Basf Corp. v. Willowood, LLC
Basf Corp. v. Willowood, LLC
Opinion of the Court
This matter is before the Court on Defendant Willowood Limited's Motion to Dismiss, which asserts that the Court lacks personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. # 60.) For the following reasons, the Court concludes that it does not have personal jurisdiction over Willowood Limited and accordingly grants the motion.
I. BACKGROUND
On February 1, 2018, Plaintiff BASF ("BASF") filed a lawsuit against Defendants Willowood, LLC ("W-LLC"), Willowood USA, LLC ("W-USA"), Greenfields Marketing, Limited ("Greenfields"), RightLine, LLC ("RightLine"), and Willowood Limited ("W-Limited") for patent infringement pursuant to
BASF is incorporated in Delaware, and its principal place of business is in Florham Park, New Jersey. (Doc. # 50 at ¶ 1.) BASF researches, develops, tests, and sells different products and technologies in the agrochemical field. (Id. at ¶ 41.) BASF researched and developed pyraclostrobin, a "break-through fungicidal chemical for use (1) in disease control and plant health in a variety of plants, (2) as a seed treatment for disease control and plant health in a variety of crops, and (3) as a drench for soil borne disease control and improved plant health in production ornamentals." (Id. at ¶ 42.) BASF obtained two patents
Defendant W-Limited is a limited liability company that is incorporated and has its principal place of business in Hong Kong. (Id. at ¶ 4.) Defendant W-USA, a limited liability company incorporated in Oregon with its principal place of business in Broomfield, Colorado, is a wholly owned subsidiary of W-Limited. (Id. at ¶¶ 1 and 19.) Defendants W-LLC and RightLine are both wholly owned subsidiaries of W-USA.
BASF filed an amended complaint on July 30, 2018. (Doc. # 50.) W-Limited subsequently filed the instant Motion to Dismiss for lack of personal jurisdiction on August 15, 2018. (Doc. # 60.) Plaintiff filed a response on September 5, 2018 (Doc. # 65) and W-Limited filed a reply on September 19, 2018 (Doc. # 70).
II. LAW
To establish personal jurisdiction over a nonresident defendant, a plaintiff must show both that jurisdiction is proper under the forum state's long-arm statute and that the exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. See Equifax Servs., Inc. v. Hitz ,
"The Due Process Clause protects a [defendant's] liberty interest in not being subject to the binding judgments of a forum with which [it] has established no meaningful 'contacts, ties, or relations.' " Burger King Corp. v. Rudzewicz ,
When there are multiple defendants, as is the case here, "minimum contacts must be found as to each defendant over whom the court exercises jurisdiction." Home-Stake Prod. Co. v. Talon Petroleum, C.A. ,
A court may assert general jurisdiction over a foreign corporation to hear any and all claims against it when its affiliations with the state are so "continuous and systematic" such that it is essentially at home in the forum state. Daimler AG v. Bauman ,
Specific jurisdiction, on the other hand, depends on an "affiliation between the forum and the underlying controversy."
III. STANDARD OF REVIEW
Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a motion to dismiss may be granted if the court lacks personal jurisdiction over the defendant. Although the plaintiff bears the burden of establishing personal jurisdiction over the defendant, at the preliminary stage of the litigation, this burden is "light." Intercon, Inc. v. Bell Atl. Internet Sol., Inc .,
*1025Melea, Ltd. v. Jawer SA ,
The allegations in the complaint must be taken as true only so long as they remain undisputed by the defendant's affidavits.
IV. ANALYSIS
BASF states that W-Limited is subject to personal jurisdiction in Colorado on essentially three separate theories. First, W-USA is W-Limited's alter ego. (Doc. # 65 at 13.) Second, W-Limited is alternatively subject to personal jurisdiction by itself. (Doc. # 50 at ¶ 8.) Third, the Court may exercise jurisdiction over W-Limited pursuant to Federal Rule of Civil Procedure 4(k)(2). (Id. at ¶ 38.) The Court will consider each argument in turn.
A. Alter Ego Relationship Between W-Limited and W-USA
BASF alleges that W-Limited is subject to personal jurisdiction in Colorado because W-USA is the alter ego, or agent, of W-Limited. (Doc. # 65 at 13.) BASF asserts W-USA is a wholly owned subsidiary of W-Limited and its principal place of business in Broomfield, Colorado. (Doc. # 50 at ¶¶ 1, 19.) Further, W-Limited allegedly established W-USA as a distributor for sales to the United States market. (Id. at 20.) W-Limited imports and supplies crop protection products to W-USA and/or W-LLC. (Id at ¶ 21.) W-USA purportedly registered and sold infringing products, obtained in violation of the '392 and '451 patents, in Colorado. (Id. at ¶¶ 22, 76-81.) BASF also alleges that W-Limited directed W-USA to "take action" in Colorado. (Doc. # 65 at 13.)
