Baker v. Bensalz Productions, Inc.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

BELINDA BAKER, et al.,

Plaintiffs,

Case No. 1:18-cv-757

v. JUDGE DOUGLAS R. COLE

BENSALZ PRODUCTIONS, INC.,

et al.,

Defendants.

OPINION AND ORDER

This cause comes before the Court on Defendant Excel Sports Management

LLC’s (“Excel”) Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 15),

Defendant Bensalz Productions, Inc.’s (“BSP”) Motion to Dismiss Plaintiffs’ Amended

Complaint (Doc. 21), and Plaintiffs’ Motion for Leave to File Second Amended

Complaint and to Add Additional Parties (Doc. 40). For the reasons more fully

discussed below, the Court GRANTS IN PART and DENIES IN PART Excel’s and

BSP’s (collectively “Defendants’”) Motions to Dismiss (Docs. 15, 21), and DENIES

Plaintiffs’ Motion for Leave to File Second Amended Complaint (Doc. 40).

Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ First

Amended Complaint (Doc. 2).

FACTUAL BACKGROUND

A. Baker Contracts With Defendants To Co-Produce Finney The

Starbreacher (“Finney”).

Plaintiff Belinda Baker is a resident of Warren County, Ohio. (Am. Compl., ¶ 5,

Doc. 2, #142)1. Baker created Starborne Productions, LLC and Starbreacher

Enterprises, LLC as umbrella companies for her film projects. (Id. at ¶ 6, #142–43).

Both companies are organized under Ohio law, with their principal places of business

located in Warren County, Ohio. (Id. at ¶ 6, #143). One such film project is the

children’s story Finney. (Am. Compl. at ¶ 31, #150). Finney is an “eco-conscious

adventure” that is meant to “educate millions about the fragile state of the world’s

marine life and seas while entertaining and inspiring them with endearing characters

and a heartwarming story.” (See Doc. 9, #230).

Baker alleges, in 2011, she was introduced to Michael Skouras, a member of

Bensalz Productions (“BSP”) and an employee at Twenty-First Century Fox, Inc.

(“Fox”), in relation to her Finney project. (Am. Compl. at ¶ 10, #143). After Baker

shared her creative content with Skouras and the other two members of BSP—

Richard Bennett and Eric Salzman—Skouras offered to help Baker as a co-producer

and agent. (Id. at ¶ 14, #144). Skouras then introduced Baker to Casey Close, a

member and officer at Excel Sports Management. (Id. at #145).

These people and entities—Skouras, BSP, Close, Excel, and Fox—all reside

outside Ohio. Excel is a limited liability company organized under Delaware law, with

1 The Amended Complaint contains duplicate paragraph numbering. (See, e.g., Am. Compl., ¶¶ 155,

136, #190). To avoid confusion, this Court will always cite the PageID as well as the paragraph number

in the Amended Complaint.

its principal place of business and headquarters located in New York. (Matus Decl.,

¶ 3, Doc. 15-1, #316). Excel also maintains offices in California and Florida. (Id.).

None of Excel’s four members are citizens of Ohio. (Id. at ¶ 4). BSP is a limited

liability company organized under New York law, with its principal place of business

in New York. (Bennett Decl., ¶ 3, Doc. 21-3, #378). BSP’s three members are citizens

of Florida, New York, and Texas. (Id. at ¶ 4). Fox and its subsidiaries are likewise

incorporated in Delaware and maintain a principal place of business in New York.

(Second Am. Compl., ¶¶ 10–14, Doc. 40-1, #551–52). Both Skouras and Close are

domiciled in New York. (Id. at ¶¶ 6, 8, #550).

Baker alleges that on October 31, 2011, she was led to believe that Skouras

and Close would represent her as her agent on the Finney project. (Am. Compl. at

¶ 15, #145). The next month, on November 16, 2011, Close confirmed this belief via

email. (Id. at ¶ 17). Bennett, on BSP’s behalf, signed a contract on December 2, 2011,

where BSP agreed to serve as co-executive producer for the Finney project (“Co-

Production Agreement”). (Doc. 2, #202–04).

On December 12, 2011, Bennett also signed a non-disclosure agreement with

Baker. (Doc. 9, #229). The parties dispute whether Bennett signed this NDA on BSP’s

behalf or not.2 Baker claims this agreement required BSP, its agents, and

employees—including Skouras, Close and Excel—to keep the Finney project

confidential, to require all third-parties to sign an NDA before sharing details about

the Finney project, and to properly document when and to whom they disclosed such

2 BSP claims that it was not a party to the NDA and that Plaintiffs’ copy of the agreement has been

altered. (See Bensalz’s Mot. to Dismiss, Doc. 21, #359–60. Compare Doc. 9, #229 with Doc. 21-4, #382).

details. (Am. Compl. at ¶ 22, #146–47). Skouras allegedly promised via email that the

Defendants would diligently protect Plaintiffs’ intellectual property and obtain non-

disclosure agreements from those individuals with whom the Defendants discussed

Baker’s project. (Id. at ¶ 24, #147).

