Summary
noting that the Entities "generally alleg[ed] Mr. Jayson ‘stood silent’ while actions detrimental to investors were taken and ‘failed to disclose’ certain information material to investors"
Summary of this case from Eighteen Seventy, LP v. JaysonOpinion
Case No. 19-CV-22-SWS
2020-02-04
EIGHTEEN SEVENTY L.P. and Marie Kennedy Foundation, Plaintiffs, v. Richard JAYSON, Defendant.
Amanda F. Esch, Davis & Cannon, Cheyenne, WY, Aviva Wernick, Pro Hac Vice, Jeffrey B. Goldberg, Pro Hac Vice, Hughes Hubbard & Reed LLP, Miami, FL, Jena R. Akin, Davis & Cannon LLP, Sheridan, WY, for Plaintiffs. Michael B. Rosenthal, Hathaway & Kunz, Cheyenne, WY, for Defendant.
Amanda F. Esch, Davis & Cannon, Cheyenne, WY, Aviva Wernick, Pro Hac Vice, Jeffrey B. Goldberg, Pro Hac Vice, Hughes Hubbard & Reed LLP, Miami, FL, Jena R. Akin, Davis & Cannon LLP, Sheridan, WY, for Plaintiffs.
Michael B. Rosenthal, Hathaway & Kunz, Cheyenne, WY, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Scott W. Skavdahl, United States District Judge
This matter comes before the Court on Defendant Richard Jayson's Motion to Dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) (ECF No. 8). The Court, having carefully considered the briefs and materials submitted in support of the motion, the response in opposition thereto, and being otherwise fully advised, finds Defendant's Motion to Dismiss should be GRANTED.
BACKGROUND
This lawsuit arises out of a series of investments made in a company called CRUPE Pte. Ltd. and its subsidiary, CRUPE Framing GmbH (collectively, "CRUPE"). Plaintiffs Eighteen Seventy L.P. and Marie Kennedy Foundation are a limited partnership and a private foundation whose activities primarily involve making investment decisions. (Comp. ¶¶ 3–7, ECF No. 1.) Both Plaintiff entities were formed under the laws of Delaware with a principal place of business situated in Big Hom, Wyoming. Id. ¶¶ 1, 6. Plaintiff Eighteen Seventy is owned by three brothers, Paul Kennedy, Peter M. Kennedy III, and John Kennedy, and managed by brothers Peter and Paul Kennedy. Id. ¶¶ 3–4. Peter and Paul Kennedy also served as President and Vice President, respectively, of Plaintiff Marie Kennedy Foundation. Id. ¶ 7. Peter and John Kennedy are residents of Wyoming, while Tenth Circuit's opinionPaul Kennedy resides in Florida. Id. ¶ 5.
Plaintiffs also have a mailing address listed in Old Greenwich, Connecticut. (Def.’s Ex 2 at 3, 5, ECF No. 9-2.)
CRUPE is a foreign corporation, organized under the laws of Singapore and managed in Zurich, Switzerland. Id. ¶ 8. CRUPE was founded in 2011 "to market and to sell a unique building material throughout the world." Id. ¶¶ 11, 13, 30. This "unique" material had "superior thermal, fire, acoustic, seismic and wind resistant properties" and could be built "more quickly and at a significantly lower cost" than traditional materials, such as cement or brick. (Pls.’ Ex. D at 5, ECF No. 21-4.) The Defendant in this action, Richard Jayson, was one of CRUPE's co-founders, as well as a director of and Chief Financial Officer ("CFO") for the company. (Compl. ¶ 13.)
In November 2011, CRUPE prepared and distributed an "information memorandum" to potential investors for the purpose of financing the company's growth. See id. This memorandum offered investors shares in CRUPE, but advised the shares "have not been and will not be registered" under the securities laws of the United States, among other countries. (Def.’s Ex. 8 at 3, ECF No. 9-8.) Plaintiffs were one of several recipients of the information memorandum, and upon consideration of these materials, they agreed to invest. (Def.’s Ex. 4 ¶ 4, ECF No. 9-4.) In January 2012, Plaintiffs reached out to CRUPE's Chief Executive Officer ("CEO") and co-founder, Stuart Richardson, who provided Plaintiffs with a standard investment agreement that would regulate "certain aspects of the [their] investments in the Company and the governing of the Company." (Pls.’ Ex. F at 6–7, ECF No. 21-6; Pls.’ Ex. B at 4, ECF No. 21-2.) Twelve other investors were also parties to this agreement. (Pls.’ Ex. B at 3.) The investment agreement was further accompanied by a subscription agreement, in which Plaintiffs agreed to purchase the equivalent of $3,313,000 in CRUPE preference shares. (Pls.’ Ex. C, ECF No. 21-3.)
The materials submitted to the Court do not explain how Plaintiffs came to be identified by CRUPE as potential investors, nor do they identify whether the information memorandum was sent to Plaintiffs’ Wyoming or Connecticut address.
None of these other investors were located in Wyoming or the United States. (See Pls.’ Ex. B at 3, ECF No. 21-2.)
