Opinion
CIVIL ACTION NO. 2:22-cv-00123-MHH
2023-03-29
Roslyn PERRYMAN, et al., Plaintiffs, v. HOTEL WETUMPKA AL, LLC, et al., Defendants.
Richard R. Newton, Richard R. Newton, Attorney at Law PC, Birmingham, AL, for Plaintiffs. Christoffer Peter Bolvig, III, Hall Booth Smith Atlanta, Birmingham, AL, for Defendant Hotel Wetumpka AL, LLC. Dennis R. Bailey, Benjamin Collier Wilson, Rushton Stakely Johnston & Garrett, PA, Montgomery, AL, for Defendant Hilton Domestic Operating Company Inc. Dennis R. Bailey, Rushton Stakely Johnston & Garrett, PA, Montgomery, AL, for Defendant Hilton Franchise Holding Company LLC.
Richard R. Newton, Richard R. Newton, Attorney at Law PC, Birmingham, AL, for Plaintiffs. Christoffer Peter Bolvig, III, Hall Booth Smith Atlanta, Birmingham, AL, for Defendant Hotel Wetumpka AL, LLC. Dennis R. Bailey, Benjamin Collier Wilson, Rushton Stakely Johnston & Garrett, PA, Montgomery, AL, for Defendant Hilton Domestic Operating Company Inc. Dennis R. Bailey, Rushton Stakely Johnston & Garrett, PA, Montgomery, AL, for Defendant Hilton Franchise Holding Company LLC. MEMORANDUM OPINION AND ORDER MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE
In this action, plaintiffs Roslyn and Stephen Perryman assert race discrimination claims against three defendants: Hotel Wetumpka AL, LLC, a Hampton Inn franchisee; Hilton Franchise Holding LLC, a Hilton entity that franchises the Hampton Inn & Suites brand; and Hilton Domestic Operating Company, the parent of Hilton Franchise Holding LLC. (Doc. 19; Doc. 14-1, pp. 2-3). In their amended complaint, the Perrymans group Hilton Domestic Operating Company and Hilton Franchise Holding Company LLC together under the label "Hilton." (See, e.g., Doc. 19, p. 4). In this opinion, the Court follows suit.
Initially, the Perrymans sued only Hotel Wetumpka and Hilton Domestic Operating Company. (Doc. 1). The Perrymans filed an amended complaint, (Doc. 19), in which they added Hilton Holding as a defendant.
The Hilton defendants have asked the Court to dismiss the Perrymans' claims against them pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. The Hilton defendants argue that due process prevents a district court in the Northern District of Alabama from exercising jurisdiction over them in this case. The Hilton defendants also contend that venue is improper in this district and that venue is proper in the Middle District of Alabama. (Doc. 26).
Turning first to the jurisdictional question, Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes a defendant to challenge a federal court's jurisdiction over the defendant. When a defendant files a motion to dismiss for lack of personal jurisdiction, a defendant typically asserts that it would be unfair for the defendant to have to defend itself in the forum in which a lawsuit is filed because the defendant is not at home in the forum and has not acted in the forum in a way that would cause the defendant to expect to have to litigate there. In the context of personal jurisdiction, "at home" jurisdiction is called general jurisdiction, and forum conduct jurisdiction is called specific jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014).
General jurisdiction "refers to the power of a court in the forum to adjudicate any cause of action involving a particular defendant, irrespective of where the cause of action arose" because the defendant is so strongly connected to the forum. Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220 n. 27 (11th Cir. 2009) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Ordinarily, a company is "at home" in its state of incorporation and in the state in which it has its "principal place of business." Daimler, 571 U.S. at 137, 134 S.Ct. 746. The forum's exercise of jurisdiction over the defendant in its place of incorporation or its principal place of business does not offend traditional notions of fair play or substantial justice because the defendant's contacts with the forum are substantial, making litigation in the forum predictable. Neither of the Hilton defendants is at home in Alabama because neither is incorporated in Alabama, and neither has its principal place of business in Alabama. Rather, the companies are incorporated in Delaware and headquartered in Virginia. (Doc. 14-1, pp. 2-3, ¶¶ 4, 7; Doc. 19, pp. 4, 22, ¶¶ 8, 111).
