United States District Court, D. Oregon
CAROL FERGUSON and LYNDA FREEMAN, on behalf of themselves and, in addition, on behalf of other similarly situated, Plaintiffs,
MARIA SMITH, an individual; ALL STAR AUTO GROUP, INC., a Delaware corporation; the SMITH AUTO GROUP, an unregistered conglomeration of entities owned by Maria Smith; GLADSTONE AUTO, LLC, an Oregon limited liability company; and CARROS, INC., an Oregon corporation, Defendants.
FINDINGS AND RECOMMENDATION
F. BECKERMAN, UNITED STATES MAGISTRATE JUDGE.
matter comes before the Court on a motion to dismiss filed by
Defendants Maria Smith (“Smith”), All Star Auto
Group, Inc. (“All Star”), the Smith Auto Group
(“Smith Auto”) (collectively, the “Smith
Defendants”), Gladstone Auto, LLC (“Gladstone
Auto”), and Carros, Inc. (“Carros”)
(collectively with the Smith Defendants,
“Defendants”). The Court has jurisdiction over
this matter pursuant to 28 U.S.C. § 1331. For the
reasons explained below, the Court recommends that the
district judge grant in part and deny in part Defendants'
motion to dismiss.
Carol Ferguson (“Ferguson”) and Lynda Freeman
(“Freeman”) are Oregon residents who worked in
the automotive sales industry. Smith has a direct ownership
interest in two Oregon-based auto dealerships, Gladstone Auto
and Carros, and oversees the operation of those dealerships.
On March 1, 2018, Plaintiff brought this suit, individually
and on behalf of others similarly situated, alleging that
Defendants willfully failed to pay them, and other similarly
situated individuals, minimum and overtimes wages in
violation of the Fair Labor Standards Act
(“FLSA”) and Oregon state law. On May 3, 2018,
Defendants filed a motion to dismiss, wherein the Smith
Defendants argued that Plaintiffs' complaint should be
dismissed for lack of personal jurisdiction and Defendants
collectively argued that Plaintiffs fail to state a plausible
claim for relief.
I.STANDARD OF REVIEW
Lack of Personal Jurisdiction
a defendant moves to dismiss for lack of personal
jurisdiction, ‘the plaintiff bears the burden of
demonstrating that jurisdiction is appropriate.'”
Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1141
(9th Cir. 2017) (quoting Schwarzenegger v. Fred Martin
Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)).
“Where, as here, the motion is based on written
materials rather than an evidentiary hearing, ‘the
plaintiff need only make a prima facie showing of
jurisdictional facts.'” Schwarzenegger, 374
F.3d at 800 (quoting Sher v. Johnson, 911 F.2d 1357,
1361 (9th Cir. 1990)). In determining whether the plaintiff
has made such a showing, the court must accept uncontroverted
allegations in the complaint as true and resolve any factual
conflicts in affidavits in the plaintiff's favor.
Id. (citing AT&T v. Compagnie Bruxelles
Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).
Failure to State a Claim
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
(2007)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
at 678. “The plausibility standard is not akin to a
probability requirement, but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Mashiri v. Epstein Grinnell & Howell, 845 F.3d
984, 988 (9th Cir. 2017) (internal quotation marks omitted)
(citing Iqbal, 556 U.S. at 678)).
Smith Defendants move to dismiss Plaintiffs' complaint
for lack of personal jurisdiction. See Fed. R. Civ.
P. 12(b)(1). It is well settled that “[p]ersonal
jurisdiction over each defendant must be analyzed
separately.” Harris Rutsky & Co Ins. Servs.,
Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130
(9th Cir. 2003) (citation omitted). Accordingly, the Court
will individually consider whether it may exercise personal
jurisdiction over Smith, All Star, and Smith Auto.
courts ordinarily follow state law in determining the bounds
of their jurisdiction over [defendants].” Picot v.
Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting
Daimler AG v. Bauman, 571 U.S. 117, 125 (2014)).
