the Court will deny Defendant's motion to dismiss for lack of personal jurisdiction and Defendant's alternative motion for abstention. The Court will grant Defendant's alternative motion to transfer venue.

I. Relevant Factual Background

In essence, Plaintiff claims that FSO breached its employment contract with him and wrongfully terminated him. (Doc. 1-1 at 11; Doc. 26-1 at 1.)

FSO is a Texas corporation with its principal place of business in Katy, Texas. (Doc. 26-1 at 2.) With the exception of Plaintiff, FSO's officers were all located in Texas during Plaintiff's employment with FSO. (Id.) FSO services financial advisors through the Internet via the sale of membership access to its library of financial tools and materials. (Id.) FSO services are all online, and its computer servers are located in Austin, Texas; in addition, all of FSO employees and contractors are currently located in Texas. (Doc. 26-1 at 3.) FSO is not authorized to do business in Louisiana, (Doc. 1 at 3; Doc. 26-1 at 3), and does not have a registered agent for service of process in Louisiana, (Doc. 26-1 at 3). Additionally, FSO claims it has no offices located in Louisiana, does not own any real property or significant assets in Louisiana, and does not maintain a bank account or conduct any advertising in Louisiana. (Id.) FSO's Louisiana customers total only approximately 1% of FSO's customers. (Id.)

O'Quin entered into an employment contract ("Employment Contract" or "Contract") with FSO on July 1, 2016. (Doc. 1-1 at 3.) According to the terms of the Contract, FSO agreed to guarantee employment to O'Quin for a minimum of five years, subject to renewals afterward. (Doc. 1-1 at 4.) Based on the Employment Contract, Plaintiff claims that he was a term employee of FSO, with the term of his employment running from July 1, 2016 through July 1, 2021. (Id.) Under the Employment Contract, O'Quin was to be the President of FSO, work about 30-hours a week over a five-day workweek, and perform duties specified in the Contract. (Doc. 1-1 at 4-5.) The Contract also included O'Quin's salary for performing his duties as President, which was $4,000 per month, the annual salary rate equivalent to the highest paid employee at FSO. (Doc. 1-1 at 5.) Additionally, the Employment Contract required O'Quin to perform his duties from his home office in East Baton Rouge Parish. (See Doc. 1-1 at 3; Doc. 1-1 at 31.)

In the summer of 2017, the majority owners of FSO, Jim O'Quin and Zach Kirkpatrick ("Kirkpatrick") allegedly began to institute various changes to FSO. (Id.) Plaintiff disagreed with and opposed these changes. (Id.) When it became clear that the parties could not come to an agreement on the operation of the company, the parties began to discuss buyout proposals. (Doc. 1-1 at 6.) However, Plaintiff, Jim O'Quin, and Kirkpatrick never reached an agreement on a buyout proposal. (Id.) Afterward, Jim O'Quin and Kirkpatrick met with Plaintiff to discuss thenew duties they expected him to take on as President of FSO. (Id.) Allegedly, these new duties far exceeded the scope of what Plaintiff agreed to do in his employment contract. (Id.) Plaintiff claims the purpose of these new duties was to attempt to force him to perform more work than he was capable of handling, in an effort to persuade him to quit. (Id.) Due to the Employment Contract, FSO was unable to terminate Plaintiff's employment "at will" because Plaintiff was employed under a fixed-term contract, which had not expired and FSO did not have serious grounds of complaint to terminate him for other reasons. (Id.)

One month prior to the alleged breach of contract, FSO issued a report outlining the tasks Plaintiff accomplished pursuant to his new duties. (Doc. 1-1 at 7.) FSO was purportedly satisfied with Plaintiff's performance and work at that time. (Id.) In July 2017, Plaintiff sent Jim O'Quin and Kirkpatrick an email specifying his concerns about the future of the company. (Id.) In his correspondence, Plaintiff expressed his intentions to no longer be involved in managing FSO with the title of President, given that the new duties were more than he could handle on a part-time basis, per the original Employment Contract. (Id.) Plaintiff purportedly offered to discuss with Jim O'Quin and Kirkpatrick his intent to resign as President of FSO, but continue under his Contract as an employee of FSO with a different title and duties they all could agree upon. (Id.) Plaintiff claims such changes were permitted under the Contract, which specified that Plaintiff's employment duties or title could be changed by agreement and with approval of the parties. (Id.)