In Daimler, the Supreme Court recognized that in an exceptional case, a defendant may be subject to general jurisdiction in a forum other than the defendant's place of incorporation or principal place of business if the defendant's conduct in the forum is so substantial that the defendant effectively is at home there. Daimler, 571 U.S. at 139 n. 19, 134 S.Ct. 746. The Perrymans allege that Hilton is responsible for "the overall operation, management, policy-making, [and] oversight" of its franchise hotels and that Hilton "regularly conducted business in the State of Alabama." (Doc. 19, p. 4, ¶¶ 8-9). Hilton has established that it has franchised 2,281 Hampton Inn and Hampton Inn & Suites hotels in the United States, 40 of which are located in Alabama. (Doc. 14-1, p. 3, ¶¶ 9-10). Under these circumstances, Hilton's presence in Alabama does not qualify as an exceptional circumstance that would subject Hilton to a lawsuit in the Northern District of Alabama based on general jurisdiction. Daimler, 571 U.S. at 139 n. 20, 134 S.Ct. 746 ("General jurisdiction [ ] calls for an appraisal of a corporation's activities in their entirety, nationwide and worldwide. A corporation that operates in many places can scarcely be deemed at home in all of them."); see Fidrych v. Marriott Int'l, Inc., 952 F.3d 124, 134 (4th Cir. 2020) (where nothing distinguishes a franchisor's relationship with the forum state from its relationship with any other state where it does business, the case is not an "exceptional" one under Daimler).
In the absence of general jurisdiction, the Court must determine whether the Hilton defendants are subject to specific jurisdiction here. The Fourteenth Amendment's Due Process clause limits this Court's specific personal jurisdiction to instances where the defendant has "certain minimum contacts with [the State] such that the maintenance of the suit [here] does not offend 'traditional notions of fair play and substantial justice.' " Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (quoting International Shoe Co. v. State of Wash., Office of Unemployment Compensation and Placement, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The "minimum contacts" that establish personal jurisdiction over a defendant must be "contacts that the 'defendant himself' creates with the forum State." Walden v. Fiore, 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (quoting Rudzewicz, 471 U.S. at 475, 105 S.Ct. 2174 (emphasis in Rudzewicz)). "Regardless of where a plaintiff lives or works, an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State." Walden, 571 U.S. at 290, 134 S.Ct. 1115. " '[T]he central concern of the inquiry' " is the " 'relationship among the defendant, the forum, and the litigation.' " Daimler, 571 U.S. at 126, 134 S.Ct. 746 (quoting Shaffer v. Heitner, 433 U.S. 186, 197, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)); see also Walden, 571 U.S. at 284, 134 S.Ct. 1115.
A court examining the issue of specific jurisdiction must evaluate the nature of the conduct at issue, the nature of the defendant's contacts with the state, the extent to which the conduct at issue impacted the forum state generally, and the extent to which the conduct at issue directly injured citizens of the forum state.
With respect to the conduct at issue, the Court "accept[s] as true the allegations in the complaint." Stubbs v. Wyndham Nassau Resort and Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir. 2006). The Perrymans' claims concern their attempt to stay at the Wetumpka Hampton Inn located in Elmore County, Alabama. (Doc. 19, p. 4, ¶ 6). The Perrymans are Black, and they live in Jefferson County, Alabama. (Doc. 19, p. 3, ¶¶ 3-5). The Perrymans allege that in October of 2021, they and their children traveled to Elmore County to visit family. The Perrymans attempted to stay overnight at the Wetumpka Hampton Inn, but the manager told Ms. Perryman that the hotel had no rooms for her, even though Ms. Perryman had called the hotel earlier in the day and confirmed that rooms were available. (Doc. 19, pp. 8-9, ¶¶ 28-29, 35; see also Doc. 19, p. 12, ¶¶ 55, 58). The manager also refused the Perrymans when they asked to use the restroom, misrepresenting that the restroom was out of order. (Doc. 19, pp. 9-10, ¶¶ 38-41, 59). The Perrymans contend that race motivated the hotel manager's refusal to accommodate them and that the manager was acting within the line and scope of her employment with Wetumpka Hampton Inn when she refused the Perrymans' request for accommodations. (Doc. 19).
