We CBD, LLC v. Planet Nine Private Air, LLC

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

DOCKET NO. 3:21-cv-00352-FDW-DSC

WE CBD, LLC and WE C MANAGE, LLC, )

)

Plaintiffs, )

)

v. )

) ORDER

PLANET NINE PRIVATE AIR, LLC, )

)

Defendant. )

)

THIS MATTER is before the Court on Defendant Planet Nine Private Air, LLC’s (“Planet

Nine”) Motion to Dismiss Plaintiffs’ Complaint (Doc. No. 1) for lack of personal jurisdiction and

improper venue pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure,

respectively. (Doc. No. 8). For the reasons stated herein, the Court DENIES Defendant’s Motion

to Dismiss (Doc. No. 8).

I. BACKGROUND

Plaintiff We CBD, LLC (“We CBD”) is a limited liability company incorporated under the

laws of the State of North Carolina, and Plaintiff We C Manage, LLC (“WCM”) is a limited

liability company incorporated under the laws of the State of Oregon. (Doc. No. 1, pp. 1-2). Mr.

Daniel Martin (“Martin”), who resides in North Carolina, is the principal of both We CBD and

WCM and is WCM’s sole member. (Doc. No. 14, p. 7). Planet Nine is a limited liability company

formed under the laws of the State of Delaware and maintains its principal place of business in

Van Nuys, California. (Doc. No. 9, p. 6).

According to their Complaint, Plaintiffs are affiliated companies who work closely for the

purpose of acquiring and distributing hemp. (Doc. No. 1, p. 2). Plaintiffs contacted Planet Nine

for the purpose of shipping hemp internationally, and following a series of written and oral

communications, the parties entered into a written contract (the “Contract”) wherein Planet Nine

agreed to fly Plaintiffs’ hemp internationally, via private charter plane, from Medford, Oregon to

Zurich, Switzerland on November 8, 2020. Id. at 3. Plaintiffs allege, and Defendant does not

dispute, that the parties agreed that the plane would stop to refuel and pick up Martin at the

Charlotte-Douglas International Airport in Charlotte, North Carolina before departing for Zurich.

Id. at 3; Doc. No. 14, p. 7. Indeed, Plaintiffs assert “one of the reasons that Planet Nine was hired

was because it was able to, and agreed to, stop in North Carolina.” (Doc. No. 14, p. 5).

On November 8, 2020, prior to departure to Zurich and while stopped in Charlotte, United

States Customs and Border Protection (the “CBP”) detained the plane to inspect the cargo onboard,

subsequently resulting in the seizure and eventual destruction of a significant portion of Plaintiffs’

cargo. (Doc. No. 9, p. 7). Plaintiffs assert that the CBP boarded the plane because it could see

cargo loaded on the plane when the general declaration for the flight listed no cargo and neither an

accompanying air cargo manifest nor electronic export information were filed. Id. Plaintiffs

further assert Planet Nine represented to Plaintiffs that it would handle all necessary filings and

administrative details related to the cargo and passengers with the United States, including the

CBP, and that Planet Nine negligently and recklessly failed to do so. (Doc. No. 1, p. 4).

Consequently, Plaintiffs now assert state law claims against Planet Nine for negligence, gross

negligence, breach of fiduciary duty, negligent misrepresentation, and unfair and deceptive trade

practices. (Doc. No. 1).

II. STANDARD OF REVIEW

A. Personal Jurisdiction

When a challenge to personal jurisdiction is addressed only on the basis of motion papers,

supporting legal memoranda, and the relevant allegations of a complaint, “the burden on the

plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the

jurisdictional challenge.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989) (citation omitted).

Under those circumstances, the court “must construe all relevant pleading allegations in the light

most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the

existence of jurisdiction.” Id. If the existence of jurisdiction turns on disputed factual questions, a

court may resolve the challenge on the basis of an evidentiary hearing, or, when a prima facie

demonstration of personal jurisdiction has been made, it can proceed “as if it has personal

jurisdiction over th[e] matter, although factual determinations to the contrary may be made at trial”.

Pinpoint IT Servs., L.L.C. v. Atlas IT Export Corp., 812 F. Supp. 2d 710, 717 (E.D. Va. July 13,

2011) (citing 2 James Wm. Moore et al., Moore's Federal Practice ¶ 12.31 (3d ed. 2011)).

Regardless, the plaintiff must eventually prove the existence of personal jurisdiction by a

preponderance of the evidence, either at trial or at a pretrial evidentiary hearing. New Wellington

Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 n. 5 (4th Cir. 2005).

