PRICE v. BH MEDIA GROUP, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

GAYLA PRICE, )

)

Plaintiff, )

)

v. ) 1:19-CV-960

)

GREENSBORO NEWS & RECORD, )

LLC, BH MEDIA GROUP, INC., )

BERKSHIRE HATHAWAY, INC., )

and KELLY YOUNG, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Catherine C. Eagles, District Judge.

In this employment discrimination case, the defendant Berkshire Hathaway, Inc.

moves to dismiss for lack of personal jurisdiction. The plaintiff Gayla Price worked in

Greensboro at Berkshire Hathaway’s subsidiary from May 2016 to May 2017. Because

the record shows that Berkshire Hathaway does not have the necessary minimum contacts

with North Carolina to allow the Court to exercise personal jurisdiction over it, the Court

will grant Berkshire Hathaway’s motion.

Background

The Supreme Court recognizes two types of personal jurisdiction: general (or “all-

purpose”) jurisdiction and specific (or “case-linked”) jurisdiction. Bristol-Myers Squibb

Co. v. Super. Ct. of Cal., 137 S. Ct. 1773, 1779–80 (2017). The parties agree that

Berkshire Hathaway is not subject to general jurisdiction in North Carolina. See Doc. 13

at 9–10; Doc. 15 at 6. Accordingly, the Court will only consider whether Berkshire

Hathaway is subject to specific jurisdiction in this case.

Out-of-state defendants are subject to specific personal jurisdiction only if both the

forum state’s long-arm statute and due process are satisfied. See Universal Leather, LLC

v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014). In North Carolina, these

considerations are co-extensive. Christian Sci. Bd. of Dirs. of the First Church of Christ,

Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001).

To satisfy due process requirements, a defendant must have sufficient “minimum

contacts” with the forum state such that “the maintenance of the suit does not offend

traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S.

310, 316 (1945).1 This requires that a defendant have “purposefully directed his

activities at the residents of the forum” and that the cause of action “arise[s] out of or

relate[s] to” those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472–73

(1985). “This test is designed to ensure that the defendant is not ‘haled into a jurisdiction

solely as a result of random, fortuitous, or attenuated contacts.’” Consulting Eng’rs

Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009) (quoting Burger King, 471

U.S. at 475). Alternatively, a defendant may be subject to personal jurisdiction here if it

is the alter ego or partner of an entity over which the Court already has jurisdiction. See

Sky Cable, LLC v. DIRECTV, Inc., 886 F.3d 375, 391–92 (4th Cir. 2018) (alter ego);

1 The Court omits internal citations, alterations, and quotation marks throughout this opinion,

unless otherwise noted. See United States v. Marshall, 872 F.3d 213, 217 n.6 (4th Cir. 2017).

Design88 Ltd. v. Power Uptik Prods., LLC, 133 F. Supp. 2d 873, 876 (W.D. Va. 2001)

(citing Young v. F.D.I.C., 103 F.3d 1180, 1193 (4th Cir. 1997)) (partner).

When, as here, a court examines personal jurisdiction based on the pleadings,

motions, and affidavits—i.e., without an evidentiary hearing—the burden on the plaintiff

is simply to make a prima facie showing of personal jurisdiction. Sneha Media & Entm’t,

LLC v. Assoc. Broad. Co. P Ltd., 911 F.3d 192, 196–97 (4th Cir. 2018) (treating a

12(b)(2) motion “at such a preliminary stage . . . in conceptually the same manner” as a

motion to dismiss under 12(b)(6)). The court must take the allegations in the light most

favorable to the plaintiff, id., resolving “all disputed facts and reasonable inferences in

the plaintiff’s favor.” D2L Ltd. v. Biggs, No. CCB-18-2994, 2019 WL 3975656, at *1

(D. Md. Aug. 22, 2019) (citing Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc.,

334 F.3d 390, 396 (4th Cir. 2003)).

Although the standard may be lenient, the court need not “credit conclusory

allegations.” Masselli & Lane, PC v. Miller & Schuh, PA, 215 F.3d 1320 (table), 2000

WL 691100, at *1 (4th Cir. May 30, 2000) (quoting Ticketmaster-N.Y., Inc. v. Alioto, 26