While it is unclear from the complaint, Plaintiffs argue in their papers here

that both contracts (the NDA and Co-Production Agreement) were negotiated via

electronic communications with Baker while she resided in Ohio. (See Pls.’ Memo. in

Opp’n to Excel, Doc. 28, #486 (“Defendant Excel participated in extensive and ongoing

contacts, negotiations, and planning by repeated telephone and email

communications with Plaintiffs in Ohio throughout a two-year period.”); Pls.’ Memo.

in Opp’n to Bensalz, Doc. 30, #508 (same)). Plaintiff does not assert that any of the

Defendants’ representatives were in Ohio when they sent those communications.

B. During A Meeting In New York City, Skouras Allegedly Sexually

Assaulted Baker.

On December 20, 2011, Baker met with Defendants’ agents (Skouras and

Close) at Excel’s office in New York City to discuss the deal. (Am. Compl. at ¶ 18,

#145). Skouras and Close reviewed the project in detail and solidified their

commitment to represent Baker and secure financing and a production deal for the

Finney project. (Id.). The two men allegedly convinced Baker to trust them by

“dropping names of well-known film studios and celebrities that they alleged to know

and promised to reach out to[.]” (Id. at ¶ 19, #146). During this meeting, Close told

Baker that Finney could become the “Lion King of the Seas.” (Id. at ¶ 32, #150).

Baker claims Skouras made several promises, including to peddle the Finney

project to his top-level connections at Fox, all while “rub[bing her] back and arms in

a way she found uncomfortable and suggestive, even brushing his hand across her

breast as he was doing so.” (Id. at ¶ 147, #196–97). Baker thought Skouras’s “quid

pro quo messages were tacit but clear; if you’re nice to me, i.e. sexually, I will get your

deal done and provide publicity for you and your project[.]” (Id. at #197) (quotations

omitted). Baker alleges that the messages became less tacit and even more clear when

Skouras forcibly pushed himself up behind Baker in an elevator “to rub and brush

himself up against her and grope her buttocks[.]” (Id. at ¶ 148, #197; see also id. at ¶

75, #171). The harassment allegedly continued “throughout 2012.” (Id. at ¶ 148,

#197).

C. The Parties’ Contractual Relationship Turns Sour.

Skouras purportedly broke his promise to Baker and violated the NDA by

sharing information about the Finney project without first obtaining Baker’s

permission or requiring that the individuals to whom he disclosed the materials sign

an NDA. For example, Skouras supposedly shared Plaintiffs’ project with Harvey

Weinstein without Baker’s prior knowledge or permission. (Id. at ¶ 25, #147–48).

Skouras also told Baker “in 2011 and 2012” via email that he had shared information

with Lis Wiehl, a professional author and former Fox News legal analyst, without

having Wiehl sign an NDA. (Id. at ¶ 27, #149). Baker expressed concern to Close and

Skouras about sharing information on the Finney project without her advance

knowledge or permission, but they repeatedly told her not to worry and promised to

provide her with a list of the individuals with whom they had spoken. (See, e.g., id. at

¶ 25, #148).

By May 2012, Plaintiffs created a pitch package for Defendants to use when

discussing the Finney project with prospective investors and television producers.

(See id. at ¶ 38, #154–55; Doc. 9, #230–39). Defendants promised they would send

this pitch packet to Disney, Dreamworks, Sony, MGM, Paramount, Blue Sky, and

several other studios, but Baker never received proof that Defendants actually sent

the pitch packet or, if so, that the studios had signed NDAs before receiving the

materials. (Am. Compl. at ¶ 39, #155). Baker alleges she repeatedly attempted to

check on Defendants’ progress in finding a production company for her film, but

Defendants continued to provide her “insincere and lame excuse[s].” (Id. at ¶ 45,

#158). As late as October 2012, Defendants continued to claim they had sent the script

to producers like Bruce Berman of Village Road Show. (Id. at ¶ 51, #162). Baker later

discovered that Defendants never sent Berman the script. (Id. at ¶ 61, #166–67).

Eventually the relationship became openly hostile. Baker claims Skouras

warned her that if she “remotely question[ed] him or anyone he brought in to the

project” that Skouras would “retaliate so hard” that Baker “would not know what hit

her.” (Id. at ¶ 47, #158). Salzman and Skouras repeatedly told Baker, “[w]e have a

contract and we will sue you!” (Id. at #159). In July 2012, Skouras emailed Gary

Rhein, one of Baker’s associates, and stated he was “pissed off” at Baker and how

Baker should hope that Skouras would not “crush her project right then.” (Id. at ¶ 49,

#160).

By October 2012, “things had really fallen apart between Ms. Baker and the

Defendants.” (Id. at ¶ 60, #165). On October 2, 2012, Salzman told Baker she was “too

batshit crazy for anyone to deal with.” (Id. at #166). He also threatened legal action,

saying “we have a contract and we will sue you.” (Id.). According to Baker, the next

month, in November 2012, Skouras told her that “her project was dead,” he was

“killing her project,” and he planned on “letting every studio know his opinion of her.”

(Id. at ¶ 66, #168). Specifically, that she was “unfit for the film industry,” “a clueless,

crazy bitch,” and “a complete waste of time.” (Id.). At this point, in November 2012,

their working relationship had ended. (See id. at ¶ 81, #174; Baker Decl., Doc. 30, ¶

3, #514).