B. Venue

Venue is appropriate in “a judicial district in which any defendant resides, . . . a substantial

part of the events or omission giving rise to the claim occurred, or a substantial part of property

that is the subject of the action is situated….” 28 U.S.C. § 1391. Under Federal Rule of Civil

Procedure 12(b)(3), a defendant may move to dismiss a complaint for improper venue. When a

12(b)(3) motion to dismiss is filed, the plaintiff then bears the burden to establish that venue is

proper in the judicial district in which the plaintiff has brought the action. Pfohl v. Saber

Healthcare Grp., LLC, 784 F. App'x 137, 140 (4th Cir. 2019) (citing Sneha Media & Entm’t, LLC

v. Associated Broad. Co. P Ltd., 911 F. 3d 192, 197 (4th Cir. 2018)). If the court finds venue to

be improper, the court shall dismiss or, in the interest of justice, transfer the case to the district or

division in which the case could have been brought. 28 U.S.C. § 1406(a). “Whether dismissal or

transfer is appropriate lies within the sound discretion of the district court”. White v. Wal-Mart

Distribution Center, 2009 WL 275835, at *1 (W.D.N.C. Feb. 4, 2009) (citation omitted).

III. Analysis

A. Personal Jurisdiction

The determination of personal jurisdiction is based upon a two-part inquiry. The first, or

statutory, part requires the assertion of personal jurisdiction under North Carolina's long-arm

statute. The second, or constitutional, part requires the exercise of personal jurisdiction comply

with due process. Christian Sci. Bd. of Dirs. of the First Church of Christ, Scientist v. Nolan, 259

F.3d 209, 215 (4th Cir. 2001). Courts have historically construed North Carolina's long-arm statute

to be coextensive with the Due Process Clause. This construction collapses the statutory and

constitutional requirements into a single inquiry of whether the non-resident defendant has such

“minimum contacts” with the forum state that exercising jurisdiction over it does not offend

“traditional notions of fair play and substantial justice.” See Nolan, 259 F.3d at 215 (citing Int'l

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

There are two types of long-arm jurisdiction over a defendant: general and specific.

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8 & 9 (1984). The

burden rests on the plaintiff to show beyond a preponderance of the evidence that the Court has

justification for exercising jurisdiction, Combs, 886 F.2d at 676, and the determination of whether

jurisdiction is appropriate depends on the facts and circumstances of each case, Burger King Corp.

v. Rudzewicz, 471 U.S. 462, 478–79, 485–86 (1985).

i. Specific Personal Jurisdiction

Specific jurisdiction can be established so long as the defendant’s relevant conduct has

“such a connection with the forum state that it is fair for the defendant to defend itself in that state.”

CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292 n. 15 (4th Cir. 2009)

(citing Helicopteros Nacionales de Colombia, S.A., 466 U.S. at 414-15). Specific jurisdiction can

also be established when the cause of action “arises out of the defendant’s contacts with the

forum.” Saudi v. Northrop Grumman Corp., 427 F.3d 271, 276 (4th Cir. 2005) (citation omitted).

The Fourth Circuit has created a three-part test to determine if specific personal jurisdiction is

appropriate. See Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009).

For the reasons set forth below, the Court finds Plaintiffs’ factual allegations are sufficient to

satisfy its jurisdictional burden at this early stage.

The first factor in the Consulting Engineers Corp. test is the extent to which the defendant

purposefully availed itself of the privileges of conducting activities in the forum state. Id. If a

defendant reasonably anticipates being brought to court in the forum, this element will be satisfied.

SC Advisors 7, LLC v. Rudnick, 2020 WL 4227469, at *2 (W.D.N.C. 2020) (citing CEM Corp.

v. Personal Chemistry AB, 192 F. Supp. 2d 438, 442 (W.D.N.C. 2002)). Several non-exclusive

factors shed light on whether a defendant purposefully availed itself to the forum state and can

reasonably anticipate being brought into court, including:

(1) Whether the defendant maintains offices or agents in the forum

state,

(2) Whether the defendant owns property in the forum state,

(3) Whether the defendant reached into the forum state to solicit or

initiate business,

(4) Whether the defendant deliberately engaged in significant or

long-term business activities in the forum state,

(5) Whether the parties contractually agreed that the law of the

forum state would govern disputes,

(6) Whether the defendant made in-person contact with the

resident of the forum in the forum state regarding the business

relationship,

(7) The nature, quality, and extent of the parties’ communications

about the business being transacted, and

(8) Whether the performance of contractual duties was to occur

within the forum.

Consulting Engineers Corp., 561 F.3d at 278.

Here, the record supports a finding that Planet Nine purposefully availed itself of the

privilege of conducting business in North Carolina. Although Planet Nine does not maintain

offices or agents, or own property, in North Carolina, and the parties did not contractually agree

that the laws of North Carolina would govern disputes, the remaining factors weigh in favor of

finding purposeful availment.