After signing the initial investment and subscription agreements, Plaintiffs continued their relationship with CRUPE and made several additional investments in the company. From 2012 to 2016, Plaintiffs purchased several million dollars’ worth of additional CRUPE preference shares, acquired portions of the company's debt, and provided financing to the company through loan agreements. (Compl. ¶¶ 8–9, 45.) In total, Plaintiffs suffused the company with $10,488,000, making them CRUPE's largest investor. Id. ¶¶ 27–70. Paul Kennedy also accepted a position as a member of CRUPE's board of directors, and in 2015 became Chairman. (Def.’s Ex. 4 ¶ 2.)
Plaintiffs contend that, in an effort to induce these and other investments, CRUPE's CEO Stuart Robertson, and the Defendant, CFO Richard Jayson, made a series of misrepresentations and omissions about CRUPE's assets, financial prospects, and other material information. (Compl. ¶¶ 10–18.) Among these misrepresentations were statements that CRUPE owned and controlled certain patented intellectual property related to the unique building material, when in fact Mr. Robertson later transferred the intellectual property out of CRUPE. Id. ¶¶ 39–43. Plaintiffs further allege the information memorandum provided to investors stated CRUPE's "sales order book" was in excess of $600 million, but in reality CRUPE's revenue from 2012 to 2015 only reached $3,000,000 in the aggregate, much of which was from steel sales rather than sales of the building material. Id. ¶¶ 47–48.
Following Mr. Robertson and Mr. Jayson's allegedly fraudulent activity, successive legal proceedings took place. In addition to an arbitration in Switzerland, two other lawsuits were filed. The first action was brought on behalf of CRUPE against Mr. Robertson in Singapore. (Def.’s Ex. 9, ECF No. 9-9.) The Singapore court dismissed the lawsuit in 2016 without a decision on the merits. See id. The second action occurred in the United States; Paul Kennedy, Eighteen Seventy L.P., and the Marie Kennedy Foundation filed suit against Mr. Robertson and others in United States District Court for the Southern District of Florida, alleging fraud, negligent misrepresentation, and violations of securities laws. (See Def.’s Reply Ex. 1, ECF No. 22-1.) In March 2018, the Florida court entered a default judgment against the defendants for approximately $15 million.
Prior to entering default judgment, the Florida court determined it had personal jurisdiction over the defendants. (See Def.’s Reply Ex. 1) Significantly, the court based its exercise of jurisdiction on the specific language of Florida's long-arm statute, which encompassed "tortious acts within the state." Id. at 9. In the context of fraud, Florida common law also provided that the "tortious act" could be committed outside the state if the plaintiff's injury occurred within the state of Florida. Id.
Plaintiffs filed the present action on January 30, 2019 in the District of Wyoming, this time against Mr. Jayson. (See ECF No. 1.) The complaint asserts two causes of action—gross negligence and breach of fiduciary duties—based upon Mr. Jayson's alleged misrepresentations to investors and his purported failure to disclose materially adverse information. Id. ¶¶ 63–75. Plaintiffs contend Mr. Jayson's conduct fell below the applicable standard of care and was not in conformity with his fiduciary duties. See id. Defendant moved to dismiss the case on July 30, 2019, arguing this Court lacks personal jurisdiction over him (ECF No. 9). Mr. Jayson is a resident of the United Kingdom and has never traveled to Wyoming. (Def.’s Ex. 1 ¶¶ 2, 24, ECF No. 9-1.) He did not physically conduct any business in Wyoming and was, during the times alleged, acting on behalf of CRUPE. Id. ¶¶ 19, 25. As a result, he avers that he is not subject to personal jurisdiction in Wyoming.
In support of personal jurisdiction, Plaintiffs contend Mr. Jayson transacted business with and caused harm to Plaintiffs in Wyoming (ECF No. 21). In particular, Plaintiffs assert Mr. Jayson: (1) drafted and reviewed the information memorandum, investment agreement, and subscription agreement sent to Plaintiffs in Wyoming, (2) signed the investment and loan agreements, which listed a Wyoming address for Plaintiffs, (3) participated in negotiations for Plaintiffs’ loan agreements, (4) communicated with Plaintiffs in Wyoming via email and in phone conversations, and (5) attended meetings in Hong Kong, China and Zurich, Switzerland where Peter Kennedy, a Wyoming resident, was present. Id. at 3–17.
STANDARD OF REVIEW
To establish that a court has personal jurisdiction over a nonresident defendant in a diversity action, the plaintiff must show that the court's exercise of personal jurisdiction would be consistent with both the forum state's long-arm statute and the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Marcus Food Co. v. DiPanfilo , 671 F.3d 1159, 1166 (10th Cir. 2011). Wyoming's long-arm statute permits Wyoming courts to exercise personal jurisdiction over a defendant on any basis that is consistent with the Wyoming or United States constitutions. WYO. STAT. ANN. § 5–1–107(a) ; Black Diamond Energy Partners 2001-A Ltd. v. S & T Bank , 278 P.3d 738, 742–43 (Wyo. 2012). Because Wyoming's long-arm statute confers the maximum jurisdiction permissible consistent with due process, the personal jurisdiction inquiry can be collapsed into a single analysis under the Due Process Clause. Emp'rs Mut. Cas. Co. v. Bartile Roofs, Inc. , 618 F.3d 1153, 1159 (10th Cir. 2010).
