Opinion
Civil Action No. 04-1549 Section: I/3.
January 11, 2005
ORDER AND REASONS
Before the Court is a motion to dismiss filed by defendants, George S. Sotirin and Stephen R. Puterbaugh, pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. Defendants contend that plaintiffs, Andrew Carlisle and SoCal 66, fail to state a claim upon which relief can be granted. Additionally, defendants contend that the Court lacks personal jurisdiction over them. For the following reasons, defendants' motion is GRANTED IN PART and DENIED IN PART.
Rec. Doc. No. 5.
I. Background
Plaintiffs Andrew Carlisle and SoCal 66, a sole proprietor and his internet business, resell merchandise through internet auction houses. Defendants, Sotirin, Puterbaugh, and J.C. Felts, are corporate officers of Gadzooks, Inc., which has filed voluntary bankruptcy proceedings in Texas.
Rec. Doc. No. 1, ¶¶ 1, 6.
Rec. Doc. No. 1, ¶¶ 21-23. Defendant J.C. Felts has not been served and, therefore, does not join in this motion.
Plaintiffs made inventory purchases of merchandise primarily from New Orleans' area Gadzooks' stores but also from Gadzooks' stores located in Alabama, Florida, and Mississippi. Plaintiffs allege that they had a binding contractual relationship with Gadzooks through their use of promotional coupons issued by Gadzooks for frequent buyers. After using the promotional coupons, which allegedly had no expiration date, Carlisle informed an unidentified individual associated with Gadzooks that he had been buying merchandise for resale through his business, SoCal 66.
Sometime after learning of Carlisle's business, Sotirin and/or Puterbaugh allegedly instructed the managers and employees of Gadzooks' stores not to sell merchandise to Carlisle. Plaintiffs allege that defendants published an internal store memo that accused Carlisle of fraudulently using promotional coupons and banned him from Gadzooks' stores, all of which gives rise to liability for defamation, tortious interference with contract, and fraud. Plaintiffs' claims arise from defendants' allegedly false statements made within the internal store memo and the subsequent dissemination of those statements by telephone and email to other employees of Gadzooks.
II. Rule 12(b)(2) and Personal Jurisdiction
In the context of a motion filed pursuant to Rule 12(b)(2), a plaintiff must establish a court's personal jurisdiction over the defendant. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994). When considering such a motion, the court must accept as true "[t]he allegations of the complaint, except insofar as controverted by opposing affidavits." Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985) (citing DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1270-71 (5th Cir. 1983)). Further, "all conflicts in the facts must be resolved in favor of the plaintiff for purposes of determining whether a prima facie case for personal jurisdiction has been established." Id.
"A federal district court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution." Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993).
With respect to the first prong, this Court must apply Louisiana's long arm statute, La.Rev.Stat. Ann. section 13:3201, because a nonresident defendant is subject to the personal jurisdiction of a federal court sitting in diversity in Louisiana to the same extent that the defendant would be amenable to the jurisdiction of a Louisiana court. See Trinity Indus., Inc. v. Myer Assocs., Ltd., 41 F.3d 229, 230 (5th Cir. 1995). The first prong of the personal jurisdiction analysis collapses into the second prong because Louisiana's long arm statute provides that a court may exercise jurisdiction over a nonresident defendant to the full extent provided by the due process clause of the United States Constitution. See La.Rev.Stat. Ann. § 13:3201(B); see also Petroleum Helicopters, Inc. v. Avco Corp., 513 So. 2d 1188, 1191 (La. 1987).
Louisiana's personal jurisdiction statute states in pertinent part: "a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and of the Constitution of the United States." La.Rev.Stat. Ann. § 13:3201(B).
