United States District Court, D. Oregon
TIMOTHY C. ROTE, Plaintiff,
LOT SOLUTIONS, INC., and DOES 1 THROUGH 5, Defendants.
FINDINGS AND RECOMMENDATION
Honorable Paul Papak United States Magistrate Judge
pro se Timothy C. Rote (a citizen of Oregon) filed
this action against defendant Lot Solutions, Inc.
("Lot") (a corporation organized under Georgia
and headquartered in Florida), and five Doe defendants (each
alleged to be a citizen of a state other than Oregon) on July
15, 2016. By and through his complaint, Rote alleges that at
all material times he was a "secured creditor" and
shareholder of Northwest Direct Marketing, Inc.
("NDM"), that NDM and Lot were parties to an
agreement pursuant to which NDM agreed to provide Lot with
"inbound and outbound telemarketing services" and
Lot agreed to pay NDM for those services, that Lot breached
its payment obligations to NDM, and that Rote "has
foreclosed on the Accounts Receivable of NDM for the purpose
of collecting said receivables and paying the secured
lenders' .. . their balances owed and to return the
balance for the benefit of the unsecured creditors."
Arising out of the foregoing, Rote alleges Lot's
liability to him under Oregon law for breach of its contract
with NDM, Rote seeks award of compensatory damages in the
amount of $463, 701.90 plus interest. This court may properly
exercise diversity jurisdiction over Rote's cause of
action pursuant to 28 U.S.C. § 1332, based on the
complete diversity of the parties and the amount in
before the court is Lot's motion (#20) to dismiss
Rote's cause of action for failure to state a claim
and/or for failure to join a necessaiy party, and in the
alternative to transfer this action to the state of Georgia
pursuant to the forum-selection clause of the agreement
between Lot and NDM. I have considered the motion and all of
the pleadings and papers on file. For the reasons set forth
below, Lot's motion to dismiss should be granted in part
and denied in part, Rote's claim should be dismissed
without prejudice, and Lot's alternative motion to
transfer should be denied. I recommend that Rote be granted a
period of thirty days within which to amend his pleading to
cure the defects identified herein, and that the court enter
judgment in connection with such dismissal only in the event
of his failure to do so within the specified period.
Failure to State a Claim
survive dismissal for failure to state a claim pursuant to
Rule 12(b)(6), a complaint must contain more than a
"formulaic recitation of the elements of a cause of
action;" specifically, it must contain factual
allegations sufficient to "raise a right to relief above
the speculative level, " Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). To raise a right to
relief above the speculative level, "[t]he pleading must
contain something more ... than ... a statement of facts that
merely creates a suspicion [ofj a legally cognizable right of
action." Id., quoting 5 C. Wright & A.
Miller, Federal Practice and Procedure § 1216, pp.
235-236 (3d ed. 2004); see also Fed. R. Civ. P.
8(a). Instead, the plaintiff must plead affirmative factual
content, as opposed to any merely conclusory recitation that
the elements of a claim have been satisfied, that
"allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937,
1949 (2009). "In sum, for a complaint to survive a
motion to dismiss, the non-conclusory 'factual content,
' and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to
relief." Moss v. United States Secret Serv.,
572 F.3d 962, 970 (9th Cir. 2009), citing Iqbal, 129
S.Ct. at 1949.
ruling on a 12(b)(6) motion, a court may generally consider
only allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice." Swartz v. KPMG LLP, 476 F.3d
756, 763 (9th Cir. 2007). In considering a motion to dismiss,
this court accepts all of the allegations in the complaint as
true and construes them in the light most favorable to the
plaintiff. See Kahle v. Gonzales, 474 F.3d 665, 667
(9th Cir. 2007). Moreover, the court "presume[s] that
general allegations embrace those specific facts that are
necessary to support the claim." Nat'l Org. for
Women v. Scheidler, 510 U.S. 249, 256 (1994),
quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 561 (1992). The court need not, however, accept legal
conclusions "cast in the form of factual
allegations." Western Mining Council v. Watt,
643 F.2d 618, 624 (9th Cir. 1981).
Failure to Join a Necessary Party
may move to dismiss a complaint for "failure to join a
party under Rule 19." Fed.R.Civ.P. 12(b)(7). The courts
of the Ninth Circuit follow a three-step inquiry in
considering dismissal pursuant to Rule 12(b)(7). See Salt
River Project Agr, Imp. & Power Dist. v. Lee, 672 F,
3d 1176, 1179 (9th Cir. 2012). That inquiry "is a
practical, fact-specific one, designed to avoid the harsh
results of rigid application." Dawavendewa v. Salt
River Project Agr. Imp. & Power Dist, 276 F.3d 1150,
1154 (9th Cir. 2002), The court must first "determine
whether a nonparty should be joined under Rule 19(a) ... as a
person required to be joined if feasible.'" E.E.