Here, it is undisputed that We CBD is incorporated in North Carolina and operated by its

principal member, Martin, a resident of North Carolina. (Doc. No. 1, p. 1). Similarly, although

incorporated in Oregon, WCM is operated by Martin, its sole member. Id. Further, based on the

record at this early stage, it appears Planet Nine was made aware of Plaintiffs’ ties to North

Carolina, their close affiliation with one another, and that “[Planet Nine] was working with both

Plaintiffs and owed the same duties to both Plaintiffs”. Id. at 2. After “extensively negotiat[ing]”,

(Doc. No. 14, p. 9), and exchanging several emails, phone calls, and text messages with Plaintiffs

through Martin, Planet Nine entered into the Contract with Plaintiffs to fly their cargo from

Medford, Oregon to Zurich, Switzerland. (Doc. No. 1, p. 3). Notably, Martin executed the

Contract on behalf of WCM, (Doc. No. 9-1, p. 2), and of critical importance, the parties agreed

that the plane would stop to refuel and pick up Martin at the Charlotte-Douglas International

Airport in Charlotte, North Carolina before departing for Zurich. (Doc. No. 1, p. 3; Doc. No. 14,

p. 7). Indeed, Planet Nine’s plane was stopped in Charlotte, North Carolina when Plaintiffs’ cargo

was seized by the CBP, the crux of Plaintiffs’ injury here. (Doc. No. 14, p. 9). Moreover, Plaintiffs

assert that “the parties anticipated that this partnership would continue long-term, and Plaintiffs

would use Planet [Nine’s] aircraft services after the successful completion of th[e November 8,

2020] trip.” Id. Accordingly, at this early stage, the Court finds Planet Nine purposefully availed

itself of the privilege of conducting business in North Carolina.

The second factor focuses on whether a defendant’s contacts with the forum state form the

basis of plaintiff’s suit. Consulting Engineers Corp., 561 F.3d 273. In the case at hand, Plaintiffs’

injury occurred in Charlotte, North Carolina when their cargo was seized by the CBP, (Doc. No.

14, p. 11), and Plaintiffs’ claims arise out of Planet Nine’s alleged failure to deliver on its promises

and alleged false representations to Plaintiffs and Martin that “it could handle the stop in Charlotte

and that it took care of the appropriate paperwork.” Id. Thus, the second factor is also satisfied.

Finally, the third factor focuses on whether Plaintiffs’ allegations satisfy the constitutional

requirements of due process. To satisfy the due process prong of the personal jurisdiction analysis,

there must be sufficient ‘minimum contacts’ between the nonresident defendant and the forum

state. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Sufficient minimum contacts may

not “offend ‘traditional notions of fair play and substantial justice.’” Id. (quoting Milliken v.

Meyer, 311 U.S. 457, 463 (1941)). As discussed above, Plaintiffs have sufficiently pled that Planet

Nine had continuous contact with North Carolina, via communications with Plaintiffs and Martin

and its intentional stop in Charlotte, North Carolina, such that it has exercised the privilege of

conducting business within North Carolina. (Doc. No. 14, p. 12). As such, the burden on

Defendant in adjudicating the issues in North Carolina is not unconstitutionally unreasonable or

unfair. Moreover, North Carolina’s interest in adjudicating this dispute and the shared interest of

the states in obtaining efficient resolution of disputes favors this Court’s exercise of personal

jurisdiction over Planet Nine, as Plaintiffs are residents of, or have a close connection to, North

Carolina, this dispute involves North Carolina funds, and the heart of Plaintiffs’ injury arose in

North Carolina, which intimately relates to other litigation on this Court’s docket. Marx Indus.,

Inc. v. Chestnut Ridge Foam, Inc., 903 F. Supp. 2d 358, 365 (W.D.N.C. 2012) (citing Burger King,

471 U.S. at 476). Planet Nine consequently has sufficient minimum contacts with North Carolina

such that this Court’s exercise of personal jurisdiction over it does not offend traditional notions

of fair play and substantial justice and the third factor is satisfied.

Accordingly, in construing Plaintiffs’ allegations in the light most favorable to Plaintiffs,

assuming their credibility, and drawing the most favorable inferences for the existence of

jurisdiction, the Court finds its exercise of specific personal jurisdiction over Planet Nine

appropriate at this early stage. See Combs, 886 F.2d at 676.

ii. General Personal Jurisdiction

A court may exercise general personal jurisdiction over defendants who have sufficient

“continuous and systematic” contacts with the forum state to justify the defendants being sued in

that state for any reason, regardless of where the relevant conduct occurs. CFA Inst., 551 F.3d at

292 n. 15. Thus, general jurisdiction, as distinguished from specific jurisdiction, requires that the

defendant’s continuous and systematic contacts with the forum state be so substantial and of such

a nature as to render the defendant essentially at home in the forum state. See Daimler AG v.