Baker vaguely alleges that “[s]ince parting ways with the Defendants, [she]

has continued to experience interference and disruption in her business efforts on

account of Defendants[.]” (Am. Compl. at ¶ 86, #175). She also claims that on April

24, 2018, BSP and Salzman sent her a “nefarious link to spyware/malware” as an

“intentional aggressive act” to “instill fear [in] and intimidate” Baker. (Id. at ¶ 87).

D. Procedural History And Pending Motions.

Plaintiffs filed what was originally a pro se complaint3 on November 5, 2018.

(Doc. 1). They subsequently amended their complaint as of right on December 20,

3 Although that fifty-five-page complaint says it was filed “by and through counsel” (see Compl., Doc.

1, #1), it was signed by “Belinda R. Baker” as a “Pro Se litigant.” (See id. at #55). Corporate entities

cannot appear pro se. See Doherty v. Am. Motors Corp., 728 F.2d 334, 340 (6th Cir. 1984) (“The rule of

this circuit is that a corporation cannot appear in federal court except through an attorney.); Ward v.

Intercontinental Mortg. Grp., LLC, No. 1:09-cv-473, 2012 WL 3025098, at *1 (S.D. Ohio July 24, 2012)

(noting that limited liability companies cannot appear in federal court except through an attorney)

(citing Rowland v. Cal. Men’s Colony, 506 U.S. 194, 202 (1993)). As described more fully below,

Plaintiffs subsequently retained counsel, and are currently represented by that counsel.

2018.4 (Doc. 2). In their Amended Complaint, Plaintiffs assert eight claims: (1) breach

of the NDA against BSP, (2) breach of the Co-Production Agreement against BSP and

Excel, (3) fraud against BSP and Excel, (4) breach of fiduciary duty against BSP and

Excel, (5) intentional infliction of emotional distress against BSP, (6) civil conspiracy

against BSP and Excel, (7) tortious interference with business contracts and

prospective economic relations against BSP and Excel, and (8) a violation of New York

gender-based violence and Human Rights laws against BSP.

Excel and BSP each subsequently filed Motions to Dismiss under Fed. R. Civ.

P. 12(b)(2) and (6). In its Motion filed March 11, 2019, Excel argues that (1) this Court

cannot exercise personal jurisdiction over Excel, (2) Starborne and Starbreacher are

not proper parties, (3) Plaintiffs’ breach of contract, breach of fiduciary duty, fraud,

and tortious interference claims are barred by the statute of limitations, and

(4) Plaintiffs fail to state a claim for their breach of contract, fraud, breach of fiduciary

duty, tortious interference, civil conspiracy, and New York City Gender-Based

Violence Act and Human Rights Laws claims. (See Excel’s Mot. to Dismiss, Doc. 15).

BSP makes similar arguments in its Motion filed March 27, 2019, including: (1) this

Court has no personal jurisdiction over BSP, (2) Starborne and Starbreacher cannot

file pro se, (3) Plaintiffs’ claims are barred by the applicable statutes of limitations,

and (4) Plaintiffs’ fail to state a claim for breach of contract, fraud, breach of fiduciary

duty, intentional infliction of emotional distress, civil conspiracy, tortious

4 The Amended Complaint again purports to be filed “by and through counsel,” but is signed by Baker

as a pro se litigant. (See Am. Compl. at #141, 199–200).

interference, or violation of New York City Gender-Based Violence Act and Human

Rights Laws. (See Bensalz’s Mot. to Dismiss, Doc. 21).

Plaintiffs then retained counsel, who filed a notice of appearance on April 1,

2019. Through counsel, Plaintiffs responded to each Motion to Dismiss in turn. First,

on April 23, 2019, Plaintiffs extensively argued that this Court does have personal

jurisdiction over Excel. (See Pls.’ Memo. in Opp’n to Excel, Doc. 28, #477–87). But,

instead of responding to Excel’s arguments aimed at the substance of Plaintiffs’

complaint (how it fails to state a claim), Plaintiffs stated “they will presently seek

leave of the Court to amend their Complaint a second time, which will render the

remainder of Defendant Excel’s motion to dismiss moot.” (Id. at #487–88). Similarly,

on May 9, 2019, Plaintiffs only responded to BSP’s jurisdictional arguments. (See Pls.’

Memo. in Opp’n to Bensalz, Doc. 30). Plaintiffs again stated, “they will presently seek

leave of the Court to amend their Complaint a second time, which will render the

remainder of Defendant Bensalz’s motion to dismiss moot.” (Id. at #512).

Several months passed before Plaintiffs filed a motion seeking leave to amend

their complaint. On October 9, 2019, “[b]ased on additional facts and information

discovered during the pendency of this litigation,” Plaintiffs sought leave to amend

their complaint and name additional defendants: Mike Skouras and Casey Close

personally, as well as Fox and various Fox entities. (See Pls.’ Mot. for Leave to File

Second Am. Compl. and Add Additional Parties, Doc. 40, #544). They also want to

add claims for misappropriation of trade secrets, a violation of the Defend Trade

Secrets Act, negligent infliction of emotional distress, and vicarious liability, while

withdrawing their claims for breach of contract under the Co-Production Agreement,

fraud, and civil conspiracy. (Id. at #544–45). Even though Plaintiffs made changes to

their factual allegations in their proposed Second Amended Complaint, they did not

put any further evidence regarding personal jurisdiction into the record.

