Brit Uw, Limited v. Manhattan Beachwear, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BRIT UW, LIMITED, :
:
Plaintiff, : Civil Action No.: 16-0523 (RC)
:
v. : Re Document No.: 7
:
MANHATTAN BEACHWEAR, LLC, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING DEFENDANT’S MOTION TO DISMISS
I. INTRODUCTION
Plaintiff Brit UW, Limited (Brit) seeks declaratory relief to establish that it need not pay
Defendant Manhattan Beachwear, LLC (MBW) under a professional liability insurance policy
that Brit provided. MBW’s involvement in this controversy began when it retained Clyde
Hettrick, a partner at Dickstein Shapiro LLP (Dickstein), to represent it in an insurance matter.
During the representation, Mr. Hettrick left Dickstein to form his own firm, and took MBW with
him as a client. MBW later came to regret this decision, to the extent that it fired Mr. Hettrick
and sued him (and his new firm) for malpractice. Brit—one of several insurers on Dickstein’s
professional liability policy—declined coverage of the malpractice suit.
MBW, through a variety of legal machinations, both received a judgment for
$63,888,486.49 against the defendants in the malpractice action, and obtained assignment of the
defendants’ claims against Dickstein’s insurers, including Brit. Noting that MBW was poised to
sue it for millions, Brit filed this action seeking, inter alia, a declaration of non-coverage over
the malpractice claims. Now before the Court is MBW’s motion to dismiss this action for lack of
personal jurisdiction, lack of subject matter jurisdiction, failure to join a party, lack of venue, and
forum non conveniens. The Court concludes that it does not have personal jurisdiction over
MBW under either specific or general jurisdiction, and thus dismisses the action in its entirety
without reaching the other issues.
II. BACKGROUND1
This case involves an insurance dispute between plaintiff Brit, an insurer, and defendant
MBW,2 an erstwhile3 swimwear manufacturer. Brit was one of several insurers that issued a
professional liability insurance policy to Dickstein, and MBW was one of Dickstein’s clients.
The origins of this case began to germinate in 2007, when MBW claimed that it lost
$11,459,421 due to a fire and theft in Indonesia. Soura Decl. ¶ 8, ECF No. 7-1; Compl. ¶ 17, ECF
No. 1. MBW disagreed with its insurer’s handling of the claim, and hired Clyde Hettrick—then a
partner at Dickstein in the Los Angeles office—to represent it in the Indonesia matter. Soura
1
For the purposes of resolving this motion, the Court accepts the factual allegations of
the plaintiff. See Talenti v. Clinton, 102 F.3d 573, 574 (D.C. Cir. 1996). The Court also considers
the parties’ affidavits and declarations. See Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005).
2
MBW is a limited liability company organized in Delaware. Soura Decl. ¶ 3, ECF No.
7-1. MBW’s members include LLCs organized in Nevada with members residing in California
and Florida. Soura Decl. ¶ 3. Its principal place of business appears to be in California. See Soura
Decl. ¶ 4 (stating that MBW’s principal place of business was California until 2010); Affidavit of
Service, ECF No. 5 (stating that MBW’s CEO was served in California).
3
Up until 2010, MBW engaged in the manufacture and sale of women’s swimwear.
Soura Decl. ¶¶ 4, 7. Whether or not MBW continued to engage in such commercial activities
after 2010 is a point of contention in this case. According to MBW, all manufacturing and related
tasks were taken over by MBW Inc.—a different entity than the defendant here—in 2010,
leaving MBW in existence only to pursue certain legal claims, including the Indonesia-based
claim underlying this action. Soura Decl. ¶ 7. Brit believes that MBW may have remained
involved with or responsible for manufacturing activities after 2010 and requests jurisdictional
discovery. Pl.’s Mem. P. & A. Opp’n Def.’s Mot. Dismiss (Pl.’s Opp’n) at 42–43, ECF No. 13.
As discussed infra Part III.C, the Court denies jurisdictional discovery and does not investigate
MBW’s corporate structure because, even if MBW continued to produce swimwear, this Court
lacks personal jurisdiction.
2
Decl. ¶ 9. The retainer agreement was negotiated in California, mailed from California, and
contained a California arbitration provision. Soura Decl. ¶ 9. Brit and several other London
insurers provided professional liability insurance to Dickstein at the time.4 Compl. ¶¶ 1,7; see
also Primary Professional Liability Insurance Policy, ECF No. 1-1, Ex. A. After submitting a
claim package on MBW’s behalf in the Indonesia matter, Mr. Hettrick left Dickstein and started
his own law firm, Compl. ¶ 18; Soura Decl. ¶ 10, retaining MBW as a client, Compl. ¶ 18; Soura
Decl. ¶ 10.
Relations between Mr. Hettrick and MBW soon soured. In June of 2011, MBW replaced
Mr. Hettrick with lawyers from Dickstein’s Los Angeles office for the Indonesia matter, Soura
Decl. ¶ 12, and in 2012 MBW sued Mr. Hettrick for malpractice in Los Angeles Superior Court,
Compl. ¶ 28; see also Complaint for Legal Malpractice, Manhattan Beachwear, LLC v. Hettrick
Law, P.C., No. BC497520 (Cal. Super. Ct. Dec. 14, 2012), ECF No. 1-3, Ex. C. Dickstein’s
insurers, including Brit, were not named in the malpractice case. See Complaint for Legal
Malpractice, Manhattan Beachwear, LLC v. Hettrick Law, P.C., No. BC497520 (Cal. Super. Ct.