"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgment of a forum with which the individual has established no meaningful 'contacts, ties, or relations.'" Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 336 (5th Cir. 1999) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985) ( citing International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945))). The due process analysis is also two pronged. First, the defendant must "have certain minimum contacts with [the forum] such that the maintenance of the [law] suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 342-43, 85 L. Ed. 278 (1940)). Second, it must be reasonable to require the nonresident to defend the lawsuit in the forum state. See Burger King, 471 U.S. at 474-77, 105 S. Ct. at 2183-85. Under the reasonableness prong, "[a] court must consider the burden on the defendant, the interests of the forum State, . . . the plaintiff's interest in obtaining relief[,] . . . the interstate judicial system's interest in obtaining the most efficient resolution of controversies[,] and the shared interest of the several States in furthering fundamental substantive social policies." Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 113, 107 S. Ct. 1026, 1033, 94 L. Ed. 2d 92 (1987) (citing World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490 (1980)) (internal quotation omitted).
Finally, the minimum contacts inquiry for personal jurisdiction may be subdivided into two categories: specific jurisdiction and general jurisdiction. Gundle Lining Construction Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 205 (5th Cir. 1996). Plaintiffs allege that the Court has specific jurisdiction over the defendants. Accordingly, the Court limits its minimum contacts inquiry to the issue of specific personal jurisdiction.
"If a defendant has sufficient 'continuous and systematic' general contacts with the state, the forum may exercise general personal jurisdiction over the defendant for a 'cause of action that does not arise out of or relate to the defendant's activities in the forum state.'" Guidry v. United States Tobacco Co., 188 F.3d 619, 624 (5th Cir. 1999) (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984) (internal citations omitted).
Specific jurisdiction is jurisdiction arising out of or related to the defendant's contacts with the forum. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S. Ct. 1868, 1872 n. 8, 80 L. Ed. 2d 404 (1984). "A court may exercise specific jurisdiction over a nonresident defendant when the claim asserted against the defendant arises out of or relates to his contact with the forum." Planet Beach Franchising Corp. v. C3BIT, Inc., No.Civ.A. 02-1859, 2002 WL 1870007, *2 (E.D. La. Aug. 12, 2002). A single act by the defendant directed at the forum state can be enough to confer specific in personam jurisdiction over the defendant if the cause of action arises out of that act. See Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 419 (5th Cir. 1993). "Obtaining personal jurisdiction over a non-resident of a state is constitutionally permissible if the nonresident 'purposefully availed himself of the benefits and protections' of [the forum state] by establishing 'minimum contacts' such that the defendant could 'reasonably anticipate being haled into court in the forum state.'" Wein Air Alaska, Inc. v. Brandt, 195 F.3d 208, 211 (5th Cir. 1999) (quoting Holt Oil Gas Corp. v. Harvey, 801 F.2d 773, 777 (5th Cir. 1986)). "When the actual content of communications with a forum gives rise to intentional tort causes of action, this alone constitutes purposeful availment." Id. at 213. The communications that defendants allegedly directed to Louisiana Gadzooks' stores serve as the basis of all three of plaintiffs' causes of action. As such, plaintiffs have established a prima facie case for minimum contacts with respect to the claims asserted.
The Fifth Circuit has explained that:
Once a plaintiff has established minimum contacts, the burden shifts to the defendant to show the assertion of jurisdiction would be unfair. To show that an exercise of jurisdiction is unreasonable once minimum contacts are established, the defendant must make a "compelling case" against it. It is rare to say the assertion is unfair after minimum contacts have been shown. The standards to be used are the "traditional notions of fair play and substantial justice." The interests to balance in this determination are the burden on the defendant having to litigate in the forum; the forum state's interests in the lawsuit; the plaintiff's interests in convenient and effective relief; the judicial system's interest in efficient resolution of controversies; and the state's shared interest in furthering fundamental social policies.Id. at 215 (citations omitted).