This Court first considers the Defendants’ Motions to Dismiss—specifically,

Defendants’ arguments that this Court lacks personal jurisdiction over Defendants.

Because this Court agrees with Defendants that it lacks personal jurisdiction, this

Court GRANTS IN PART Defendants’ Motions (Docs. 15, 21) on Rule 12(b)(2)

grounds only. Thus, this Court denies the rest of Defendants’ Motions and Plaintiffs’

Motion for Leave as moot.5

DISCUSSION

I. Defendants’ Motions To Dismiss For Lack Of Personal Jurisdiction.

A. Standard Of Review.

When faced with a motion to dismiss under Federal Rule of Civil Procedure

12(b)(2), the plaintiff bears the burden of proving personal jurisdiction exists over

each defendant. CompuServe Inc. v. Patterson, 89 F.3d 1257, 1261–62 (6th Cir. 1989).

A Rule 12(b)(2) motion “may be heard and determined before trial, but [] the court

5 The Court recognizes that Plaintiffs’ Motion for Leave includes a request to add additional parties.

Those individuals and entities, though, are not yet parties to this action. That being said, based on the

allegations in the Amended Complaint, which discuss the alleged actions by those individuals and

entities, it appears that there may be personal jurisdiction issues with these potential new defendants,

as well. At the same time, those parties, not having been served, have not had an opportunity, or a

reason, to lodge any such arguments. Accordingly, this Order does not address whether personal

jurisdiction does, or does not, exist over those other parties. Nor does this Order address whether the

Defendants, who this Order dismisses without prejudice for lack of jurisdiction, may be necessary and

indispensable parties in an action by Plaintiffs against those other parties. If, once this action is

dismissed, Plaintiffs file a new action against the parties identified as proposed additional parties

here, such issues can be addressed at that time.

has the power to defer [the] hearing of evidence and a ruling on the motion until

trial.” Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989). “As

there is no statutory direction for procedure upon an issue of jurisdiction, the mode

of its determination is left to the trial court.” Id. (quoting Gibbs v. Buck, 307 U.S. 66,

71–72 (1939)).

If the court “decides that the motion can be ruled on before trial,” and “rules

on the motion without an evidentiary hearing, the plaintiff need only make a ‘prima

facie’ case that the court has personal jurisdiction.” Conn v. Zakharov, 667 F.3d 705,

711 (6th Cir. 2012). Under that standard, the court should deny the motion to dismiss

so long as the plaintiff sets forth “sufficient facts that support a finding of

jurisdiction.” Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 (6th Cir. 2006);

see also Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)

(explaining that a plaintiff makes a prima facie showing by “establishing with

reasonable particularity sufficient contacts between [the defendants] and the forum

state to support jurisdiction”). But the plaintiff may not rest on his pleadings to

answer the movant’s affidavits. Instead, the plaintiff must set forth “sufficient facts”

establishing jurisdiction (typically by providing affidavits). Serras, 875 F.2d at 1214.

If the court elects to resolve the motion without an evidentiary hearing, the court

must view the pleadings and affidavits in the light most favorable to the plaintiffs,

although the court may consider the defendant’s undisputed factual allegations.

Conn, 667 F.3d at 711; Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000).

This “prevent[s] non-resident defendants from avoiding jurisdiction simply by filing

an affidavit that denies all jurisdictional facts.” CompuServe, 89 F.3d at 1262.

B. Plaintiffs Have Failed To Establish That This Court Has

Jurisdiction Over Defendants.6

In a diversity action, the court looks to the forum state’s laws to determine if

personal jurisdiction exists. Calphalon, 228 F.3d at 721. As the forum here is Ohio,

personal jurisdiction exists only if such jurisdiction is consistent with both Ohio’s

long-arm statute and the Fourteenth Amendment’s Due Process Clause. Id. The

Plaintiff must clear both the statutory and the constitutional hurdles, and the Court

is free to consider them in either order. See Theunissen v. Matthews, 935 F.2d 1454,

1459 (6th Cir. 1991) (considering jurisdiction under the Due Process Clause first

because a defect under this analysis “would foreclose the exercise of personal

jurisdiction even where a properly construed provision of the long-arm statute would

otherwise permit it”). Starting with the latter, the Court concludes Defendants are

correct that the exercise of jurisdiction over them on the facts here would violate the

Fourteenth Amendment’s Due Process Clause. Given that determination, the Court

finds it unnecessary to analyze personal jurisdiction under Ohio’s long-arm statute.

1. Plaintiff Cannot Show Sufficient Minimum Contacts To

Support Either General Or Specific Jurisdiction Under

The Constitution.

The federal Due Process Clause requires that, before a Court exercises

jurisdiction over a party, the Court must determine that the party had sufficient

6 The Defendants make essentially the same arguments challenging personal jurisdiction, so this

Court will consider their Motions together.

contacts with the forum state so that finding personal jurisdiction would not offend

“traditional notions of fair play and substantial justice.” Third Nat’l Bank in

Nashville v. WEDGE Grp., Inc., 882 F.2d 1087, 1089 (6th Cir. 1989) (quoting Int’l

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Personal jurisdiction under the

Constitution comes in two flavors: (1) general personal jurisdiction (i.e., jurisdiction

independent of whether the cause of action arises out of the defendant’s contacts with

the forum state), and (2) specific jurisdiction (i.e., jurisdiction over a cause of action

that arises out of a defendant’s contacts with the forum state). Id. Neither is present

here.

a. Plaintiffs Cannot Establish General Personal

Jurisdiction Over Defendants, As Defendants Are

Not “At Home” In Ohio.