Dec. 14, 2012). Brit declined to provide coverage in the malpractice suit. Compl. ¶ 31.
4
Brit was the lead underwriter for Dickstein’s professional liability insurance policy from
2003 through the 2012–2013 policy at issue in this case. Lowther Decl. ¶¶ 6, 12, ECF No. 13-2.
Each year the D.C. office of Dickstein Shapiro negotiated and executed a new one-year
professional liability insurance policy. Lowther Decl. ¶ 5. Negotiations typically took place by
phone and email, and involved an in-person meeting in Brit’s London office. Lowther Decl.
¶¶ 10, 11, 16, 17. The policies were delivered to the D.C. office by email. Gladdis Decl. ¶ 11,
ECF No. 13-4. During the term of the insurance policies, Brit collaborated with the D.C.
Dickstein office by phone and email, Lowther Decl. ¶¶ 20, 21, and attended occasional in-person
meetings in D.C., see Lowther Decl. ¶¶ 24, 25 (describing approximately one in-person meeting
every two years). The D.C. office paid the insurance premium, Lowther Decl. ¶ 13, and
submitted all claims to Brit, Lowther Decl. ¶ 29, including the notification of the claims at issue
in this case, Lowther Decl. ¶¶ 32, 33.
3
The malpractice case was ongoing when Mr. Hettrick died in 2013. Following his death,
MBW took an unorthodox approach5 to resolving the matter. First, MBW reached a settlement
with Mr. Hettrick’s estate and Hettrick’s new law firm. See generally Settlement Agreement,
ECF No. 1-4, Ex. D. Instead of disposing of the court case, however, the settlement provided that
the case would proceed to a bench trial but the estate would not contest MBW’s allegations on
damages or culpability. Settlement Agreement ¶ 3 (“The ESTATE . . . agree[s] not to contest the
nature or amount of any claims made by MB against the ESTATE. Liability and the extent of
MB’s damages against the ESTATE will be determined . . . in an uncontested prove-up hearing
. . . . and shall be entered as a judgment against the ESTATE in the ACTION”). The estate
further agreed to assign6 any claims it might have against Brit (or Dickstein’s other insurers) to
MBW. Compl. ¶ 33; Soura Decl. ¶ 16; Settlement Agreement ¶ 4 (“[T]he ESTATE shall assign
to MB . . . any and all assignable claims against [the professional liability insurers]”). In
exchange for these concessions, MBW agreed not to collect on the judgment from Hettrick’s
estate. See generally Settlement Agreement.
A bench trial occurred pursuant to this agreement, and the court issued a judgment of
$63,888,486.49 in MBW’s favor. Compl. ¶ 34; Judgment After Court Trial, Manhattan
Beachwear, LLC v. Hettrick Law, P.C., No. BC 497520 (Cal. Super. Ct., August 10, 2015), ECF
No. 7-1, Ex. B. Although this judgment was entered against Hettrick’s estate, the settlement
5
Based on the unusual circumstances of this judgment, Brit variously alleges that it was
“obtained through fraud and/or collusion” or suffered from other defects. See, e.g., Compl. ¶ 35.
These claims form part of Brit’s claim for relief, but are not at issue in resolving this motion.
6
The record here contains only an agreement between Hettrick’s estate and MBW to so
assign the claims: “[T]he ESTATE shall assign to MB and/or MB’s designated assignee, in the
form attached hereto as Exhibit A, any and all assignable claims against Lloyd’s and any agents,
representatives, related companies or other persons or entities against whom a claim may be
brought . . .” Settlement Agreement, Stay and Covenant Not to Execute ¶ 4, ECF 1-4. Neither
party, however, disputes that such an assignment in fact occurred.
4
agreement contemplated that MBW would bring suit against Brit and Dickstein’s other insurers
to enforce the judgment.7 Settlement Agreement, ¶ 10, ECF No. 1-4, Ex. D (“Through the
Assignment . . . MB . . . shall file an action against [Dickstein’s insurers] . . . .”).
Brit filed this suit seeking declaratory judgment to protect it against MBW’s8 claims.9
MBW moves to dismiss the complaint for lack of personal jurisdiction, as per Federal Rule of
Civil Procedure 12(b)(2). MBW further moves to dismiss for lack of subject matter jurisdiction,
as per Rule 12(b)(1); improper venue, as per Rule 12(b)(3); failure to join a party, as per Rule
12(b)(7); and forum non conveniens. See generally Mem. P. & A. Supp. Def.’s Mot. Dismiss
(Def.’s Mot. Dismiss), ECF No. 7.
III. ANALYSIS
The Court begins, and ends, its analysis by considering MBW’s motion to dismiss for
lack of personal jurisdiction. Because the Court agrees with MBW that MBW is not subject to
either specific jurisdiction on this claim or general jurisdiction in the District, the Court will
grant the motion and dismiss the complaint in its entirety.
7
It appears from the record that Mr. Hettrick’s new law firm was defended, under a
reservation of rights, by its own insurer in the malpractice lawsuit. No claims by or relating to
Mr. Hettrick’s separate insurer are at issue here.