F.3d 201, 203 (1st Cir. 1994)). Blanket allegations as to multiple defendants are

insufficient. See Sterne v. Thompson, No. 1:05 CV 477 JCC, 2005 WL 2563179, at *2

(E.D. Va. Oct. 7, 2005) (addressing Rule 12(b)(6) motion). A parent-subsidiary

relationship does not by itself support jurisdiction. See Saudi v. Northrop Grumman

Corp., 427 F.3d 271, 276 (4th Cir. 2005). Plaintiffs must base their claim for personal

jurisdiction “on specific facts set forth in the record.” Magic Toyota, Inc. v. Se. Toyota

Distribs., Inc., 784 F. Supp. 306, 310 (D.S.C. 1992).

Once a defendant presents evidence indicating that the requisite minimum contacts

do not exist, the plaintiff must come forward with affidavits or other evidence in support

of its position. See Velez v. Colon, No. 1:18CV917, 2019 WL 4774162, at *2 (M.D.N.C.

Sept. 30, 2019) (citing Wolf v. Richmond Cty. Hosp. Auth., 745 F.2d 904, 908 (4th Cir.

1984)); see also IMO Indus., Inc. v. SEIM s.r.l., No. 3:05-CV-420-MU, 2006 WL

3780422, at *1 (W.D.N.C. Dec. 20, 2006) (plaintiff “may not rest on mere allegations

where the defendant has countered those allegations with evidence that the requisite

minimum contacts do not exist”). Where both sides present evidence about personal

jurisdiction, factual conflicts must be resolved in favor of the party asserting jurisdiction

for the limited purpose of determining whether a prima facie showing has been made.

See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 62 (4th Cir. 1993); Barclays Leasing, Inc.

v. Nat’l Bus. Sys., Inc., 750 F. Supp. 184, 186 (W.D.N.C. 1990); see also Combs v.

Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

Facts

Berkshire Hathaway has filed a declaration by its Vice President and Controller

about the nature and extent of the company’s contacts with North Carolina. See

generally Doc. 13-1. The plaintiff has not responded with affidavits, but she has

provided excerpts from her employee handbook, Docs. 15-1 to 15-3; a letter to

employees of Berkshire Hathaway subsidiaries from the Berkshire Hathaway chair, Doc.

15-4; and what appears to be a BH Media Group website screenshot. Doc. 15-5. These

exhibits supplement but do not contradict Berkshire Hathaway’s evidence in any material

way. The Court has also considered the specific, non-conclusory allegations of the

unverified complaint that Berkshire Hathaway’s evidence does not dispute or that have

been admitted by other defendants. See Doc. 10.

Based on the evidence of record and viewing it in the light most favorable to the

plaintiff, the Court makes the following findings of fact.

Ms. Price worked for defendant Greensboro News & Record, LLC, or its

successor, BH Media Group, from May 18, 2016, through May 5, 2017. See Doc. 3 at ¶¶

8–11; Doc. 10 at p. 2, ¶¶ 8–9. Berkshire Hathaway is a holding company that owns BH

Media Group. Doc. 3 at ¶ 12; Doc. 10 at ¶ 12; Doc. 13-1 at ¶ 8. Berkshire Hathaway has

a separate board of directors and separate employees, assets, and bank accounts from BH

Media Group. Doc. 13-1 at ¶ 9.

Berkshire Hathaway is incorporated in Delaware, with its principal place of

business and headquarters in Omaha, Nebraska. Id. at ¶ 2. It is not registered to do

business in North Carolina, and it does not have a registered agent, pay taxes, maintain an

office, own or lease any property, manufacture products, or have any employees working

in North Carolina. Id. at ¶¶ 3–5. It has no bank accounts or telephone numbers in North

Carolina. Id. at ¶ 6.

Like Berkshire Hathaway, BH Media Group is headquartered in Omaha. See Doc.

15-5. BH Media Group’s website indicates it is “A Berkshire Hathaway Company,” id.,

as does a 2015 BH Media Group Handbook, presumably for employees. See Doc. 15-1.

On what appears to be one page of the handbook, employees are told that Berkshire

Hathaway Inc. has adopted for itself and all of its subsidiaries, including BH Media

Group, a policy prohibiting employees from providing anything of value to any

government employee. Doc. 15-3.