A court may assert general personal jurisdiction over foreign corporations

under the Due Process Clause when their “affiliations with the State are so

continuous and systematic as to render them essentially at home in the forum State.”

Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quotations omitted). “At home in

the forum State” typically means either the corporation’s principal place of business

or formal place of incorporation is located there. Id. at 139. The Supreme Court,

however, has noted the possibility that “in an exceptional case, … a corporation’s

operations in a forum other than its formal place of incorporation or principal place

of business may be so substantial and of such a nature as to render the corporation

at home in that State.” Id. at 139 n.19.

To illustrate the latter point, the Bauman Court used the Court’s earlier

decision in Perkins v. Benquet Consol. Mining Co., 342 U.S. 437, 448 (1952). Id.

Benquet was incorporated in the Philippines, where it operated gold and silver mines.

It ceased its mining operations during the Japanese occupation of the Philippines in

World War II. Benquet’s president moved to Ohio, started up an office, and oversaw

the company’s activities from there. Perkins, 342 U.S. at 448. Perkins, an Ohio

resident, sued Benquet on a claim that did not arise in Ohio and did not relate to

Benquet’s activities in Ohio. The Supreme Court held that Ohio courts could exercise

general jurisdiction over Benquet without offending due process because “Ohio was

the corporation’s principal, if temporary, place of business.” Keeton v. Hustler

Magazine, Inc., 465 U.S. 770, 779 n.11 (1984) (citing Perkins, 342 U.S. at 448).

Perkins opens the possibility that a foreign defendant could have a “temporary”

or “constructive” “home” in a state based on exceptional circumstances. That appears

to be what Plaintiffs argue here. They claim Defendants are “an entirely different

kind of organization, to which the paradigm of a place of incorporation or principal

place of business should not apply.” (Pls.’ Memo. in Opp’n to Excel at #482). They

argue that Excel is a company “that trades on its national impact and ‘connections’,”

maintains high-profile Ohio clients, and has members serving on various boards in

Ohio. (Id. at #482–83). Plaintiffs also claim that, besides one short fitness video, BSP’s

only business dealings ever have been this relationship with Plaintiffs. (Pls.’ Memo.

in Opp’n to Bensalz at #506). Plaintiffs argue that all these connections “are of such

a substantial nature as to render the corporation ‘at home’ in Ohio.” (Pls.’ Memo. in

Opp’n to Excel at #483).

This Court disagrees. “It is one thing to hold a corporation answerable for

operations in the forum State, [it is] quite another to expose it to suit on claims having

no connection whatever to the forum State.” Daimler, 571 U.S. at 139 n.19. The latter

is, of course, the result that would follow if the Court were to find general jurisdiction

over Defendants here—both of them would ostensibly be subject to jurisdiction in

Ohio, even for matters not related to any contact with the State. While it may well be

true that Excel’s partners attended Ohio universities, or serve on Ohio boards, or that

Excel has a few (unrelated) clients in Ohio, these Ohio connections do not make this

the kind of “exceptional case,” see Daimler, 571 U.S. at 139 n.19, that would transform

Ohio into Excel’s “home”, temporary or otherwise, thereby opening Excel to suits of

all manners and kinds in Ohio courts.

As for BSP, even if Plaintiffs are correct that BSP’s only business dealings are

those that it undertook with Plaintiffs (who are Ohio citizens), those dealings are

likewise not substantial enough to render BSP “at home” here. The only Ohio-focused

activity, even under Plaintiffs’ account, was BSP’s solicitation of business (and later

communications about that business) with an Ohio resident. All of BSP’s other

activities occurred outside the State. That is simply too thin a reed to support the

notion that BSP created a “temporary home” in Ohio like the Supreme Court found

in Perkins.

Accordingly, Plaintiffs failed to establish that this Court has general personal

jurisdiction over Defendants.

b. Plaintiffs Cannot Establish Specific Personal

Jurisdiction Over Defendants.

That still leaves the question of specific jurisdiction. Specific jurisdiction

requires a lesser showing of contacts, as the court’s power over the out-of-state

defendant in the specific-jurisdiction setting is limited to the causes of action that

arise out of those contacts. See Third Nat’l Bank, 882 F.2d at 1089. As both parties

acknowledge, the Sixth Circuit has adopted a three-part test for determining whether

the exercise of specific personal jurisdiction over a defendant comports with due

process: (1) the defendant must have purposefully availed himself of the privilege of

acting in the forum state or purposefully caused a consequence in the forum state;

(2) the cause of action must arise from the defendant’s activities there; and (3) the

defendant’s acts or consequences must have a substantial enough connection with the

forum state to make the exercise of jurisdiction over the defendant reasonable.

Nationwide Mut. Ins. Co. v. Tryg Int’l Ins. Co., Ltd., 91 F.3d 790, 794 (6th Cir. 1996)

(citing Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)).

