Nevada Corporate Headquarters, Inc. v. Sellers Playbook, Inc.

          ORDER

          JAMES C. MAHAN UNITED STATES DISTRICT JUDGE.

         Presently before the court is plaintiff Nevada Corporate Headquarters, Inc.'s (“NCH”) motion to remand. (ECF No. 15). Defendants Northern Mechanical Contractors, Inc. (“Northern”) and Science Center Drive, LLC (“Science Center”) filed a response. (ECF No. 17). Defendants Matthew R. Tieva and Jesssie C. Tieva (collectively “the Tievas”) also filed a response. (ECF No. 18). NCH did not file any replies and the time to do so has passed.

         Also before the court is Northern and Science Center's motion to dismiss. (ECF No. 7). NCH filed a response (ECF No. 14), to which Northern and Science Center replied (ECF No. 16).

         I. Facts

         This action arises from a contract dispute between NCH and defendant Sellers Playbook Inc. (“Sellers Playbook”). (ECF No. 1). The complaint contains the following allegations:

         On February 13, 2017, the Tievas incorporated Sellers Playbook in Minnesota, which is a company that teaches individuals how to sell goods through online platforms. Id. Sellers Playbook had a working relationship with NCH where it would refer its customers to NCH for compensation. Id. The parties do not disclose the nature of the services that NCH would provide to Sellers Playbook's referrals. See id.

         In late 2017, the Federal Trade Commission (“FTC”) began investigating Sellers Playbook for being an enterprise engaging in deceptive acts. Id. Although the full extent of the FTC's investigation is unclear at this time, the Tievas and Sellers Playbook received communications indicating that government agencies were looking into Sellers Playbook's business practices. Id. Specifically, in February 2018, the advertising review manager for the Better Business Bureau of Minnesota and North Dakota exchanged emails with Mr. Tieva regarding Sellers Playbook's business activities. Id. The Minnesota Attorney's General Office also informed the Tievas that they were under investigation. Id.

         In April 2018, the Tievas approached NCH to arrange an agreement where NCH would pay an advance for referrals at a discount rate. Id. The Tievas represented that they were financially sound and needed additional resources to expand the operations of the business including Sellers Playbook and defendant Exposure Marketing Company doing business as Sellers Online and Sellers Systems. Id. At no point during the negotiation did the Tievas disclose that the FTC was investigating Sellers Playbook. Id.

         On April 24, 2018, the parties entered into a written agreement (“Lead Agreement”) based upon the Tievas' false statements and material omissions about their business operation and the pending investigation. Id. The contract provides that NCH pay a $1, 000, 000.00 advance in exchange for customer referrals at a discount rate until the advance is completely satisfied. Id. The parties agreed that the Tievas would use the funds to expand Sellers Playbook and would repay the advance within twenty-four months. Id.

         The Tievas diverted the funds to other entities such as Northern or Science Center, which have the same address, phone number, facsimile number, and employees as Sellers Playbook and Exposure Marketing Company. Id. On June 30, 2018, the FTC and/or the Minnesota Attorney General's Office shut down Sellers Playbook, seized its assets, and initiated a suit against the Tievas, Sellers Playbook, and Exposure Marketing Company. Id. Thereafter, the Tievas ceased referring customers to NCH. Id.

         On August 16, 2018, NCH initiated this lawsuit in the Eighth Judicial District Court of Nevada. (ECF No. 1). The complaint asserts seven causes of action: (1) declaratory relief; (2) breach of contract; (3) fraud in the inducement; (4) injunctive relief; (5) “corporate theft;” (6) “Fraud: Intentional Misrepresentation;” (7) civil conspiracy; (8) alter ego; (9) unjust enrichment; (10) breach of the implied covenant of good faith and fair dealing; (11) “Fraud: Promise Without the Intent to Perform;” (12) negligence; and (13) punitive damages. Id. On September 21, 2018, defendants removed this action to federal court. Id.

         Now, NCH moves to remand. (ECF No. 15). Northern and Science Center also move to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). (ECF No. 7).

         II. Legal Standard

         a. Remand

         Federal courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989).

         Upon notice of removability, a defendant has thirty days to remove a case to federal court once he knows or should have known that the case was removable. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1250 (9th Cir. 2006) (citing 28 U.S.C. § 1446(b)(2)). Defendants are not charged with notice of removability “until they've received a paper that gives them enough information to remove.” Id. at 1251.

         Specifically, “the ‘thirty day time period [for removal] . . . starts to run from defendant's receipt of the initial pleading only when that pleading affirmatively reveals on its face' the facts necessary for federal court jurisdiction.” Id. at 1250 (quoting Harris v. Bankers Life & Casualty Co., 425 F.3d 689, 690-91 (9th Cir. 2005) (alterations in original)). “Otherwise, the thirty-day clock doesn't begin ticking until a defendant receives ‘a copy of an amended pleading, motion, order or other paper' from which it can determine that the case is removable. Id. (quoting 28 U.S.C. § 1446(b)(3)).

         A plaintiff may challenge removal by timely filing a motion to remand. 28 U.S.C. § 1447(c). On a motion to remand, the removing defendant faces a strong presumption against removal, and bears the burden of establishing that removal is proper. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996); Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992).

         b. Personal jurisdiction

         Federal Rule of Civil Procedure 12(b)(2) allows a defendant to move to dismiss a complaint for lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). To avoid dismissal under Rule 12(b)(2), a plaintiff bears the burden of demonstrating that its allegations establish a prima facie case for personal jurisdiction. See Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Allegations in the complaint must be taken as true and factual disputes should be construed in the plaintiff's favor. Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).

         “When no federal statute governs personal jurisdiction, the district court applies the law of the forum state.” Boschetto, 539 F.3d at 1015; see also Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). Where a state has a “long-arm” statute providing its courts jurisdiction to the fullest extent permitted by the due process clause, as Nevada does, a court need only address federal due process standards. See Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 134 P.3d 710, 712 (Nev. 2006) (citing Nev. Rev. Stat. § 14.065); see also Boschetto, 539 F.3d at 1015.

         An assertion of personal jurisdiction must comport with due process. See Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012). Two categories of personal jurisdiction exist: (1) general jurisdiction; and (2) specific jurisdiction. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-15 (1984); see also LSI Indus., Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000).

         General jurisdiction arises where a defendant has continuous and systematic ties with the forum, even if those ties are unrelated to the litigation. See Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales de Columbia, S.A., 466 U.S. at 414-16). “[T]he plaintiff must demonstrate the defendant has sufficient contacts to constitute the kind of continuous and systematic general business contacts that approximate physical presence.” In re W. States Wholesale Nat. Gas Litig., 605 F.Supp.2d 1118, 1131 (D. Nev. 2009) (internal quotation marks and citations omitted). In other words, defendant's affiliations with the forum state must be so “continuous and systematic” as to render it essentially “at home” in that forum. See Daimler AG v. Bauman, 571 U.S. 117, 137 (2014).

         Specific jurisdiction arises where sufficient contacts with the forum state exist such that the assertion of personal jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co., 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The Ninth Circuit has established a three-prong test for analyzing an assertion of specific personal 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 forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it ...