Goellner-Grant v. Platinum Equity LLC
Goellner-Grant v. Platinum Equity LLC
Opinion of the Court
Before this Court is defendant Platinum Equity, LLC's ("Platinum") motion to dismiss (# 13) and memorandum in support (# 14) for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2). Plaintiffs have filed a memorandum in opposition (# 20), and Platinum has filed a reply in support. (# 24). Finding personal jurisdiction is lacking over Platinum, which cannot be remedied by jurisdictional discovery, this Court will dismiss Platinum from this case.
I. BACKGROUND
This case, originally brought in St. Louis County Circuit Court, was removed to this Court on June 4, 2018, under diversity jurisdiction,
The backbone of this lawsuit, resting principally on allegations that a defective boom lift caused the death of decedent Randall Lee Grant ("Decedent"), lies in the realm of product liability and negligence that occurred in Missouri. But, it is the relationship between the movant, Platinum, and fellow defendant BlueLine Rental, LLC. ("BlueLine") that precipitates the present jurisdictional dispute. Platinum is a Delaware-based limited liability company with its principle place of business in California. (# 5, p. 2). Platinum is a private equity investment firm that plaintiffs highlight "specializ[es] in the merger, acquisition, and operation of companies " conducting business in a range of different product markets. (# 20-7, p. 2 (emphasis in original) ). Platinum, itself, has no offices, property, or employees in Missouri, nor is it registered to do business in Missouri. (# 14-1, p. 2). BlueLine is also a Delaware-based limited liability company with its principle place of business in Texas; however, unlike Platinum, BlueLine-which operates more than 130 rental stores across North America-has a notable sales presence in Missouri, which plaintiffs assert includes at least three sales locations renting out lifts like the one that allegedly caused Decedent's death. (# 20-5; # 20, p. 7).
As mentioned, the present jurisdictional dispute revolves around the unique relationship between Platinum and BlueLine-Platinum is the parent company of BlueLine, one of Platinum's many subsidiaries. The history of their relationship, and how the lift involved in Decedent's death is entangled in that relationship, is briefly set forth:
The lift, a JLG Aerial Boom Lift, Model No. E450AJ, was first designed, manufactured, assembled, marketed, and sold by JLG Industries, Inc. ("JLG") to Midwest Aerials & Equipment, Inc. ("Midwest Aerials")
*1025on or about April 23, 2002, in Kansas City, Kansas. (# 5, p. 4; # 20, p. 2).
From these facts, the parties' dispute becomes clear. Plaintiffs, seeking jurisdiction, argue that Platinum, the parent, was in full control and dominion over BlueLine, its subsidiary, so as to result in Platinum being the mere alter-ego of BlueLine-a theory that, if sustained, causes Platinum to be subject to this Court's jurisdiction by way of the underlying parent-subsidiary relationship notwithstanding the lack of Platinum's own, direct contacts with Missouri. Platinum, seeking dismissal for lack of jurisdiction, sets forth two counterarguments: (a) it does not, in fact, dominate BlueLine's operations to such a degree that jurisdiction should reach it by way of the underlying parent-subsidiary relationship; and (b) in any event, it is impossible to find Platinum acted through its subsidiary, BlueLine, as to the sale of the particular lift in question into Missouri (the relevant contact for specific jurisdiction) because that sale occurred four years before Platinum acquired BlueLine.
II. ANALYSIS
In a diversity action such as this one, the Court "may assume jurisdiction over the nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause." Romak USA, Inc. v. Rich ,
*1026To survive a motion to dismiss for lack of personal jurisdiction, the non-moving party need only make a prima facie showing of jurisdiction; that is, the "plaintiff must state sufficient facts in the complaint to support a reasonable inference that defendants may be subjected to jurisdiction in the forum state." Steinbuch v. Cutler ,
Personal jurisdiction may be either general or specific. Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County , --- U.S. ----,
"Specific jurisdiction is very different. In order for a state court to exercise specific jurisdiction, 'the suit' must 'aris[e] out of or relat[e] to the defendant's contacts with the forum.' "
"The baseline for minimum contacts is some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Clune ,
*1027A. Platinum's Parent-Subsidiary Relationship With BlueLine Does Not Create Personal Jurisdiction Over Platinum.