“Oregon law authorizes personal jurisdiction over
defendants to the full extent permitted by the United States
Constitution.” Ranza v. Nike, Inc., 793 F.3d
1059, 1068 (9th Cir. 2015) (citation omitted). The Court must
therefore inquire whether its exercise of jurisdiction over
Smith, All Star, and Smith Auto “comports with the
limits imposed by federal due process.” See
id. (“We therefore inquire whether the District of
Oregon's exercise of jurisdiction over [defendant]
‘comports with the limits imposed by federal due
process requires that the defendant ‘have certain
minimum contacts' with the forum state ‘such that
the maintenance of the suit does not offend traditional
notions of fair play and substantial justice.'”
Picot, 780 F.3d at 1211 (quoting Int'l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945)). “The
strength of contacts required depends on which of the two
categories of personal jurisdiction a litigant invokes:
specific jurisdiction or general jurisdiction.”
Ranza, 793 F.3d at 1068. In this case, Plaintiffs
invoke specific jurisdiction. (See Pls.' Resp.
at 2, stating that “plaintiffs contend that this Court
has specific jurisdiction over [the Smith] defendants rather
than general jurisdiction”). The Ninth Circuit employs
the following three-prong test to determine if a defendant
has sufficient minimum contacts to be subject to specific
(1) [t]he non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he
purposefully avails himself of the privilege of conducting
activities in the forum, thereby invoking the benefits and
protections of its laws;
(2) the claim must be one which arises out of or relates to
the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play
and substantial justice, i.e., it must be reasonable.
Picot, 780 F.3d at 1211 (quoting
Schwarzenegger, 374 F.3d at 802). Plaintiffs bear
the burden of proving the first two prongs. Id. If
Plaintiffs fail “‘to satisfy either of these
prongs, personal jurisdiction is not established in the forum
state.'” Morrill, 873 F.3d at 1142
(citation omitted). If Plaintiffs satisfy both of the first
two prongs, the burden shifts to the Smith Defendants to
“‘set forth a compelling case that the exercise
of jurisdiction would not be reasonable.'”
Picot, 780 F.3d at 1212 (quoting CollegeSource,
Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir.
the first prong of the specific jurisdiction test, Plaintiffs
must show that the Smith Defendants “purposefully
direct[ed]” their activities toward Oregon, or
“purposefully avail[ed]” themselves of the
privilege of conducting activities in Oregon. In the Ninth
Circuit, courts “generally apply the purposeful
availment test when the underlying claims arise from a
contract, and the purposeful direction test when they arise
from alleged tortious conduct.” Morrill, 873
F.3d at 1142 (citing Schwarzenegger, 374 F.3d at
800). The latter test applies here given the nature of the
underlying claims. See, e.g., Huddleston v. John
Christner Trucking, LLC, No. 1:17-cv-00925, 2017 WL
4310348, at *4 (E.D. Cal. Sept. 28, 2017)
(“‘Although a FLSA claim for relief ostensibly
arises from an employment contract, courts have likened FLSA
claims to tort claims and have applied the purposeful
direction standard.'”) (citations omitted).
“purposeful direction” or “effects”
test is derived from Calder v. Jones, 465 U.S. 783
(1984). See Axiom Foods, Inc. v. Acerchem Int'l,
Inc., 874 F.3d 1064, 1069 (9th Cir. 2017) (noting that
the purposeful direction test is “often referred to as
the ‘effects' test, ” which is derived from
Calder). “Under this test, a defendant
purposefully directed his activities at the forum if he:
‘(1) committed an intentional act, (2) expressly aimed
at the forum state, (3) causing harm that the defendant knows
is likely to be suffered in the forum state.'”
Picot, 780 F.3d at 1215 (quoting
Schwarzenegger, 374 F.3d at 803). Application of
this test requires the court to focus on the defendant's
contacts with the forum state itself, not on the
defendant's contacts with persons who reside in the forum
state, because “a ‘mere injury to a forum
resident is not a sufficient connection to the
forum'” state to establish personal jurisdiction.
Id. (citation omitted); see also Walden v.
Fiore, 571 U.S. 277, 290 (2014) (explaining that
“an injury is jurisdictionally relevant only insofar as
it shows that the defendant has formed a contact with the
forum State, ” and that “[t]he proper question is
not where the plaintiff experienced a particular injury or
effect but whether the defendant's conduct connects him
to the forum in a meaningful way”).