8
According to MBW, it assigned its rights in the judgment and settlement to SFA Group,
LLC (SFA), such that “SFA owns the right to pursue coverage under the Dickstein insurance program,
including the coverage provided by Brit.” Def.’s Mot. Dismiss at 10, ECF No. 7; see also Soura
Decl. ¶ 18; Assignment of Rights and Acknowledgement of Assignment, ECF No. 7-1, Ex. C;
Assignment of Judgment and Acknowledgement of Assignment, ECF No. 7-1, Ex. D. As discussed
infra notes 17 and 20, the Court finds that it need not reach this issue to resolve the case.
9
Since the initiation of this suit, in fact, SFA sued Brit and the other insurers in
California Superior Court, arguing that they wrongfully refused coverage in the malpractice
action. See generally Complaint, SFA Group, LLC v. Certain Underwriters at Lloyd’s, No. BC
618980 (Cal. Super. Ct. May 2, 2016), ECF No. 7-2, Ex. A.
5
Personal jurisdiction requires that the court be able to exercise jurisdiction over a party
under both “the applicable long-arm statute” and “the demands of due process.” United States v.
Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995); accord GTE New Media Servs. Inc. v. BellSouth
Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000). When a case, such as this one, Compl. ¶ 3, is
brought in diversity, “the federal district court’s personal jurisdiction over the defendant is
coextensive with that of a District of Columbia court.” Helmer v. Doletskaya, 393 F.3d 201, 205
(D.C. Cir. 2004).
The plaintiff bears the burden of establishing that the court may properly exercise
personal jurisdiction over each defendant. Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456
(D.C. Cir. 1990). The Court will resolve factual discrepancies in favor of the plaintiff, Crane,
894 F.2d at 456, but “[b]are allegations and conclusory statements are insufficient.” Johns v.
Newsmax Media, Inc., 887 F. Supp. 2d 90, 95 (D.D.C. 2012); see also Second Amendment
Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). In addition to the
pleadings, the Court may consider other evidence, such as affidavits. See Mwani v. bin Laden,
417 F.3d 1, 7 (D.C. Cir. 2005).
Personal jurisdiction may be satisfied by either specific or general jurisdiction. D’Onofrio
v. SFX Sports Grp., Inc., 534 F. Supp. 2d 86, 90 (D.D.C. 2008). Specific jurisdiction requires
only sufficient “‘minimum contacts’ with [the forum],” but requires that the plaintiff’s claims
arise from those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 (1984) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). General jurisdiction,
on the other hand, “sets a high bar,” requiring that the defendant have “continuous and
systematic” contacts with the forum state—but then permits the forum to adjudicate any claims
against the defendant, whether or not the claims are related to the defendant’s actions in the
6
forum. D’Onofrio, 534 F. Supp. 2d at 90 (citation omitted). The Court considers the applicability
of each in turn.
A. Specific Jurisdiction
MBW argues that neither of its two acts arguably relating to D.C.—retaining lawyers at
Dickstein, a firm headquartered in D.C., and taking assignment of the Hettrick estate’s claims
against Dickstein’s insurers—should subject it to personal jurisdiction in D.C. See, e.g., Reply
Mem. Supp. Def.’s Mot. Dismiss (Def.’s Reply), ECF No. 14 at 7–11. Brit does not seriously
contend that merely hiring Hettrick, a Dickstein attorney residing and working in California,
creates personal jurisdiction.10 Instead, Brit hangs its hat on the argument that MBW accepted
10
Any argument that retaining Hettrick alone satisfied the requirements of specific
jurisdiction would be unsuccessful. The D.C. Circuit has previously found that merely hiring a
law firm with a D.C. office falls beneath the threshold for minimum contacts. See Thompson
Hine, LLP v. Taieb, 734 F.3d 1187 (D.C. Cir. 2013). In Thompson Hine, the court based its
conclusion on: the short duration of the contract, the lack of a “choice-of-law provision” or
“consent to suit in the District” in the retainer, the execution of the retainer outside the District,
and the lack of any requirement in the retainer “that the firm perform work or receive payment in
the District.” Id. at 1192. MBW’s contacts with D.C. here are even more remote. MBW’s
retainer agreement was negotiated in and mailed from California, and was with Clyde Hettrick, a
lawyer located in California. Soura Decl. ¶ 9, ECF No. 7-1. In Thompson Hine, the work under
the retainer actually ended up being performed by lawyers located in D.C., 734 F.3d at 1188–89,
but here Brit does not dispute the Dickstein lawyers performed work only in California.
Brit’s attempted reliance on Xenophon is misplaced. Pl.’s Opp’n at 12, ECF No. 13
(“This case is more analogous to Xenonphon [sic] . . .” In Xenophon, the court identified personal
jurisdiction when the non-resident defendant hired a resident-corporation to perform D.C.-
specific public relations tasks. Xenophon Strategies, Inc. v. Jernigan Copeland & Anderson,
PLLC, No. 15-1774, 2016 WL 1367734, at *4–5 (D.D.C. Apr. 6, 2016). Brit does not argue here
that the work Dickstein performed bore any relation to D.C. Instead, Brit’s gloss is that the
presence of a D.C. choice-of-law provision in Xenophon (and its absence in Thompson Hine) was
the hinge on which personal jurisdiction turned. See Pl.’s Opp’n at 12. This Court disagrees. The
Xenophon decision clearly holds that the choice-of-law provision is one small piece in the larger
minimum contacts puzzle, and that the D.C.-specific nature of the contract services was more
important in finding personal jurisdiction. See generally Xenophon, No. 15-1774, 2016 WL
1367734. Even if Brit’s interpretation were correct, only Dickstein’s insurance policy with Brit
contained a D.C. choice-of-law provision, not the retainer agreement between MBW and
Dickstein (indeed, that retainer agreement actually contained a California arbitration provision).
