T1 Payments LLC v. New U Life Corp.

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T1 PAYMENTS LLC, Plaintiff v. NEW U LIFE CORPORATION, Defendant AND ALL RELATED COUNTERCLAIMS

No. 2:19-cv-01816-APG-DJA

United States District Court, D. Nevada

January 21, 2022

ORDER [ECF NOS. 88, 99, 123, 124, 125, 159 170]

ANDREW P. GORDON UNITED STATES DISTRICT JUDGE

This is a breach of contract action arising out of a credit card processing agreement (the CPPA) between plaintiff T1 Payments, LLC (T1) and defendant New U Life Corporation (New U). New U has asserted counterclaims against T1, T1 Payments Limited (T1UK), ^[1] TGlobal Services Limited (TGlobal), Donald Kadson, Debra King, Amber Fairchild (collectively, the T1 parties), and Payvision B.V. (Payvision). New U contends that the counterdefendants engaged in an illegal credit card laundering scheme and defrauded New U out of its funds under the guise of offering legitimate credit card payment processing services.

Payvision a Dutch limited liability company, moves to dismiss New U's counterclaims against it for lack of personal jurisdiction, for forum non conveniens, and for failure to state a claim. New U opposes and moves for leave to file a supplemental brief. Payvision moves for leave to file a sur-reply.

The T1 parties also filed multiple motions to dismiss for failure to state a claim. New U opposes those motions as well.

The parties are familiar with the facts, so I repeat them here only where necessary to resolve the motions. I deny without prejudice Payvision's motion to dismiss for lack of personal jurisdiction and open a jurisdictional discovery period. I grant Payvision's motion to dismiss the claims against it for failure to state a claim, with leave to amend. I grant in part the T1 parties' motions to dismiss, with leave to amend.

I. ANALYSIS

A. Personal Jurisdiction and Forum Non Conveniens

Payvision contends it is a Dutch company with no contacts with Nevada, so it is not subject to personal jurisdiction in this court. Payvision also contends that New U is bound by a forum selection clause in the agreement between Payvision and TGlobal, which selects the United Kingdom. New U responds that Payvision is bound by a forum selection clause in the CPPA between New U and T1, which selects Nevada as the forum for disputes arising out of the CPPA. New U alternatively contends that Payvision is subject to specific jurisdiction in Nevada.

New U moves for leave to file a supplemental response to Payvision's motion to dismiss. New U contends that after briefing was complete on the original motion, discovery revealed additional facts showing that Payvision has more contacts with Nevada than Payvision represented in its motion. New U also contends that the Supreme Court's decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S.Ct. 1017 (2021) is new authority that supports New U's contention that Payvision is subject to specific personal jurisdiction in Nevada.

Payvision opposes supplementation, arguing that if New U wanted to conduct jurisdictional discovery prior to responding to Payvision's motion to dismiss, it should have done so. Payvision contends that instead, New U took advantage of Payvision's inability to participate in discovery without waiving its objection to the court's exercise of personal jurisdiction over it to lead the T1 parties into making statements at depositions that suggest Payvision has contacts with Nevada without Payvision having the opportunity to cross examine that testimony. Payvision contends that New U could and should have developed this evidence before, so there is no good cause to allow New U to supplement its response now. Payvision also contends that Ford merely clarified existing law and is distinguishable from this case.

Finally, Payvision moves for leave to file a sur-reply to New U's reply to the motion for leave to file a supplement. Payvision contends it should have the opportunity to address New U's argument in reply that Payvision chose not to attend the relevant depositions because the argument is new and incorrect. Payvision contends that it had no choice but to opt out of the depositions because if it participated, that may mean it waived its objection to the exercise of personal jurisdiction over it. New U responds that its argument was not new and was a fair response to Payvision's argument that I should not consider the deposition testimony due to Payvision not being present to cross examine the witnesses. New U also contends that Payvision could have participated in the depositions without waiving its already preserved objection to personal jurisdiction.