To that end, defendants submit that it would offend traditional notions of fair play and substantial justice to exercise specific jurisdiction over corporate officers arising out of conduct imputed to the corporation itself. Defendants direct the Court to the fiduciary shield doctrine for the proposition that "jurisdiction over a foreign corporation does not necessarily confer jurisdiction over the individual officers and employees of that corporation." Fuller v. American Recreational Vehicles, 801 So. 2d 642, 645-48 (La.App. 3d Cir. 2001); see also 16 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE ¶ 108.42[3][b][iii] (3d ed. 2002).
Pursuant to the fiduciary shield doctrine, the acts of a corporate officer in his corporate capacity generally are not sufficient to provide personal jurisdiction over that person in his individual capacity. Fuller, 801 So. 2d at 645-46. Instead, personal jurisdiction must be premised on the officer's personal contacts with the forum state. Id. The fiduciary shield doctrine will not apply, however, when the officer allegedly commits an intentional tort or fraud directed at the forum state or when the officer acts outside of his legitimate corporate authority. Id.; see Estate of Monroe v. Bottle Rock Power Corp., No. 03-2682, 2004 WL 737463, *8 (E.D. La. Aug. 2, 2004).
With respect to plaintiffs' claims for fraud and tortious interference with contract, plaintiffs' allegations fall squarely within the exception to the fiduciary shield doctrine. Plaintiffs specifically allege that Sotirin and Puterbaugh committed acts of fraud and intentionally interfered with a contract. Furthermore, Fifth Circuit law supports asserting personal jurisdiction over an out-of-state defendant when a claim of fraud is asserted. See Wien Air Alaska, 195 F.3d at 215 (stating "[i]f a cause of action for fraud committed against a resident of the forum is directly related to the tortious activities that give rise to personal jurisdiction, an exercise of jurisdiction likely comports with the due process clause, given the obvious interests of the plaintiff and the forum state").
Furthermore, specific personal jurisdiction over nonresident defendants in defamation cases may be found where the effects of the defamatory statement caused injury. See Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984) (individual injured in California need not go to Florida to seek redress from persons who, though remaining in Florida, knowingly caused the injury in California). The Fifth Circuit has embraced the Calder "effects" test, finding a basis for personal jurisdiction when an act done outside the state has consequences or effects within the state. See Guidry v. United States Tobacco Co., 188 F.3d 619, 628 (5th Cir. 1999).
While defendants were outside Louisiana when they allegedly communicated defamatory statements to individuals in Louisiana, the effects of the defamation were aimed at a Louisiana resident and felt within the forum. Based on Calder and its progeny, the effects of defendants' alleged defamation serve as minimum contacts with Louisiana for the purpose of personal jurisdiction. See id.
Based on plaintiffs' allegations, defendants' contacts with the forum are enough to satisfy the minimum contacts requirement and, therefore, the Court finds a basis for exercising specific personal jurisdiction over the defendants. In the absence of controverting opposing affidavits filed by defendants or any other showing by defendants that litigating this matter in Louisiana would present an unreasonable burden, plaintiffs have sufficiently established a prima facie case for specific personal jurisdiction and the Court concludes that exercising specific personal jurisdiction over defendants is reasonable and comports with due process.
III. Rule 12(b)(6) and Defendants' Motion to Dismiss
In order to determine whether a motion to dismiss has merit, Fifth Circuit law instructs that "the standard to be applied to a motion to dismiss under Federal Rule 12(b)(6) is a familiar one." Jefferson v. Lead Ind. Ass'n. Inc., 106 F.3d 1245, 1250 (5th Cir. 1997). The district court must take the factual allegations of the complaint as true and resolve any ambiguities or doubts regarding the sufficiency of the claim in favor of the plaintiff. Fernandez-Montes v. Allied Pilots Ass'n., 987 F.2d 278, 284 (5th Cir. 1993). The complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff cannot prove any set of facts in support of her claim that would entitle her to relief. Fernandez-Montes, 987 F.2d at 284, 285; Leffall v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994). However, conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss. Fernandez-Montes, 987 F.2d at 284; Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994). Where a complaint shows on its face that it is barred by an affirmative defense, a court may dismiss the action for failing to state a claim. Kaiser Aluminum Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).