Compare Primary Professional Liability Insurance Policy, ECF No. 1-1, Ex. A, with Soura Decl.
7
D.C. personal jurisdiction by taking assignment of the Hettrick estate’s claims against Brit under
the professional liability policy, which it argues was a “D.C. contract.” See, e.g., Pl.’s Mem. P.
& A. Opp’n Def.’s Mot. Dismiss (Pl.’s Opp’n), ECF No. 13 at 9–13. Because the Court concludes
that taking assignment of the contract does not meet the minimum contacts with the forum
requirement of the due process clause, exercising specific jurisdiction over MBW is not warranted.
The District of Columbia’s long-arm statute permits a court to “exercise personal
jurisdiction over a person” when “a claim for relief aris[es] from the person’s . . . transacting any
business in the District of Columbia.” D.C. Code § 13-423 (2012). This provision is interpreted
“to provide jurisdiction to the full extent allowed by the Due Process Clause” such that “the
statutory and constitutional jurisdictional questions . . . merge into a single inquiry: would
exercising personal jurisdiction accord with the demands of due process?” Thompson Hine, LLP
v. Taieb, 734 F.3d 1187, 1189 (D.C. Cir. 2013) (internal quotation marks and citation omitted).
Due process is satisfied if the defendant has “certain minimum contacts with [the forum]
such that the 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) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)), and that the defendant “should reasonably anticipate being
haled into court” in the forum, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980). The court analyzes the “quality and nature of the defendant’s activity” in the forum to
determine if the defendant “purposefully avail[ed] itself of the privilege of conducting activities
within the forum State, thus invoking the benefits and protections of its laws.” Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474–75 (1985) (quoting Hanson v. Denckla, 357 U.S. 235,
¶ 9. The choice-of-law provision’s relevance is thus highly circumscribed. Moreover, the
Supreme Court has held that “such a [choice-of-law] provision standing alone [is] insufficient to
confer jurisdiction.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 482 (1985).
8
253 (1958)); see also IMark Mktg. Servs., LLC v. Geoplast S.p.A., 753 F. Supp. 2d 141, 154
(D.D.C. 2010). In some cases, a single act may suffice to bring the defendant within the forum’s
personal jurisdiction, if the act is “neither irregular nor casual.” Int’l Shoe, 326 U.S. at 319–20.
In Burger King, the Supreme Court rejected a “mechanical test” to establish personal
jurisdiction over a non-resident defendant who entered into a contract with a resident. Burger
King, 471 U.S. at 478. Although such a mechanical test is inappropriate, on some occasions
entering into a contract may suffice to create personal jurisdiction—as it did in Burger King
itself. “[T]he contract ‘alone’ could supply the necessary ‘minimum contacts’” when the contract
is so wide-reaching and exacting that its terms create a “‘substantial connection’ between the
non-resident and the forum.” Thompson Hine, 734 F.3d at 1193 (quoting Burger King, 471 U.S.
at 475–76). To determine if the contract is one that creates such a substantial connection, the
Court uses a “highly realistic” lens to analyze the “prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties’ actual course of dealing” and
determines if the defendant “purposefully established minimum contacts within the forum.”
Burger King, 471 U.S. at 479 (citation omitted). The focus is on the actions of the defendant
because “[t]he unilateral activity of those who claim some relationship with a nonresident
defendant cannot satisfy the requirement of contact with the forum State.” Id. at 474–75 (quoting
Hanson, 357 U.S. at 253); see also Helmer v. Doletskaya, 393 F.3d 201, 205–06 (D.C. Cir. 2004)
(finding that personal jurisdiction was proper over a defendant who entered into a contract in
D.C. when that contract required sending monthly billing statements to D.C. and having bills
paid from D.C. accounts).
Contrary to Brit’s apparent position, the analysis of the defendant’s contacts with the
forum state is required when the defendant is the assignee of a contract. Brit appears to argue that
9
if the initial contract was sufficiently connected to D.C.,11 then any assignee would automatically
step into the shoes of the assignor and “submit[] to a D.C. court’s jurisdiction under the D.C.
long-arm statute.” See Pl.’s Opp’n, ECF No. 13 at 10. The Court finds that this standard is not
supported by the law of this circuit or in harmony with the teachings of Burger King. Neither of
the two cases Brit cites, Johnson and Farouki, applied a mechanical rule to chain the personal
jurisdiction of the assignee to that of the assignor. Instead, both courts performed the standard
analysis, guided by Burger King, to determine if the assignee’s contacts with the forum state
were sufficient to indicate that the assignee purposefully availed itself of the forum state.
For example, in Johnson the court held that specific jurisdiction was proper over a
defendant who took assignment of a mortgage on D.C. property and thereafter received a stream
of income from D.C.12 Johnson v. Long Beach Mortg. Loan Trust 2001-4, 451 F. Supp. 2d 16, 31
11
Brit does not specify the precise degree of connection between the contract and the
District required for a contract to be, in its terms, a “D.C. contract,” which would allow a District
of Columbia court to exercise personal jurisdiction over the parties (and their assignees).