The parties engage in much wrangling over the procedural steps each side did or did not take to litigate the personal jurisdiction and forum non conveniens questions. But ultimately, the questions are whether the forum selection clauses apply, what to do if both apply, whether this court may exercise personal jurisdiction over Payvision, and whether to dismiss for forum non conveniens. Consequently, I grant New U's motion to supplement^[2] and Payvision's motion for leave to file a sur-reply.

I deny without prejudice Payvision's motion to dismiss based on lack of personal jurisdiction and open a jurisdictional discovery period so that I can make an informed decision on whether the Nevada forum selection clause applies to Payvision, ^[3] whether the court has personal jurisdiction over Payvision, whether to dismiss for forum non conveniens, whether New U is bound by the forum selection clause in the TGlobal/Payvision contract, and what should happen if both forum selection clauses apply. New U has presented evidence from which it appears that further discovery may show that Payvision had substantially more contacts with Nevada (particularly, that it knew of and benefitted from the CPPA that allowed Payvision to process transactions that originated in the United States) than its motion to dismiss would lead one to believe. See ECF Nos. 159-3 through 159-5. Payvision contends that it could have countered that evidence had it been able to attend the depositions and cross-examine the witnesses without waiving its objection to personal jurisdiction. I will give Payvision that opportunity now.

Consequently, I deny without prejudice Payvision's motion to dismiss on the basis of personal jurisdiction and forum non conveniens.^[4] I open jurisdictional discovery for a period of 60 days. Payvision's participation in jurisdictional discovery will not constitute a waiver of its objection to this court's exercise of personal jurisdiction over it. Within 30 days after jurisdictional discovery closes, Payvision may file a motion to dismiss for lack of personal jurisdiction and forum non conveniens if facts exist to do so.

B. Motions to Dismiss for Failure to State a Claim

All counterdefendants, including Payvision, move to dismiss the counterclaims for failure to state a claim and failure to plead fraud with particularity. New U agrees to dismiss counts three, four, and five against Payvision. ECF No. 117 at 18 n.6. I therefore grant that portion of Payvision's motion to dismiss as unopposed. New U otherwise contends that it has plausibly alleged its counterclaims against each of the counterdefendants.

In considering a motion to dismiss, I take all well-pleaded allegations of material fact as true and construe the allegations in a light most favorable to the non-moving party. Kwan v. SanMedica Int'l, 854 F.3d 1088, 1096 (9th Cir. 2017). However, I do not assume the truth of legal conclusions merely because they are cast in the form of factual allegations. Navajo Nation v. Dep't of the Interior, 876 F.3d 1144, 1163 (9th Cir. 2017). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555.

For claims sounding in fraud, Federal Rule of Civil Procedure 9(b) requires a plaintiff to “state with particularity the circumstances constituting fraud.” “This means the plaintiff must allege the who, what, when, where, and how of the misconduct charged, including what is false or misleading about a statement, and why it is false.” United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (simplified). However, the plaintiff may allege knowledge generally. Fed.R.Civ.P. 9(b). “[A]llegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.” United Healthcare Ins. Co., 848 F.3d at 1180 (quotation omitted).

Where the plaintiff alleges a fraudulent scheme or conspiracy, “[p]articipation by each conspirator in every detail in the execution of the conspiracy is unnecessary to establish liability, for each conspirator may be performing different tasks to bring about the desired result.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quotation omitted). But a plaintiff may not “merely lump multiple defendants together” in the complaint's allegations. Id. Rather, the plaintiff must “differentiate [its] allegations when suing more than one defendant . . . and inform each defendant separately of the allegations surrounding [its] alleged participation in the fraud.” Id. at 764-65(quotation omitted). Where there are multiple defendants, “a plaintiff must, at a minimum, identify the role of each defendant in the alleged fraudulent scheme.” Id. at 765 (simplified).

1. Alter Ego

Kasdon T1UK, TGlobal, Fairchild, and King move to dismiss the allegations that they are alter egos of T1 or each other. Th...