BH Media Group employees have access to an ethics hotline that Berkshire

Hathaway provides. Doc. 13-1 at ¶¶ 8, 10. As disclosed in materials given to employees,

see Doc. 15-4, Berkshire Hathaway does not handle calls to the hotline; instead, it has

hired a third party for that purpose. Doc. 15-2 (instructing employees to “contact

NAVEX Global at one of the Berkshire hotline numbers”); Doc. 15-3 (“Berkshire

Hathaway has arranged for a third party service which allows employees to anonymously

report concerns 24 hours a day . . . .”); Doc. 15-4 (letter from Berkshire Hathaway chair

“[t]o all employees of Berkshire Hathaway Inc. and subsidiaries” referring to “a process

that will enable you to report anonymously through an independent third-party

organization . . . NAVEX Global”). The third-party administrator assigns the hotline

phone calls or online submissions to the relevant subsidiary company for investigation.

Doc. 13-1 at ¶ 10; Doc. 15-3; Doc. 15-4. Ms. Price called this ethics hotline during the

course of her employment about the hostile work environment and discrimination, Doc. 3

at ¶¶ 29, 46, 48, and the third party assigned her complaints to BH Media Group for

investigation. See Doc. 13-1 at ¶¶ 10–11.

Analysis

Specific jurisdiction exists when the “suit aris[es] out of or [is] related to the

defendant’s contacts with the forum.” Helicopteros Nacionales de Colombia, S.A. v.

Hall, 466 U.S. 408, 414 n.8 (1984). To determine the existence of specific jurisdiction,

courts consider “(1) the extent to which the defendant purposefully availed itself of the

privilege of conducting activities in the State; (2) whether the plaintiffs’ claims arise out

of those activities directed at the State; and (3) whether the exercise of personal

jurisdiction would be constitutionally reasonable.” Consulting Eng’rs Corp., 561 F.3d at

278. Only if a court finds that the plaintiff has satisfied the first prong of the test for

specific jurisdiction does a court need to consider prongs two and three. See id. While

the analysis is not a mechanical one, the Fourth Circuit has summarized the factors the

courts have considered in deciding whether a defendant “purposefully availed” itself of

the privilege of doing business in a state.2 Id.

Here, none of the relevant factors indicate Berkshire Hathaway intended to do

business in North Carolina. Berkshire Hathaway does not maintain offices or own

property here. There is no evidence it engaged in business activities here or reached into

the state to initiate such activities. Berkshire Hathaway’s decision to make an ethics

hotline administered by a third party available to employees of a North Carolina

subsidiary does not show that Berkshire Hathaway directed its activities toward North

Carolina. See Hoffman v. Tyco Int’l, Ltd., No. 06-2961, 2006 WL 3759709, at *2–3

(E.D. Pa. Dec. 18, 2006) (citing cases).

2 Those factors include: “whether the defendant maintains offices or agents in the forum

state; whether the defendant owns property in the forum state; whether the defendant reached

into the forum state to solicit or initiate business; whether the defendant deliberately engaged in

significant or long-term business activities in the forum state; whether the parties contractually

agreed that the law of the forum state would govern disputes; whether the defendant made in-

person contact with the resident of the forum in the forum state regarding the business

relationship; the nature, quality and extent of the parties’ communications about the business

being transacted; and whether the performance of contractual duties was to occur within the

forum.” Consulting Eng’rs Corp., 561 F.3d at 278 (citing cases).

The Court may also exercise specific jurisdiction over Berkshire Hathaway if it is

the alter ego or the partner of BH Media Group. Ms. Price has not offered any evidence

to support the exercise of personal jurisdiction under the alter ego theory, which requires:

(1) Control, not mere majority or complete stock control, but

complete domination, not only of finances, but of policy and business

practice in respect to the transaction attacked so that the corporate entity as

to this transaction had at the time no separate mind, will or existence of its

own; and

(2) Such control must have been used by the defendant to commit

fraud or wrong, to perpetrate the violation of a statutory or other positive

legal duty, or a dishonest and unjust act in contravention of plaintiff’s legal

rights; and

(3) The aforesaid control and breach of duty must proximately cause

the injury or unjust loss complained of.

