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Le-Vel Brands LLC v. Bland

United States District Court, N.D. Texas, Dallas Division

September 27, 2019

LE-VEL BRANDS, LLC, Plaintiff,
v.
DUSTIN BLAND, Defendant.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay United States District Judge

         Before the court is Defendant Dustin Bland’s Motion to Dismiss Complaint (Doc. 22), filed February 21, 2019; and Defendant’s Evidentiary Objections to Declaration of Christopher Schmidt and Motion to Strike (Doc. 49), filed August 16, 2019. After careful consideration of the motions, responses, replies, pleadings, record, evidence, testimony, arguments presented at the February 26-27, 2019 hearing, and applicable law, the court denies Defendant’s Motion to Dismiss Complaint (Doc. 22); and overrules and denies Defendant’s Evidentiary Objections to Declaration of Christopher Schmidt and Motion to Strike (Doc. 49).

         I. Factual and Procedural Background

         Plaintiff Le-Vel Brands, LLC (“Plaintiff” or “Le-Vel”), with its principal place of business located in Collin County, Texas, [1] is a health and wellness multi-level marketing company that sells dietary supplements, including a product line called “Thrive.” Le-Vel markets its products exclusively through the use of “Promoters.” Promoters earn money through commissions and bonuses, and by enrolling other individuals as downline Promoters.[2] On April 17, 2017, Defendant Dustin Bland (“Defendant” or “Mr. Bland”), an Indiana resident, became a Promoter for Le-Vel. During his time as a Promoter, he “created a network of approximately 16, 000 downline Le-Vel Promoters and 65, 000 Le-Vel customers[;] and earned commissions totaling over $1, 000, 000.” Pl.’s Original Pet. ¶ 10. According to Plaintiff, Defendant joined Isagenix in late 2018 and has continued to “solicit Le-Vel’s Promoters and clients in violation of the Promoter Agreement.” Id. On December 28, 2018, Le-Vel terminated Mr. Bland, contending that he was “engaging in blatant violations of the Non-Solicitation Agreement by contacting Le-Vel Promoters in [an] attempt to direct them away from Le-Vel and over to Isagenix [a competing company] . . . and using [his] position as a Leader with Le-Vel to hold meetings with other Le-Vel Promoters in order to then pitch an [Isagenix] presentation in order to recruit them into Isagenix.” Id. ¶ 11. Plaintiff further asserts that, even after the company sent a letter to Defendant explaining the basis for his termination and outlining his continued obligations pursuant to the Agreement, Defendant has “continued to solicit Le-Vel’s customers and Promoters.” Id. ¶ 12.

         On January 1, 2019, Plaintiff filed its Original Petition and Verified Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction (Doc. 1-3) (“Petition”) in the 68th Judicial District Court of Dallas County, Texas. In its Petition, it alleges several causes of action against Defendant: (1) breach of contract; (2) business disparagement; (3) defamation; (4) tortious interference with existing contracts; and (5) tortious interference with prospective business relations. These claims stem from Mr. Bland’s alleged violation of the restrictive covenants provided in an agreement between the parties, referred to as the Promoter Agreement[3] (the “Agreement”).

         To enroll as a Promoter, an individual must click on a box next to the phrase, “I agree to the Policies and Procedures, ” which has “Policies and Procedures” hyperlinked[4] in blue. Upon clicking the hyperlink, the Policies and Procedures appear in a separate window. The Agreement contains various terms, including one that prohibits a Promoter from directly or indirectly soliciting any Le-Vel customers or Promoters during the term of the Agreement and for a period of 12 months thereafter. In section 1.2 of the Agreement, it further states that “[a] Promoter will under no circumstance disparage or infringe upon the Le-Vel name, image[, ] or reputation in connection with the promotion of Le-Vel products or misappropriate any confidential or proprietary information or trade secrets (including Customer and Promoter names and address lists) for use by the Promoter or others.” Additionally, the Agreement includes language establishing personal jurisdiction of the federal courts in Dallas, Texas over Promoters and proper venue in the federal courts in Dallas County, Texas. Plaintiff contends that when Defendant became a Promoter for the company, he “affirmatively agree[d] to the terms of the Promoter Agreement.” Pl.’s Original Pet. ¶¶ 6-7, 9-10.

         On January 18, 2019, Defendant removed the case based on diversity jurisdiction. On February 9, 2019, Plaintiff filed a Motion for Preliminary Injunction (Doc. 17). On February 21, 2019, Defendant filed his Motion to Dismiss Complaint (Doc. 22), asserting that Plaintiff’s Petition should be dismissed pursuant to the following: (1) Federal Rule of Civil Procedure 12(b)(2) for a lack of personal jurisdiction; (2) Federal Rule of Civil Procedure 12(b)(3) for improper venue; (3) Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim as it relates to all alleged counts asserted in Plaintiff’s Petition; and (4) the Texas Anti-Slapp Act as it relates to Counts Two through Five of Plaintiff’s Petition. On February 26-27, 2019, the court held a hearing regarding Plaintiff’s request for a preliminary injunction and allowed the parties to present evidence related to whether the court had personal jurisdiction over Defendant. Prelim. Inj. Hr’g Tr. 3:17-4:10 (Feb. 26, 2019). The court has declined to rule on Plaintiff’s request for a preliminary injunction until the matter of personal jurisdiction is resolved.