The Perrymans allege that the Hilton defendants "maintained a policy, practice or custom of allowing their front desk managers" to "racially profile [ ] would-be guests." (Doc. 19, p. 6, ¶ 19). The Perrymans assert that "Hilton has a recent history of similar incidents involving Black guests and invitees at Hilton and Hilton franchise hotels throughout the United States." (Doc. 19, p. 15, ¶ 71; see Doc. 19, pp. 16-17, ¶¶ 75-78, 80-93). The Perrymans state that Hilton tried to "maximiz[e] operational control over its franchisees, while intentionally, purposefully turning its back on, and/or opting out of, setting standards for its franchisees complying with various Civil Rights laws, namely those prohibiting racism at Hilton-brand franchisees" from which Hilton "derives millions of dollars in profit." (Doc. 19, p. 20, ¶ 96). The Perrymans allege that by virtue of the franchise agreement between Wetumpka Hampton Inn and Hilton Franchise Holding Company, Hilton "administers 'quality assurance' " for the Wetumka Hampton Inn in Alabama and conducts guest satisfaction surveys and audits to "ensure compliance" with quality assurance standards. (Doc. 19, pp. 23, 27, ¶¶ 115, 117. 131-33). The Perrymans contend that Hilton has refused to address racism perpetrated by Hilton franchisees using the standards in Hilton franchise agreements and has refused to update its franchise agreements to address the issue of racism at Hilton brand properties. (Doc. 19, pp. 25-27, ¶¶ 126, 129-30).
The Perrymans do not allege that the Hilton defendants had direct involvement in the Wetumpka Hampton Inn's manager's refusal to allow the Perrymans to reserve a room at the hotel or to use the hotel's restroom. By affidavit, the Hilton defendants have established that neither of them "own[s], operate[s], or manage[s] any of the 'Hampton Inn & Suites' branded hotels located in Alabama," that neither of them has an "ownership interest in Hampton Inn, Wetumpka," that neither of them employs the staff of the Wetumpka Hampton Inn, and that neither of them has "responsibility or control of any kind for, or over the day-to-day activities or operations, or the personnel" working at the Wetumpka Hampton Inn. (Doc. 14-1, pp. 3-4, ¶¶ 11-12, 16-20).
Wetumpka Hampton Inn's franchise agreement with Hilton Holding provides that neither Hilton Holding nor Wetumpka Hampton Inn is the agent or representative of the other and that Wetumpka Hampton Inn has "exclusive control over [its] daily affairs." (Doc. 14-1, p. 34, § 16.1). The agreement states that Wetumpka Hampton Inn must "comply with Laws and, on request, give evidence of compliance," (Doc. 14-1, p. 18, § 5.1.11), and Wetumpka Hampton Inn must "comply with Standards for the training of persons involved in the operation of the Hotel, including completion by the General Manager and other key personnel of the of the Hotel of a training program . . . at a site we designate," (Doc. 14-1, p. 18, § 5.1.5). The agreement gives Hilton Holding the right to communicate directly with managers at the Wetumpka Hampton Inn. (Doc. 14-1, p. 22, § 7.1). The agreement obligates Wetumpka Hampton Inn to prepare and deliver to Hilton Holding certain reports and records and to permit Hilton Holding to audit and inspect records. (Doc. 14-1, p. 25, § 10.3).
Originally, the agreement was between Hotel Wetumpka and Hampton Inns Franchise LLC, which later assigned the contract to Hilton Holding. (Doc. 14-1, pp. 3, 46).
The definition of "Laws" in the franchise agreement is broad enough to encompass federal civil rights laws. (Doc. 14-1, p. 12).