A party seeking to hale an out-of-state defendant into court must establish each of

these three elements. Here, Plaintiffs fail to show any.

i. Defendants have not purposefully availed

themselves of Ohio law.

Purposeful availment requires that a defendant’s contacts with the forum state

“proximately result from actions by the defendant himself that create a substantial

connection with the forum State.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475

(1985) (emphasis in original) (quotation omitted). This ensures that a defendant will

not be “haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or

‘attenuated’ contacts.” Id. Where a defendant deliberately engages in significant

activities within a state or creates continuing obligations between himself and

residents of the forum state, “he manifestly has availed himself of the privilege of

conducting business there.” Id. at 475–76. If the defendant’s efforts are “purposefully

directed” towards residents of a state, then the absence of physical contacts between

the defendant and that state would not defeat personal jurisdiction. Id. at 476.

The purpose of requiring such contacts is twofold. First, “[i]t protects the

defendant against the burdens of litigating in a distant or inconvenient forum.”

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980). Second, it

protects the defendant against attempts by states to “reach out beyond the limits

imposed on them by their status as coequal sovereigns in a federal system.” Id. Plus,

if a defendant has purposefully availed itself of the protection of the forum state, it

“has clear notice that it is subject to suit there, and can act to alleviate the risk of

burdensome litigation by procuring insurance, passing the expected costs on to

consumers, or, if the risks are too great, severing its connection with the State.”

World-Wide Volkswagen, 444 U.S. at 297.

Here, Plaintiffs make two arguments to show purposeful availment: Excel and

BSP (1) “participated in extensive and ongoing contacts, negotiations, and planning

by repeated telephone and email communications with Plaintiffs in Ohio throughout

a two-year period,” and (2) chose to target an Ohio resident and business.7 (See Pls.’

Memo. in Opp’n to Excel at #485–86; Pls.’ Memo. in Opp’n to Bensalz at #508–09).

Considered separately or together, that is not enough.

It is well settled that the mere existence of a contract with a citizen of a foreign

state is not enough to show purposeful availment, see Burger King, 471 U.S. at 478,

and Plaintiffs do not argue otherwise here. Rather, Plaintiffs point to Defendants’

acts surrounding that contract (communications that occurred in negotiating and

performing the contract). Under Sixth Circuit precedent, that is certainly the correct

starting point. Bridgeport Music, Inc. v. Still N The Water Pub., 327 F.3d 472, 482

(6th Cir. 2003) (noting that courts should focus on the defendant’s actions in the

negotiation and performance of the contract in determining jurisdiction). But, in that

regard, the Sixth Circuit has also held that the mere fact that an out-of-state party

had contacts with an in-state party to negotiate an agreement “is not of controlling

significance.” LAK, Inc. v. Deer Creek Enters., 885 F.2d 1293, 1300 (6th Cir. 1989).

Rather, such contacts often amount to “precisely the sort of ‘random,’ ‘fortuitous’ and

‘attenuated’ contacts that the Burger King Court rejected as a basis for haling non-

resident defendants into foreign jurisdictions.” Id. at 1300–01. Accordingly, a court

must undertake a holistic analysis of the totality of the circumstances surrounding

the prior negotiations and contemplated future consequences, the terms of the

contract, and the parties’ actual course of dealing when determining if the defendant

7 Plaintiffs could have, but did not, make other arguments in support of specific personal jurisdiction

over Defendants. Because they failed to do so, the Court considers any other arguments in support of

specific personal jurisdiction waived.

purposefully established minimum contacts in the forum. Nationwide Mut. Ins. Co.,

91 F.3d at 795 (citing Burger King, 417 U.S. at 479).

To be sure, in Cole v. Mileti, the Sixth Circuit arguably reached a different

conclusion. 133 F.3d 433 (6th Cir. 1998). There, the court proclaimed that if “a

nonresident defendant transacts business by negotiating and executing a contract via

telephone calls and letters to an Ohio resident, then the defendant has purposefully

availed himself of the forum by creating a continuing obligation in Ohio.” Id. at 436.

Such language suggests that contract negotiations with a person who happens to be

located in a particular state suffice to make the out-of-state defendant subject to suit

for a cause of action arising out of the contract. Although there, it is perhaps worth

noting, the out-of-state defendant had been an Ohio resident, and business associate

of the plaintiff, for many years before moving to California, and the contract at issue

involved the out-of-state defendant’s purchase of personal property (shares in a

company) that the Ohio plaintiff owned.

In any event, in subsequent cases, the Sixth Circuit has walked back any such

broad reading of Cole. In particular, in later cases, the Sixth Circuit has distinguished

between situations where the defendant has made contact with an Ohio-based

plaintiff in order to exploit a market within the state, as opposed to situations where

the defendant had contact with the state only because the plaintiff happened to reside

there, with the latter cases constituting the type of “fortuitous” contacts that do not

give rise to “purposeful availment.” See Calphalon, 228 F.3d at 722; McMunigal v.