A. Defamation
Pursuant to Louisiana law, four elements are required for a defamation claim: (1) a false and defamatory statement concerning another; (2) an unprivileged publication to a third party other than plaintiff; (3) fault on the part of the publisher; and (4) injury. Trentecosta v. Beck, 703 So.2d 552, 559 (La. 1997); see also Brannan v. Wyeth Laboratories, Inc., 526 So. 2d 1101, 1105 (La. 1988) (listing defamation as five elements: (1) defamatory words, (2) publication, (3) falsity, (4) malice, actual or implied, and (5) resulting injury).
"Statements are defamatory only if the words, taken in context, tend to injure the person's reputation, to expose the person to public ridicule, to deter others from associating or dealing with the person, or to deprive the person of public confidence in his or her occupation." Blanchard Co. v. Barrick Gold Corp., No.Civ.A. 02-3721, 2003 WL 22071173, *13 (E.D. La. Sept. 3, 2003). Furthermore, the defamatory words must be "of and concerning" the plaintiff, i.e., directly or indirectly cast a personal reflection on the plaintiff. See In re New York Life Ins. Co. Agents' Class Claimants Solicitation Litigation, 92 F. Supp. 2d 564, 569 (E.D. La. 1997).
At the outset, the Court recognizes that plaintiffs have failed to allege that a false or defamatory statement was made which concerned SoCal 66. Plaintiffs' complaint only identifies allegedly false and defamatory statements which were of and concerning Carlisle.
See Rec. Doc. No. 1, ¶¶ 26, 27.
With respect to Carlisle's defamation cause of action, defendants challenge plaintiff's ability to establish the "publication" element. Defendants contend that the plaintiffs have failed to allege any set of facts that defendants published the defamatory statements to a third party.
"[A]ny communication to a third party, absent a privilege, absolute or qualified, is considered a publication." Costello v. Hardy, 864 So. 2d 129, 142 (La. 2004). Statements between employees made within the course and scope of their employment do not constitute publication for the purpose of a defamation claim. Johnson v. Delchamps, Inc., 715 F. Supp. 1345, 1347 (M.D. La. 1989); Cangelosi v. Schweggmann Bros. Giant Super Markets, 390 So. 2d 196, 198 (La. 1980); see Atwood v. Grand Casinos of Louisiana, Inc., No.Civ.A. 04-715, 2004 WL 2537432, *3 (La.App. 3d Cir. Nov. 10, 2004) (stating "statements between employees, made within the course and scope of their employment, are not statements communicated or publicized to third persons"). However, such intra-corporate communications must be made in good faith. See Atwood, 2004 WL 2537432, *3; Smith v. Lady of the Lake Hospital, Inc., 639 So. 2d 730, 742 (La. 1994).
Plaintiffs contend that defendants' statements were outside the course and scope of their employment. Plaintiffs also allege that defendants published defamatory statements "with malice." Plaintiffs have, therefore, plead a specific allegation that may negate the intra-corporate privilege for defendants because plaintiffs have attacked defendants' assertion that their statements were made in good faith, a prerequisite for the intra-corporate privilege to apply. Accordingly, there is no obvious privilege which would bar relief against the defendants.
B. Tortious Interference with Contract
Plaintiffs contend that Gadzooks' Vice President of Human Resources, Puterbaugh, and Vice President of Store Operations, Sotirin, intentionally and unjustifiably interfered with plaintiffs' contractual relationship with Gadzooks. Plaintiffs allege that promotional coupons issued by Gadzooks "constitute a binding agreement, and thus, a contractual relation, between Gadzooks and its customers [i.e., plaintiffs]." Defendants claim that they had reasonable justification for their conduct and acted within the scope of their corporate authority.
Rec. Doc. No. 1, ¶¶ 31-41.