Conversely, W-Limited argues that W-USA is not its alter ego because W-Limited does not own W-USA, the entities do not have common controlling ownership, and W-USA's profits do not flow to W-Limited. (Doc. # 70 at 8-9.) The Court agrees.
In the instant case, Federal Circuit law controls personal jurisdiction questions because the "jurisdictional issue is intimately involved with the substance of the patent laws." Avocent Huntsville Corp. v. Aten Int'l Co. ,
In Colorado, the agency theory of personal jurisdiction is based on the concept that a principal is responsible for the actions of its agent.
*1026First Horizon Merch. Servs., Inc. v. Wellspring Capital Mgmt., LLC ,
If a subsidiary is merely an alter ego of the principal, the corporate veil may be pierced, "if not doing so would defeat public convenience, justify wrong, or protect fraud." Great Neck Plaza, L.P. v. Le Peep Rests., LLC ,
Similarly, such control could be evidence that the subsidiary is the parent's agent because the subsidiary is conducting the "real" business of the parent. First Horizon ,
In this case, BASF's statements in its Amended Complaint present nothing more than conclusory allegations with regard to the theory of agency or alter ego. Although BASF alleges in its responses that W-Limited directed W-USA to take action, BASF does not present any specific facts to support what kind of action was suggested or if that action related to W-USA's registration or distribution of the disputed products. Moreover, W-Limited argues it does not control W-USA. (Doc. # 70 at 9.) To support this assertion, Vijay Mundhra, the Managing Director and controlling owner of W-Limited, declared that W-Limited does not "own any of [W-USA]'s membership interests," and W-Limited "had nothing to do with [W-USA]'s attempts to register these products in the United States." (Doc. # 61-1 at ¶ 8, 13.)
Although Mr. Mundhra did own both W-Limited and W-USA at one point, he sold more than 50% of the controlling interest to a private equity group in April 2016. (Doc. # 70-1 at ¶ 2.) Mr. Mundhra currently owns only 25% of W-USA's membership interests. (Id. at ¶ 3.) Mr. Mundhra admits that he is on the board of W-USA, but as a minority owner, he does not have control of the company. (Id. at ¶ 4.) Further, W-USA pays W-Limited for products supplied to W-USA, therefore W-USA "is not an affiliate of or owned or controlled" by W-Limited and W-USA's profits do not flow to W-Limited. (Id. at ¶ 6.) Lastly, Mr. Mundhra asserts W-Limited was not involved in supplying or facilitating W-USA's acquisition of the products at issue because W-Limited "did not broker the allegedly-infringing products for" W-USA. (Id. at ¶ 10.)
*1027Accordingly, the Court finds that BASF has not pled enough facts to support its alter ego or agency theories for purposes of establishing general jurisdiction. As such, the Court will next consider whether W-Limited is subject to general jurisdiction notwithstanding its affiliation with W-USA.
B. General Jurisdiction - W-Limited as a Sole Entity
W-Limited, by itself, is not subject to general jurisdiction. Plaintiff avers that jurisdiction in Colorado is appropriate because Defendants have continuous and systematic general business contacts in Colorado: "they have committed acts of patent infringement in the State of Colorado ... [they] regularly transact business within the [s]tate ... and [they] regularly and purposefully avail themselves of the benefits of the [s]tate ... by ... marketing, using, shipping, offering to sell or selling, or causing others to use, offer to sell, or sell, agrochemical products in the State ..." (Doc. # 50 at ¶ 8.) To supplement these allegations, Plaintiff, in its Response, argues that W-Limited is "at home" in the United States because it generates approximately 50% of its total revenue from the United States. (Doc. # 65 at 6.)
BASF's allegations misconstrue the minimum contacts analysis in evaluating general jurisdiction in the forum state, specific jurisdiction, and jurisdiction under Rule 4(k)(2). Rule 4(k)(2) establishes jurisdiction "[w]hen a plaintiff's claims arise under federal law and the defendant is not subject to the jurisdiction of any state's court of general jurisdiction." GCIU-Employer Ret. Fund v. Coleridge Fine Arts ,
Although the general jurisdiction inquiry may investigate "an appraisal of a corporation's activities in their entirety," the inquiry still focuses on whether a corporation is "at home" in the forum state . BNSF ,
Based on these facts, it appears W-Limited's connections to Colorado fall far short of the "continuous and systematic general business contacts" that give rise to general jurisdiction and would enable the Court to hear any and all claims related to W-Limited. See Helicopteros ,
C. Specific Jurisdiction and Rule 4(k)(2)
BASF avers specific jurisdiction in Colorado is appropriate pursuant to Colorado's long arm statute and Rule 4(k)(2) because "BASF's claims against W-Limited arise out of W-Limited's contacts with Colorado and/or the United States." (Doc. # 65 at 8.)
