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Head v. Las Vegas Sands, LLC

United States District Court, S.D. Texas, McAllen Division

March 27, 2018

SHERI W HEAD, et al, Plaintiffs,


          Micaela Alvarez United States District Judge

         The Court now considers Las Vegas Sands, LLC d/b/a the Venetian Resort Hotel Casino/the Palazzo Resort Hotel Casino (the “Venetian”);[1] MGM Grand Hotel, LLC (“MGM Hotel”);[2] MGM Resorts International Inc., (“MGM Resorts”), [3] Desert Palace, Inc., d/b/a/ Caesar's Palace (“Caesar's Palace”);[4] Desert Palace LLC (“Desert Palace”);[5] Harvey's Tahoe Management Company, Inc., d/b/a Harrah's Casino Hotel Lake Tahoe (“Harrah's”); and Caesars Entertainment Corporation's (“Caesars Entertainment”)[6] (collectively “Defendants”) motions to dismiss for lack of personal jurisdiction.[7] The Court also considers Sheri and Haylee Head's (“Plaintiffs”) responses, [8] and Defendants' replies.[9] After duly considering the record and relevant authorities, the Court GRANTS Defendants' motions, and DISMISSES the case WITHOUT PREJUDICE for lack of personal jurisdiction over Defendants.

         I. Background

         This case arises because William Washington Head Jr. (“Decedent”)-a high-stakes Las Vegas gambler-tragically committed suicide after plunging into debt.[10] Plaintiffs allege that Defendants lured Decedent into debt (and thus into psychological distress and ultimately suicide) by enticing him to gamble in Las Vegas and extending large lines of credit for him to use in the process.[11] The alleged enticements included: over $1 million dollars of “customer retention” rebates, [12] free first-class travel, luxurious accommodations, luxury items, vacations, food, and beverages.[13] Allegedly, Defendants “were aware of the amount of money [Decedent] had received in casino credit and were aware of his huge gambling losses, and they continued to extend additional credit to him, pushing him further into a never ending spiral of debt.”[14]

         Decedent's estate entered probate in the Hidalgo County Probate Court.[15] Defendants thereafter “filed suit in the pending probate case seeking to enforce their alleged claims on [Decedent's] estate.”[16] In response, Plaintiffs-Decedent's heirs-filed the instant suit against Defendants in the Hidalgo County Probate Court, alleging wrongful death and intentional infliction of emotional distress (“IIED”), employing the Texas survival statute as a vehicle for relief.[17] Defendants subsequently removed[18] and filed the instant motions to dismiss for lack of personal jurisdiction.[19] Plaintiffs responded, [20] and Defendants replied, [21] rendering the motions ripe for review. The Court now turns to its analysis.

         II. Preliminary Matters

         The Court first addresses some preliminary matters concerning the ripeness of the instant motions, as well as the scope of the Court's personal jurisdictional analysis.

         A. Plaintiffs' request for jurisdictional discovery

         Embedded within Plaintiffs' responses to the instant motions are requests for jurisdictional discovery.[22] In the Rule 12(b)(2) context, a Court has discretion to permit a party to conduct jurisdictional discovery.[23] However, the movant must make a “preliminary showing of jurisdiction” which includes “factual allegations that show with reasonable particularity the possible existence of [personal jurisdiction].”[24] Furthermore, the movant must “[1] identify the discovery needed, [2] the facts expected to be obtained thereby, and [3] how such information would support personal jurisdiction.”[25]

         Here, for reasons further discussed below, Plaintiffs fail to make a preliminary showing of jurisdiction. Moreover, their requests for jurisdictional discovery contain no rationale or accompanying explanation as to what facts are likely to be discovered which would meaningfully support personal jurisdiction. Plaintiffs' briefing does contain certain unsupported jurisdictional allegations, but-as further discussed below-they are of no consequence, even if they were to be supported by future discovery. For these reasons, Plaintiffs' requests for jurisdictional discovery are DENIED. Consequently, the instant motions are ripe for review.

         B. Defendants' motions to strike Sheri Head's affidavit

         Sheri Head's two-page affidavit is Plaintiffs' only evidence supporting personal jurisdiction.[26] Defendants present objections to this affidavit and move to strike it.[27] Specifically, Defendants contend that the affidavit does not comply with Federal Rule of Civil Procedure 56, and that certain statements contained within it are substantively inadmissible hearsay, conclusory, and inadmissible under (uniquely) applicable state evidence rules.[28]

         Defendants each cite a single Fifth Circuit case-Johnston v. Multidata Sys. Int'l Corp.[29]-for the proposition that a plaintiff's personal jurisdiction evidence must meet Rule 56 standards.[30] However, Johnston simply does not support this proposition. The Court cannot otherwise find any cases within the Fifth Circuit supporting this proposition. Importantly, the instant motions were filed under Rule 12(b)(2), not Rule 56. Thus, Rule 56 evidentiary standards do not directly apply to Plaintiffs' evidence, and Defendants' Rule 56-based objections to Sheri Head's affidavit are unavailing.