         II. Defendant’s Evidentiary Objections and Motion to Strike

         On August 16, 2019, Defendant filed its Evidentiary Objections to Declaration of Christopher Schmidt[5] (the “Declaration”) and Motion to Strike (Doc. 49). In its motion, Defendant contends that the court should strike certain statements in the Declaration, as they are conclusory and speculative. Defendant, however, fails to state any applicable authority warranting his motion to strike the Declaration at this stage of the proceedings. Further, pursuant to the Federal Rules of Civil Procedure, the court will already consider whether statements are conclusory and speculative in conducting its 12(b)(2) and 12(b)(6) analysis. Thus, after reviewing the motion, response, reply, and the Declaration, the court overrules Defendant’s evidentiary objections and denies his motion to strike.

         III. Defendant’s Motion to Dismiss

         A. Legal Standard

         1. Rule 12(b)(2) – Lack of Personal Jurisdiction

         On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing a prima facie case for the court’s jurisdiction over a nonresident defendant. See Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993); Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). When the court rules on the motion without an evidentiary hearing, the plaintiff may establish personal jurisdiction by presenting a prima facie case that personal jurisdiction is proper, id.; proof by a preponderance of the evidence is not required. International Truck & Engine Corp. v. Quintana, 259 F.Supp.2d 553, 556 (N.D. Tex. 2003) (citing WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir. 1989)). The court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery. Stuart, 772 F.2d at 1192. Uncontroverted allegations in a plaintiff’s complaint must be taken as true, and conflicts between the facts contained in the parties’ affidavits must be resolved in favor of the plaintiff. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990). After a plaintiff makes his prima facie case, the burden then shifts to the defendant to present “a compelling case that the presence of some other consideration would render jurisdiction unreasonable.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).

         A federal court has jurisdiction over a nonresident defendant if the state long-arm statute confers personal jurisdiction over that defendant, and if the exercise of jurisdiction is consistent with due process under the United States Constitution. Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993). Because the Texas long-arm statute extends to the limits of federal due process, Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990), the court must determine whether (1) the defendants have established “minimum contacts” with the forum state; and, (2) whether the exercise of personal jurisdiction over the defendants would offend “traditional notions of fair play and substantial justice.” Ruston Gas, 9 F.3d at 418 (citing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         The “minimum contacts” prong is satisfied when a defendant “purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Burger King, 471 U.S. at 475. The nonresident defendant’s availment must be such that the defendant “should reasonably anticipate being haled into court” in the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). This test “ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random, ’ ‘fortuitous, ’ or ‘attenuated’ contacts, or of the ‘unilateral activity of another party or a third person.’” Burger King, 471 U.S. at 475 (citations omitted). The “minimum contacts” prong of the inquiry may be subdivided into contacts that give rise to “specific” personal jurisdiction and those that give rise to “general” personal jurisdiction. Marathon Oil Co. v. A.G. Ruhrgas, 182 F.3d 291, 295 (5th Cir. 1999). Specific jurisdiction is only appropriate when the nonresident defendant’s contacts with the forum state arise from, or are directly related to, the cause of action. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). The exercise of general personal jurisdiction is proper when the nonresident defendant’s contacts with the forum state, even if unrelated to the cause of action, are continuous, systematic, and substantial. Id. at 414 n.9.

         In evaluating the second prong of the due process test, the court must examine a number of factors in order to determine fairness and reasonableness, including: (1) the defendant’s burden; (2) the forum state’s interests; (3) the plaintiff’s interest in convenient and effective relief; (4) the judicial system’s interest in efficient resolution of controversies; and (5) the state’s shared interest in furthering social policies. Asahi Metals Indus. Co. v. Superior Court, 480 U.S. 102, 112 (1987). As noted above, “once minimum contacts are established, a defendant must present ‘a compelling case that the presence of some consideration would render jurisdiction unreasonable.’” Eviro Petroleum, Inc. v. Kondur Petroleum, 79 F.Supp.2d 720, 725 (S.D. Tex. 1999) (quoting Burger King, 471 U.S. at 277). In fact, “[o]nly in rare cases . . . will the exercise of jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully established minimum contacts with the forum state.” Id. (quoting Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex. 1991)).

         2. Rule 12(b)(3) – Improper Venue

         Once a defendant raises the issue of improper venue, the plaintiff has the burden to prove that the chosen venue is proper. International Truck & Engine Corp. v. Quintana, 259 F.Supp.2d at 558; Psarros v. Avior Shipping, Inc., 192 F.Supp.2d 751, 753 (S.D. Tex. 2002). In resolving a Rule 12(b)(3) motion, “the court is permitted to look at evidence beyond simply those facts alleged in the complaint and its proper attachments.” Ambraco, Inc. v. Bossclip B. V., 570 F.3d 233, 238 (5th Cir. 2009) (internal quotation marks omitted). Under the general venue statute, venue is proper in:

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which ...

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