Arias v. Mercedes-Benz USA, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

JOSE ARIAS, ET AL. CIVIL ACTION

VERSUS

MERCEDES-BENZ USA, LLC, NO. 20-00546-BAJ-SDJ

ET AL,

RULING AND ORDER

Before the Court is Defendant Mercedes-Benz USA, LLC’s Motion To

Dismiss First Amended Complaint Pursuant To Fed. R. Civ. P. 12(b)(2)

(Dec. 10). Plaintiffs oppose the Motion. (Doc. 11). Defendant filed a Reply

Memorandum. (Doc. 14). Relatedly, Plaintiffs filed a Motion To Stay Decision On

Defendant’s Motion To Dismiss And To Compel Jurisdictional Discovery.

(Doc. 12, Doc. 13).

For the reasons stated herein, Defendant's Motion to Dismiss (Doc. 10) is

GRANTED IN PART and DENIED IN PART and Plaintiffs’ Motion to Stay

(Doc. 12) is DENIED. The Court finds that it lacks personal jurisdiction over

Defendant but concludes that it 1s in the interest of justice to transfer the matter to

the United States District Court for the Southern District of Mississippi pursuant to

28 U.S.C. § 1631 rather than dismiss the case.

I. BACKGROUND

This case arises out of a dispute over an allegedly defective vehicle. Plaintiffs

Jose and Wynette Arias, domiciled in Louisiana, are the purchasers of the vehicle.

(Doc. 6, 9 1, 17-19). Defendant Mercedes-Benz USA, LLC (“MBUSA”) is a Delaware

corporation with its principal place of business in Atlanta, Georgia. (fd. at | 21).

Plaintiffs allegedly purchased a vehicle from Mercedes Benz of

South Mississippi, an authorized MBUSA dealership located in D’Iberville,

Mississippi, for $79,037.77. dd. at [4 19, 23). At the time of purchase, the vehicle was

accompanied by a written warranty providing bumper-to-bumper coverage for a

period of four years or 50,000 miles. (/d. at {| 25).

During the warranty period, Plaintiffs allegedly began to experience an odor

emanating from the vehicle’s HVAC system. (/d. at 28). Plaintiffs assert that they

repeatedly brought the vehicle to Mercedes-Benz of New Orleans (““MBNO”) for

repans.! Ud. at [J 28-35). MBNO, however, only offered the Plaintiffs “for-fee”

maintenance and cleanings. (/d. at 4 28). After various attempted repairs, the defects

at issue remained. (Ud. at 28-35).

Plaintiffs allege that they wrote to Defendant MBUSA to put it on notice that

the vehicle was defective. Ud. at § 35). Plaintiffs assert that Defendant refused to

repair, repurchase, or replace the vehicle. (d.). Plaintiffs now bring claims against

Defendant for breach of express warranty Ud. at 36-45), breach of implied

warranty (id. at J 46-50), violations of the Magnusson-Moss Warranty Act,

MBNO is not a defendant in this matter.

15 U.S.C. § 2301, et seg. Ud. at 9] 51-61), and unjust enrichment or “opportunistic

breach of contract” (Id. at {| 62-68). Ud. at J 3).

Defendant MBUSA moves to dismiss this action for lack of personal

jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 10, p. 1).

Il. LEGAL STANDARD

Personal jurisdiction is “an essential element of the jurisdiction of a district

court, without which it is powerless to proceed to an adjudication.” Ruhrgas AG v.

Marathon Oil Co., 526 U.S. 574, 583 (1999). “The plaintiff bears the burden of

establishing jurisdiction, but need only present prima facie evidence.” Revell v. Lidov,

317 F.8d 467, 469 (5th Cir. 2002). In considering a motion to dismiss for lack of

personal jurisdiction, the Court must accept the plaintiffs “uncontroverted

allegations, and resolve in [his] favor all conflicts between the facts contained in the

parties’ affidavits and other documentation.” Alpine View Co. Lid. v. Atlas Copco AB,

205 F.3d 208, 215 (5th Cir. 2000).

A federal district court sitting in diversity may exercise personal jurisdiction

over a foreign defendant ifthe following are met: (1) the long-arm statute of the forum

state creates personal jurisdiction over the defendant; and (2) the exercise of personal

jurisdiction is consistent with the due process guarantees of the U.S. Constitution.