In accordance with due process, a federal court "may exercise personal jurisdiction over a nonresident defendant only so long as there exists ‘minimum contacts’ between the defendant and the forum State ... [and] [t]he defendant's contacts with the forum state [are] such that maintenance of the suit ‘does not offend traditional notions of fair play and substantial justice.’ " World Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 291, 100 S.Ct. 580, 62 L.E.2d 490 (1980) (quoting International Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). A defendant meets the minimum contacts requirement if it "purposefully avails itself of the privilege of conducting activities within the forum State." Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Such conduct within the forum State "make[s] being sued there foreseeable so that the defendant could ‘reasonably anticipate’ the suit." Fireman's Fund Ins. Co. v. Thyssen Min. Const. of Canada, Ltd. , 703 F.3d 488, 493 (10th Cir. 2012) (quoting World Wide Volkswagen , 444 U.S. at 297, 100 S.Ct. 580 ). A nonresident defendant's contacts with the forum state can give rise to either general or specific personal jurisdiction. Shrader v. Biddinger , 633 F.3d 1235, 1239 (10th Cir. 2011).
The plaintiff bears the burden of establishing personal jurisdiction, whether general or specific. Far W. Capital, Inc. v. Towne , 46 F.3d 1071, 1075 (10th Cir. 1995). When a court entertains the motion based on the complaint, affidavits, and other written materials, the plaintiff need only make a prima facie showing of personal jurisdiction. OMI Holdings, Inc. v. Royal Ins. Co. of Can. , 149 F.3d 1086, 1091 (10th Cir. 1998). The plaintiff can make such a showing by demonstrating facts that, if true, would support jurisdiction over the defendant. AST Sports Sci., Inc. v. CLF Distribution, Ltd. , 514 F.3d 1054, 1057 (10th Cir. 2008). The court takes as true all well-pled facts in the complaint and resolves all factual disputes in the plaintiff's favor. Dudnikov v. Chalk & Vermilion Fine Arts, Inc. , 514 F.3d 1063, 1070 (10th Cir. 2008). Conflicting affidavits are also resolved in the plaintiff's favor, and "the plaintiffs prima facie showing is sufficient notwithstanding the contrary presentation by the moving party." Behagen v. Amateur Basketball Ass'n of U.S.A. , 744 F.2d 731, 733 (10th Cir. 1984). It is with these standards in mind that the Court undertakes an evaluation of Defendant's motion.
DISCUSSION
Defendant raises two primary arguments in support of dismissal: (1) he is not subject to personal jurisdiction in his individual capacity pursuant to the fiduciary shield doctrine and/or the no imputed contacts rule, and (2) an exercise of personal jurisdiction over him would offend due process and traditional notions of fair play and substantial justice because he is a resident of the United Kingdom and has never subjected himself to jurisdiction in Wyoming. The Court turns first to Defendant's arguments under the fiduciary shield doctrine and no imputed contacts rule, then addresses Defendant's due process concerns.
A. The "No Imputed Contacts" Rule and the Fiduciary Shield Doctrine
Mr. Jayson asserts he at all times acted in his capacity as a director and officer of CRUPE during the conduct alleged by Plaintiffs, therefore his actions as a corporate agent cannot be attributed to him individually for purposes of the personal jurisdiction calculus. (Def.’s Mot. to Dismiss at 7–11.) More particularly, Mr. Jayson avers he is protected under the so-called "no imputed contacts" rule or the fiduciary shield doctrine in the absence of any facts suggesting he acted as an "alter ego" of CRUPE. Id. at 9–10.
Under the alter ego doctrine, a corporate entity may be disregarded and the owner held personally liable for the entity's liabilities when the owner does not treat the corporation as a separate and distinct business entity. See PanAmerican Mineral Servs., Inc. v. KLS Enviro Res., Inc. , 916 P.2d 986, 990 (Wyo. 1996).
The Tenth Circuit's opinion in Newsome v. Gallacher , 722 F.3d 1257, 1275 (10th Cir. 2013), is instructive as to the application of both doctrines. Newsome observed that "[j]urisdiction over a corporation in a particular forum does not automatically confer jurisdiction over that corporation's employees." Id. The no imputed contacts rule is an extension of this principle, providing an "employees’ ‘contacts with [the forum state] are not to be judged according to their employer's activities there.’ " Id. (quoting Calder v. Jones , 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) ). This rule is a function of due process, which provides that a "defendant's contacts with the forum State must be assessed individually." Id. (citing Calder , 465 U.S. at 790, 104 S.Ct. 1482 ).