Bloch, No. 1:09-cv-01674, 2010 WL 2106186, at *8 (N.D. Ohio May 25, 2010) (finding

the communications from defendant to plaintiff in Ohio about the contract occurred

solely because the plaintiff happened to reside in Ohio, not because the defendant

wished to create “continuous and substantial” consequences there) (citing Calphalon,

228 F.3d at 723); Int’l Techs. Consultants, Inc. v. Euroglas S.A., 107 F.3d 386, 395

(6th Cir. 1997) (“[I]t was purely fortuitous that International Technologies happened

to have a Michigan address.”). In short, there is no per se rule that a contractual

relationship with an in-state citizen, coupled with interstate communications related

to that contract, automatically suffice to render an out-of-state defendant subject to

personal jurisdiction where the plaintiff resides. See McMunigal, 2010 WL 2106186,

at *9.

The Sixth Circuit’s later decision in Condon v. Flying Puck, LLC, 35 F. App’x

173, 174 (6th Cir. 2002), is instructive on this point. There, like here, contract

negotiations occurred between an out-of-state party and an Ohio resident. When the

latter sued, the district court found it lacked personal jurisdiction, and the Sixth

Circuit affirmed. In doing so, the Sixth Circuit distinguished Cole, finding that, unlike

Condon, Cole had involved “an ongoing business relationship that lasted over ten

years, so that their business transactions ‘continuously arose from plaintiff’s

activities in Ohio.’” Condon, 35 F. App’x at 174. The contractual relationship in

Condon, by contrast, lasted less than two years. Id. The instant case is more like

Condon than Cole.

The point is simply this: to create personal jurisdiction, out-of-state defendants

must purposefully avail themselves of—that is, they must choose to direct their

activities toward—the forum state. If instead they are choosing to direct their

activities toward a particular person, and that person merely happens to live in the

forum state, that is not enough. Yet that is all that Plaintiffs allege regarding

Defendants’ activities here.

Separately, Plaintiffs point to the NDA’s Ohio choice-of-law provision to argue

that Defendants contractually accepted personal jurisdiction in Ohio. But the

Supreme Court has stated that such provisions, in and of themselves, are insufficient

to establish jurisdiction. See Burger King, 471 U.S. at 482. The Sixth Circuit has

likewise treated choice-of-law provisions as a relevant factor to consider, but not as

dispositive. See Calphalon, 228 F.3d at 723; CompuServe, 89 F.3d at 1264. Here, the

choice-of-law provision may tip in favor of jurisdiction, but it is insufficient to

overcome the fact that Defendants’ contacts with the forum state, even as

characterized by Plaintiffs, constitute the sort of random, fortuitous and attenuated

contacts that do not suffice to show purposeful availment.

ii. Plaintiffs’ cause of action does not arise from

Defendants’ activities in Ohio.

To establish personal jurisdiction, it is not enough for the plaintiff to show the

defendant purposefully availed itself of the laws of the forum state. The plaintiff must

also demonstrate that the cause of action arose from the defendant’s activities in the

forum state. Southern Mach. Co., 401 F.2d at 381; see also Calphalon, 228 F.3d at

723. What exactly that means under Sixth Circuit case law is open to interpretation.

Some cases seem to suggest that, in the breach of contract setting, this means that

the activities constituting the breach must have occurred in Ohio. See, e.g., Condon,

35 F. App’x at 174 (finding this prong not satisfied because the breach of contract

arose from the defendant’s failure to compensate the plaintiff for work performed out

of state); Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 152 (6th Cir. 1997)

(finding this prong not satisfied because the defendant’s alleged breach of contract by

failure to pay the purchase price occurred out of state). Other cases, though, seem to

adopt a more relaxed threshold, expressly stating that this criterion “does not require

that the cause of action formally ‘arise from’ defendant’s contacts with the forum.”

Third Nat’l Bank in Nashville v. WEDGE Grp., Inc., 882 F.2d 1087, 1091 (6th Cir.

1989) (emphasis added).

This Court need not mine the possible distinction between these two

approaches, though, as even under the more relaxed standard, “the cause of action,

of whatever type, [must] have a substantial connection with the defendant’s in-state

activities.” Southern Machine Co., 401 F.2d at 384 n.27 (emphasis added). This turns

on the relationship, if any, between the “operative facts” of the plaintiff’s cause of

action and the defendant’s contacts with the forum. See id. at 384 n.29. To be sure,

this relationship may give rise to jurisdiction even absent physical presence, but

typically only where the Ohio-directed activities “form the ‘heart’ of the cause of

action.’” Int’l Corp. v. Henderson, 428 F.3d 605, 617–18 (6th Cir. 2005) (quoting Neal

v. Janssen, 270 F.3d 328, 333 (6th Cir. 2001)).

Here, Plaintiffs argue that “[a]s a direct and proximate result of Defendant[s’]

[] active targeting of Plaintiffs, Defendant[s were] able to coerce Plaintiffs into

partnering with [Defendants] as their agents and” partner/manager. (Pls.’ Memo. in

Opp’n to Excel at #486; Pls.’ Memo. in Opp’n to Bensalz at #509). The problem with

this argument, though, is that it does not show how Defendants’ activities that

occurred in this forum have a “substantial connection” to the causes of action that

Plaintiffs seek to assert in this suit. Southern Machine Co., 401 F.2d at 384 n.27. To

the contrary, Plaintiffs seem to concede that all the facts forming “the ‘heart’ of the

cause of action” occurred out of state. Int’l Corp. 428 F.3d at 618.