When a plaintiff's claims arise under federal law and the defendant is not subject to general jurisdiction, " Rule 4(k)(2) of the Federal Rules of Civil Procedure provides for federal long-arm jurisdiction if the plaintiff can show that the exercise of jurisdiction comports with due process." GCIU-Emp'r Ret. Fund. ,
In its Amended Complaint, BASF alleges the "acts of patent infringement [occurred] in the State of Colorado" and W-Limited "deriv[es] substantial revenue" from "among other things, marketing, using, shipping, offering to sell or selling, or causing others to use, offer to sell, or sell, agrochemical products in the State of Colorado." (Doc. # 50 at ¶ 8.) BASF asserts that the Amended Complaint has enough facts to establish how W-Limited is subject to specific jurisdiction because its affiliates "obtained the necessary registrations for the infringing pyraclostrobin products" in Colorado and "W-Limited's relationship to [the other Defendants is] clear." (Doc. # 65 at 9.)
These allegations generally argue that the first prongs of the Calder test-requiring an intentional act directed at the forum state-have been met because the facts as alleged should be taken as true and therefore evidence W-Limited's intentional actions to direct business to Colorado. See (id .); see also
The Court agrees that the Amended Complaint alleges enough facts to explain how all Defendants, except W-Limited, are subject to jurisdiction in Colorado. BASF details how W-USA, W-LLC, RightLine and Greenfields sought registration and approval for different products, some of which are at issue in this litigation. (Doc. # 50 at ¶ 9-18, 23-37.) Then BASF merges all defendants under one name, Willowood, to further detail "Willowood's Regulatory Registrations" and "Acts Giving Rise to This Action." (Id. at 62-87.) However, BASF's argument assumes the truth of the alter ego theory, which this Court has already rejected in Section IV(a). The Court notes that merging all defendants under one name cannot accurately detail which facts plausibly establish jurisdiction, especially when certain alleged facts cannot apply specifically to W-Limited. For example, BASF alleges, "Willowood has been seeking registrations of its Willowood Pyrac 2EC with numerous state regulatory authorities." (Id. at 62.) Although BASF alleges, in great detail, how every other *1029defendant sought registration of this product, BASF never alleges that W-Limited attempted to register a product itself. Thus, having no way of distinguishing when W-Limited's actions differ from all other Defendants, the Court cannot assume that such statements equally apply to W-Limited.
Moreover, the Court must take as true BASF's well-pled facts-as opposed to conclusory allegations-and only to the extent those facts are not contradicted by W-Limited's affidavits. Melea, Ltd .,
The parties do not dispute that W-Limited derives 50% of its revenue from the United States. However, BASF has failed to connect any percentile of W-Limited's revenue stemming from Colorado to support its specific jurisdiction assertion. Moreover, BASF has failed to allege any fact to support that any percentile of W-Limited's revenue was generated from selling the infringing products in the United States for Rule 4(k)(2) jurisdiction. Finally, after setting aside BASF's conclusory and contradicted allegations, the Court finds nothing in the Amended Complaint that supports a conclusion that W-Limited purposefully directed its activities to Colorado. The Court accordingly need not reach the question of whether BASF's injuries arose out of W-Limited's contacts with the forum because W-Limited did not purposefully sell the infringing products at issue in Colorado. Thus, the Court finds that it does not have specific jurisdiction over W-Limited pursuant to the Colorado long-arm statute or Federal Rule of Civil Procedure 4(k)(2).
V. CONCLUSION
Based on the foregoing analysis, the Court GRANTS Defendant's Motion to Dismiss (Doc. # 60.) and Defendant Willowood Limited is DISMISSED from this civil action. It is
FURTHER ORDERED that the caption on all subsequent filings shall reflect the removal of Defendant Willowood Limited as a Defendant in this case.
Patent '392 titled "Crystalline modifications to Pyraclostrobin" was issued on October 19, 2010. (Id. at ¶ 44.) This patent describes various forms of pyraclostrobin, including several crystalline modifications. (Id. at ¶ 45.) Patent '451 titled "Method for Producing 2-(3-Pyrazolyl-Oxymethylene) Nitrobenzenes" was issued on October 17, 2000. (Doc. # 50 at ¶ 48). It describes processes for preparing the aforementioned chemical compound, "which include an intermediate for preparing pyraclostrobin." (Id. at ¶ 49.) It also describes processes for making, and the method of using, a type of modification for controlling phytopathogenic fungi. (Id. )
W-LLC and RightLine are limited liability companies incorporated in Oregon with their respective principal places of business in Broomfield, Colorado. (Doc. # 50 at ¶ 2, 5.)
See supra note 1.
Reference
- Full Case Name
- BASF CORPORATION v. WILLOWOOD, LLC, Willowood USA, LLC, Willowood Limited, Greenfields Marketing, Limited, RightLine, LLC
- Cited By
- 5 cases
- Status
- Published