The parties spend considerable time arguing the merits of In Re Genetically Modified Rice Litigation ,
"Here ... the two corporate defendants Bayer AG and Bayer CropScience AG have a close, synergetic relationship. The corporate parent serves to provide guidance and set policy. The subsidiary's purpose is to carry out the directives of the parent and fulfill its obligations with the Bayer enterprise. Without the existence of one, the other lacks a key aspect of its essential make-up. Bayer benefits from marketing itself as a single, unified enterprise. As such, CropScience AG acts as a 'mere instrumentality or adjunct' of the larger corporate parent."
Id. at 1075. Under the Unocal test, personal jurisdiction exists over a parent company if the subsidiary's services were "sufficiently important to the foreign [parent] corporation that if it did not have a [subsidiary] to perform them, the [parent]'s own officials would undertake to perform substantially similar services." Unocal ,
This Court disagrees. The continued validity of In Re Genetically Modified Rice Litigation is questionable. Six years after the opinion in that case, the U.S. Supreme Court decided Daimler AG v. Bauman ,
"The Ninth Circuit's agency finding rested primarily on its observation that MBUSA's services were important to Daimler, as gauged by Daimler's hypothetical readiness to perform those services itself if MBUSA did not exist. Formulated this way, the inquiry into importance stacks the deck, for it will always yield a pro-jurisdiction answer: anything a corporation does through an independent contractor, subsidiary, or distributor is presumable something that the corporation would do by other means if the independent contractor, subsidiary, or distributor did not exist. The Ninth Circuit's agency theory thus appears to subject foreign corporations to general jurisdiction whenever they have an in-state subsidiary or affiliate, an outcome that would sweep beyond even the sprawling view of general jurisdiction we rejected in Goodyear ."
Id. at 135-136 (internal quotations and citations omitted). Thus, to the extent the In Re Genetically Modified Rice Litigation opinion focuses on the mere advantageous *1028synergy between parent and subsidiary for purposes of finding jurisdiction as espoused in Unocal , it cannot be said to comport with Daimler .
There is one wrinkle in that conclusion: Daimler was a case involving general jurisdiction, whereas In Re Genetically Modified Rice Litigation was a case applying specific jurisdiction. Compare Daimler ,
"[ Daimler's ] criticism applies no less in the context of specific jurisdiction than in that of general jurisdiction. Accordingly, Daimler's reasoning is clearly irreconcilable with the agency test set forth in Unocal . The Daimler Court's express recognition of the potential viability of agency relationships for establishing specific jurisdiction does not alter our holding."
Id. at 1024 (citations omitted).
Even though the Genetically Modified Rice Litigation decision has eroded under Daimler and the subsequent abandonment of Unocal , it does appear to remain good law for the proposition that, within the framework of specific jurisdiction, there are two independent methods of reaching a parent company through a subsidiary: (a) alter-ego liability; and (b) agency liability. See
Alter-ego liability looks at the totality of the parent company's relationship with the subsidiary asking whether the relationship is so "completely dominated" by the parent company that it is proper to fully "disregard the corporate form of the subsidiary" altogether. Blanks v. Fluor Corp. ,
To establish alter-ego liability in this case, plaintiffs primarily focus upon the business synergy between Platinum and BlueLine, stating "Platinum Equity has no problem aligning itself and sharing in BlueLine Rental's success and business achievements because these successes work to further Platinum Equity's overall enterprise." (# 20, p. 10). But, this is essentially an application of the Ninth Circuit's Unocal test, which, as mentioned, was recently abandoned as unsalvageable under Daimler . For purposes of determining alter-ego liability, it does not matter that a parent company shares in the business success and achievements of its subsidiaries. That was the conclusion clearly reached in Daimler as to general jurisdiction, which prompted Williams to question Unocal 's continued application even in the context of specific jurisdiction. Rather, as explained, the question to be answered for alter-ego liability is whether Platinum so totally and manifestly dominated and controlled BlueLine that it is reasonable to disregard BlueLine's corporate form and hold Platinum directly liable as if it had acted on its own. See Blanks ,