Plaintiff alleges that in an effort to terminate him without having to pay him for the remaining months of his employment term under the Contract, Kirkpatrick and Jim O'Quin distorted Plaintiff's offer to resign as President as providing notice of Plaintiff's intent to terminate his employment with FSO entirely. (Doc. 1-1 at 8.) Plaintiff asserts that he never intended to resign completely from employment with FSO and that his email specificallyexcluded that possibility. (Id.) After Plaintiff was aware that his email would be used to terminate his employment with FSO, he rescinded his offer to resign as President of FSO in an email sent to Jim O'Quin and Kirkpatrick on July 24, 2017. (Id.) Kirkpatrick responded by attempting to convince Plaintiff that he should accept Kirkpatrick and Jim O'Quin's buyout proposal, and Kirkpatrick noted that Plaintiff's resignation had already been accepted. (Id.) Kirkpatrick and Jim O'Quin allegedly offered Plaintiff another opportunity to buy out their FSO shares because the parties could not amicably work together. (Id.) Plaintiff claims that Jim O'Quin and Kirkpatrick "forced" Plaintiff to make a decision: either he could remain an employee under his current Employment Contract following the buyout or he would lose his employment with FSO if he failed to agree to their buyout terms. (Doc. 1-1 at 8-9.) Plaintiff attempted to negotiate with Jim O'Quin and Kirkpatrick to lower their selling price to no avail. (Doc. 1-1 at 9.) Purportedly, this allowed Jim O'Quin and Kirkpatrick to make the decision for Plaintiff because they knew he would be unable to meet their price. (Id.)

On August 7, 2017, Kirkpatrick sent a letter to Plaintiff providing that he was formally accepting Plaintiff's resignation from FSO, effective immediately, noting that FSO appreciated Plaintiff's offer to resign in lieu of the company terminating his employment. (Id.) Plaintiff claims this letter was nothing more than a termination letter. (Doc. 1-1 at 10.) Therefore, Plaintiff asserts that FSO breached its Contract to employ him for a minimum of five years when it terminated Plaintiff without any serious grounds for complaint. (Doc. 1-1 at 11.) As a result, FSO wrongfully terminated Plaintiff. (Id.) Plaintiff claims he is entitled to the remainder of his salary under the terms of the contract and reasonable attorney's fees pursuant to La. R.S. §§ 23:631-632. (Id.)

II. Discussion

A. Summary of Ruling

Defendant's motion raises three issues. First, Defendant argues that Plaintiff's case should be dismissed because Plaintiff cannot satisfy the prima facie burden of establishing that this Court has personal jurisdiction over FSO. Second, and in the alternative, Defendant urges this Court to transfer this case to the Southern District of Texas, Houston Division ("Southern District") under 28 U.S.C. § 1404(a) because it is a more convenient forum than the Middle District of Louisiana ("Middle District"). Third, and as a further alternative, Defendant requests that the Court stay the case pursuant to the Colorado River abstention doctrine. See Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976).

In sum, the Court will deny Defendant's motion to dismiss for lack of personal jurisdiction. Plaintiff has met his prima facie burden of demonstrating that this Court could establish specific personal jurisdiction over Defendant. However, the Court will grant Defendant's alternate motion to transfer venue. Pursuant to § 1404(a) and Fifth Circuit jurisprudence, Defendant has shown that a transfer of venue to the Southern District is clearly more convenient. As a result, the Court need not reach the issue of whether to grant Defendant's alternative motion for abstention; this alternative motion is denied without prejudice.

B. Personal Jurisdiction

1. Parties' Arguments

a. Defendants' Motion (Doc. 26) and Supporting Memorandum (Doc. 26-1)

Defendant argues that Plaintiff's claims against FSO should be dismissed because FSO is not subject to personal jurisdiction in Louisiana. (Doc. 26-1 at 1.)

Defendant first contends that Plaintiff's case should be dismissed under Rule 12(b)(2) for lack of personal jurisdiction in Louisiana. (Doc. 26-1 at 5.) A federal court has jurisdiction over nonresident defendants if the forum state confers personal jurisdiction over that defendant by statute and if the exercise of jurisdiction is consistent with constitutional due process. (Doc. 26-1 at 5 (citing Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th Cir. 1993)).) Defendant argues that Louisiana's long-arm statute is...