Krausz Indus. Ltd. v. Smith-Blair, Inc., 188 F. Supp. 3d 545, 556 (E.D.N.C. 2016)

(quoting Glenn v. Wagner, 313 N.C. 450, 455, 329 S.E.2d 326, 330 (1985)). The

excerpts of the BH Media Group manual, the website screenshot, and the Berkshire

Hathaway letter, see Docs. 15-1 through 15-5, do show a connection between the two

entities, but they do not show Berkshire Hathaway’s “complete domination” over BH

Media Group. Berkshire Hathaway’s creation of a hotline, administered by a third party,

does not indicate it controlled BH Media Group’s overall employment practices or BH

Media Group’s investigation of hotline complaints, nor does the mere fact that it required

employees of subsidiaries to report ethical concerns. See Docs. 15-3, 15-4. There is “no

allegation or evidence of majority or complete stock control, and complete domination of

finances, policy and business practice.” Krausz Indus., 188 F. Supp. 3d. at 557 (cleaned

up and quoting Glenn, 313 N.C. at 455, 329 S.E.2d at 330). To the contrary, Berkshire

Hathaway has offered uncontroverted evidence that it has a separate board of directors,

assets, and bank accounts from, and that it does not exercise day-to-day control over the

operations of, BH Media Group. Doc. 13-1 at ¶ 9.

Next, the Court may have personal jurisdiction over Berkshire Hathaway if it has a

partnership with BH Media Group over which the Court has jurisdiction. See Avanti

Hearth Prods., LLC v. Janifast, Inc., No. 3:10–cv–00019–FDW, 2010 WL 3081371, at

*3 (W.D.N.C. Aug. 6, 2010); accord Walker v. White, 609 F. Supp. 2d 529, 536–37

(W.D.N.C. 2009). In North Carolina, “[a] partnership is an association of two or more

persons to carry on as co-owners a business for profit.” N.C. Gen. Stat. § 59-36(a).

North Carolina courts have defined a partnership as “a combination of two or more

persons of their property, effects, labor, or skill in a common business or venture, under

an agreement to share the profits or losses in equal or specified proportions, and

constituting each member an agent of the others in matters appertaining to the partnership

and within the scope of its business.” Best Cartage, Inc. v. Stonewall Packaging, LLC,

219 N.C. App. 429, 437–38, 727 S.E.2d 291, 299 (2012); see also Rhue v. Rhue, 189

N.C. App. 299, 308, 658 S.E.2d 52, 59–60 (2008).

Here, Ms. Price has not alleged any facts concerning a profit-sharing agreement

between Berkshire Hathaway and BH Media Group. Her assertions about Berkshire

Hathaway’s ownership of and control over BH Media Group—which she suggests as

proof of partnership as well, see Doc. 15 at 11—are inconsistent with a partnership. The

fact that the same in-state attorney represents both defendants in this litigation does not

alone demonstrate they are acting in partnership or that BH Media Group is Berkshire

Hathaway’s alter ego.

In her brief, Ms. Price asks the Court for jurisdictional discovery on the alter ego

and partnership theories. Putting aside the lack of compliance with the Local Rules, see

L.R. 7.3, the Court exercises its discretion to deny the request, as she has not “articulated

with reasonable particularity” the facts supporting application of either theory of

jurisdiction. Krausz Indus., 188 F. Supp. 3d at 557 (citing Base Metal Trading, Ltd. v.

OJSC “Novokuznetsky Aluminum Factory”, 283 F.3d 208, 216 (4th Cir. 2002)). Nor has

she offered any evidence or information even hinting at facts to support these theories.

Conclusion

Berkshire Hathaway has not purposefully directed its activities at the state of

North Carolina, and it is not connected with BH Media Group in an alter ego or partner

relationship so as to allow the Court to exercise jurisdiction over it. Accordingly, due

process does not permit the exercise of specific personal jurisdiction over Berkshire

Hathaway in North Carolina.

It is ORDERED that the defendant Berkshire Hathaway’s motion to dismiss, Doc.

is GRANTED.

This the 6th day of February, 2020.

Mab ema

"UNITED STATES DISTRICTSJUDGE —

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