Because the Court does not accept Brit’s position, it does not explore the contours of such a
“D.C. contract.” However, the argument that the original contract here was such a “D.C.
contract” would not be as straightforward as Brit suggests.
Brit discusses negotiations for Dickstein’s insurance policy—which involved email and
phone communication with the District—and that the executed policy was sent to the District by
email. See Pl.’s Opp’n at 10, ECF No. 13. But, these contacts are not very helpful in establishing
personal jurisdiction. See Katopothis v. Windsor-Mount Joy Mut. Ins. Co., No. 14-380, 2016 WL
5374081, at *16 (D.D.C. Sept. 26, 2016) (“[E]mail and telephone communications sent into the
District of Columbia are not sufficient to [confer personal jurisdiction] in themselves, even if
they are made pursuant to an underlying contract between a resident [plaintiff] and a nonresident
[d]efendant . . . . After all, such communications are incidental to nearly every business
relationship; they are not indicative of any desire to do business in D.C. and do not suffice to
show purposeful availment or minimum contacts.” (internal quotation marks and citations
omitted)); Dove v. United States, No. 86-0065, 1987 WL 18739, at *3 (D.D.C. Oct. 9, 1987)
(holding that “the mere delivery of documents . . . . does not confer jurisdiction”).
12
Furthermore, the court in Johnson identified an alternative basis of personal
jurisdiction against the defendant under D.C. Code § 13-423(a)(5) because the defendant had a
security interest in D.C. property. Johnson, 451 F. Supp. 2d at 30. No such alternative basis of
specific jurisdiction applies here.
10
(D.D.C. 2006). The court in Johnson repeatedly emphasized the continuing contacts of the
assignee with D.C.—specifically, that the assignee contemplated and received continual
mortgage payments from D.C. based on its ownership interest in real property in D.C. Id. at 30.
When the court stated that “[t]aking assignment of a mortgage note is neither an ‘irregular nor
casual’ act” it did so in the context of the continual income stream and other D.C. connections
that flow from a mortgage note. Id. at 31 (quoting Int’l Shoe, 326 U.S. at 320); see also Farouki
v. Petra Int’l Banking Corp., 811 F. Supp. 2d 388, 399 (D.D.C. 2011) (finding that the court had
personal jurisdiction over a bank which took assignment of a loan when the assignment occurred
in D.C. and the assignment involved a claim to D.C. property), vacated in other part, 705 F.3d
515 (D.C. Cir. 2013). This analysis tracks the Supreme Court’s admonition in Burger King to
take a “highly realistic” approach to the contacts contemplated by the contract.
Johnson drew heavily on the Supreme Court’s analysis in McGee, which is also helpful
here. 451 F. Supp. 2d at 31–33. In McGee, the Supreme Court permitted a forum to exercise
personal jurisdiction over a defendant when the “suit was based on a contract which had
substantial connection with that State.” McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957).
The contract at issue was actually the assignment of a prior life insurance policy to a new insurer.
Id. at 221–22. The Court held that the assignee had a substantial connection to the forum state
because the new contract was “delivered in [the forum state], the premiums were mailed from
there and the insured was a resident of that State when he died.” Id. at 223. As in Johnson and
Farouki, this analysis thus focused on the contacts of the assignee to the forum state. If the rule
were as Brit suggests, the Court would have had no cause to address the assignee’s contacts with
the forum and could have concluded its analysis after determining that the assignor was subject
to personal jurisdiction.
11
From McGee, Johnson, and Farouki, this Court concludes that the applicable test for
exercising personal jurisdiction over a non-resident assignee, when the assignee’s purported
connection to the forum state stems from the assignment, is whether the assignee’s contacts with
the forum state are sufficient to satisfy the minimum contacts requirement of the due process
clause. In other words, the assignee must “purposefully establish[] minimum contacts with the
forum,” as determined through a “highly realistic” analysis that considers the assignee’s “prior
negotiations and contemplated future consequences, along with the terms of the [assignment] and
the parties’ actual course of dealing.” Burger King, 471 U.S. at 479. If the assignee has taken an
interest in real property in the district, or if the assignment was executed in the district, or if the
assignee receives an income stream from the district, or other similar connections to the forum
are present, then exercising personal jurisdiction over the assignee may be appropriate.13
Although the D.C. Circuit has not provided guidance on this issue, this conclusion is in accord
with that in other circuits. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773,
784 (7th Cir. 2003) (holding that “an assignee does not step automatically into the shoes of the
assignor for purposes of personal jurisdiction” and collecting cases). The Court thus turns to the
connections between the assignment and the forum in this case.
Brit argues that MBW’s contacts with D.C. resulting from the assignment of the claims
against Brit suffice to create specific jurisdiction over MBW. However, there are virtually no
contacts tying the assignment to the District. Brit does not argue that the assignment was
13
This analysis is in harmony with Johnson’s statement that “an assignee of a contract
created and to be performed in a particular forum may be subject to the jurisdiction of the
forum’s courts, even if the assignee has no other relevant contacts with the forum.” Johnson, 451
F. Supp. 2d at 31 (D.D.C. 2006) (emphasis added) (citing McGee, 355 U.S. 220). As Burger
King established, a non-resident entering into any type of contract, assignment or not, may or
may not be subject to personal jurisdiction depending on the connection between the contract and
the forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–76 (1985).
