Petition of John Paul Reddam

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Banking Department
No. 2016-0567
PETITION OF JOHN PAUL REDDAM
(New Hampshire Banking Department)
Argued: September 20, 2017
Opinion Issued: February 9, 2018
McLane Middleton, Professional Association, of Manchester (Wilbur A.
Glahn, III, Michael A. Delaney, Andrew R. Hamilton, and Benjamin B. Folsom
on the brief, and Mr. Glahn orally), for John Paul Reddam.
Gordon J. MacDonald, attorney general (Seth M. Zoracki, assistant
attorney general, on the brief and orally), for the New Hampshire Banking
Department.
LYNN, J. The New Hampshire Banking Department (Department)
initiated an adjudicative proceeding against CashCall, Inc. (CashCall), WS
Funding, LLC (WS Funding), and John Paul Reddam, for violations of RSA
chapter 399-A (2006 & Supp. 2012) (repealed and reenacted 2015). By petition
for a writ of certiorari, see Sup. Ct. R. 11, Reddam challenges the Department’s
denial of his motion to dismiss for lack of personal jurisdiction.1 We affirm and
remand.
1 Although Reddam is the petitioner here, he, as well as CashCall and WS Funding, are
respondents in the underlying action. For ease of reference, we will refer to them collectively as
“the respondents,” and we will refer to CashCall and WS Funding as “the respondent companies.”
I
The following facts come from the parties’ stipulation or are otherwise
found in the record. Reddam is the president and chief executive officer of
CashCall, a lending and loan services corporation headquartered and
incorporated in California. Reddam owns all of CashCall’s corporate stock.
Reddam is also the president of WS Funding, a wholly owned subsidiary of
CashCall. WS Funding is a Delaware limited liability company with a principal
place of business in California. Neither Reddam, CashCall, nor WS Funding is
licensed under RSA chapter 399-A to issue small loans in New Hampshire.
Both CashCall and WS Funding have contractual relationships with
Western Sky Financial, which is not a party to this action. Western Sky
Financial is wholly owned by an enrolled member of the Cheyenne River Sioux
Tribe, which is a sovereign Indian nation located within South Dakota and
recognized by the United States Department of the Interior.
CashCall is a licensed mortgage banker in New Hampshire under RSA
chapter 397-A (2006 & Supp. 2011). Pursuant to RSA 397-A:12 (Supp. 2011),
the Department commenced an examination of CashCall in early 2012. The
Department’s examiner discovered that CashCall appeared to be engaged in the
business of purchasing and servicing small loans or “payday loans” in
association with Western Sky Financial.
In June 2013, after analyzing and reviewing CashCall’s responses to an
administrative subpoena duces tecum and reviewing the business relationships
among CashCall, WS Funding, and Western Sky Financial, the Department
issued a cease and desist order to CashCall, WS Funding, and Reddam. In the
cease and desist order, the Department found that either CashCall, or WS
Funding, was the “actual” or “de facto” lender for the payday and small loans,
and that Western Sky Financial was a front for the respondents’ unlicensed
activities.
As relevant here, the relationship among these companies was primarily
governed by two agreements that they entered into in 2010: an “Agreement for
Service” (Service Agreement) between CashCall and Western Sky Financial; and
an “Agreement for the Assignment and Purchase of Promissory Notes”
(Assignment Agreement) between WS Funding and Western Sky Financial.
(Quotations omitted.) Reddam signed the Service Agreement as president of
CashCall, and he signed the Assignment Agreement as president of WS
Funding. Through 2013, pursuant to these agreements, CashCall reimbursed
Western Sky Financial for numerous office and operational expenses, including
payroll expenses, advertising expenses, and fees paid to consumer loan lead
generators, and provided website hosting and support services for Western Sky
Financial’s website. CashCall informed prospective borrowers that it was
assisting them with the loan application process on behalf of Western Sky
2
Financial. Pursuant to the Assignment Agreement, Western Sky Financial
agreed to assign and WS Funding agreed to purchase all loans made through
Western Sky Financial’s website. Every borrower received a notice of
assignment that identified WS Funding as the purchaser of the loan and
directed the borrower to remit all payments to CashCall.
