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Stuart v. Churn LLC

United States District Court, M.D. North Carolina

June 3, 2019



          Catherine C. Eagles, District Judge.

         Andrew Stuart has sued his former employers, Van Leeuwen Ice Cream LLC and Churn LLC, contending they breached his employment agreement and committed various torts and statutory violations. The defendants seek dismissal based on lack of personal jurisdiction. Because Mr. Stuart has made a prima facie showing that (i) the defendants purposefully availed themselves of the privilege of conducting activities in the forum State, (ii) that Mr. Stuart's claims arise out of those activities, and (iii) that the exercise of personal jurisdiction would be constitutionally reasonable, the motion will be denied. His claims for breach of contract and fraud, which the defendants do not otherwise challenge, will proceed. The Court will rule on the motion to dismiss Mr. Stuart's other claims for failure to state a claim by separate order issued as time permits.

         I. Background and Overview

         Mr. Stuart alleges that Van Leeuwen's previous corporate iteration, Churn, hired him on July 12, 2017, under the terms of an employment agreement attached to his complaint. See Doc. 2 at ¶¶ 3-5; Doc. 2-1.[1] Under this contract, Mr. Stuart was entitled to certain benefits when he reached one year of employment on July 12, 2018. Doc. 2 at ¶¶ 7-8. Van Leeuwen has refused to provide him these benefits. Id. at ¶¶ 10-14. He claims Van Leeuwen's actions constitute breach of contract, fraud, unjust enrichment, breach of fiduciary duty, and unfair and deceptive trade practices in violation of North Carolina law. Id. at ¶¶ 15-61.

         Mr. Stuart filed his complaint in state court in February 2019 against Van Leeuwen and Churn. Doc. 2 at 1. Van Leeuwen removed the case to federal court based on diversity of citizenship, see Doc. 1, and now moves to dismiss the complaint for lack of personal jurisdiction. Docs. 10, 11.

         II. Personal Jurisdiction

         The Supreme Court recognizes two types of personal jurisdiction: general (or “all-purpose”) jurisdiction and specific (or “case-linked”) jurisdiction. Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 137 S.Ct. 1773, 1779-80 (2017). The parties agree that Van Leeuwen is not subject to general jurisdiction in North Carolina.[2] Accordingly, the Court will only consider whether Van Leeuwen is subject to specific jurisdiction.

         A court has specific jurisdiction over a defendant that has “purposefully directed his activities at residents of the forum” and if the “litigation results from alleged injuries that arise out of or relate to those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985).[3] Out-of-state defendants are subject to the personal jurisdiction of a federal court only if both the forum state's long-arm statute and due process are satisfied. E.g., Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014). In North Carolina, these considerations are co-extensive. Christian Sci. Bd. of Dirs. of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001).

         To determine whether specific jurisdiction lies in the forum state, courts consider “(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.” Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 189 (4th Cir. 2016); accord Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 397 (4th Cir. 2003). The plaintiff must prevail on all three prongs. Perdue Foods, 814 F.3d at 189.

         The purposeful availment inquiry requires an evaluation of several factors, including: (i) whether the defendant maintains offices or agents in the forum state; (ii) whether the defendant owns property in the forum state; (iii) whether the defendant reached into the forum state to solicit or initiate business; (iv) whether the defendant deliberately engaged in significant or long-term business activities in the forum state; (v) whether the parties contractually agreed that the law of the forum state would govern disputes; (vi) whether the defendant made in-person contact with the resident of the forum in the forum state regarding the business relationship; (vii) the nature, quality and extent of the parties' communications about the business being transacted; and (viii) whether the performance of contractual duties was to occur within the forum. Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009).

         “[A] contract with an out-of-state party does not always establish minimum contacts in the plaintiff's home forum, even when the dispute arises from the contract.” Protocol, LLC v. Henderson, 18 F.Supp.3d 689, 697-98 (M.D. N.C. 2014) as amended (May 15, 2014) (citing Burger King, 471 U.S. at 478). On the other hand, “physical presence in the forum state is not essential, ” Perdue Foods, 814 F.3d at 191, as “it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted.” Burger King, 471 U.S. at 476.

         III. Jurisdictional facts

         Mr. Stuart has the burden of establishing personal jurisdiction by a preponderance of the evidence, but he need only make a prima facie showing absent an evidentiary hearing on the matter. Carefirst, 334 F.3d at 396. At this stage, “the district court must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiff's favor.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993).

         Both parties have submitted affidavits in support of their positions. In large part, the parties either agree or have not offered contradicting evidence on facts presented. The parties dispute the reasons Mr. Stuart worked remotely from North Carolina and the extent to which Van Leeuwen expected Mr. Stuart to conduct business on its behalf in North Carolina. The Court has drawn all reasonable inferences and resolved all conflicting facts in the affidavits in Mr. Stuart's favor, see Indus. Carbon Corp. v. Equity ...

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