United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE
the Court is Defendant Robin “Ross” Cooper's
motion to dismiss or transfer filed May 21, 2019 (Doc. 15).
For the reasons that follow, the Court hereby DENIES
IN PART and GRANTS IN PART
Defendant Cooper's motion. Although the Court concludes
that it lacks personal jurisdiction over all Defendants in
this case, the Court DENIES Defendant
Cooper's motion to dismiss (Doc. 15) for lack of personal
jurisdiction. Rather than dismissing the case, the Court
GRANTS Defendant Cooper's motion to
transfer venue (Doc. 15) to the Southern District of
California, but the Court elects to transfer the case
pursuant to 28 U.S.C. § 1406(a), rather than 28 U.S.C.
§ 1404(a). Further, because the Court exercises its
discretion to transfer the case, the Court hereby
DENIES Defendant Verimatrix, Inc.'s
motion to dismiss (Doc. 18) as MOOT.
a declaratory-judgment action arising out of a
stock-ownership dispute. Plaintiffs James Pyung Lee and Hee
Sook Nam allege that Defendant Cooper, the former Chief
Executive Officer of Defendant Verimatrix, Inc., agreed with
Plaintiffs to transfer stock shares to Plaintiffs. Doc. 9,
Pls.' First Am. Compl., ¶¶ 14-15. According to
Plaintiffs, they each provided consideration to receive 220,
000 shares in Defendant Verimatrix. Id. ¶¶
17-18. On or about March 12, 2003, Plaintiffs allege,
Defendant Cooper transferred 220, 000 stock shares to each
Plaintiff. Id. Thereafter, a Director of Defendant
Verimatrix delivered the endorsed shares to Plaintiffs in
Dallas County, Texas. Id. ¶ 15.
December 2018, Plaintiffs discovered that Defendant Inside
Secure was seeking to acquire shares of Defendant Verimatrix.
Doc. 28, App. Supp. Pls.' Combined Resp., Exs. 1-2,
¶ 6. Now, Plaintiffs contend, Defendant Inside
Secure's acquisition of Defendant Verimatrix is
purportedly complete, but neither Plaintiff has sold his or
her shares. Id. ¶ 7. Confusingly, Plaintiffs omit
any facts indicating whether they were consulted regarding
this acquisition or whether Defendants have denied
Plaintiffs' ownership in the stock altogether.
See Doc. 9, Pls.' First Am. Compl.; Doc. 27,
Pls.' Combined Resp. It appears that the alleged
acquisition is an attempt to divest Plaintiffs of their
claimed interest in the stock. In any event, this
characterization of the allegations does not affect the
filed this declaratory-judgment action in Texas state court
on January 9, 2019. Doc. 1-3, Pls.' Orig. Pet., 1. They
seek a declaratory judgment stating that: (1) Plaintiffs are
owners of Defendant Verimatrix; (2) Plaintiffs own the stock
certificates attached to their amended complaint (Doc. 9);
and (3) Defendant Cooper had the legal authority to transfer
the stock to Plaintiffs. Doc. 9, Pls.' First Am. Compl.,
¶ 20. Based on diversity jurisdiction, Defendant Cooper
timely filed a notice of removal (Doc. 1). Subsequently,
Plaintiffs filed an amended complaint (Doc. 9). Next,
Defendant Cooper filed a motion to dismiss or transfer (Doc.
15); Plaintiffs responded (Doc. 27); and Defendant Cooper
replied (Doc. 29). Accordingly, Defendant Cooper's motion
to dismiss or transfer is now ripe for review.
motion to dismiss, Defendant Cooper seeks dismissal for: (1)
lack of personal jurisdiction; (2) improper venue; (3)
failure to join a necessary party; and (4) failure to state a
claim due to the expiration of the statute of limitations.
Doc. 16, Br. Supp. Def.'s Mot., 3. As an alternative to
dismissal, Defendant Cooper also contends that transfer of
the case is proper under 28 U.S.C. § 1404.
Dismissal Under Federal Rule of Civil Procedure 12(b)(2)
for Lack of Personal Jurisdiction
Rule of Civil Procedure 12(b)(2) allows for dismissal of an
action when a court lacks personal jurisdiction over the
defendant. A plaintiff bears the burden of establishing a
trial court's personal jurisdiction over each defendant.
Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.
1985). “To satisfy that burden, the [plaintiff] must
‘present sufficient facts as to make out only a prima
facie case supporting jurisdiction,' if a court rules on
a motion [to dismiss] without an evidentiary hearing.”
Lahman v. Nationwide Provider Sols., 2018 WL
3035916, at *4 (E.D. Tex. June 19, 2018) (quoting Alpine
View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 215 (5th
considering the motion to dismiss, ‘allegations in a
plaintiff's complaint are taken as true except to the
extent that they are contradicted by defendant's
affidavits.'” Lahman, 2018 WL 3035916, at
*4 (alterations incorporated) (quoting Int'l Truck
& Engine Corp. v. Quintana, 259 F.Supp.2d 553, 557
(N.D. Tex. 2003) (citing Wyatt v. Kaplan, 686 F.2d
276, 282-83 n.13 (5th Cir. 1982))). Further, “[a]ny
genuine, material conflicts between the facts established by
the parties' affidavits and other evidence are resolved
in favor of [the] plaintiff for the purposes of determining
whether a prima facie case exists.” Valdez
v. Kreso, Inc., 157 F.Supp.2d 722, 725 (N.D.