Revell, 317 F.3d at 469. Because Louisiana's long-arm statute, La. R.S. § 13:3201,

et seq., extends jurisdiction to the full limits of due process, the Court's focus is solely

on whether the exercise of its jurisdiction over Defendant would offend federal due

process. See Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 336 (5th Cir. 1999)

(citing La. B.S. § 138:3201(B)).

The Due Process Clause of the Fourteenth Amendment permits a court

to exercise personal jurisdiction over a foreign defendant when (1) that

defendant 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.

Sufficient minimum contacts will give rise to either specific or general

jurisdiction. General jurisdiction exists when a defendant's contacts

with the forum state are unrelated to the cause of action but are

‘continuous and systematic. Specific jurisdiction arises when the

defendant's contacts with the forum arise from, or are directly related

to, the cause of action.

Revell, 317 F.3d at 470.

The Court has two options upon determining that it lacks personal jurisdiction

over a foreign defendant. The first option is to dismiss the foreign defendant without

prejudice. Guidry v. U.S. Tobacco Co., 188 F.3d 619, 623 n.2 (5th Cir. 1999).

Alternatively, the Court may transfer the entire action “to any other such court...

in which the action... could have been brought at the time it was filed.”

28 U.S.C. § 1631; see Franco v. Mabe Trucking Co., No. 19-30316, 2021 WL 1035958,

at *3 (5th Cir. Mar. 18, 2021) (holding that “the plain text of § 1631 indicates that it

permits a district court to transfer an action when it lacks subject-matter jurisdiction,

personal jurisdiction, or both.”).

TI, DISCUSSION

A, Defendant’s Motion to Dismiss

Defendant asserts that the Court does not have jurisdiction over it pursuant

to Federal Rule of Civil Procedure 12(b)(2). (Doc. 10-1, p. 1).

i. Specifie Jurisdiction

Defendant argues that the Court lacks specific jurisdiction over it because the

Plaintiffs’ action does not arise from forum-related contacts. (Doc. 10-1, p. 3, 6).

Plaintiffs purchased the vehicle in Mississippi. Ud. at p. 6). Plaintiffs then drove the

vehicle from Mississippi to their home in Louisiana. (U/d.). While the vehicle was

repaired in Louisiana, Defendant asserts that it was repaired by an independently

owned and operated authorized dealer, MBNO, and Plaintiffs make no claim for

negligent repair. Ud.). Defendant argues that absolutely no activities pertinent to

Defendant's relation to the vehicle occurred in Louisiana, (/d.). Defendant contends

that because the claim does not arise out of forum contacts created by Defendant,

Plaintiffs cannot establish specific jurisdiction over Defendant. Ud. at p. 8).

Plaintiffs respond that Defendant failed to honor its warranty in Louisiana in

three ways: (1) Defendant allowed MBNO to charge Plaintiffs for warranty repairs or

refused coverage; (2) Defendant authorized MBNO to perform ineffective repair

attempts; and (3) when Plaintiffs contacted Defendant, Defendant communicated to

Plaintiffs through their Louisiana counsel. (Doc. 11, p. 11).

Additionally, Plaintiffs argue that Defendant purposely avails itself of

Louisiana because it markets and sells thousands of Mercedes-Benz cars with its

warranties in Louisiana every year. (Doc. 11, p. 10). Plaintiffs argue that Defendant

distributes Mercedes-Benz branded vehicles in Louisiana throughout a network of

authorized dealers. (fd. at p. 4). Plaintiffs also assert that Defendant authorizes

MBNO, the company that performed the repairs on the vehicle, to use its trademarks

and “trade dress” and contend that Defendant and MBNO use similar fonts.