         Moreover, the general rules of evidence concerning admissibility (e.g., the rule against hearsay etc.) do not apply in the Rule 12(b)(2) context. Case law within the Fifth Circuit is very scant on this issue, but the only district court which appears to have directly addressed it held that a plaintiff's supporting evidence does not need to be admissible to be considered at the Rule 12(b)(2) stage: “Whether the evidence submitted . . . will ultimately be admissible at the trial is not relevant at this stage of the proceedings.”[31] The underlying rationale is two-fold. First, where, as here, the Rule 12(b)(2) motion is ruled on without an evidentiary hearing, the plaintiff only needs to set forth a prima facie case of personal jurisdiction.[32] This is less than a preponderance of the evidence.[33] Second, and more importantly, Rule 12(b)(2) movants can ultimately hold the plaintiff to his/her burden of establishing personal jurisdiction by a preponderance of the evidence (and subject to the Federal Rules of Evidence) at trial.[34]

         One district case has applied the Federal Rules of Evidence to a plaintiff's Rule 12(b)(2) evidence.[35] However, that court launched into the objections to the plaintiff's Rule 12(b)(2) evidence without addressing the predicate question of whether the Federal Rules of Evidence apply.[36] That court cited no authority or rationale for this approach, and it ignored persuasive authority to the contrary. It did cite a Fifth Circuit opinion for the proposition that “the court may consider admissible affidavits and other materials”[37] in the 12(b)(2) context. However, the cited authority does not itself indicate that a plaintiff's Rule 12(b)(2) evidence must be admissible.

         The Fifth Circuit has indicated that in the Rule 12(b)(2) context, a plaintiff's hearsay statements contained within an affidavit may not be considered, so long as those statements are “directly contradicted by defendants' affidavits.”[38] However, Defendants have not submitted any affidavits directly contradicting relevant hearsay statements contained within Sheri Head's affidavit. Thus, those hearsay statements may still be considered consistent with Fifth Circuit precedent. Nevertheless, the Court need not consider any of Plaintiffs' conclusory statements, even if uncontroverted.[39] Except insofar as this may be the case (the Court will make it clear when and if it is), Defendants' objections and motions to strike Sheri Head's affidavit are DENIED. The Court now turns to the legal standard governing the instant motions.

         III. Legal Standard

         A. General framework

         Rule 12(b)(2) authorizes dismissal based on the defense that a court lacks jurisdiction over the defendant.[40] The plaintiff bears the burden of establishing personal jurisdiction over foreign defendants, [41] but need only establish a prima facie showing of personal jurisdiction to survive a motion to dismiss when there is no evidentiary hearing.[42] A prima facie showing is less demanding than proof by a preponderance of the evidence.[43] Such a showing can be made using any recognized discovery method.[44] Absent a hearing, the court must accept as true any non-conclusory jurisdictional allegations in the plaintiff's complaint and resolve all factual conflicts presented by the parties' submitted evidence in the plaintiff's favor.[45] However, courts should not countenance vague, overgeneralized, or otherwise conclusory allegations.[46]

         Two conditions must be met to establish personal jurisdiction: “(1) the forum state's long-arm statute [must confer] personal jurisdiction over that defendant; and (2) the exercise of personal jurisdiction [must] compl[y] with the due process requirements of the Fourteenth Amendment of the United States Constitution.”[47] The first step in the analysis can generally be ignored in Texas federal courts because the Texas long-arm statute is purportedly co-extensive with Fourteenth Amendment Due Process.[48] Thus, if the exercise of personal jurisdiction complies with the due process requirements of the Fourteenth Amendment, which it must, then the analysis is complete because personal jurisdiction automatically exists under the Texas long-arm statute, and both elements are thus simultaneously satisfied.[49]

         In turn, constitutional Due Process is satisfied if the foreign defendant “(1) has purposefully availed himself of the benefits and protections of the forum state by establishing minimum contacts with the forum state, and (2) the exercise of jurisdiction over that defendant does not offend traditional notions of fair play and substantial justice.”[50] There is no need to proceed to the second prong if the first is not satisfied. The first prong-“minimum contacts”- can be established in two ways: specific jurisdiction or general jurisdiction.

