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Hilton v. Stern & Eisenberg, P.C.

United States District Court, M.D. North Carolina

July 6, 2018

DEBORAH HILTON, Plaintiff,
v.
STERN & EISENBERG, P.C. and STERN & EISENBERG SOUTHERN, P.C., Defendants.

          MEMORANDUM ORDER

          THOMAS D. SCHROEDER, CHIEF DISTRICT JUDGE.

         Defendant Stern & Eisenberg, P.C. (“SEPC”) moves to dismiss this putative fair debt collection class action for lack of personal jurisdiction over it. (Doc. 13.) Plaintiff, Deborah Hilton, contends that SEPC is subject to the court's personal jurisdiction. Alternatively, she urges the court to either deny SEPC's motion in anticipation of her demonstrating jurisdiction at trial or permit her to conduct limited jurisdictional discovery to demonstrate jurisdiction. (Doc. 17 at 31.) For the reasons set forth below, the court will grant Hilton's request for limited jurisdictional discovery.

         I. BACKGROUND

         In December of 2015, Hilton received a debt collection letter, commonly known as a dunning letter, bearing the letterhead of both SEPC and Stern & Eisenberg Southern, P.C. (“Southern”) and which allegedly included a “trap” in violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (Doc. 1 at 1; Doc. 1-1.) Hilton never received, in any communication, notice that she must make a written request to the creditor in order to receive verification of the debt.[1]

         On September 22, 2017, Hilton filed this action against SEPC and Southern. (Doc. 1.) SEPC moved to dismiss Hilton's claims against it for a lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 13.) Southern did not oppose the motion to dismiss and provided affidavits in support of a lack of personal jurisdiction over its co-defendant. (Doc. 13-1.) The motion has been fully briefed and is ready for decision. (Doc. 14; Doc. 17; Doc. 19.)

         II. ANALYSIS

         A. Factual Allegations of Personal Jurisdiction

         Hilton argues that the letterhead of the dunning letter she received should subject SEPC to the personal jurisdiction of the court as it is evidence of the firm's intentional, continuous, and systematic contact with North Carolina sufficient to show general jurisdiction or, alternatively, constitutes an intentional direct act sufficient to demonstrate specific jurisdiction. (Doc. 17 at 1-2.) SEPC opposes a finding of personal jurisdiction over it on the grounds that it does not have a systematic and continuous presence in North Carolina and, further, the letter was sent by a separate legal entity that was not authorized to use the letterhead. (Doc. 14 at 14.)

         Personal jurisdiction can be either general or specific. If the party maintains “continuous and systematic” contacts with a state, the forum state has general personal jurisdiction over it, and the nonresident may be sued on any claim in that state. See Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 445-46 (1952). But where continuous and systematic contacts are absent, a court may assert specific personal jurisdiction over a defendant for any dispute arising from the defendant's contact with the forum state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 n.8 (1984). Specific personal jurisdiction “requires only that the relevant conduct have such a connection with the forum state that it is fair for the defendant to defend itself in that state.” CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292 n.15 (4th Cir. 2009).

         When a court's personal jurisdiction is challenged by a Rule 12(b)(2) motion, the plaintiff has the burden of proving personal jurisdiction by a preponderance of the evidence. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). Where a challenge to personal jurisdiction is addressed only on the basis of motion papers, supporting legal memoranda, and the allegations of the complaint, “the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge.” Id. Under these circumstances, 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.” Id. If the defendant provides evidence denying the essential jurisdictional facts, then the plaintiff must present sufficient evidence to create a factual dispute on each jurisdictional element which has been denied. Pinpoint IT Servs., L.L.C. v. Atlas IT Exp. Corp., 812 F.Supp.2d 710, 716-17 (E.D. Va. 2011); Indus. Carbon Corp. v. Equity Auto & Equip. Leasing Corp., 737 F.Supp. 925, 926 (W.D. Va. 1990). Once a defendant provides “specific denials contrary to a plaintiff's assertions of facts supporting jurisdiction, a plaintiff's ‘bare allegations that the defendants had significant contacts with the [forum] state' are insufficient to establish jurisdiction by a preponderance of the evidence.” Lianyungang FirstDart Tackle Co. v. DSM Dyneema B.V., 871 F.Supp.2d 482, 487 (E.D. N.C. 2012) (citing Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396, 402-03 (4th Cir. 2003)). Notwithstanding a threshold prima facie finding of personal jurisdiction, a plaintiff must subsequently “prove the existence of personal jurisdiction by a preponderance of the evidence” at a pretrial evidentiary hearing or at trial. New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 n.5 (4th Cir. 2005) (internal citation omitted).

         On this record, Hilton has not presented sufficient evidence to make a prima facie showing of personal jurisdiction. SEPC is not headquartered or incorporated in North Carolina, and there is no undisputed fact that would otherwise indicate that SEPC is “at home” in North Carolina and subject to general jurisdiction. Further, the conditions of specific jurisdiction are factually disputed. Hilton points out that “single or occasional acts, ” like sending or authorizing the sending of a letter, can subject a party to specific jurisdiction. (Doc. 17 at 4) (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2018)). However, SEPC claims that Southern's use of the letterhead was unauthorized and that SEPC cannot be subject to personal jurisdiction through the actions of a third party. If SEPC did not authorize use of its letterhead, it is unlikely that it had intentional contact with North Carolina such that it would be fair to hale it into court here.

         B. Limited Jurisdiction Discovery

         Hilton contends that “[d]iscovery will show that SEPC and Southern sent letters into the forum state of North Carolina specifically to target the consumers there (Ms. Hilton and the putative class members) as part of an intentional campaign to obtain payment from them in the forum state.” (Doc. 17 at 3-4.) To prove this, Hilton requests permission to seek discovery regarding: (1) SEPC's declarations submitted in support of its motion to dismiss, and (2) personal jurisdiction over SEPC generally. (Id. at 31.) Hilton suggests that there are several unanswered questions in the record that are necessary to the determination of personal jurisdiction over SEPC. These include: (1) who did the creditor retain?; (2) who are Southern's officers and directors?; (3) are there mutual employees between SEPC and Southern?; (4) does SEPC require all of its offices to use the same letter template?; (5) does SEPC oversee or control Southern in such a way that jurisdiction would be appropriate via the “alter ego” test?; (6) does a SEPC or Southern employee review the client's file before sending a collection letter?; and (7) does a SEPC or Southern employee review the collection letter before sending it? (Id. at 11-12.) Hilton further argues that SEPC has systematic and continuous contact with the forum state through attorneys it employs to work in the forum state. In support of this claim, Hilton provides screenshots of the SEPC website showing that six attorneys work for SEPC in North Carolina. (Id. at 70, 77, 86, 87, 88, and 94.)

         SEPC denies that five of the attorneys have ever been employees of SEPC. (Doc. 19-2 ¶ 5.) It challenges the “unauthenticated printouts and screenshots of SEPC's website, individual attorneys' LinkedIn pages, and email signatures . . . .” (Doc. 19 at 4.) Hilton has presented evidence of inaccuracies in SEPC's statements, and SEPC has responded with denials. Additionally, Hilton argues that SEPC has a systematic and continuous connection with the forum state through an office in Charlotte, N.C. (Doc. 17 at 22.) In contrast, Steven Eisenberg stated in an affidavit that SEPC does not have any office or facility outside of the states of Pennsylvania, New York, and New Jersey. (Doc. 13-2 ¶ 3.) Eisenberg also stated that “SEPC does not have and has not at any time had any offices, facilities, or ...


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