12
negotiated or executed in the District,14 unlike the assignment at issue in Farouki. By taking
assignment, MBW had no reason to anticipate receiving any revenue from D.C., much less a
continuous stream—indeed, MBW’s hoped-for reward would likely be collected from Brit, a
London insurer, and, as MBW notes, it took assignment only of the “right to collect on a loss that
had already occurred” rather than any ongoing “insurable risk” that might require “continuing
performance,” see Def.’s Reply at 9, ECF No. 14. This is in stark contrast to the assignments
found to satisfy the requirements of personal jurisdiction in McGee, where the assignee received
continuing premium payments from the forum, 355 U.S. at 223, and Johnson, where the assignee
received monthly mortgage payments from D.C., 451 F. Supp. 2d at 31.15 Nor did MBW gain
any interest in D.C. property through the assignment, unlike in Johnson, 451 F. Supp. at 31, and
Farouki, 811 F. Supp. 2d 399.
14
Because the proper focus is on the assignee’s contacts, Brit’s arguments that
Dickstein’s professional liability insurance policy may have been negotiated or executed in the
District, see Pl.’s Opp’n at 10, ECF No. 13, are not persuasive. Had the place of execution of the
original contract been a dispositive factor, the analysis in McGee, Johnson, and Farouki would
have been much simpler.
Similarly, Brit’s reliance upon the choice-of-law provision in the professional liability
policy, see Pl.’s Opp’n at 9, is unavailing. The provision does not select D.C. as the forum for
future litigation. Because courts in other jurisdictions are competent to apply D.C. law, the
choice-of-law provision does not establish that either party would be haled into court in the
District. In addition, the provision appears in the contract between Dickstein, not a party here,
and Brit—not MBW. Furthermore, Burger King is clear that “such a provision standing alone
[is] insufficient to confer jurisdiction.” 471 U.S. at 482.
15
The facts here also differ from those in the cases cited by Brit because here it was the
party with the greater connection to the forum state that served as the assignor. See Johnson v.
Long Beach Mortg. Loan Trust 2001-4, 451 F. Supp. 2d 16, 25–27 (D.D.C. 2006) (plaintiff who
continued to pay mortgage payments to assignee was a D.C. resident); McGee v. Int’l Life Ins.
Co., 355 U.S. 220, 220 (1957) (decedent who continued to pay insurance premiums to assignee
resided in the forum state). Thus, in this case neither interested party after the assignment had a
substantial connection to D.C.
13
In sum, the court does not find any “prior negotiations,” “contemplated future
consequences” or “terms of the [assignment] and the parties’ actual course of dealing” that
suggest that MBW “purposefully established minimum contacts” with D.C. by taking assignment
of the Hettrick estate’s claims against Brit under the professional liability policy.16 See Burger
King, 471 U.S. at 479. In applying Burger King’s “realistic” lens, the Court sees no reason that
MBW would have expected to be haled into court in the District based on taking assignment of
claims against a London insurer. This conclusion is in line with others in this circuit in the
general contract context. See Fasolyak v. The Cradle Soc’y, Inc., No. 06-01126, 2007 WL
2071644, at *6 (D.D.C. July 19, 2007) (finding that arguments in favor of personal jurisdiction
“lose their force when, as is the case here, both parties to the dispute are nonresidents, the
contract contemplates no performance in the District of Columbia, and the defendant engaged in
no act directed at District citizens or acted pursuant to a contract that anticipated future
consequences here”). Because MBW’s purposeful actions directed at the forum state do not pass
the due process threshold of minimum contacts, the Court concludes that exercising specific
jurisdiction over MBW is not appropriate here.17
16
Indeed, the Settlement Agreement specified California law for any disputes between
MBW and the estate. Settlement Agreement ¶ 22, ECF No. 1-4, Ex. D.
17
The Court notes that, if SFA were the proper defendant, it would likely also not be
subject to this Court’s specific jurisdiction. Under the facts as alleged, SFA, like MBW, is only
connected to D.C. by taking assignment of the claims against Brit. SFA’s connection is even
more attenuated than MBW’s because SFA took assignment of the legal claims from MBW rather
than directly from the Hettrick estate. See Soura Decl. ¶ 18, ECF No. 7-1 (“On January 1, 2016,
MBW transferred its rights in the settlement agreement and the judgment to SFA Group, LLC.”);
see also Assignment of Rights and Acknowledgement of Assignment, ECF No. 7-1, Ex. C.
14
B. General Jurisdiction
Brit argues that MBW is subject to general jurisdiction in D.C. because it “promoted and
sold its products through retailers in D.C.”18 Pl.’s Opp’n at 14, ECF No. 13. MBW argues that its
contacts are insufficient to meet the “exceptional” standard warranting general jurisdiction in a
forum that is not the defendant’s place of incorporation or principal place of business. See Def.’s
Mot. Dismiss at 11–14, ECF No. 7; Def.’s Reply at 4–7, ECF No. 14. The Court concludes that,
even if MBW undertakes activities in D.C. as Brit alleges, it is not “essentially at home” in the
District and thus general jurisdiction is not appropriate.