         B. Specific jurisdiction

         The first manner Due Process “minimum contacts” may be established is through specific jurisdiction, [51] which requires, among other things, that the nonresident defendant “has purposefully directed [his] activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.”[52] The Fifth Circuit has set forth a three-step analysis for determining whether specific jurisdiction exists:

(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum- related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.[53]

With regard to the first element-purposeful availment-whether minimum contacts exist is a fact-intensive inquiry that ultimately reduces to whether the Defendant could reasonably anticipate being haled into the courts in the forum.[54] A defendant “must not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts . . . .”[55]

         Consequently, “[j]urisdiction must not be based on the fortuity of one party residing in the forum state.”[56] For example, a forum court may not have specific personal jurisdiction over a foreign defendant that negotiates, executes and even carries out portions of a contract with the claimant within the forum-even in a breach of contract case.[57] This was the case in Harvey, where even lopping on systematic communications by the foreign defendant to the Texas plaintiff did not make any difference.[58] The reason for this outcome is that the foreign defendant's contacts with the forum amounted to nothing more than the “mere fortuity that [the plaintiff] happens to be a resident of the forum.”[59] This logic has been crystalized in Fifth Circuit precedent since Harvey.[60]

         With regard to the second element-whether the plaintiff's claim arises out of the foreign defendant's in-forum conduct-the contours are less clear. What is clear is that the plaintiff's claims must “arise” from the defendant's conduct in the forum state. However, claims rarely have a single contributing cause, and certain contributing causes play less pronounced roles than others in bringing claims about. Thus, the relevant question is this: how directly and strongly must a foreign defendant's in-forum conduct contribute to the plaintiff's claim in order for that claim to have “arisen” from the foreign defendant's in-forum conduct?

         Different Circuits take different approaches, and the Fifth Circuit has not recently answered this question in a manner as definitive as other circuits.[61] Nevertheless, available Fifth Circuit precedent, [62] Texas district courts, [63] other circuits, [64] and legal scholarship[65] all indicate that the Fifth Circuit has adopted the “but-for” test. This test “as the name indicates . . . is satisfied when the plaintiff's claim would not have arisen in the absence of the defendant's contacts.”[66]

         C. General jurisdiction

         The second form of “minimum contacts” is general jurisdiction, [67] which is established when the foreign defendant's contacts with the forum state are so extensive and substantial as to render the defendant effectively “at home” in the forum state.[68] The test for general jurisdiction is very demanding because the forum-contacts in question do not give rise to the claims at bar. The Fifth Circuit has stated, “[t]his circuit has consistently imposed the high standard set by the Supreme Court when ruling on general jurisdiction issues.”[69]

         The Supreme Court in Daimler[70] recently clarified the nature and contours of general jurisdiction, ultimately holding that corporations are generally only “at home” in their state of incorporation and the state of their principle place of business.[71] The ostensible basis for this limiting principle is two-fold. First, the Supreme Court was seeking a general jurisdiction principle that pointed to concrete-“ascertainable”-geographical locations.[72] Second, the Supreme Court sought a limiting principle, one that would point to “unique”[73] (i.e., discreet) forums and that would not result in “exorbitant”[74] and “unacceptably grasping”[75] jurisdiction over corporate defendants nationwide.

         Thus, systematic corporate activities “of some sort”[76] within the forum, including systematic business transactions, [77] are not enough to establish general jurisdiction. If they were, many corporate defendants would be subject to the personal jurisdiction of courts in all fifty states. Besides generating “exorbitant” and “unacceptably grasping” nationwide jurisdiction, this would undue the Supreme Court's longstanding aim of permitting corporate defendants “to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.”[78] Consequently, it is not enough that a corporate defendant “engages in a substantial, continuous, and systematic course of business” in the forum state-this alone the Daimler Court expressly rejected.[79] Rather, the corporate defendant's connections with the forum state must be such that they render the corporation effectively at home in the forum state. This analysis can only be conducted by analyzing the corporate defendant's activity in the forum state compared and contrasted with their own activity in other locations. Thus, “[g]eneral 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.”[80] In sum, the general jurisdiction test is “incredibly hard”[81] to meet.

         Regardless of whether the Court is conducting a specific or general jurisdiction analysis, the guiding principle is the same: for Due Process purposes, “minimum contacts” exist when the defendant's “conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.”[82] With all this in mind, the Court now turns to its analysis.