In this case, Plaintiffs allege Mr. Jayson personally signed the investment and loan agreements, participated in discussions and negotiations for Plaintiffs’ ongoing investments, and contacted Plaintiffs by telephone and email. Although these actions were taken in his capacity as an officer and director of CRUPE, they demonstrate Mr. Jayson was a "primary participant" in the alleged wrongdoing. See Calder 465 U.S. at 790, 104 S.Ct. 1482 (noting a defendant's status as an employee does not "insulate [him] from jurisdiction"). Because Plaintiffs’ jurisdictional claims are not based solely upon CRUPE's contacts with the forum state, the Court finds the no imputed contacts rule does not prevent an exercise of personal jurisdiction over Mr. Jayson. See Niemi v. Lasshofer , 770 F.3d 1331, 1350 (10th Cir. 2014) (holding the defendant "was a primary participant[ ] in an alleged wrongdoing intentionally directed at residents of the forum state" therefore "personal jurisdiction over him as an individual [was] proper") (internal quotations omitted).
By contrast, Newsome held the fiduciary shield doctrine goes beyond the safeguards provided by due process and further heightens an employee's protection from suit. Id. at 1275. Pursuant to this doctrine, an employee's contacts with the forum state "will not count against [them] in the personal jurisdiction analysis so long as the employee acted solely on the corporation's behalf." Id. Thus, in those states where the doctrine has been adopted, an employee will not be subjected to personal jurisdiction even if he has had substantial contacts with the forum state in his individual capacity as a corporate agent. Id. Pursuant to its minimum contacts analysis under the due process clause of the Fourteenth Amendment, see infra , Part C, the Court finds Plaintiffs have not demonstrated sufficient contacts with Wyoming by Mr. Jayson such that the Court may exercise personal jurisdiction over him. Given the Court's finding that the lesser requirements of due process were not satisfied, exploration of the additional protections provided by the fiduciary shield doctrine under Wyoming state law is unnecessary. Accordingly, the Court declines to discuss it at this time.
Because it exceeds the parameters of due process, the fiduciary shield doctrine exists only as a creature of state law. Newsome , 722 F.3d at 1276. While the Wyoming Supreme Court has not expressly adopted the fiduciary shield doctrine, in Ten Mile Industrial Park v. Western Plains Service Corp. , 810 F.2d 1518 (10th Cir. 1987), the Tenth Circuit invoked the fiduciary shield doctrine under an application of Wyoming law. See Newsome , 722 F.3d at 1277.
Notably, Newsome also identified a potential exception to this doctrine. See Newsome , 722 F.3d at 1279. When an employee has acted in his own personal interests, such as through a breach of fiduciary duties, many jurisdictions will not employ a fiduciary shield because this type of claim, "by its very nature, [suggests] that the agent did not act on the principal's behalf, but in the agent's own interest at the principal's expense." Id.
B. General Jurisdiction
General jurisdiction over a foreign defendant is appropriate "when [the defendant's] affiliations with the [forum] 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, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (quoting Int'l Shoe , 326 U.S. at 317, 66 S.Ct. 154 ). With general personal jurisdiction, a court may exercise jurisdiction over an out-of-state party for all purposes. See Daimler AG v. Bauman , 571 U.S. 117, 126, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). "Because general jurisdiction is not related to the events giving rise to the suit, courts impose a more stringent minimum contacts test, requiring the plaintiff to demonstrate the defendant's continuous and systematic general business contacts." Benton v. Cameco Corp. , 375 F.3d 1070, 1080 (10th Cir. 2004) (quotations omitted). Plaintiffs do not assert Mr. Jayson's contacts meet the more stringent standard for general personal jurisdiction, therefore the Court focuses its inquiry on the requirements for specific jurisdiction.
C. Specific Jurisdiction
A court may exercise specific jurisdiction over a foreign defendant if the cause of action relates to the defendant's contacts with the forum state. See Daimler , 571 U.S. at 126, 134 S.Ct. 746. To determine whether a defendant's contacts are sufficiently related, courts make a dual inquiry. OMI Holdings, Inc. v. Royal Ins. Co. of Canada , 149 F.3d 1086, 1091 (10th Cir. 1998). First, the court must consider "whether the defendant has such minimum contacts with the forum state ‘that he should reasonably anticipate being haled into court there.’ " Id. (quoting World-Wide Volkswagen , 444 U.S. at 297, 100 S.Ct. 580 ). Such "minimum contacts" are present " ‘if the defendant has purposefully directed his activities at residents of the forum" and the litigation "arises out of or results from ‘actions by the defendant himself that create a substantial connection with the forum state.’ " Id. (quoting Asahi Metal Industry Co. v. Superior Court of California , 480 U.S. 102, 109, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) and Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). Second, the court must decide "whether the exercise of personal jurisdiction over the defendant offends ‘traditional notions of fair play and substantial justice.’ " Id. (quoting Asahi Metal , 480 U.S. at 113, 107 S.Ct. 1026 ). "This latter inquiry requires a determination of whether a district court's exercise of personal jurisdiction over a defendant with minimum contacts is ‘reasonable’ in light of the circumstances surrounding the case." Id.