D.C. law provides for general jurisdiction over “foreign corporation[s] doing business in
the District” under D.C. Code § 13-334(a) (2012). Gorman v. Ameritrade Holding Corp., 293
F.3d 506, 509 n.1 (D.C. Cir. 2002). That jurisdiction is “coextensive with the reach of
constitutional due process.”19 Freedman v. Suntrust Banks, Inc., 139 F. Supp. 3d 271, 278
(D.D.C. 2015) (quoting Gorman, 293 F.3d at 510). The Supreme Court has recently spoken to
the extent of permissible general jurisdiction: “A court may assert general jurisdiction over
18
In its reply brief, MBW argues that the activities Brit cites are actually performed by
MBW Inc., a separate corporate entity that now handles all manufacturing and sales. See, e.g.,
Def.’s Reply at 6, ECF No. 14 (“Brit conflates MBW LLC (the defendant herein) with MBW
Inc., and argues as if the two separate entities are synonymous. They are not. MBW LLC ceased
all manufacturing and distribution operations in 2010, but continued to exist to pursue the
insurance claim . . . . Meanwhile, MBW Inc. has been the operating entity responsible for
manufacturing and distributing swimwear for nearly six years.”). According to MBW, the
defendant-entity “presently has no contacts with the District whatsoever.” Def.’s Mot. Dismiss at
13, ECF No. 7. The Court does not resolve these issues of corporate structure because, even if
the activities in question were attributable to the defendant, they would not satisfy the high bar
required for exercising general jurisdiction over MBW.
19
A separate barrier exists here barring Brit from benefiting from the D.C. Code’s grant
of general jurisdiction—D.C. law requires “that personal service be made within the District of
Columbia.” Everett v. Nissan Motor Corp., 628 A.2d 106, 108 (D.C. 1993) (citing D.C. Code
§ 13–334(a) (2012)). It appears that service in this case was effected in California. See Affidavit
of Service, ECF No. 5 (noting that MBW was served through its CEO in Sacramento,
California).
15
foreign (sister-state or foreign-country) corporations to hear any and all claims against them
when their affiliations with the State are so ‘continuous and systematic’ as to render them
essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011) (quoting Int’l Shoe, 326 U.S. at 317). Corporate defendants are
paradigmatically “at home” at either their place of incorporation or principal place of business.
Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014).
A corporation is not “essentially at home” merely because it uses the stream of commerce
to deliver products to the forum state. See Goodyear, 564 U.S. at 927 (“Flow of a manufacturer’s
products into the forum, we have explained, may bolster an affiliation germane to specific
jurisdiction . . . [but] do[es] not warrant a determination that, based on those ties, the forum has
general jurisdiction over a defendant.”). Indeed, it would be “unacceptably grasping” to exercise
“general jurisdiction in every State in which a corporation engages in a substantial, continuous,
and systematic course of business.” Daimler, 134 S. Ct. at 761 (internal quotation marks
omitted). In Daimler, the Supreme Court held that general jurisdiction was not proper over the
defendant in California, even though the defendant was substantially involved in commerce
there: it had three offices with employees and was the largest seller of luxury vehicles in the
state. Id. at 752. The Supreme Court concluded that:
If [the defendant’s] California activities sufficed to allow adjudication of this
Argentina-rooted case in California, the same global reach would presumably be
available in every other State in which [the defendant’s] sales are sizable. Such
exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state
defendants “to structure their primary conduct with some minimum assurance as
to where that conduct will and will not render them liable to suit.”
Id. at 761–62 (quoting Burger King, 471 U.S. at 472)).
Although Daimler and Goodyear set a high bar for asserting general jurisdiction over
foreign entities, the Supreme Court left open the possibility that “in an exceptional case, a
16
corporation’s operations in a forum other than its formal place of incorporation or principal place
of business may be so substantial and of such a nature as to render the corporation at home in
that State.” Id. at 761 n.19. With these principles in mind, the Court considers whether exercising
general jurisdiction over MBW is proper here.
This is clearly not the prototypical case of general jurisdiction because it is undisputed
that MBW is not incorporated in D.C. and does not have its principal place of business in D.C.
See Soura Decl. ¶¶ 3–4, ECF No. 7-1 (stating that “MBW is a Delaware limited liability
company” with members that are residents of Delaware, Nevada, California, and Florida and that
the principal place of business during manufacturing was California); see also Def.’s Mot.
Dismiss at 1, 12–13, ECF No. 7 (“MBW never manufactured any products in the District, never
sold or delivered any merchandise in this District, never maintained an office in this District,
never had employees in the District . . .”); Def.’s Reply at 4, ECF No. 14. Instead, Brit focuses
its argument on the activities that MBW does perform within the District. These activities are
largely those which a major nationwide manufacturer would be expected to undertake in every
state. Brit claims that MBW “purposefully introduces its products into D.C. and benefits by
selling its products within D.C.” through “retailers and merchants.” Pl.’s Opp’n at 14–15, ECF
No. 13. Brit also claims that MBW “markets its clothing products through various brand names
that are advertised and sold to District of Columbia residents,” including in magazines that are
available in the District such as “People Magazine, Allure, Glamour, and Fitness Magazine.”
Pl.’s Opp’n at 14–15. Accepting each of these allegations as true, MBW is far less involved in
D.C. than the Daimler defendant was in California. Unlike the defendant in Daimler, MBW does
not have any physical offices or employees in the District, and there is no evidence in the record
as to its size of the market share in the district. Compare Soura Decl. ¶ 6, ECF No. 7-1 (“[MBW]
17
was never registered to do business in the District and never had an agent for service of process
there. It never had a customer in the District, never manufactured merchandise in the District,
never sold directly or shipped products to the District, and never had any employees in the
District.”), with Daimler, 134 S. Ct. at 752.