         IV. Legal Analysis

         A. Limited scope of the Court's analysis

         Before launching into its substantive analysis, the Court makes some general observations about the scope of its analysis, as well as the scope of relevant supporting materials offered by Plaintiffs. As previously noted, Plaintiffs bear the initial burden to establish a prima facie case of specific or general jurisdiction.[83] The Court may consider non-conclusory, uncontradicted allegations contained within Plaintiffs' pleading, as well as any recognized method of discovery.[84] Importantly, only Defendants' conduct in Texas is relevant to the present analysis.

         Here, Plaintiffs' petition provides no indication of what specific acts Defendants committed in Texas.[85] Thus, Plaintiffs' petition is incapable of supporting personal jurisdiction, and can be disregarded. Otherwise, Plaintiffs only submit a single, two-page affidavit to carry their burden.[86] This affidavit has the same general deficiency as the petition. For example, it indicates that Defendants called Decedent to solicit his business, [87] gifted him vacations, [88] offered him discounts, [89] extended him credit, [90] and also that the Venetian placed one debt collection call to Decedent.[91] However, all of these allegations fail to explain where these actions took place. The only allegation that does so is as follows: “All named defendants sent corporate jets to McAllen, Texas on numerous occasions. The private jets were sent specifically for my husband.”[92] Thus, the only question for the Court is whether this particular allegation is capable of supporting either specific or general jurisdiction.

         Even this sole remaining allegation fails to support personal jurisdiction. As previously noted, supporting allegations may not be “vague, ” “overgeneralized, ” or “conclusory.”[93] To this end, a plaintiff must submit evidence supporting personal jurisdiction over each defendant, and cannot simply lump them all altogether.[94] Plaintiff's remaining allegation does just this: “All named defendants sent corporate jets to McAllen, Texas on numerous occasions.”[95] This statement is conclusory because it provides no details explaining exactly who sent jets, when, and how often. It is also overgeneralized, vague, and lumps all the defendants together. Thus, even Plaintiffs' sole remaining supporting allegation fails. Nevertheless, and for thoroughness sake, the Court proceeds to analyze the remaining allegation as though it did not necessarily fail.

         B. There is no specific jurisdiction

         Sheri Head alleges that Defendants “sent corporate jets to McAllen, Texas on numerous occasions. The private jets were sent specifically for my husband.”[96] This allegation fails to satisfy the first element of the Fifth Circuit's specific jurisdiction test-purposeful availment. Defendants' contacts with Texas were based on the mere fortuity that Decedent lived in Texas; they never would have sent jets to Texas for Decedent if Decedent lived in Florida or Alaska. Thus, Defendants did not purposefully avail themselves of the benefits and privileges of Texas, and could not reasonably foresee that they would be haled into Texas courts for IIED and wrongful death claims arising from Decedent's subsequent decision to kill himself. In sum, Defendants' contacts with Texas were “random, fortuitous, and attenuated, ”[97] and thus incapable of supporting specific jurisdiction.

         Sheri Head's allegation also fails to satisfy the second element of specific jurisdiction- that the plaintiff's claim arises out of the foreign defendant's in-forum conduct. Simply put, Plaintiffs allege so many different ways in which Defendants enticed Decedent to gamble, that it is impossible to say jet transportation from Texas to Las Vegas-alone-was a but-for cause of Plaintiffs' IIED and wrongful death claims. Consider the following alleged enticements that have no expressed connection with Texas:

• My husband was a heavy gambler at the casinos . . . for many years;[98]
• Throughout this time, the casinos extended lines of credit on multiple occasions;[99]
• My husband was repeatedly contacted .... The purpose of the telephone calls ranged from soliciting his business, offering rebates, and making personal invitations to vacation resorts or blackjack tournaments;[100]
• Every casino, except MGM, gifted my husband numerous vacation trips including vacations to Alaska, Cabo San Lucas, and the 2012 London Olympics;[101]
• Despite heavy losses, the casinos continued to give my husband additional lines of credit;[102]
• To retain his business, the casinos often offered “customer retention discounts” which totaled well over ($) 1 million dollars;[103]
• My husband received a collections phone call from the Venetian;[104]
• [Defendants offered] free luxurious accommodations, gifted luxury items, free vacations for friends and family, food, and beverages, in addition to other incentives;[105]
• Defendants knew [Decedent] exhibited signs of a problem gambler, yet continued to extend him large credit lines which encouraged [D]ecedent to gamble for large periods of time and for high stakes;[106]
• [Defendants failed] to implement policies and procedures regarding extending large amounts of credit to problem gamblers;[107]
• [Defendants failed] to properly train and supervise its employees to recognize and determine signs of problem gamblers;[108]
• [Defendants failed] to enact or enforce adequate and/or reasonable measures to protect customer from becoming financially decimated;[109] and
• Appropriate and even minimally adequate scrutiny of [Decedent's] finances and problem gambling history would have led Defendants to conclude that an obvious consequence of extending him millions of dollars in credit and/or loans to lose in the casinos would be financially disastrous and cause him great mental stress and anguish, or the Defendants chose to willfully ignore the issue due to their own greed.[110]