Tex. 2001) (citing Jones v. Petty-Ray Geophysical
Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992) and
Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.
federal court sitting in diversity may exercise personal
jurisdiction over a nonresident defendant to the same extent
as a forum-state court. Wilson v. Belin, 20 F.3d
644, 646 (5th Cir. 1994). A Texas state court can exercise
jurisdiction over a nonresident if two preconditions are met:
(1) the nonresident must be amenable to service of process
under Texas's long-arm statute; and (2) the assertion of
jurisdiction over the nonresident must comport with the due
process clause of the Fourteenth Amendment. Jones,
954 F.2d at 1067. Because Texas's long-arm statute has
been held to extend to the limits of due process, the Court
need only determine whether jurisdiction over the defendants
is constitutionally permissible. Schlobohm v.
Schapiro, 784 S.W.2d 355, 357 (Tex. 1990).
the federal constitutional test of due process, two elements
must be satisfied: (1) the defendant must have purposefully
availed itself of the benefits and protections of the forum
state by establishing “minimum contacts” with
that state such that it should reasonably anticipate being
haled into court there; and (2) the exercise of jurisdiction
over the defendant must not offend traditional notions of
fair play and substantial justice. Jones, 954 F.2d
“minimum contacts” prong of the due process
analysis can be met through contacts giving rise to either
specific or general personal jurisdiction. Gundle Lining
Constr. Corp. v. Adams Cty. Asphalt, Inc., 85 F.3d 201,
205 (5th Cir. 1996). “General personal jurisdiction is
found when the nonresident defendant's contacts with the
forum state, even if unrelated to the cause of action, are
continuous, systematic, and substantial.” Marathon
Oil Co. v. A.G. Ruhrgas, 182 F.3d 291, 295 (5th Cir.
1999). In contrast, specific personal jurisdiction is
established through the defendant's contacts with the
forum state that arise from, or are related to, the cause of
action. Gundle Lining, 85 F.3d at 205. The
specific-jurisdiction inquiry “focuses on the
relationship among the defendant, the forum, and the
litigation.” Walden v. Fiore, 571 U.S. 277,
283-84 (2014) (internal citations and quotation marks
specific jurisdiction over a defendant, a court must find
that “the defendant's suit-related conduct . . .
create[s] a substantial connection with the forum
[s]tate.” Id. at 284. This connection
“must arise out of contacts that the defendant
himself creates with the forum [s]tate, ” and
it must be based on “the defendant's contacts with
the forum [s]tate itself, not the defendant's contacts
with persons who reside there.” Id. at 284-85
(emphasis in original) (internal citations and quotation
marks omitted). Thus, a defendant cannot be “haled into
court” based on the “‘random, fortuitous,
or attenuated' contacts he makes by interacting with
other persons affiliated with the [s]tate.”
Id. at 286 (internal quotation marks omitted)
(quoting Burger King v. Rudzewicz, 471 U.S. 462, 475
(1985)). And a defendant's physical entry into the forum
state, whether in person or through an agent, is “a
relevant contact” in assessing personal jurisdiction,
but it is not a prerequisite to jurisdiction.
Walden, 571 U.S. at 285.
Court now turns to whether it has personal jurisdiction over
Defendants Cooper, Verimatrix, and Inside Secure. Plaintiffs
do not explicitly indicate whether they contend that
Defendants are subject to general or specific jurisdiction-or
both. See Doc. 9, Pls.' First Am. Compl.,
¶¶ 6-11; Doc. 27, Pls.' Combined Resp., 2-4.
But because their arguments focus exclusively on
Defendants' contacts with Texas that relate to the cause
of action, Plaintiffs' arguments sound only in specific
jurisdiction. See Gundle Lining, 85 F.3d at 205.
example, in their amended complaint, Plaintiffs allege that
Defendants Cooper and Verimatrix have “minimum contacts
with the state of Texas via their entry to Texas and
targeting of Texas residents to conduct a [sale] of . . .
stock and transfer of stock certificate[s].” Doc. 9,
Pls.' First Am. Compl., ¶ 10. And in their response,
Plaintiffs contend that “Defendants clearly knew that
Plaintiffs were Texas residents, they aimed their activities
at Texas, and the[y] knew that the brunt of those activities
would be felt in Texas.” Doc. 27, Pls.' Combined
Resp., 4. Further, Plaintiffs' only argument supporting
personal jurisdiction over Defendant Inside Secure rests on
the notion that, because Defendant Verimatrix is
“allegedly a subsidiary of Inside Secure, ” and
there is personal jurisdiction over Defendant Verimatrix, the
Court has personal jurisdiction over Defendant Inside Secure.
Id. at 7.
Plaintiffs' failure to allege general jurisdiction over
any defendant in the case, this Court focuses its analysis
exclusively on whether it has specific jurisdiction over each
Defendant. Moreover, because Plaintiffs rely on the same
arguments to support a finding of personal jurisdiction for
both Defendant Cooper and Defendant Verimatrix, the Court
addresses personal jurisdiction over these Defendants
Defendants Cooper and Verimatrix
Court first examines whether it has specific jurisdiction
over Defendants Cooper and Verimatrix. Plaintiffs contend
that Defendants Cooper and Verimatrix “have minimum
contacts with the state of Texas” by virtue of
“their entry to Texas and targeting of Texas residents
to conduct a [sale] of a stock ...