This conclusion is buttressed by other decisions from this jurisdiction. In Freedman v.
Suntrust Banks, Inc., the court rejected general jurisdiction over a defendant who “operate[d]
numerous retail branches and ATMs, and maintain[ed] a significant ‘brick-and-mortar’
presence” in D.C. because Daimler “explicitly foreclose[d]” subjecting such a defendant to
general jurisdiction in each of multiple “primary bases of operation.” 139 F. Supp. 3d 271, 279
(D.D.C. 2015). Brit’s comparison of this case to Marshall v. I-Flow LLC, 856 F. Supp. 2d 104
(D.D.C. 2012), is unpersuasive for several reasons. Pl.’s Opp’n at 14, ECF No. 13. First,
Marshall was decided before the Supreme Court’s further clarification of the standard for
general jurisdiction in Daimler. Second, MBW’s alleged activities within the district are far short
of the activities undertaken in Marshall, which include the defendant “establish[ing] and
benefit[ing] from a partnership with the George Washington University Hospital, devot[ing] an
entire [sales] region to sales in Washington, D.C.” and using “expert medical consulting services
of prominent Washington, D.C. medical facilities and physicians.” Marshall, 856 F. Supp. 2d at
108 (internal quotation marks and citations omitted). Brit nowhere claims that MBW engaged in
a “partnership” with a D.C. entity or performed any acts that would similarly render it
“essentially at home” in the District. The Court thus concludes that exercising general
jurisdiction over MBW is not appropriate.20
20
The Court notes that it would likely reach the same conclusion as to the exercise of
general jurisdiction over SFA. Like MBW, SFA Group is not incorporated in D.C. and does not
have its principal place of business in D.C. Soura Decl. ¶ 19, ECF No. 7-1. It is not disputed that
18
C. Jurisdictional Discovery
Brit requests that, should the Court be unconvinced of its jurisdiction over MBW, the
Court should grant Brit jurisdictional discovery. Because the Court agrees with MBW that such
discovery is unwarranted, it denies Brit’s request.
Jurisdictional discovery is appropriate “if a party demonstrates that it can supplement its
jurisdictional allegations through discovery.” GTE New Media Servs. Inc., 199 F.3d at 1351. A
plaintiff seeking jurisdictional discovery must provide “specific discoverable facts,” Cheyenne
Arapaho Tribes of Okla. v. United States, 558 F.3d 592, 596 (D.C. Cir. 2009), rather than “mere
conjecture or speculation” that discovery could lead to personal jurisdiction, FC Inv. Grp. LC v.
IFX Mkts., Ltd., 529 F.3d 1087, 1094 (D.C. Cir. 2008).
In this case, Brit argues that jurisdictional discovery might reveal that MBW undertook
“a specific marketing campaign for the D.C. region,” and that such a campaign might include
“working with D.C. retailers, targeting advertising in the D.C. area, and employees who are
responsible for sales in D.C.” Pl.’s Opp’n at 43, ECF No. 13. According to Brit, these facts, if
established, would provide for the general jurisdiction of this Court over MBW. Pl.’s Opp’n at
42–43 (citing Marshall, 856 F. Supp. 2d at 108).21
Even if jurisdictional discovery established the facts that Brit alleges, this Court would
still conclude that exercising general jurisdiction over MBW would not be appropriate. In
SFA has not “conducted any business in Washington D.C. [sic].” Soura Decl. ¶ 20. General
jurisdiction over SFA would thus also be inappropriate as it is not “essentially at home” in the
District. See also Def.’s Mot. Dismiss at 14, ECF No. 7 (“SFA does not conduct and has never
conducted any business in the District of Columbia, and does not have any employees here. It is
not registered to do business in the District and it does not have an office or an agent for service
of process here. None of its members reside in the District. SFA has no contacts with the District
and therefore it cannot be subject to general personal jurisdiction here.” (citations omitted)).
21
Brit does not argue that jurisdictional discovery could establish specific jurisdiction
over MBW, and the Court does not address this possibility.
19
Daimler, the Supreme Court held that a defendant was not subject to general jurisdiction despite
having offices and employees in the forum state, and specifically targeting sales of the
defendant’s products to retailers in the forum state. Daimler AG v. Bauman, 134 S. Ct. 746, 752
(2014). Brit’s claimed contacts here are less broad in scope than the contacts that existed in
Daimler, and general jurisdiction would thus remain improper. Even if MBW did “work[] with
D.C. retailers,” or “target[] advertising in the D.C. area,” or have “employees who are
responsible for sales in D.C.,” Pl.’s Opp’n at 43, these contacts would not be sufficient to show
that MBW was “essentially at home” in the District, Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. 915, 919 (2011). Thus, because Brit has not demonstrated that “discovery will
enable it to show that the court has personal jurisdiction over the defendant,” the Court denies
Brit’s request for jurisdictional discovery as futile. FC Inv. Grp., 529 F.3d at 1093–94; see also
Simon v. Republic of Hungary, 37 F. Supp. 3d 381, 394 (D.D.C. 2014) (denying jurisdictional
discovery to show general jurisdiction when it would be futile), appealed in other part, 812 F.3d
127 (D.C. Cir. 2016).
IV. CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss (ECF No. 7) is GRANTED.
An order consistent with this Memorandum Opinion is separately and contemporaneously issued.
Dated: January 26, 2017 RUDOLPH CONTRERAS
United States District Judge
20