Bauman, 571 U.S. 117 (2014). Therefore, “[T]he threshold level of minimum contacts to confer

general jurisdiction is significantly higher than for specific jurisdiction,” CFA Inst., 551 F.3d at

292 n. 15 (quoting ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir. 1997)).

Despite conceding that Planet Nine is a limited liability company formed under the laws

of the State of Delaware and maintains its principal place of business in Van Nuys, California,

Plaintiffs assert “general personal jurisdiction may also apply if Planet [Nine] has continuous and

systematic activities in North Carolina rendering it essentially at home here.” (Doc. No. 14, p. 4)

(emphasis added). Instead of providing factual support for their assertion, Plaintiffs postulate

“Planet [Nine] may have continuously and systematically conducted business in North Carolina,

derived substantial income from North Carolina, and its planes may have frequently and

continuously have made use of North Carolina airports.” Id. at 5. In response, Planet Nine has

provided evidence that it “has no long-term contracts with companies in North Carolina” and,

“during the year in question, less than one-third of one percent of Planet Nine’s flight segments

traveled to North Carolina, and the revenue generated from those flight segments constituted one-

third of one percent of Planet Nine’s total charter revenue for that year.” (Doc. No. 15, p. 2).

In hopes of furthering their speculation, Plaintiffs contend this “Court should allow limited

jurisdictional discovery to assess the extent of contacts Planet [Nine] had with North Carolina to

determine that general jurisdiction is proper.” (Doc. No. 14, p. 5). The Court declines to do so.

When, as here, “a plaintiff offers only speculation or conclusory assertions about contacts with a

forum state, a court is within its discretion in denying jurisdictional discovery.” Carefirst of

Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 402. In any event, the Court

has determined that it may appropriately exercise specific personal jurisdiction over Planet Nine.

Therefore, the Court DENIES Planet Nine’s Motion to the extent it seeks to dismiss Plaintiffs’

Complaint for lack of personal jurisdiction.

B. Venue

Planet Nine also moves this Court to dismiss Plaintiffs’ Complaint for improper venue

pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. (Doc. No. 9, p. 16). Whether

venue is proper or improper is generally governed by 28 U.S.C. § 1391. Atl. Marine Const. Co.,

Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 55 (2013). “When venue is challenged,

the court must determine whether the case falls within one of the three categories set out in [28

U.S.C.] § 1391(b).” Id. at 56. 28 U.S.C. § 1391(b) provides a civil action may be brought, and

venue is proper, in:

(1) a judicial district in which any defendant resides, if all defendants are residents

of the State in which the district is located;

(2) a judicial district in which a substantial part of the events or omissions giving

rise to the claim occurred, or a substantial part of property that is the subject of the

action is situated; or

(3) if there is no district in which an action may otherwise be brought as provided

in this section, any judicial district in which any defendant is subject to the court's

personal jurisdiction with respect to such action.

28 U.S.C. § 1391.

For the reasons set forth above, the Court also finds that a substantial part of the events or

omissions giving rise to Plaintiffs’ claims occurred in Charlotte, North Carolina and venue is

proper in the Western District of North Carolina. To the extent Planet Nine asserts “[a]ll of the

activities before the flight, including delivery of the hemp to the Oregon airport, loading the plane,

and testing of the hemp occurred outside of North Carolina” and venue is proper in the United

States District Court for the Central District of California, (Doc. No. 9, p. 12), Plaintiffs argue, and

the Court agrees, venue may be proper in more than one jurisdiction. See Mitrano v. Hawes, 377

F.3d 402, 405 (4th Cir. 2004) (“… it is possible for venue to be proper in more than one judicial

district.”); See also Szulik v. Tag V.I., 858 F. Supp. 2d 532, 544 (E.D.N.C. 2012) (“That substantial

activities took place in district B does not disqualify district A as a proper venue as long as

substantial activities took place in A, too. In fact, district A should not be disqualified even if it is

shown that the activities in B were more substantial, or even the most substantial.”) (internal

citations and quotations omitted). Accordingly, the Court DENIES Planet Nine’s Motion to the

extent it seeks to dismiss or transfer Plaintiffs’ Complaint for improper venue.!

IV. Conclusion

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss (Doc. No. 8) is

DENIED.

IT IS SO ORDERED.

Signed: November 23, 2021

Frank D. Whitney é □

United States District Judge ages

' Planet Nine also moves the Court to transfer this case to the Central District of California pursuant to 28 U.S.C. §

1406(a). 28 U.S.C. § 1406(a) provides, “[t]he district court of a district in which is filed a case laying venue in the

wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division

in which it could have been brought.” As this Court has determined venue is proper in the Western District of North

Carolina, analysis of transfer under 28 U.S.C. § 1406(a) is unnecessary.