United States District Court, W.D. North Carolina, Charlotte Division
SPENCER KREBS, MORGAN SWITZER DAVE WYATT KRYSTAL HORSLEY JACENTA MARIE PRICE MARKISHA DOBSON, on behalf of themselves and all others similarly situated, Plaintiffs,
CHARLOTTE SCHOOL OF LAW, LLC INFILAW CORPORATION INFILAW HOLDING, LLC STERLING CAPITAL PARTNERS, L.P. STERLING CAPITAL GMBH & CO. KG JAY CONISON CHIDI OGENE DON LIVELY BETSY DEVOS, Defendants.
C. Mullen, United States District Judge
MATTER is before the Court upon Defendants Sterling Capital
Partners, L.P. and Sterling Capital Partners, GMBH & CO.
KG's (collectively “Sterling Entities”)
Motion to Dismiss pursuant to Rules 12(b)(2) and 12(b)(6) of
the Federal Rules of Civil Procedure. (Doc. No. 63.)
Plaintiffs have filed a response and Sterling Entities have
filed a reply. Accordingly, this matter is ripe for
are current or former students at Charlotte School of Law
(“CSL”). On behalf of themselves and a putative
class, they assert a number of claims stemming from issues
concerning CSL's accreditation status with the American
Bar Association (“ABA”), including allegations
that the Defendants made misrepresentations to them, breached
contracts with and fiduciary duties to them, and engaged in
unfair and deceptive trade practices, all to entice
Plaintiffs to enroll at, or to continue to attend, CSL.
Entities are affiliated with a private equity firm that is
based in Illinois, with its headquarters in Chicago. That
private equity firm holds investments in InfiLaw Holding.
InfiLaw Holding holds an ownership interest in InfiLaw
Corporation. InfiLaw Corporation owns shares in CSL. To say
it another way: Sterling Entities are two corporate levels
removed from CSL.
Standard of Review
order to survive a motion to dismiss under Rule 12(b)(6),
Plaintiffs' Complaint must contain “more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). As
the United States Supreme Court has held, the “short
and plain statement of the claim, ” as set forth in
Rule 8(a)(2), “must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). A complaint is only
plausible when it “pleads factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678. “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. A court need
not accept as true a plaintiff's “unwarranted
inferences, unreasonable conclusions, or arguments.”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
federal court may exercise personal jurisdiction over a
foreign defendant only if the state in which the court sits
could exercise personal jurisdiction. Carefirst of Md.,
Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390,
396 (4th Cir. 2003). Plaintiffs must therefore show that
North Carolina's exercise of personal jurisdiction over
the Sterling Entities would comport with both: (1) North
Carolina's long-arm statute, N.C. G.S. 1-75.4, and (2)
constitutional due process. Universal Leather, LLC v.
Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014).
Because North Carolina's long-arm statute is co-extensive
with the limits of due process, the “dual
jurisdictional requirements collapse into a single inquiry,
” and only the due process inquiry need be addressed.
Christian Sci. Bd. of Directors of First Church of
Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir.
process inquiry focuses on whether the defendant has
“minimum contacts” with North Carolina such that
“maintenance of the suit does not offend traditional
notions of fair play and substantial justice.”
Id. (quoting Int'l Shoe Co. v. State of
Wash., 326 U.S. 310, 316 (1945)). Under the due process
inquiry, there are two paths for a district court to assert
jurisdiction over an out-of-state defendant: general and
specific jurisdiction. Universal Leather, 773 F.3d
at 559. General jurisdiction requires a “showing of
continuous and systematic activities in the forum state,
” whereas specific jurisdiction applies where
“defendant's qualifying contacts with the forum
state also constitute the basis for the suit.”
when determining if a court has personal jurisdiction over
defendants in a case, plaintiff bears the burden of proof.
See Carefirst, 334 F.3d at 396 (“When personal
jurisdiction is properly challenged under Rule 12(b)(2), the
jurisdictional question is to be resolved by the judge, with
the burden on the plaintiff ultimately to prove grounds for
jurisdiction by a preponderance of the evidence.”).
But, when “adjudicating [a 12(b)(2)] motion, the court
construes all disputed facts and draws all reasonable
inferences from the proof in favor of jurisdiction.”
Manley v. Air Canada, 753 F.Supp.2d 551, 556 (E.D.
N.C. 2010) (citing Carefirst, 334 F.3d at 396).
“However, where the court does not conduct an
evidentiary hearing and relies instead only on the pleadings
and affidavits alone, plaintiff need only make a prima facie
showing of jurisdiction.” Id. (citing In
re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997)).
And “[m]ere allegations of in personam jurisdiction are
sufficient for a party to make [such] a prima facie
showing.” Barclays Leasing, Inc. v. National
Business Systems, Inc., 750 F.Supp. 184, 186 (W.D. N.C.
Defendants' 12(b)(2) Motion
general personal jurisdiction over a corporation can be done
in a number of ways. The most common way is for the forum
state to be the corporation's “place of
incorporation [or] principal place of business.”
Daimler AG v. Bauman, 134 S.Ct. 746, 760-61 (2014).
In addition, a court can exercise general personal
jurisdiction over a corporate defendant if the corporation
has “continuous and systematic” contacts so as to
render it “essentially at home” in the forum
state. Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. 915, 919 (2011).
undisputed that Sterling Entities are not incorporated in
North Carolina and their principal places of business are
also not in North Carolina, so the inquiry turns to whether
Sterling Entities have “continuous and
systematic” contacts with North Carolina. Plaintiffs
have alleged no facts, other than a conclusory allegation,
that would allow the Court to find the necessary
“continuous and systematic” contacts required for
general personal jurisdiction. Goodyear Dunlop Tires
Operations, S.A., 564 U.S. at 919. Indeed, Plaintiffs
seem to recognize this shortcoming as they fail to address
general jurisdiction in ...