Between July and October 2013, attorneys from four different law firms
filed appearances on behalf of the respondents. The respondents issued
discovery requests to the Department and responded to the Department’s
discovery requests. The Department and the respondents also negotiated a
four-page stipulation of uncontested facts.
In December 2013, the respondents moved to dismiss or, alternatively,
stay the cease and desist order pending the outcome of arbitration, arguing
that: (1) the Department’s action violated the dormant Commerce Clause of the
Federal Constitution; (2) the Department lacked subject matter jurisdiction to
“penalize or halt tribal member conduct”; and (3) the Department’s claims were
subject to binding arbitration provisions contained in the loan agreements.
Reddam additionally argued that he is not subject to personal jurisdiction in
New Hampshire, and he attached a supporting affidavit.
As relevant here, Reddam stated in his affidavit that he had never lived
in New Hampshire, had not visited New Hampshire in the preceding year,
owned no real property in New Hampshire, and had no personal business
dealings in New Hampshire. With regard to his activity through CashCall,
Reddam stated that, to his knowledge, he had “never personally interacted with
any Western Sky borrower whose loan was serviced by CashCall” and had “no
personal involvement with CashCall’s servicing and collection operation, except
that [he] instruct[ed] CashCall managers and supervisors to ensure that all
applicable laws are obeyed.”
In April 2016, the Department’s presiding officer denied the respondents’
motion. Regarding Reddam’s personal jurisdiction argument, the Department
found that it could constitutionally exercise jurisdiction over Reddam. Reddam
filed a motion for rehearing, which, in a proposed order, the Department’s
reviewing officer recommended be denied, and the Department’s commissioner
accepted the reviewing officer’s proposed order as a final order. This petition
followed.
In his petition, Reddam argues that the Department erred by ruling that
it had personal jurisdiction over him. The Department argues that it properly
exercised jurisdiction over Reddam and makes two alternative arguments: (1)
that Reddam’s petition should be dismissed for failing to exhaust his
administrative remedies; and (2) that Reddam waived his personal jurisdiction
defense by actively litigating the action for six months before asserting that the
Department lacked personal jurisdiction over him.
3
II
“Our standard of review for rulings on motions to dismiss for lack of
personal jurisdiction varies according to the case’s procedural posture.” N.H.
Bank Comm’r v. Sweeney, 167 N.H. 27, 32 (2014). When, as in this case, the
Department rules on the motion without holding an evidentiary hearing, the
Department employs a prima facie standard, and we review its decision de
novo. See id. Under the prima facie standard, the inquiry is whether the
Department has proffered evidence which, if credited, is sufficient to support
findings of all facts essential to personal jurisdiction. See id. The Department
ordinarily cannot rest upon the pleadings, but must adduce evidence of specific
facts. See id. Both the Department and this court, when undertaking de novo
review, must accept the Department’s properly documented proffers as true for
the purpose of determining the adequacy of the prima facie jurisdictional
showing. See id. The Department’s evidentiary proffers must be construed in
the light most congenial to its jurisdictional claim, and facts put forward by a
respondent may be considered to the extent they are uncontradicted. See id.
Determining whether a court may exercise personal jurisdiction over a
respondent contemplates a two-part analysis. Id. “First, the State’s long-arm
statute must authorize such jurisdiction.” Id. (quotation omitted). “Second,
the requirements of the [F]ederal Due Process Clause must be satisfied.” Id.
