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Martensen v. Koch

United States District Court, N.D. California

April 30, 2013

WILLIAM KOCH and DOES 1-25, inclusive, Defendant

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For Kirby Martensen, Plaintiff: Brian Gearinger, LEAD ATTORNEY, Gearinger Law Group, San Francisco, CA; John Houston Scott, W. David Corrick, W. Gordon Kaupp, LEAD ATTORNEYS, Scott Law Firm, San Francisco, CA.

For William Koch, Defendant: John Charles Hueston, LEAD ATTORNEY, Irell and Manella LLP, Los Angeles, CA; Cathy Tran Moses, Melissa R McCormick, Irell & Manella LLP, Newport Beach, CA.


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This action involves the alleged false imprisonment of Kirby Martensen (" Plaintiff" ) by William Koch (" Defendant" ) and other unnamed parties. Now pending before the Court are Defendant's motions to (1) dismiss Plaintiff's First Amended Complaint (" FAC" ) (i) under Rule 12(b)(3) for improper venue, or in the alternative, to transfer the case under 28 U.S.C. § 1404(a); (ii) under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction; and (iii) under Rule 12(b)(6) for failure to state a claim for relief; and (2) strike Plaintiffs' punitive damages allegations under Federal Rule of Civil Procedure 12(f) (" Motions" ). (Dkt. No. 39.) After carefully considering the parties' pleadings on the Motions, and having the benefit of oral argument on April 25, 2013, the Court GRANTS in part and DENIES in part the Motion to Dismiss and DENIES the Motion to Strike.


Until March 22, 2012, Plaintiff, a resident of Berkeley, California, was an executive employee of companies owned and/or controlled by Defendant, including OxBow

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Carbon & Minerals, Inc. (" OCM" ), and Oxbow Carbon & Minerals International (" OCM International" ). OCM and OCM International sell a significant amount of petroleum coke and steam coal throughout Asia, shipping millions of metric tons of product to that region each year. In late 2011, Plaintiff was promoted to the position of Senior Vice President-Asia with OCM International, and relocated to OCM International's Singapore office. Plaintiff came to believe that the company's business efforts in Asia included implementing a plan to evade paying taxes to the United States on profits in excess of $200,000,000 per year.

Sometime in 2011, Defendant was notified of an anonymous letter alleging that Plaintiff and another employee, Larry Black, had been engaging in theft, breaches of fiduciary duty, fraud, and self-dealing against the Oxbow companies. Based on this information, Defendant directed a comprehensive forensic review of thousands of documents, including the letters, memoranda, and electronic corporate communications of Plaintiff and several other employees. Defendant's review of these communications revealed that Plaintiff and others had expressed concern over the legality of what they were doing on behalf of Oxbow and their distrust of upper management. As a result, Defendant promoted and implemented a plan to intimidate and discredit Plaintiff for the purpose of chilling his speech and damaging his credibility.

In early 2012, Plaintiff and other executive employees of OCM International (Larry Black, Charlie Zhan, Joe Lombardi, Rich Ansley, and Bruce Taverner) were directed to attend a meeting with Defendant and others at Defendant's property known as Bear Ranch located near Aspen, Colorado. Bear Ranch is accessible only through a private road owned and maintained by Defendant. The meeting was scheduled for March 21 and March 22, 2012.

On the morning of March 21, 2012, Plaintiff flew directly from San Francisco to Aspen. He arrived just before noon and was met at the airport by Defendant. After lunch in Aspen, Plaintiff, Defendant, and others drove to Bear Ranch to have dinner and spend the night. There was no cell phone reception or Wi-Fi connection at the ranch. " As a result, [Plaintiff] had no way to communicate with the outside world while he was at Bear Ranch." (Dkt. No. 38 ¶ 18.)

The next morning, Plaintiff and the other guests had breakfast at the ranch followed by a business meeting. Defendant then invited Plaintiff and the other guests to tour his nearby western town--a collection of approximately 50 buildings designed to replicate an authentic late-19th century western town. This was followed by a helicopter tour of the ranch and a lunch hosted by Defendant in one of the town's meeting rooms.