1. Minimum Contacts
The two elements of "minimum contacts" require that: (1) the defendant "purposefully directed" his activities at residents of the forum state, and (2) the plaintiff's injuries arose out of the defendant's forum-related activities. Shrader v. Biddinger , 633 F.3d 1235, 1239 (10th Cir. 2011). The Supreme Court—and by extension the Tenth Circuit—applies the first requirement by "analogizing individual cases to discrete Supreme Court personal jurisdiction precedents." See Dudnikov v. Chalk & Vermilion Fine Arts, Inc. , 514 F.3d 1063, 1071 (10th Cir. 2008). As a result, the purposeful direction inquiry appears differently depending upon whether the case at issue is "tort based" or "contract based." Id. ("In the tort context, we often ask whether the nonresident defendant ‘purposefully directed’ its activities at the forum state; in contract cases, meanwhile, we sometimes ask whether the defendant "purposefully availed" itself of the privilege of conducting activities or consummating a transaction in the forum state."). In all events, however, the "shared aim" of this inquiry is "to ensure that an out-of-state defendant is not bound to appear to account for merely ‘random, fortuitous, or attenuated contacts’ with the forum state." Id. (quoting Burger King , 471 U.S. at 475, 105 S.Ct. 2174 ).
This case does not fall neatly within either a "tort" or "contract" category. On one hand, Plaintiffs bring claims of gross negligence and breach of fiduciary duty, which are firmly grounded in tort. See Newsome , 722 F.3d at 1264 (describing a suit against corporate directors and officers for breach of fiduciary duties as "tort-based"); see also Niemi , 770 F.3d at 1348 (noting "the correct measure of specific jurisdiction in [an investment fraud case] [was] the ‘purposeful direction’ test applicable to tort actions, rather than the ‘purposeful availment’ test used in contract cases" despite a loan agreement between the parties). On the other hand, the underlying contacts at issue originate almost exclusively from the investment and loan agreements between Plaintiffs and CRUPE, which are contractual. See Old Republic Ins. Co. v. Cont'l Motors, Inc. , 877 F.3d 895, 904 n.11 (10th Cir. 2017) ("Even though it brings a tort claim, Old Republic relies on minimum contacts for jurisdiction that concern contractual understandings between Continental Motors and Colorado FBOs"); see also Far W. Capital, Inc. v. Towne , 46 F.3d 1071, 1079–80 (10th Cir. 1995). Given the dual nature of this case, and in consideration of Plaintiffs’ briefing (which does not include a discussion of tort-based elements), the Court analyzes Plaintiffs’ claims under case law from both categories.
i. Contractual Relationship
Turning first to the contract context, the Supreme Court's opinion in Burger King Corporation v. Rudzewicz , serves as a touchstone for contractually-related "minimum contacts" inquiries. 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ; Old Republic , 877 F.3d at 905. In Burger King , the Supreme Court upheld an exercise of personal jurisdiction over the defendant where he "purposefully availed" himself of the laws of forum state by "entering a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ " in that state. Walden v. Fiore , 571 U.S. 277, 285, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (quoting Burger King , 471 U.S. at 479-480, 105 S.Ct. 2174 ). "Although contractual obligations may create sufficient ties to establish jurisdiction, an out-of-state resident's contract with a resident of the forum state is insufficient, standing alone, to create personal jurisdiction." Dental Dynamics, LLC v. Jolly Dental Grp., LLC , 946 F.3d 1223, 1226 (10th Cir. 2020). The contractual relationship must create a "substantial connection" with the forum state, as demonstrated through "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing[.]" Burger King , 471 U.S. at 479, 105 S.Ct. 2174. In this case, the negotiations between Plaintiffs and Mr. Jayson on behalf of CRUPE, the terms of the agreements, the future consequences of the agreements, and the parties’ course of dealing all fail to establish the necessary minimum contacts with Wyoming. Plaintiffs argue the agreements at issue were sent to Plaintiffs in Wyoming "to solicit [their] investment in CRUPE." (Pls.’ Opp. at 15.) However, Mr. Jayson participated only in drafting the information memorandum, which was then sent by CRUPE to investors around the world. (Def.’s Ex. 1 ¶ 9.) Plaintiffs thereafter reached out to Mr. Robertson about purchasing CRUPE shares and signing the investment and subscription agreements. (Pls.’ Ex. F at 6–7.) Although "solicitation by the defendant is some evidence suggesting purposeful availment," the evidence presented here demonstrates, at best, an attenuated effort by Mr. Jayson to solicit a Wyoming resident's investment in a foreign corporation, rather than purposeful availment by Mr. Jayson of the privilege of conducting business in Wyoming. See Bell Helicopter Textron, Inc. v. Heliqwest Int'l, Ltd. , 385 F.3d 1291, 1297 (10th Cir. 2004) (internal quotations and alterations omitted); Burger King , 471 U.S. at 476, 105 S.Ct. 2174.