The Court cannot determine from the information currently before it the extent to which Hilton Holding has had contact with the State of Alabama in connection with its franchise agreement with Wetumpka Hampton Inn. The record does not disclose how frequently Hilton Holding communicates directly with managers of the hotel or travels to Alabama to inspect or audit reports that might contain information relevant to the Perrymans' claims. The Perrymans have noted that discovery is available to explore jurisdictional issues, (Doc. 28, p. 18), but the Perrymans have not requested specific jurisdictional discovery, and they have not submitted evidence to refute the information that the Hilton defendants provided by affidavit in support of their motion to dismiss.
"The right to jurisdictional discovery is a qualified one, available 'when a court's jurisdiction is genuinely in dispute.' " Wolf v. Celebrity Cruises, Inc., 683 Fed. Appx. 786, 792 (11th Cir. 2017) (quoting Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 730 (11th Cir. 1982)). Jurisdictional discovery requests may not "serve as fishing expeditions, and, as such, are appropriate only when 'a party demonstrates that it can supplement its jurisdictional allegations through discovery.' " Wolf, 683 Fed. Appx. at 792 (citation omitted).
As noted, the Perrymans have not requested jurisdictional discovery, and they have not demonstrated that they can supplement their jurisdictional allegations regarding the Hilton defendants through discovery. The Perrymans have simply asked the Court, if it grants the Hilton defendants' motion to dismiss, to dismiss the claims against those defendants without prejudice to leave open the possibility of naming the defendants again "depending on what additional information discovery may bring - during the course of this case against" Wetumpka Hampton Inn. (Doc. 28, p. 22). The request indicates that the Perrymans currently are not aware of discovery that would enable them to develop their jurisdictional allegations regarding the Hilton defendants. See Posner v. Essex Ins. Co., 178 F.3d 1209, 1214 (11th Cir. 1999) ("Here, no discovery efforts were made in the eight months between the time Plaintiffs filed the complaint and the time it was dismissed; . . . Plaintiffs' only allusion to jurisdictional discovery was on the first page of their memorandum in opposition to the motion to dismiss filed seven and one-half months after the complaint and more than five months after the filing of the motion to dismiss; even then, Plaintiffs failed to specify what they thought could or should be discovered. The district court, therefore, did not so much deny discovery as it dismissed the case before discovery was taken."); Wolf, 683 Fed. Appx. at 792 ("Mr. Wolf's general request for jurisdictional discovery—made over four months after filing his complaint and buried within his response to OCT's motion to dismiss—did not specify what information he sought or how that information would bolster his allegations. The district court therefore did not improperly deny jurisdictional discovery.").
In the absence of evidence refuting the Hilton defendants' evidence concerning their lack of control over the operations of Wetumpka Hampton Inn, the Perrymans have not carried their burden to establish that a federal court in the Northern District of Alabama may exercise specific jurisdiction over the Hilton defendants in this case. United Technologies Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). Therefore, the Court dismisses the Perrymans' claims against the Hilton defendants pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction.
The Hilton defendants' argument concerning venue is persuasive; venue seems to be proper in the United States District Court for the Middle District of Alabama where the Wetumpka Hampton Inn is located. (Doc. 26, pp. 23-24). Even so, because the Court has dismissed the Perrymans' claims against the Hilton defendants pursuant to Rule 12(b)(2), those defendants no longer have an interest in the venue issue. In its answer, Wetumpka Hampton Inn did not contest venue in this district. (Doc. 25, p. 2, ¶ 2). A defendant may waive a challenge to venue. Aero Technologies, LLC v. Lockton Co. Intern. Ltd., 406 Fed. Appx. 440, 441 (11th Cir. 2010) ("This circuit has long recognized that 'venue is a personal privilege to be raised by motion and the privilege may be waived.') Harris Corp. v. Nat'l Iranian Radio & Television, 691 F.2d 1344, 1349 (11th Cir. 1982). We have further recognized that for strategic reasons, and otherwise, defendants often waive their defense of improper venue. See Booth v. Carnival Corp., 522 F.3d 1148, 1153 (11th Cir. 2008)." Because only the Hilton defendants challenged venue and the claims against them are dismissed, the venue argument is moot.
The Clerk of Court shall please TERM Doc. 26.
DONE and ORDERED this March 29, 2023.