(quotation omitted). “However, because New Hampshire’s long-arm statute
authorizes the exercise of personal jurisdiction over a non-resident to the
extent permissible under the Federal Due Process Clause, the due process
analysis is normally dispositive of the matter.” Id. (quotation and citation
omitted); see also Metcalf v. Lawson, 148 N.H. 35, 37 (2002) (stating that, in
determining whether a New Hampshire court may exercise personal
jurisdiction over a non-resident defendant, “our primary analysis relates to due
process”).
III
We first address the Department’s argument that this petition should be
dismissed as premature because Reddam did not exhaust his administrative
remedies. “The rule requiring administrative remedies to be exhausted prior to
appealing to the courts is based on the reasonable policies of encouraging the
exercise of administrative expertise, preserving agency autonomy and
promoting judicial efficiency.” Konefal v. Hollis/Brookline Coop. School Dist.,
143 N.H. 256, 258 (1998) (quotation omitted). We have recognized that the
exhaustion of administrative remedies doctrine is flexible, and that exhaustion
is not required under certain circumstances. Id.
The Department argues that we should dismiss Reddam’s petition
because he seeks review of an interlocutory agency order rather than a final
4
order. According to the Department, Reddam should not seek review until after
the final hearing on the Department’s claims. We disagree.
Reddam argues that it is a violation of the Federal Due Process Clause
for New Hampshire to exercise jurisdiction over him. That clause protects a
non-resident respondent from the burden of litigating in a foreign forum unless
the “respondent has minimum contacts with the forum, such that the
maintenance of the suit does not offend traditional notions of fair play and
substantial justice.” Sweeney, 167 N.H. at 33. The Department ruled that it
had made a prima facie showing of personal jurisdiction, and it denied
Reddam’s motion for rehearing. Under such circumstances, if the Department
erred in concluding that the exercise of personal jurisdiction over him was
proper, it would be unfair — absent extraordinary countervailing
considerations (which have not been brought to our attention) — to require
Reddam to defend the dispute on the merits in order to preserve his
jurisdictional challenge. See Mosier v. Kinley, 142 N.H. 415, 424 (1997) (“[I]t
would be unfair to force a defendant to expend the time and resources
necessary to mount a defense on the merits if the court has no personal
jurisdiction over the defendant.”); cf. N.H. Super. Ct. R. 9(e). The longer that
Reddam, a resident of California, is required to defend this litigation in New
Hampshire, the greater the burden. Thus, to minimize this burden, it is best to
resolve as early as possible the issue of whether the Department made a prima
facie showing of personal jurisdiction. See Mosier, 142 N.H. at 424 (ruling that
a defendant must seek an immediate appeal of a trial court’s ruling on personal
jurisdiction or waive the ability to later attack that ruling).
Therefore, under these circumstances, we reject the Department’s
argument that we should dismiss Reddam’s petition for failing to exhaust his
administrative remedies.
IV
We now turn to the substance of Reddam’s argument that the
Department erred by ruling that it could exercise personal jurisdiction over
him. “Under the Federal Due Process Clause, a court may exercise personal
jurisdiction over a non-resident respondent if the respondent has minimum
contacts with the forum, such that the maintenance of the suit does not offend
traditional notions of fair play and substantial justice.” Sweeney, 167 N.H. at
33. “Personal jurisdiction can be ‘general,’ if the respondent’s contacts with
the forum state are ‘continuous and systematic,’ or ‘specific,’ if ‘the cause of
action arises out of or relates to the respondent’s forum-based contacts.’” Id.
(brackets omitted). Here, the Department asserts only that the court may
exercise specific personal jurisdiction. Whether a respondent’s contacts are
sufficient to confer specific personal jurisdiction “depends upon the
relationship between the [respondent], the forum, and the litigation.” Alacron
v. Swanson, 145 N.H. 625, 628 (2000).
5
In determining whether the exercise of specific personal jurisdiction over
the respondent comports with due process, we examine whether: (1) the
contacts relate to the cause of action; (2) the respondent has purposefully
availed himself of the protection of New Hampshire’s laws; and (3) it would be
fair and reasonable to require the respondent to defend the suit in New
Hampshire. Sweeney, 167 N.H. at 33. “Each factor must be evaluated on a
case-by-case basis, and all three factors must be satisfied for the exercise of
jurisdiction to be constitutional.” Id.