(Id. at p. 10).

Defendant responds that its sales volume in Louisiana is immaterial because

Plaintiffs’ cause of action did not arise from a Louisiana sale. (Doc. 14, p. 5).

Defendant also asserts that MBNO is not a subsidiary of Defendant, but rather, is an

independent and privately owned company. (/d. at p. 6). Ultimately, Defendant

argues that Plaintiffs’ warranty claims arise out of the sale and purchase of the

vehicle. Ud. at p. 7). The transaction occurred in Mississippi, not Louisiana; Plaintiffs

then transported the vehicle to Louisiana where they reside. (Ud. at p. 7-8).

Defendant argues that “[d]ue process does not permit plaintiffs to create personal

jurisdiction by their own actions.” (fd. at p. 8).

The United States District Court for the Western District of Louisiana recently

considered strikingly similar circumstances in Dupree v. Mercedes-Benz, LLC. There,

plaintiff purchased a vehicle from defendant MBUSA in Mississippi and drove it to

his home in Louisiana. Dupree v. Mercedes-Benz USA LLC, No. CV 6:19-00734, 2019

WL 7597605, at *4 (W.D. La. Dec. 26, 2019), report and recommendation adopted, No.

CV 6:19-00734, 2020 WL 262759 (W.D. La. Jan. 16, 2020). Repairs were performed

on the vehicle at an independently owned and operated authorized dealer rather than

defendant MBUSA. Id. While defendant MBUSA provided the warranty at issue, it

did not directly repair the vehicle it warranted in Louisiana. Id.

The court apphed the United States Court of Appeals for the Fifth Circuit’s

three-step analysis for specific jurisdiction and found that the plaintiff failed to

establish that his claims resulted from defendant MBUSA’s forum-related contacts.

Id. at *4. The Fifth Circuit’s analysis is as follows: (1) whether the defendant has

minimum contacts with the forum state, 1e., whether it purposely directed its

activities toward the forum state or purposefully 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. fd. at *3 (citing Monkton Ins. Services,

Lid. v. Ritter, 768 F.3d 429, 433 (5th Cir. 2014)). The court ultimately concluded that

“no activities germane to [defendant] MBUSA’s relation to the vehicle occurred in

Louisiana.” Jd. Accordingly, the court found that it did not have specific jurisdiction

over defendant MBUSA. fd.

Similarly, here, Plaintiffs’ cause of action does not arise out of Defendant's

forum-related contacts. See id. at *4; see also Revell v. Lidov, 317 F.8d 467, 470

(5th Cir. 2002) (Specific jurisdiction arises when the defendant's contacts with the

forum arise from, or are directly related to, the cause of action”). No activities

germane to Defendant’s relation to the vehicle occurred in Louisiana. See Dupree,

2019 WL 7597605, at *4. Rather, Plaintiffs drove to Mississippi, purchased the

vehicle, and then drove the vehicle to their home in Louisiana. (Doc. 6, 4] 19, 23-24).

Plaintiffs later sought repairs to the vehicle at MBNO, a Louisiana company that is

not named as a defendant in this matter. (/d. at {| 28). Even if Defendant sells vehicles

in Louisiana in general, Plaintiffs did not purchase the vehicle at issue in Louisiana.

dd. at 9f 19, 23-24). Plaintiffs did not obtain the warranty from Defendant in

Louisiana. Ud. at J 23-25). Additionally, the fact that Defendant sent two letters to

Plaintiffs’ counsel’s Louisiana address does not rise to the level of “purposefully

availfing] itself of the privileges of conducting activities” in Louisiana necessary to

establish specific jurisdiction. (Doc. 11-1); see Monkton Ins. Services, Ltd. v. Ritter,