In this view, plaintiffs argue Platinum and BlueLine are one-and-the-same because Platinum assisted in a "rebranding initiative" by which Volvo Rents became BlueLine. (# 20, p. 7). They point to the fact that Platinum "shaped" and "maintained" BlueLine's customer base, and urge that this Court take note of the "long-term operational stewardship" and "safety stewardship" that Platinum has had over BlueLine. (# 20, p. 7). While admitting Platinum never directly sold lifts in Missouri, they point to the fact that Platinum "marketed and reaped the benefit of BlueLine's presence and sales in Missouri." (# 20, p. 9). And they conclude BlueLine must be a mere "instrument" of Platinum-another way of saying Platinum and BlueLine are one-and-the-same-because Platinum's "investment portfolio is expanded through its relationship with BlueLine." (# 20, p. 10). Plaintiffs grasp at straws. None of these allegations (many of which are loosely supported through links to press release articles) are of the quality or quantity to find that Platinum, in fact, dominates BlueLine. Courts at both the federal and state level have rejected many of plaintiffs' assertions outright. See, e.g., In Re Enterprise Rent-a-Car Wage & Hour Employment Practices Lit. ,
B. Jurisdictional Discovery Would Not Change the Result of the Court's Decision and So It Will Be Denied
Finally, the Court denies plaintiffs' request for jurisdictional discovery. (# 20, p. 11). There is no requirement that jurisdictional discovery be permitted where a plaintiff merely suspects supportive facts might be revealed. Viasystems, Inc. ,
III. CONCLUSION
For the reasons set forth above, Platinum's Motion to Dismiss (# 13) will be granted.
Accordingly,
IT IS HEREBY ORDERED that defendant Platinum Equity, LLC.'s motion to dismiss (# 13) is GRANTED . Plaintiffs' claims are dismissed against Platinum Equity, LLC. without prejudice.
IT IS FURTHER ORDERED that plaintiffs' request for jurisdictional discovery is DENIED .
A separate Order of Dismissal will accompany this Memorandum and Order.
So ordered this 18th day of September 2018.
In a separately-filed case, Goellner-Grant et al. v. JLG Industries, Inc. et al., Case No. 4:18-cv-342-SNLJ, this Court dismissed JLG from a lawsuit filed by the same three plaintiffs involved in this case. On June 19, 2018, this Court found it lacked personal jurisdiction over JLG in light of the parties' agreement that "the lift in question was actually sold [by JLG] to a company in Kansas," whereby that company (Midwest Aerials) then sold it to a Missouri company. Based on this fact, this Court held that it lacked specific jurisdiction over JLG because "JLG's involvement ended in Kansas, and a third party went on to sell the lift in Missouri." This Court noted that specific jurisdiction, unlike general jurisdiction, requires the relevant contact (under the so-called "minimum contacts" test) to have a connection, in itself, with the events of the case. While plaintiffs tried to point to JLG's general distribution network in Missouri, this Court ultimately found that it was not this general, network-related contact that related to plaintiffs' claims. See Goellner-Grant v. JLG Industries, Inc.,
Plaintiffs are inconsistent on whether Volvo Rents was acquired in 2011 or 2012. (Compare # 20, p. 2; with # 20, p. 6; see also # 20-3, p. 2). It appears from the attached exhibits that Volvo Rents may have, in fact, been acquired at the very end of 2011. In any event, this particular factual incongruency is immaterial to the Court's decision.
Neither party specifically explains what became of the lift after it was sold to CBL, a Missouri company, in 2010. In fact, between the First Amended Petition, the Memorandum in Support, the Memorandum in Opposition, and the Reply in Support, only one mention of "CBL" appears: plaintiffs' brief acknowledgment that the lift was sold to CBL by Midwest Aerials. (# 20, p. 2; # 20-2).
In identifying the key legal differences between agency and alter-ego theories of liability under Missouri law, the Court commends the opinion in Blanks v. Fluor Corp. ,
Reference
- Full Case Name
- Renee Teresa GOELLNER-GRANT, Kyle D. Grant, and Alexander Goellner v. PLATINUM EQUITY LLC, BlueLine Rental LLC, United Rentals, Inc., and United Rentals (North America), Inc.
- Cited By
- 6 cases
- Status
- Published