United States District Court, D. Nevada
before the court is a motion to dismiss filed by defendants
Medical Cost Containment Professionals, LLC (“Medical
Cost”), Daniel Ayala (“Ayala”), Jarred
Pierce (“Pierce”), and Frank Whelan
(“Whelan”). (ECF No. 13). Plaintiff Three Rivers
Provider Network, Inc. (“TRPN”) filed a response
(ECF No. 19), to which defendants replied (ECF No. 21).
before the court is defendants' motion to set aside
clerk's entry of default (ECF No. 12), to which plaintiff
responded (ECF No. 20). Defendants have not replied, and the
time for doing so has since passed.
instant action involves an alleged breach of contract and
conspiracy by former employees of a medical billing company
to form a similar organization that utilizes their previous
employer's intellectual property and confidential
information to grow its business.
time of commencement of the suit, plaintiff was a proprietary
provider network with its corporate headquarters in
Henderson, Nevada. (ECF No. 1 at 1). Plaintiff relies on its
contracts with clients, client lists, and intellectual
property to serve as the foundation of its business model.
Id. at 6. The three individual defendants all held
high-ranking positions at TRPN: Ayala was plaintiff's
national account manager, Pierce was the vice president of
managed care, and Whelan served as plaintiff's CFO.
Id. The company provided the individual defendants
access to its intellectual property and had them sign
confidentiality agreements. Id. at 4-6.
complaint, plaintiff claims that beginning sometime in late
2015, Ayala and Pierce, both of whom were plaintiff's
employees at the time, violated their confidentially
agreements and began to support a competing business, Medical
Cost. Id. at 6-7. This business would negatively
affect plaintiff by using plaintiff's business model and
confidential information obtained from its contracts to steal
away business, with the ultimate goal of replacing plaintiff
in the marketplace. Id. at 7.
complaint establishes a rudimentary timeline of events
related to the alleged conspiracy, commencing with the
allegation that Pierce began to steal proprietary information
in May of 2015. Id. In June of 2016, Ayala
purportedly used his company email account to discuss the
fiscal budget for the new company. Id. On April 8,
2016, Pierce signed a termination agreement with plaintiff.
Id. In exchange for $50, 000 in severance pay,
Pierce promised to maintain the strict confidentiality of all
plaintiff's proprietary information that he obtained
while employed with the company. Id. Ayala signed a
similar agreement on August 3, 2016. Id.
of 2017, while still employed by plaintiff, Ayala officially
filed to register Medical Cost as an LLC in California.
filed suit in the United States District Court for the
District of Nevada on January 24, 2018. Id. at.
Plaintiff asserts four causes of action against all four
defendants: (1) conversion; (2) usurpation of corporate
opportunity; (3) violation of the Uniform Trade Secrets Act;
(4) unjust enrichment; and (5) constructive trust.
Id. at 19-23. Plaintiff asserts the following causes
of action against the individual defendants only: (1) breach
of contract; (2) implied covenant of good faith and fair
dealing; (3) civil conspiracy; and (4) breach of fiduciary
duty. Id. at 10-18. Additionally, plaintiff asserts
breach of duty of loyalty against Whelan. Id. at
instant motion, defendants move to dismiss for lack of
personal jurisdiction. (ECF No. 13).
Rule of Civil Procedure 12(b)(2) allows a defendant to move
to dismiss for lack of personal jurisdiction. To avoid
dismissal under Rule 12(b)(2), a plaintiff bears the burden
of demonstrating that its allegations would establish a prima
facie case for personal jurisdiction. See Boschetto v.
Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Courts
accept allegations in a plaintiff's claim as true and
should construe factual disputes in the plaintiff's
favor. Rio Props., Inc. v. Rio Int'l Interlink,
284 F.3d 1007, 1019 (9th Cir. 2002).
jurisdiction over a defendant is proper when the law provides
for jurisdiction and the exercise of jurisdiction comports
with notions of due process. Walden v. Fiore, 134
S.Ct. 1115, 1121 (2014). “Federal courts ordinarily
follow state law in determining the bounds of their
jurisdiction over persons.” Daimler AG v.
Bauman, 571 U.S. 117, 125 (2014). Nevada has authorized
its courts to exercise jurisdiction over persons “on
any basis not inconsistent with . . . the Constitution of the
United States.” Nev. Rev. Stat. § 14.065.
process requires the defendant have at least “minimum
contacts” with the forum state so that
“maintenance of the suit does not offend traditional
notions of fair play and substantial justice.”
Int'l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945). “[T]he defendant's conduct and connection
with the forum State [must be] such that he should reasonably
anticipate being haled into court there.”
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980). “[I]t is the defendant, not the
plaintiff or third parties, who must create contacts with the
forum State.” Walden, 134 S.Ct. at 1126.
analyzing whether a defendant has a sufficient connection
with the forum state, courts distinguish between general and
specific jurisdiction. See Helicopteros Nacionales de
Colombia S.A. v. Hall, 466 U.S. 408, 414 n.8-9 (1984).
General jurisdiction is appropriate where a defendant's
activities in the forum state are so
“substantial” or “continuous and
systematic” that the defendant is essentially at home
in the forum state. Daimler, 571 U.S. at 127.
“This is an exacting standard, as it should be, because
a finding of general jurisdiction permits a defendant to be
haled into court in the forum state to answer for any of its
activities anywhere in the world.” Schwarzenegger
v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir.
court does not possess general jurisdiction, it still may
exercise specific jurisdiction if the defendant has
sufficient minimum contacts with the forum state in relation
to the cause of action. Specific jurisdiction allows a court
to hear claims that arise out of a defendant's
“purposefully directed” activities in the forum
state. Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472 (1985). The Ninth Circuit has established a three-prong
test for determining specific jurisdiction:
(1) The non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he
purposefully avails himself of the privilege of conducting
activities in the ...