Further, following Plaintiffs’ initial investment, none of the negotiations for the parties’ subsequent agreements were held in Wyoming, including those in which Mr. Jayson was a participant. See Burger King , 471 U.S. at 485, 105 S.Ct. 2174. Those meetings attended by Mr. Jayson and Peter Kennedy, a Wyoming resident, occurred in China and Switzerland. (See Pl.’s Resp. at 7.) The terms agreed upon by the parties did not otherwise implicate collateral located in Wyoming, require performance in Wyoming, or contemplate future consequences in the state of Wyoming. See Old Republic , 877 F.3d at 910–12 ; see also, e.g., Black Diamond Energy Partners 2001-A Ltd. v. S &T Bank , 278 P.3d 738, 746 (Wyo. 2012) (finding "purposeful availment" where the defendant "accept[ed] as collateral property located in Wyoming and the payments [the defendant] received on the loans were earned in Wyoming based on oil and gas operations" in Wyoming). In fact, CRUPE's shares (the primary subject matter of the parties’ agreements) were not registered or promoted within the United States. See, e.g., Anderson v. Perry , 667 P.2d 1155, 1158 (Wyo. 1983) (finding it of the "utmost importance" that the contract's subject matter—real estate—was located in Wyoming). Moreover, both the investment agreement and the loan agreement expressly provided they would be governed by the substantive laws of Switzerland and any disputes would be resolved by a Swiss arbitration tribunal. See Burger King , 471 U.S. at 481–82, 105 S.Ct. 2174 (emphasizing a choice of law provision for purposes of assessing "minimum contacts").
The collateral on the loan agreements consisted of shares in CRUPE's subsidiaries. (Compl. ¶ 56; see also ECF No. 21-1).
The parties’ actual course of dealing likewise did not establish substantial connections with Wyoming. Based upon the correspondence submitted by the parties, Paul Kennedy appeared to be the primary contact between Plaintiffs and CRUPE. In an affidavit submitted to the Florida court, Paul Kennedy stated he was in Florida—not Wyoming—at the time Plaintiffs funded their investments and during most of his communications with CRUPE. (See ECF No. 9-4.) This is in sharp contrast to the facts presented in Burger King , where "the parties’ actual course of dealing repeatedly confirmed that decision making authority was vested in the [forum state] headquarters." 471 U.S. at 480, 105 S.Ct. 2174.
Further, the "quantity and quality" of Mr. Jayson's contacts with Peter Kennedy, a Wyoming resident, do not otherwise demonstrate a substantial connection. Emp'rs. Mut. Cos. Co. v. Bartile Roofs, Inc. , 618 F.3d 1153, 1160 (10th Cir. 2010) (quoting OMI Holdings, Inc. , 149 F.3d at 1091 ). Although Mr. Jayson was "copied" on many of the emails sent to Plaintiffs by CRUPE's CEO Stuart Robertson, purposeful availment generally requires "affirmative conduct by the defendant" himself. Trierweiler v. Croxton & Trench Holding Corp. , 90 F.3d 1523, 1535 (10th Cir. 1996). Plaintiffs otherwise identified only a handful of emails and phone conversations directly between Mr. Jayson and Peter Kennedy. (See Pl.’s Ex. F, ECF No. 21-6.) Even assuming Mr. Jayson knew Peter Kennedy was in Wyoming at the time these communications occurred, the nature of this correspondence did not have any meaningful connection to, or impact in, Wyoming. See Far W. Capital, Inc. v. Towne , 46 F.3d 1071, 1077 (10th Cir. 1995) ("It is well-established that phone calls and letters are not necessarily sufficient in themselves to establish minimum contacts."). Cell phone calls and emails constitute an even less meaningful relationship with a forum state considering the modem reality that a cell phone can be located anywhere in the world (as opposed to the old school land line) and an email address is not tied to a physical location. Furthermore, these discussions focused upon the activities and operations of CRUPE, a foreign corporation operating entirely outside of the United States. (See Pl.’s Ex. F, ECF No. 21-6.) Absent any meaningful connection to the forum state itself, the communications do not demonstrate Mr. Jayson's purposeful availment of Wyoming. See Rambo v. Am. S. Ins. Co. , 839 F.2d 1415, 1418–19 (10th Cir. 1988) (noting an exercise of personal jurisdiction depends on the nature of a defendant's contacts, which must "represent an effort by the defendant to purposefully avail[ ] itself of the privilege of conducting activities within the forum State." (internal quotations and citation omitted)).
The parties cite Shrader v. Biddinger , 633 F.3d 1235, 1248 (10th Cir. 2011), for the proposition that a plaintiff must show "the defendant ... knew where [an email] recipient was located" to demonstrate purposeful direction. The Court would note, however, that the facts of Shrader involved a defamatory email sent to a large audience where the communications at issue "directly [gave] rise to the cause of action," making it inapposite to the facts presented here.
Overall, the facts presented fail to show Mr. Jayson specifically sought to do business in Wyoming, negotiated a contract envisioning significant and long-term obligations within the state of Wyoming, or conducted meaningful communications with Plaintiffs in Wyoming. Accordingly, Plaintiffs have not established purposeful direction based on Mr. Jayson's contractually-related contacts with Wyoming.
ii. Harmful Effects
Purposeful direction may also be established "when an out-of-state defendant's intentional conduct targets and has substantial harmful effects in the forum state." Old Republic , 877 F.3d at 907 (emphasis omitted). In the tort context, the Supreme Court's opinion in Calder v. Jones supplies the general framework for analyzing purposeful direction. 465 U.S. 783, 789, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) ; Newsome , 722 F.3d at 1265. The Tenth Circuit has distilled the principles of Calder into a three-part test: (1) the defendant took an intentional action, (2) that was expressly aimed at the forum state, and (3) with knowledge that the brunt of the plaintiff's injury would be felt in the forum state. Dudnikov , 514 F.3d at 1072.