A. Control Person Liability
The parties first dispute whether Reddam’s status as a “control person”
of the respondent companies is sufficient to establish personal jurisdiction.2
See RSA 399-A:18, VI (Supp. 2012) (setting forth the penalty for “[e]very person
who directly or indirectly controls a person liable under this section”). Reddam
argues that, while a control person may be statutorily liable, statutory liability
does not, standing alone, equate to minimum contacts between the control
person and the forum. The Department disagrees, and it alternatively argues
that Reddam’s status as a control person is at least “a factor to be considered
in the jurisdictional analysis.” (Quotation and ellipsis omitted.)
In support of his argument, Reddam cites In re Baan Co. Securities
Litigation, 245 F. Supp. 2d 117 (D.D.C. 2003). In re Baan involved an investor
class action filed in the United States District Court for the District of
Columbia alleging federal securities violations against Baan Company (Baan), a
NASDAQ-listed company that had offices in the United States, as well as
against a foreign company, Vanenburg Group, B.V. (Vanenburg), and a foreign
individual, J.G. Paul Baan (Paul Baan). In re Baan, 245 F. Supp. 2d at 119-
21. Paul Baan served as chairman of Baan’s board of supervisory directors
and controlled Vanenburg along with his brother. Id. The court ultimately
rejected the plaintiffs’ argument that the United States could impute the
court’s general personal jurisdiction over Baan to Paul Baan and Vanenburg
because they were “control persons” of Baan, and therefore liable for securities
violations. Id. at 127-31. The court reasoned that imputing Baan’s contacts to
the foreign defendants would “impermissibly conflate[] statutory liability with
the Constitution’s command that the exercise of personal jurisdiction must be
2
During the administrative proceeding, the Department took the position that it could exercise
jurisdiction over Reddam pursuant to RSA 399-A:18, VI and that a separate due process analysis
was unnecessary. Reddam argues that this was error because RSA 399-A:18, VI cannot support
jurisdiction that would otherwise violate the Due Process Clause. In this court, the Department
takes the position that its exercise of personal jurisdiction over Reddam comports with due
process. Therefore, because both parties agree that the Department may exercise personal
jurisdiction over Reddam if he has sufficient minimum contacts with New Hampshire such that
maintenance of the suit does not offend traditional notions of fair play and substantial justice, we
will confine our analysis to whether jurisdiction is proper under the Due Process Clause of the
Federal Constitution.
6
fundamentally fair.” Id. at 129. The court further reasoned that such
conflation would “run[] afoul of the general rule that a defendant corporation’s
contacts with a forum may not be attributed to shareholders, affiliated
corporations, or other parties.” Id. (quotation omitted). But cf. Calder v.
Jones, 465 U.S. 783, 790 (1984) (noting that employee status does not insulate
a person from personal jurisdiction).
We find this reasoning persuasive. The mere fact that a corporate officer
can and generally does control a corporation does not mean that the officer
directed the specific actions that brought liability upon the corporation and its
controlling officers. Such an officer can be liable under laws such as RSA
chapter 399-A despite taking no actions to control or direct the conduct for
which the corporation and its officers are liable in the forum state. For
example, such an officer could have delegated his authority to an employee,
who thereafter took an unanticipated action that made the corporation liable in
the forum. In such a situation, the corporate officer did not purposefully avail
himself or herself of the forum’s laws even though by statute he or she is
personally liable for the actions of the corporation. See Phillips v. Prairie Eye
Center, 530 F.3d 22, 28 (1st Cir. 2008) (stating that, when analyzing
purposeful availment factor of minimum contacts test, “contacts must be
deliberate, and not based on the unilateral actions of another party” (quotation
omitted)).