         Amongst this mass of non-Texas-specific allegations giving rise to Plaintiffs' claims lies air transportation from Texas to Las Vegas. It is difficult to imagine that Decedent would have ceased to gamble (and thus not gone into debt, become distressed, and committed suicide) in the absence of casino-provided air transportation to Las Vegas. No. doubt, the aforementioned enticements (i.e. over $1 million in discounts, free vacations, food, drinks, and accommodations etc.) would have been enough to attract any gambling addict to Las Vegas. Perhaps Decedent would have purchased his own plane tickets or driven a car. Plaintiffs bear the burden to establish a prima facie case of specific jurisdiction, and thus bear the burden to prove their claims would not have arisen but for casino-provided air transportation from Texas to Las Vegas. They have not.

         Plaintiffs' briefing mischaracterizes the nature of Sheri Head's affidavit in an attempt to advance their theory of specific personal jurisdiction. They suggest Defendants:

contacted the decedent in McAllen, Texas through calls to his personal cell phone made for the purposes of soliciting his repeat business, offering rebates, and personally inviting him to vacation resorts or blackjack tournaments; gifting the decedent numerous vacations, including trips to Alaska, Cabo San Lucas, and the 2012 London Olympics; and offering him substantial “customer retention” discounts on multiple occasions.[111]

         However, Sheri Head's affidavit does not specify where any of Defendants' aforementioned conduct took place. Thus, the allegations in Plaintiffs' briefing are not supported by Sheri Head's affidavit, and in turn do not support specific personal jurisdiction over Defendants.

         In sum, Plaintiffs have failed to establish a prima facie case of specific jurisdiction because they fail to prove up the first two elements of specific jurisdiction. Generally speaking, Plaintiffs' have not set forth cognizable allegations of Defendants' forum-related conduct from which Defendants could reasonably anticipate being haled into Texas courts for IIED or wrongful death via Decedent's suicide. There is no specific jurisdiction here.

         C. There is no general jurisdiction

         There is also no general jurisdiction in this case. As a starting point, Defendants are not Texas residents. The corporate defendants are not incorporated in Texas, and they do not have their principle place of business in Texas either.[112] The defendants in this case that are unincorporated associations do not appear to have any members in Texas.[113] Thus, Defendants are not “at home” in Texas by virtue of their residency. In turn, Plaintiffs must prove this case fits into a “small, undefined category of other situations in which a foreign corporation is nonetheless ‘essentially at home' in a forum.”[114] Plaintiffs fail to do so.

         As noted, Plaintiffs only provide evidence that Defendants “sent corporate jets to McAllen, Texas on numerous occasions. The private jets were sent specifically for my husband.”[115] Sheri Head does not indicate how many times jets were actually sent to Texas. Thus, this allegation barely qualifies as a business contact. Even if it was a business contact, it does not constitute a substantial, continuous, and systematic business contact. And even if it did, it does not contain that X-factor which goes above and beyond mere business activity to render Defendants “at home” in Texas. Put plainly, Defendants could not reasonably anticipate being haled into Texas courts (for all purposes) for sending an unknown number of jets to Texas with regard to a single individual. Thus, there is no general jurisdiction in this case.

         Plaintiffs allege certain Texas connections in their briefing without providing any evidentiary support for these allegations. Because these allegations are not contained in Plaintiffs' petition, nor supported by evidence, they are not cognizable, and cannot support personal jurisdiction over Defendants. Even if they were cognizable statements, they would make no difference. The alleged Texas connections are:

• Promotional emails offering discount codes, rebates, and special offers
• Transacting business with Texas citizens by allowing them the opportunity to select and purchase hotel rooms, show ticket, and other amenities;
• The casino websites allow Texas citizens the opportunity to apply online for lines of credit with the casino;
• Texas citizens can fill out applications disclosing detailed bank account and credit information that then allows the casino to ...

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