Although Calder itself involved a libel claim, courts have applied its principles in the context of business torts. See Newsome , 722 F.3d at 1265 ; see also Far W. Capital , 46 F.3d at 1077.
As to the first element, the Court finds Plaintiffs have alleged facts sufficient to permit an inference that Mr. Jayson acted intentionally when he misrepresented or failed to disclose certain material information to induce investments in CRUPE. See Dudnikov , 514 F.3d 1063, 1073 (10th Cir. 2008). Although Plaintiffs have brought a negligence claim—by definition an unintentional tort—the underlying facts and circumstances alleged by Plaintiff, taken as true, do not foreclose the possibility that Mr. Jayson's allegedly tortious actions were done intentionally to further the personal interests of Mr. Robertson and himself. See Compl. ¶¶ 17–75 (generally alleging Mr. Jayson "stood silent" while actions detrimental to investors were taken and "failed to disclose" certain information material to investors).
The second element, express aim, is more problematic for Plaintiffs. This prong focuses on a defendant's intentions and seeks to determine whether the forum state was the "focal point" of the defendant's tortious actions. Newsome , 722 F.3d at 1268. The Supreme Court's opinion in Walden v. Fiore is dispositive on this element. 571 U.S. 277, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014). Walden involved a law enforcement officer in Georgia who approached two Nevada residents at an airport. Id. at 280, 134 S.Ct. 1115. The Nevadans had $97,000 in their possession, which they claimed were cash winnings from a casino. Id. The officer seized the cash and drafted an affidavit for use in forfeiture proceedings. Id. The Nevada residents alleged the officer had drafted a false affidavit, and later filed suit against the officer in a Nevada federal court. Id. at 281, 134 S.Ct. 1115.
The Ninth Circuit concluded the officer had minimum contacts with Nevada based upon his knowledge of the plaintiffs’ strong connections to the state and the foreseeable harm in that state. Id. at 282, 134 S.Ct. 1115. Upon review, however, the Supreme Court reversed the Ninth Circuit and held that a defendant's knowledge of the plaintiff's connection to the forum state, standing alone, cannot confer personal jurisdiction over a defendant engaged in allegedly tortious activity. Id. at 289, 134 S.Ct. 1115. Instead, to establish purposeful direction, the plaintiff must show conduct linking the defendant to the forum state itself. Id. at 286, 134 S.Ct. 1115 ("[T]he plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him").
Following Walden , the Tenth Circuit has repeatedly affirmed that "a defendant's interaction with a plaintiff—even when allegedly tortious—is insufficient to establish personal jurisdiction." Dental Dynamics , 946 F.3d at 1226 (citing Rockwood Select Asset Fund XI (6)-1, LLC v. Devine , 750 F.3d 1178, 1180 (10th Cir. 2014) (holding alleged falsehoods in an opinion letter sent from an out-of-state law firm defendant to a plaintiff in the forum state failed to establish jurisdiction); Anzures v. Flagship Rest. Grp. , 819 F.3d 1277, 1282 (10th Cir. 2016) (" Walden teaches that personal jurisdiction cannot be based on interactions with a plaintiff known to bear a strong connection to the forum state." (quoting Rockwood , 750 F.3d at 1180 )); C5 Med. Werks, LLC v. CeramTec GMBH , 937 F.3d 1319, 1324 (10th Cir. 2019) ("[M]erely interacting with a plaintiff known to bear a strong connection to the forum state is not enough to establish jurisdiction." (internal quotation marks and citation omitted))).
Judged against these principles, the Court finds Plaintiffs cannot satisfy the second element. Mr. Jayson allegedly acted in Switzerland to solicit investments for a Swiss company from investors around the world. This conduct occurred entirely abroad, with Plaintiffs serving as the only link to the state of Wyoming. See Walden , 571 U.S. at 290, 134 S.Ct. 1115 ; contra Dudnikov , 514 F.3d at 1076 (finding purposeful direction where the defendants’ express aim "was to halt a Colorado-based sale by a Colorado resident") (emphasis added); Newsome , 722 F.3d at 1268 (finding that corporate directors expressly aimed their wrongdoing at Oklahoma when they saddled a subsidiary company, which operated exclusively in Oklahoma , with overwhelming debt). The fact that Mr. Jayson knew Plaintiffs were Wyoming entities when they made their investments does not correct this deficiency. See C5 Med. Werks , 937 F.3d at 1324. Nor does the fact that Plaintiffs were CRUPE's largest investor otherwise make the state of Wyoming the focal point of a tort occurring in Switzerland. Walden , 571 U.S. at 290, 134 S.Ct. 1115 (" Calder made clear that mere injury to a forum resident is not a sufficient connection to the forum.").