As the court in In re Baan noted, however, the forum could establish
specific personal jurisdiction over a controlling officer based upon a showing
that the officer participated in the unlawful conduct. In re Baan, 245 F. Supp.
2d at 130 n.18; see also Bulldog Investors v. Secretary of Com., 929 N.E.2d
293, 301 (Mass. 2010) (finding personal jurisdiction over employees of a
company that offered unregistered securities to a Massachusetts resident in
violation of Massachusetts law because each individual employee admitted that
he provided information by e-mail to the Massachusetts resident). Thus,
although we agree with Reddam that he is not subject to personal jurisdiction
in New Hampshire based only upon his potential statutory liability as a control
person, we agree with the Department’s alternative argument that evidence
that Reddam had knowledge of, controlled, and directed the respondent
companies’ actions that violated RSA chapter 399-A can support a finding that
the Department has specific personal jurisdiction over him.
B. Specific Personal Jurisdiction
Next, we turn to the issue of whether the Department demonstrated that
it had specific personal jurisdiction over Reddam. Reddam argues that the
Department lacked personal jurisdiction because: (1) his “personal contacts
with New Hampshire do not relate to this enforcement action”; (2) he “did not
purposefully avail himself of the protections of New Hampshire law”; and (3) “it
is not fair or reasonable to require [him] to defend this suit in New Hampshire.”
7
1. Relatedness of Contacts to Claims
We begin by examining the first factor, whether Reddam’s contacts relate
to the Department’s cause of action. “This factor involves whether the claim
underlying the litigation directly arises out of or relates to the defendant’s
forum-state activities.” State v. N. Atlantic Ref. Ltd., 160 N.H. 275, 282 (2010).
The relatedness test is a “flexible, relaxed standard.” Id. (quotation omitted).
“To satisfy the relatedness factor, there must be more than just an attenuated
connection between the contacts and the claim; the defendant’s in-state
conduct must form an important, or at least material, element of proof in the
plaintiff’s case.” Id. (quotation and brackets omitted). “The court’s assessment
of relatedness is informed by the concept of foreseeability.” Id. (quotation
omitted).
Reddam argues that his personal contacts do not relate to the
Department’s cause of action because the Department alleged only that: (1) he
is the president and CEO of CashCall and owns 100% of the company’s
corporate stock; (2) he has a mailing address identical to CashCall’s mailing
address; and (3) he is not licensed as a small loan lender in New Hampshire.
He argues that the Department “did not allege, nor present any evidence, that
Reddam had any individual involvement in CashCall’s alleged conduct with
respect to New Hampshire.”
The Department argues that, in addition to the evidence of Reddam’s
positions in the respondent companies, the record also reflects that Reddam
“had full authority to control, design, and direct CashCall’s business activities”
and is “the one running” CashCall, which “reached into New Hampshire and
made contracts with New Hampshire consumers.” (Quotation omitted.)3 The
Department contends that Reddam “us[ed] his authority to direct CashCall’s
activities” to “personally execute[] . . . the Assignment Agreement and the
Service Agreement,” of which the “very purpose and design was to enable
CashCall to engage in payday or small loan lending in New Hampshire (and
3
The Department argues that we should consider the fact that Reddam filed an individual
disclosure form that accompanied CashCall’s application for a mortgage banker license pursuant
to RSA chapter 397-A. This evidence is not related to the Department’s cause of action — alleged
violations of RSA chapter 399-A. Accordingly, we do not consider it in our analysis.
The Department further argues that we should consider the fact that, after it initiated its
action, CashCall applied for (and later withdrew its application for) a small loan license under RSA
chapter 399-A, and Reddam submitted an accompanying individual disclosure form. Although
the Department could have, but did not, present these documents during the underlying
proceeding, it nevertheless requests that we take judicial notice of them in the first instance in
this petition. See N.H.R. Ev. 201. Reddam argues that we should not take judicial notice of the
documents because he “did not have the opportunity to develop a factual record regarding the
application and his role with respect to it” and, therefore, we do not have the evidence “to properly
analyze the application.” Because we rule in the Department’s favor without considering this
evidence, we need not consider this argument.