Consider the contract claim. Even under Plaintiffs’ version of the facts, the

alleged Ohio-based activities principally related to the very initial steps of contract

formation (i.e., the “targeting” of Plaintiffs in Ohio). Yet the contract claim here

involves allegations of later breach, not problems related to contract formation. And,

as to that breach, Plaintiffs do not allege, for example, that Defendants failed to follow

the NDA and wrongfully disclosed information about the Finney project to people in

Ohio or while Defendants themselves were in Ohio. To the contrary, to the extent

that the parties have identified locations at all, the people to whom the Defendants

sought to show Finney material apparently resided in California or New York. (See

Bennett Decl. at ¶ 7, #379; Excel’s Mot. to Dismiss at #287). Plaintiffs’ allegations of

sexual assault and tortious interference likewise arise from, and relate to, activities

that allegedly occurred in New York, not Ohio.

Nor can Plaintiffs seek to rely on Southern Machine’s language to the effect

that an out-of-state defendant’s out-of-state activities may suffice for jurisdiction if

they have “a realistic impact on the commerce of that state.” 401 F.2d at 382.

Defendants’ alleged activities here have virtually no impact on Ohio’s commerce.

Again, here, the plan was to develop the Finney project through further activities

either in California or New York, not Ohio.

In sum, Plaintiffs are unable to show that the “operative facts” relating to their

causes of action have a “substantial connection with” Defendants’ in-state activities.

Southern Machine Co., 401 F.2d at 384 n.27. Rather, the central facts relevant to

Plaintiffs’ claims—to use the Sixth Circuit’s words, those facts that “form the heart

of the cause of action,” Int’l Corp. 428 F.3d at 618—occurred outside the state. Thus

Plaintiffs fail under this prong, too.

iii. Exercising personal jurisdiction over

Defendants would be unreasonable.

Because Plaintiffs failed to satisfy the first two prongs of the Southern Machine

test—either of which is dispositive—this Court need not dwell on the third. See LAK,

Inc., 885 F.2d at 1303 (“[E]ach [Southern Machine] criterion represents an

independent requirement, and failure to meet any one of the three means that

personal jurisdiction may not be invoked.”). Yet, it still merits mention, as it does not

support jurisdiction either.

The third prong requires that the defendant have a substantial enough

connection with the forum state to make the exercise of jurisdiction over the

defendant “reasonable.” See Southern Mach. Co., 401 F.2d at 381. While that term is

admittedly amorphous, the Defendants appear to have essentially no ongoing

connection with Ohio, as discussed in detail above. The most substantial connection

is likely Defendants’ contract with Plaintiffs. But the Supreme Court has stated, “[i]f

the question is whether an individual’s contract with an out-of-state party alone can

automatically establish sufficient minimum contacts in the other party’s home forum,

we believe the answer clearly is that it cannot.” Burger King, 471 U.S. at 478. Just as

the Sixth Circuit found in Kerry Steel, Inc., to subject a New York defendant to suit

in Ohio simply because the defendant contracted with an Ohio resident “would be far

from reasonable.” 106 F.3d at 152.

In an effort to address the vagueness inherent in the term “reasonable,” the

Supreme Court has instructed that the reasonableness inquiry should consider

certain factors, including: (1) the burden on the defendant, (2) the forum state’s

interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining convenient

and effective relief, (4) the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies, and (5) the shared interest of the States in

furthering fundamental substantive social policies. Burger King, 471 U.S. at 477

(citing World-Wide Volkswagen, 44 U.S. at 292).

Here, considered overall, these factors likewise counsel towards finding that

the exercise of personal jurisdiction over Defendants would be unreasonable.

Plaintiffs admittedly have an interest in obtaining convenient and effective relief by

litigating in Ohio. The burden on Defendants to litigate here, though, is high.

Moreover, Ohio has no particular cognizable interest in adjudicating the dispute. To

be sure, Ohio does have an interest in protecting its residents, but that would be true

in any case involving an Ohio plaintiff. Beyond that, this case does not seem to

involve, for example, novel questions of Ohio law or important recurring issues within

this state. Finally, the interstate judicial system’s interest in efficiency does not

counsel strongly in favor of this case being handled here versus elsewhere, and there

does not appear to be any “shared interest of the States” at issue. In sum, based on

the claims and the contacts alleged here, it would not be reasonable for this Court to

exercise jurisdiction over the out-of-state Defendants.

CONCLUSION

Because this Court finds it lacks personal jurisdiction over the Defendants, it

denies as moot the remainder of Defendants’ Motions to Dismiss regarding failure to

state a claim and Plaintiffs’ Motion for Leave to File an Amended Complaint. Thus,

this Court GRANTS IN PART Defendants’ Motions to Dismiss (Docs. 15, 21),

DENIES IN PART Defendants’ Motions to Dismiss (Docs. 15, 21), and DENIES

Plaintiffs’ Motion for Leave to File Second Amended Complaint (Doc. 40).

Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ First

Amended Complaint (Doc. 2).

SO ORDERED.

March 6, 2020 :

DATE DOUGLAS R. COL

UNITED STATES DISTRICT JUDGE

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