The final element requires the defendant to have "knowledge that the brunt of the injury would be felt in the forum state." Newsome , 722 F.3d at 1269. This inquiry "concentrates on the consequences of the defendant's action—where was the alleged harm actually felt by the plaintiff." Dudnikov , 514 F.3d at 1075. Plaintiffs suggest the brunt of the injury was felt in Wyoming because they were CRUPE's largest investor and their principal places of business were in Wyoming. However, Tenth Circuit has referred to the location of a principal place of business as a "mere fortuity." Far West , 46 F.3d at 1079 (quoting Southmark Corp. v. Life Investors, Inc. , 851 F.2d 763, 773 (5th Cir. 1988) (internal quotation marks omitted)). Further, in Newsome v. Gallacher , the Tenth Circuit found that a Delaware corporation and its creditors, to whom the defendants owed a fiduciary duty, were injured primarily in Oklahoma because that is where the corporation conducted its business. 722 F.3d at 1268. Under that same line of analysis, the injury here would have occurred primarily in Switzerland, where CRUPE conducted its business activities.
Additionally, although Plaintiffs have suggested Mr. Jayson could have foreseen their injuries in Wyoming, foreseeability is not the correct measure for due process. See Dudnikov , 514 F.3d at 1077 ("We surely agree that under Calder the mere foreseeability of causing an injury in the forum state is, standing alone, insufficient to warrant a state exercising its sovereignty over an out-of-state defendant."). No facts have been presented to support the proposition that when Mr. Jayson took his allegedly tortious actions in Switzerland, he knew the brunt of the injury would be felt in Wyoming. Therefore, Plaintiffs also fail to satisfy the third and final prong of the effects test.
Based on the Court's findings that Mr. Jayson did not expressly aim his allegedly wrongful conduct at Wyoming and that the brunt of the injury was not felt in Wyoming, the Court finds Plaintiffs have not established purposeful direction based on Mr. Jayson's tort-related contacts with Wyoming. Accordingly, Plaintiffs have not satisfied their burden of proving that Mr. Jayson purposefully directed his tort-related activities to Wyoming such that he "should reasonably anticipate being haled into court" here. See Emp'rs Mut. Cas. , 618 F.3d at 1160 (quoting OMI Holdings , 149 F.3d at 1091 ).
The next step of the specific personal jurisdiction analysis requires "the plaintiff's injuries [to] arise out of defendant's forum-related activities." Newsome , 722 F.3d at 1269 (quoting Dudnikov , 514 F.3d at 1071 ). There must be a "nexus" between the defendant's forum-related contacts and the cause of action. Emp'rs. Mut. Cas. , 618 F.3d at 1160 (quoting TH Agric. & Nutrition, LLC v. Ace European Grp. Ltd. , 488 F.3d 1282, 1291 (10th Cir. 2007) ). "When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State." Bristol-Myers Squibb Co. v. Super. Ct. of Cal. , ––– U.S. ––––, 137 S. Ct. 1773, 1781, 198 L.Ed.2d 395 (2017). The presence of a "relationship among the defendant, the forum, and the litigation" is the "central concern" in this analysis. Shaffer v. Heitner , 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977).
Plaintiffs allege Mr. Jayson "breached his fiduciary duties and was grossly negligent in performing his responsibilities" on behalf of CRUPE, thereby causing substantial injury to Plaintiffs as investors. (Compl. ¶ 29.) In sum, Plaintiffs accuse Mr. Jayson of acting in Switzerland to improperly induce Plaintiffs’ investments in a Swiss company. Mr. Jayson's primary connection to Wyoming—Plaintiffs’ headquarters in the State—remains outside the causal chain of his tortious conduct. See Newsome v. Gallacher , 722 F.3d 1257, 1270 (10th Cir. 2013) (finding satisfaction of the "arising under" element where corporate directors "knowingly acted in Canada to destroy a company operating entirely in Oklahoma"). It cannot be said that Plaintiffs’ alleged injuries arose out of Mr. Jayson's remote connection to Wyoming. Accordingly, the Court concludes Plaintiffs have not satisfied their burden of proving that their injuries arose out of Mr. Jayson's forum-related activities.
Having determined Plaintiffs failed to show Mr. Jayson purposefully directed his activities at Wyoming, or that Plaintiffs’ injuries arose out of Mr. Jayson's activities in Wyoming, the Court concludes that Plaintiffs have not established minimum "contacts, ties, or relations," with Wyoming sufficient to give its courts jurisdiction over Mr. Jayson. Int'l Shoe Co. v. Washington , 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
2. Fair Play and Substantial Justice
After a plaintiff establishes the presence of minimum contacts, the burden shifts to the defendant to show the court's exercise of personal jurisdiction would nonetheless "offend traditional notions of fair play and substantial justice." Newsome , 722 F.3d at 1271 (quoting Dudnikov , 514 F.3d at 1080 ). Having determined Plaintiffs did not meet their burden of proving minimum contacts, the burden does not shift to the Defendant.
CONCLUSION
In accordance with the forgoing analysis, the Court finds exercising personal jurisdiction over the Defendant Richard Jayson would offend the Due Process Clause of the Fourteenth Amendment due to the lack of minimum contacts between Mr. Jayson and Wyoming. Consequently, the exercise of personal jurisdiction in this case is not permitted by Wyoming's long-arm statute and the Court does not have personal jurisdiction over the Defendant in this matter. Therefore, it is hereby
ORDERED that Defendant's Motion to Dismiss (ECF No. 8) is GRANTED.