8
other states) while concealing CashCall’s identity as the true lender and
evading regulation under New Hampshire’s (and other states’) licensing and
usury laws.” (Emphasis omitted.) Based upon our review of the record of the
administrative proceedings, we agree with the Department.
The Department initiated its action against the respondents for
“engag[ing] in the business of making small loans or payday loans in New
Hampshire without obtaining a license to do so in violation of [RSA chapter
399-A].” The Department alleged that the respondents employed contractual
and other relationships with Western Sky Financial as a mechanism by which
the respondents avoided becoming licensed under RSA chapter 399-A and that
CashCall operated as the “actual” or “de facto” lender for payday or small loans
for itself and on behalf of Western Sky Financial. In other words, based upon
the Department’s allegations, the asserted purpose of this business
relationship was to allow the respondent companies to unlawfully use Western
Sky Financial’s tribal affiliation as a shield against state lending laws, such as
New Hampshire’s. Reddam was directly involved with establishing these
business relationships to issue small loans in violation of RSA chapter 399-A
through his control of the respondent companies and his execution of the
contracts that underpinned the companies’ relationships.
Accepting these evidentiary proffers as true and construing them in the
light most congenial to the Department’s jurisdictional claim, we find that the
Department has shown that Reddam’s contacts with the forum relate to the
cause of action. By offering evidence of Reddam’s positions within the
companies and his ownership interest in CashCall, the Department
demonstrated that he was in a position to control and direct the actions of the
respondent companies. The Department further demonstrated that, by
executing the Service Agreement and the Assignment Agreement, Reddam
personally participated in creating the business relationship between the
respondent companies and Western Sky Financial, and that the primary
purpose of this relationship was to issue small loans or payday loans without
complying with state licensing and regulatory requirements, including those of
New Hampshire. Viewed together, Reddam’s control of the respondent
companies and his personal participation in the alleged scheme that they used
to issue loans to New Hampshire consumers sufficiently relate to the
Department’s action. See In re Baan, 245 F. Supp. 2d at 130 n.18 (explaining
that a control person of an entity can be subject to specific personal
jurisdiction if the plaintiff supports an allegation that the control person had
knowledge of, control over, and culpably participated in the allegedly unlawful
conduct).
Furthermore, we reject Reddam’s argument that his actions were not
related to New Hampshire because he “had no specific involvement with any
loans made to New Hampshire consumers by Western Sky that were later
serviced by CashCall.” It would be nonsensical to hold that a person could
9
intentionally create a scheme for the purpose of violating the laws of numerous
states, control the company that thereafter violated those state laws in
accordance with the scheme, yet somehow be shielded from personal
jurisdiction in each such state because he did not individually target the
particular state’s consumers. As alleged by the Department, the scheme
Reddam enacted was purposefully designed to avoid each and every state law
that regulated small loan lending, including RSA chapter 399-A. It was a
foreseeable consequence of this scheme that the respondent companies would
thereafter issue unregulated loans to consumers in those states, including the
787 New Hampshire consumers that the Department identified. Therefore, we
reject Reddam’s argument that there was no evidence that his conduct was
related to the New Hampshire activity upon which the Department’s claims
were based.
2. Purposeful Availment
“To satisfy the second requirement, the defendant’s in-state contacts
must represent a purposeful availment of the privilege of conducting activities
in the forum state, thereby invoking the benefits and protection of that state’s
laws and making the defendant’s involuntary presence before the state’s courts
foreseeable.” N. Atlantic Ref. Ltd., 160 N.H. at 283-84 (quotation omitted).