O. C v. Peabody W. Coal Co., 610 F.3d 1070, 1078 (9th
Cir. 2010). If so, the court next determines "whether it
is feasible to order that the absentee be joined."
Id. (internal quotation marks omitted). Finally,
"if joinder is not feasible, the court must determine at
the third stage whether the case can proceed without the
absentee or whether the action must be dismissed."
Id. (internal quotation marks omitted). "Rule
19 is designed to protect the interests of absent parties, as
well as those ordered before the court, from multiple
litigation, inconsistent judicial determinations or the
impairment of interests or rights." CP Nat'l
Corp. v. Bonneville Power Admin., 928 F.2d 905, 911 (9th
the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to
any other district or division where it might have been
brought." 28 U.S.C. § 1404(a).
A motion to transfer venue under § 1404(a) requires the
court to weigh multiple factors in its determination whether
transfer is appropriate in a particular case. For example,
the court may consider: (1) the location where the relevant
agreements were negotiated and executed, (2) the state that
is most familiar with the governing law, (3) the plaintiffs
choice of forum, (4) the respective parties' contacts
with the forum, (5) the contacts relating to the plaintiffs
cause of action in the chosen forum, (6) the differences in
the costs of litigation in the two forums, (7) the
availability of compulsory process to compel attendance of
unwilling non-party witnesses, and (8) the ease of access to
sources of proof. Additionally, the presence of a forum
selection clause is a "significant factor" in the
court's § 1404(a) analysis.
Jones v. GNC Franchising, Inc., 211 F.3d 495, 499
(9th Cir. 2000) (footnotes omitted). The defendant bears the
burden of establishing the greater appropriateness of the
transferee forum. See Id. Courts afford a degree of
deference to a plaintiffs choice of her home forum. See,
e.g., Piper Aircraft Co. v. Reyno, 454 U.S.
235, 255 (1981).
Rote is an individual citizen of Oregon. At all material
times, Rote was the president, secretary, and registered
agent of NDM. At all material times, NDM was organized under
Oregon law and headquartered in Oregon.
Lot is a Georgia corporation headquartered in Florida.
Although Rote alleges that the Doe defendants are citizens of
states other than Oregon, he does not otherwise refer to them
in his complaint, allege any conduct attributable to them, or
suggest that any of them played any direct or indirect role
in the complained-of conduct.
Rote's Allegations Regarding the Parties'
February 17, 2008, Lot and NDM "entered into a contract
for inbound and outbound telemarketing services. Complaint,
¶ 9. NDM provided such services to Lot from a call
center located in Beaverton, Oregon. See id, ¶
10. In approximately October 2011, Lot directed NDM to cease
providing it with telemarketing services, and began relying
on a business entity it had recently acquired to perform such
services in-house. See id., ¶¶ 12, 14.
Rote advised Lot at approximately that time that pursuant to
the agreement between Lot and NDM, Lot was not entitled to
terminate its agreement with NDM without first complying with
a contractual provision calling for gradual "ramp down
of the contract volume." Id., ¶ 13. Lot
nevertheless ceased doing business with NDM without first
gradually ramping down the volume of services it required NDM
to perform. See id, ¶¶ 14, 16. At some
subsequent time, Rote "foreclosed on the Accounts
Receivable of NDM for the purpose of collecting said
receivables and paying the secured lenders, Wells Fargo and
Rote, their balances owed and to return the balance for the
benefit of the unsecured creditors." Id.,
¶ 20. It is Rote's position that, at the time Lot
ceased doing business with NDM, NDM was entitled to $239,
172.29 in "ramp-down" payments, and that at the
time he filed this action, that amount had grown with
interest to $463, 701.90. See id., ¶¶