768 F.3d 429, 433 (5th Cir. 2014)).

Plaintiffs’ unsupported allegation that MBNO is the “agent” of Defendant, or

that Defendant authorized MBNO to take certain actions or use certain fonts or

trademarks does not persuade otherwise, especially in light of the Declaration of

Defendant's Sales Operations Manager, Clifford Thomas Cieslak. (Doc. 11, p. 3;

Doc. 10-2); see also Daimler AG v. Bauman, 571 U.S. 117, 1385 (2014) (finding that the

Court did not have general jurisdiction and noting: “Agencies [| come in many sizes

and shapes: ‘One may be an agent for some business purposes and not others so that

the fact that one may be an agent for one purpose does not make him or her an agent

for every purpose.”); see also Dupree v. Mercedes-Benz USA LLC, No. CV 6:19-00734,

2019 WL 7597605, at *5 (W.D. La. Dec. 26, 2019), report and recommendation

adopted, No. CV 6:19-00734, 2020 WL 262759 (W.D. La. Jan. 16, 2020) (finding that

plaintiffs allegations related to [defendant] MBUSA's business office and marketing

and selling of products in Louisiana are merely conclusive allegations and

unsubstantiated assertions which may not be relied on as evidence) (citing Butts v.

Martin, 877 F.3d 571, 581-82 (5th Cir. 2017); Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (A pleading does not “suffice if it tenders ‘naked assertions’ devoid of ‘further

factual enhancement”)).

Cieslak verified the folowing: Defendant neither manufactures nor assembles

Mercedes-Benz parts or passenger vehicles in Louisiana (Doc. 10-2, | 5); Defendant

maintains no manufacturing or assembly facility, or presence of any kind, in

Louisiana Ud. at § 6); Defendant does not maintain a regional office in Louisiana

Ud. at | 7); Defendant provides service and technical information to the independent

Louisiana dealerships by periodically issuing technical and dealer bulletins

(id. at {| 9); and Defendant does not directly make warranty repairs to Mercedes-Benz

passenger vehicles serviced in Louisiana (Ud. at 11).

Because Plaintiffs’ cause of action does not arise out of or result from the

Defendant's forum-related contacts, the Court lacks specific jurisdiction over this

matter.

iii General Jurisdiction

Defendant also argues that the Court lacks general jurisdiction over it.

(Doc. 10-1, p. 9). Plaintiffs respond generally that “[m]inimum contacts with a forum

state may be established generally or specifically... Both types of contacts with

Louisiana are present here.” (Doc. 11, p. 8). Apart from this, Plamtiffs make no

particular arguments and present no evidence to establish that the Court has general

jurisdiction over Defendant.

Contacts between a defendant and the forum state must be “extensive” to

satisfy the “continuous and systematic” test. Submersible Sys., Inc. v.

Perforadora Cent., S.A. de C.V., 249 F.8d 418, 419 (5th Cir. 2001); see also

Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (“For an

individual, the paradigm forum for the exercise of general jurisdiction is the

individual's domicile; for a corporation it is an equivalent place, one in which the

corporation is fairly regarded as at home.”). Clearly, Plaintiffs have failed to establish

that Defendant’s contacts with Louisiana were so “extensive” to satisfy the

“continuous and systematic test,” to render Defendant “at home” in Louisiana.

Accordingly, the Court will grant Defendant’s Motion to Dismiss.

B. Transfer

In the Opposition to Defendant’s Motion to Dismiss, Plaintiffs assert that if the

Court determines that it lacks jurisdiction, the Court should transfer the case to an

appropriate federal forum—the “District of Mississippi.” (Doc. 11, p. 14). Defendants

concede that the U.S. District Court for the Southern District of Mississippi would be

the appropriate forum. (Doc. 14, p. 8).