“This factor assures that personal jurisdiction is not premised solely upon a
defendant’s random, isolated, or fortuitous contacts with the forum state.” Id.
at 284 (quotation and brackets omitted). Purposeful availment requires both
foreseeability and voluntariness. Id. “Voluntariness requires that the
defendant’s contacts with the forum state proximately result from actions by
the defendant himself.” Id. (quotation and emphasis omitted). “The contacts
must be deliberate, and not based on the unilateral actions of another party.”
Id. (quotation omitted). “Foreseeability requires that the contacts also must be
of a nature that the defendant could reasonably anticipate being haled into
court there.” Id. (quotation omitted).
Reddam argues that the Department did not satisfy this factor because
he “filed an uncontested affidavit establishing that he does not have minimum
contacts with New Hampshire and did not purposefully avail himself of the
protections of New Hampshire law.” As relevant here, Reddam stated in his
affidavit that he “never personally interacted with any Western Sky borrower
whose loan was serviced by CashCall” and had “no personal involvement with
CashCall’s servicing and collection operations.”
Even if we assume that Reddam’s affidavit is uncontested, these
statements fail to establish that he did not purposefully avail himself of New
Hampshire law. As discussed above, it is uncontested that Reddam controlled
the respondent companies and personally executed the Service Agreement and
Assignment Agreement. These agreements were intended to allow the
companies to issue loans to consumers in states, such as New Hampshire,
10
without complying with state laws, such as RSA chapter 399-A. The
voluntariness element is satisfied because Reddam personally and deliberately
took actions to set up and enable this scheme by controlling the respondent
companies and executing the Service Agreement and Assignment Agreement.
Moreover, the foreseeability element is satisfied because the very purpose of
this business relationship was to make unregulated loans to consumers in
states that regulated these types of loans, and Reddam could reasonably have
anticipated being haled into court in New Hampshire because he is personally
liable as a controlling person of the respondent companies for their
noncompliance with RSA chapter 399-A. See RSA 399-A:18, VI (repealed and
reenacted in 2015 as RSA 399-A:23, V). Thus, Reddam did not have “random,
isolated, or fortuitous” contacts with New Hampshire: He implemented a
scheme designed specifically to target consumers in states such as New
Hampshire, and which did, in fact, result in loans to 787 New Hampshire
consumers. As such, it is immaterial that Reddam did not personally interact
with any New Hampshire borrowers. Accordingly, the second factor of the
minimum contacts test is met.
3. Fairness and Reasonableness
The final requirement is whether it is fair to subject Reddam to suit in
New Hampshire. In making this assessment, we look to the five “gestalt
factors,” which consider: (1) the burden on the defendant; (2) the forum State’s
interest in adjudicating the dispute; (3) the plaintiff’s interest in obtaining
convenient and effective relief; (4) the interstate judicial system’s interest in
obtaining the most efficient resolution of controversies; and (5) the shared
interest of the several States in furthering fundamental substantive social
policies. N. Atlantic Ref. Ltd., 160 N.H. at 285-86. The gestalt factors
sometimes serve to establish the reasonableness of jurisdiction upon a lesser
showing of minimum contacts than would otherwise be required. Id.
With regard to the first factor, the burden on Reddam, he argues that he
“face[s] a heavy burden litigating in New Hampshire” and that the “burden is
particularly severe and unwarranted because [he] is currently subject to an
enforcement action in the United States District Court for the Central District
in California related to the very same 787 New Hampshire consumer loans at
issue here.” We agree with Reddam that, as a California resident, he faces a
burden if compelled to litigate in New Hampshire. See Sweeney, 167 N.H. at 38
(noting that a burden existed on the respondent “as is always the case with
non-resident respondents”).