Rec. Doc. No. 1, ¶ 33.
Pursuant to Louisiana law, a limited cause of action for tortious interference with contract exists. The U.S. Fifth Circuit, U.S. District Courts in Louisiana, and various Louisiana intermediate appellate courts have "recognized the narrowness of Louisiana's tortious interference action." Southern Serv. corp. v. Tidy Building Servs., Inc., No.Civ.A. 04-1362, 2004 WL 2784909, *6 (E.D. La. Dec. 1, 2004) (citing Egrov, Puchinsky, Afanasiev Juring v. Terriberry, Carroll Yancey, 183 F.3d 453, 457 (5th Cir. 1999)). Such a claim against a corporate officer requires five separate elements: (1) the existence of a contract; (2) the officer's knowledge of the contract; (3) that the officer induced or caused the corporation to breach the contract; (4) absence of justification on the part of the officer; and (5) damages to the third person caused by the breach. 9 to 5 Fashions v. Spurney, 538 So. 2d 228, 234 (La. 1989). A tortious interference claim may lie against a corporate officer if there is an absence of justification, i.e., an officer acted beyond the scope of his authority or in a manner adverse to the corporation's interests. See Bollinger v. Tanner Cos., Civ.A. No. 02-3248, 2003 WL 1824836, *2 (E.D. La. April 7, 2003).
Plaintiffs contend that their allegations of fraud and defamation support a finding that defendants acted beyond the scope of their authority. Plaintiffs' allegations of bad faith, intentional acts, and malice on the part of defendants support a cause of action for tortious interference with contract. While the Court recognizes the limits of a tortious interference with contract claim in Louisiana, plaintiffs have alleged what is necessary to survive a motion to dismiss for failure to state a claim.
Unlike the tortious interference with contract claim in Bollinger v. Tanner Cos., No.Civ.A. 02-3248, 2003 WL 1824836 (E.D. La. Apr. 7, 2003), plaintiffs allege more than "garden variety breach of contract claims."
C. Fraud
Defendants assert that plaintiffs' complaint fails to state a cause of action for fraud because plaintiffs do not plead facts which would establish reliance, inducement, or causation. However, plaintiffs contend that they have plead the essential elements of fraud with particularity.
Pursuant to Louisiana law, a plaintiff may establish a claim for fraud by proving the following elements: (1) a misrepresentation, (2) made with the intention to defraud or gain an unfair advantage, and (3) a resulting actual or potential loss or damage. In re Ford Motor Co., No. MDL1063, 1997 WL 539665, *2 (E.D. La. Aug. 27, 1997); see Guidry v. United States Tobacco, Inc., 188 F.3d 619, 627 (5th Cir. 1999). Additionally, for fraud to have caused plaintiffs' damage, plaintiffs must be able to show reliance, inducement, or causation, i.e., that had plaintiffs known the truth, they would not have acted as they did. See Sun Drilling Products Corp. v. Rayborn, 798 So. 2d 1141, 1153 (La.App. 4th Cir. 2003).
Plaintiffs have alleged that the false statements made by defendants caused them to cease shopping at Gadzooks' stores. Plaintiffs' pleadings specifically state that Carlisle "felt threatened to enter any of Gadzooks' stores" and that he has not shopped at any Gadzooks' store since learning of the memo issued by defendants. Furthermore, plaintiffs allege that defendants' intentional misrepresentation of the truth was made with the intent to cause damage and that plaintiffs lost income. At this early stage of the proceedings, plaintiffs have made an adequate preliminary showing that they have a cause of action for fraud against defendants. Accordingly,
Rec. Doc. No. 1, ¶ 44.
IT IS ORDERED that the motion of defendants to dismiss with respect to the defamation claim of plaintiff, SoCal 66, is GRANTED. IT IS FURTHER ORDERED that the motion to dismiss filed by defendants with respect to all other claims is DENIED.