Under 28 U.S.C. § 1631, “when a federal ‘court finds that there is a want of

jurisdiction’ and that a transfer would be ‘in the interest of justice,’ ‘the court... shall

transfer’ the action to another court ‘in which the action could have been brought’ and

the transferred action ‘shall proceed as if it had been filed in... the court to which it

was transferred ...on the date it was actually filed in... the court from which it was

transferred.” Franco v. Mabe Trucking Co., No. 19-30816, 2021 WL 1035958, at *2

10

(5th Cir. Mar. 18, 2021). The Fifth Circuit held that “the plain text of § 1631 indicates

that it permits a district court to transfer an action when it lacks subject-matter

jurisdiction, personal jurisdiction, or both.” fd. at *8. In light of the mandatory

language, the Fifth Circuit also recognized that “our sister circuits have approved

transfers even when the parties did not move under § 1631 and where the

transferring court did not mention § 1631 in its transfer orders.” Jd. at *4.

“A case is ‘transferable’ pursuant to § 1631 when three conditions are met:

(1) the transferee court would have been able to exercise its jurisdiction on the date

the action was misfiled; (2) the transferor court lacks jurisdiction; and (8) the transfer

serves the interest of justice.” Harutyunyan v. Love, No. 19-cv-41, 2019 WL 5551901,

at *6 (E.D. La. Oct. 28, 2019) (quoting Trejo-Mejia v. Holder, 593 F.3d 913, 915

(9th Cir. 2010)).

Here, there is no dispute that this action could have been brought in the

Southern District of Mississippi. Further, this Court has now determined that it lacks

personal jurisdiction over Defendant. Additionally, the Court determines that

transfer, not dismissal, best serves the mterests of justice to promote judicial

efficiency, conserve the parties’ resources, and avoid duplication of efforts. Thus, the

elements of the test for transferability under § 1631 are satisfied. See id,

C. Plaintiffs’ Motion to Stay

Finally, Plaintiffs ask the Court to reserve its decision on Defendant’s Motion

to Dismiss until after the completion of jurisdictional discovery. (Doc. 13, p. 4).

11

Plaintiffs assert that the opportunity to collect jurisdictional discovery would simplify

the resolution of Defendant’s challenge to jurisdiction. ([d.).

It is well established that “discovery on matters of personal jurisdiction...

need not be permitted unless the motion to dismiss raises issues of fact.” Kelly v.

Syria Shell Petroleum Dev. B.V., 213 F.8d 841, 855 (5th Cir, 2000). And, “[w]hen the

lack of personal jurisdiction is clear, discovery would serve no purpose and should not

be permitted.” 721 Bourbon, Ine. v. House of Auth, LLC,

140 F. Supp. 3d 586, 600 (£.D. La. 2015).

In the interest of judicial economy and preservation of the parties’ resources,

the Court will transfer the matter to the U.S. District Court for the Southern District

of Mississippi rather than grant the stay, permit jurisdictional discovery, and

continue to expend resources litigating this preliminary stage in the litigation when

the parties could achieve more expeditious resolution in the proper forum.

IV. CONCLUSION

Accordingly,

IT IS ORDERED that Defendant Mercedes-Benz USA, LLC’s Motion To

Dismiss First Amended Complaint Pursuant To Fed. R. Civ. P. 12(b)(2)

(Doc. 10) is GRANTED IN PART and DENIED IN PART. The Court finds that it

does not have personal jurisdiction over Defendant,

IT IS FURTHER ORDERED that Plaintiffs’ Motion To Stay Decision On

Defendant’s Motion To Dismiss And To Compel Jurisdictional Discovery

(Doc. 12) is DENIED.

12

IT IS FURTHER ORDERED that this matter be and is hereby transferred

to the United States District Court for the Southern District of Mississippi.

IT IS FURTHER ORDERED that Defendant Mercedes-Benz USA, LLC’s

Motion To Dismiss Pursuant To Fed. R. Civ. P. 12(b)(2) (Doc. 4) is DENIED

AS MOOT.

Baton Rouge, Louisiana, this 30 “day of March, 2021

JUDGE BRIAN St

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

13