However, based upon the information Reddam has provided, the lawsuit
to which he refers is an action by the Consumer Financial Protection Bureau
(CFPB) against Reddam, the respondent companies, and a company that is not
a party to the Department’s action for violations of the Consumer Financial
Protection Act of 2010 (the Act). The only information that Reddam provided
11
regarding this action is an opinion and order of the United States District Court
for the District of Massachusetts that concludes that the “Central District of
California is a substantially more convenient forum for this case than this
district.” This opinion and order does not identify which sections of the Act
that Reddam is alleged to have violated. Although it states that
“Massachusetts is one of sixteen States whose laws and public interests are
implicated by the plaintiff’s complaint,” it makes no mention of New Hampshire
law or the New Hampshire consumers to whom CashCall issued loans.
Accordingly, based upon the record provided by Reddam, we have no way of
discerning whether, as Reddam argues, “the CFPB seeks redress on behalf of
the same New Hampshire consumers identified in the Department’s [cease and
desist order].” Nor do we know whether that litigation is ongoing. All that is
apparent is that, in September 2015, an action by a federal agency for alleged
violations of a federal law was transferred to a federal court in California.
Based upon this information, we do not agree that Reddam’s burden in
defending allegations of culpability under RSA chapter 399-A is “particularly
severe” simply because this other action may exist.
Furthermore, as the Department notes, Reddam’s burden is mitigated by
the fact that, as the president of both respondent companies, he “will need to
continue litigating on behalf of CashCall regardless of whether he is a named
party” and “almost certainly will need to appear at the hearing as a witness.”
The next two factors are the Department’s interests in adjudicating the
dispute and obtaining convenient and effective relief. See N. Atlantic Ref. Ltd.,
160 N.H. at 285. The Department has a strong interest in enforcing state laws
against unlicensed small loan lenders, and the 787 impacted consumers all
reside in New Hampshire. See Alacron, 145 N.H. at 630. Additionally, because
the Department will still be proceeding with its action against the respondent
companies, it will be convenient to resolve its action against Reddam at the
same time and in the same forum, thereby eliminating any potential
duplication of the proceedings.
The fourth factor is the interstate judicial system’s interest in obtaining
the most efficient resolution of controversies. See N. Atlantic Ref. Ltd., 160
N.H. at 285-86. Reddam argues that this factor weighs against the
Department because its exercise of personal jurisdiction over him is
“inefficient, inconvenient and duplicative” inasmuch as the “same New
Hampshire small loans are subject to a parallel enforcement action in a
California forum.” As discussed above, Reddam has not provided us with a
record that demonstrates that the same New Hampshire small loans are
subject to a parallel enforcement action in California. Because there is no
evidence in the record that there is a risk of piecemeal litigation, we do not
consider this factor in our analysis. See id. at 287.
12
The final factor involves the “substantive social policies of the affected
governments.” Id. (quotation omitted). The Department argues, and Reddam
does not appear to dispute, that New Hampshire has a policy interest in
protecting its citizens from unregulated small and payday loans. See RSA ch.
399-A. That interest includes ensuring that when, as here, the legislature has
imposed personal liability on controlling officers of corporations in certain
heavily regulated industries, such officers cannot use the corporate form of
doing business to shield themselves from liability. See RSA 399-A:18, VI
(repealed and reenacted in 2015 as RSA 399-A:23, V). After considering all of
these factors, we conclude that it is fair and reasonable to require Reddam to
defend the Department’s action in New Hampshire.
Therefore, because the Department has made a prima facie showing that:
(1) Reddam’s contacts relate to the Department’s cause of action; (2) he
purposefully availed himself of the protection of New Hampshire law; and (3) it
is fair and reasonable to require him to defend suit in New Hampshire, we find
no due process violation in the Department’s exercise of specific personal
jurisdiction over Reddam.4
Affirmed and remanded.
DALIANIS, C.J., and HICKS, BASSETT, and HANTZ MARCONI,
JJ., concurred.
4 In light of our ruling on the merits of the due process issue, we find it unnecessary to address
the Department’s argument that Reddam consented to its exercise of personal jurisdiction over
him by failing to object in a timely fashion.
13