Following lunch, Defendant told Plaintiff and the others that they would be interviewed by a compensation specialist as part of a 360-degree peer review. Plaintiff was then escorted to a small room and interviewed " by two agents of [Defendant]" for several hours. ( Id. at ¶ 20.) Plaintiff was accused of participating in a wide-ranging scheme to defraud Oxbow and Defendant of millions of dollars, accepting bribes from competitors, and diverting freight to a known competitor. " These accusations were based on [Plaintiff's] alleged misconduct primarily when he worked for Oxbow Carbon & Minerals in Pleasant Hill, California and lived in Berkeley, California." ( Id. )

After this confrontation, at around 5:00 p.m., Plaintiff was escorted to an SUV and directed to sit in the back. Just outside the western town the vehicle stopped, the

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windows were rolled down, and Plaintiff was served with his termination papers and a lawsuit. As the vehicle returned to the ranch, Plaintiff asked where he was being taken. The driver told him that he would be taken to Aspen. Plaintiff was then driven to the main house on the ranch to collect his belongings.

When collecting his belongings, " [a]n agent of [Defendant]" searched his suitcase and toiletries. ( Id. ¶ 19.) Plaintiff was then escorted to an SUV and driven to a nearby cabin on the ranch, where he was escorted into the cabin. While escorting Plaintiff to the cabin, the driver told Plaintiff that " a sheriff is here to make sure you don't wander off." ( Id. ) Plaintiff observed a marked police vehicle parked nearby with a man in uniform behind the wheel. The police vehicle was clearly visible from the window of the room in which Plaintiff was kept.

After three hours of " being confined," ( id. ¶ 23), Plaintiff was told to collect his things and that he would be taken to an airport. " Agents of [Defendant]" directed Plaintiff to get back in the SUV with a former co-worker, Charlie Zahn, while " two agents of [Defendant] sat up front." ( Id. ) Plaintiff asked to be driven to Aspen, which is 69.3 miles from Bear Ranch, because he had a scheduled flight from Aspen to San Francisco the next morning. This request was denied. Plaintiff was told that he was being taken to Denver, which is 228 miles from Bear Ranch. Plaintiff complained and stated that he wanted to go to Aspen.

Plaintiff was driven to a small private airport in the Denver area. Once at the airport, " [Defendant's] agents" escorted Plaintiff to a private plane and ordered Plaintiff and Zahn to board the plane. ( Id. at ¶ 24.) " [Plaintiff] is informed and believes and thereupon alleges that the plane was owned or controlled by [Defendant]." ( Id. ) It was now approximately 2:00 a.m. on March 23, 2012. The private jet was manned by a pilot, co-pilot, and an escort Plaintiff believed was armed, all of whom were " agents of [Defendant]." ( Id. ) The plane landed in Oakland, California at approximately 4:00 a.m. On arrival Plaintiff was told that a car was waiting to take him to a nearby Marriot Courtyard Hotel. Plaintiff refused the request and asked an airport employee to call a cab. A cab arrived and Plaintiff left.

Regarding the involvement of the sheriff in the false imprisonment, Plaintiff alleges that a Colorado Bureau of Investigations report following the alleged incident at the ranch " confirm[s] that the Sheriff's deputies, Deputy Clarence Hart and Deputy Mike Smith, . . . were acting as Koch's agents." ( Id. at 38 ¶ 26.) Deputy Smith sometime in March 2012 asked Deputy Hart if he would be interested in doing a " security job" at Bear Ranch. ( Id. at 38 ¶ 28 (quotation marks omitted).) Deputy Smith had been approached to do the job, but he was scheduled to be on duty that day. Deputy Smith told Deputy Hart that Defendant was going to fire some employees, and he wanted a law enforcement presence " in case things got out of control." ( Id. (quotation marks omitted).) Deputy Hart accepted the job. When he arrived at the ranch in his patrol vehicle, a man he believed to be the ranch manager named Rob Gill told Deputy Hart he would be paid $50.00 per hour. Deputy Hart was at the ranch for 10 hours that day, from 10:00 a.m. to 8:00 p.m. He received a $500.00 check at the end of the day. Deputy Hart was directed to park behind a cabin near the main office. Deputy Hart observed two people being escorted to the cabin that day, and at the time he thought they may have been terminated employees. There was a " whole security detail from Florida" present on the ranch that day. ( Id. ) Deputy Hart estimated eight to nine men were on the security detail.

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Robert Gill, " who has been described as the Bear Ranch manager and is an agent of Koch," told Deputy Smith that on the day the executives were going to be fired, the phone service and Internet access at the ranch would be turned off so " these guys couldn't uh, couldn't communicate outside until they were totally done." ( Id. at ¶ 29 (quotation marks omitted).) On the day Deputy Hart performed the security job at the ranch, Deputy Smith spent a lot of time patrolling in that area. Deputy Smith said Koch had his own " kind of like secret service type" personnel on the ranch that day. ( Id. (quotation marks omitted).)

On October 11, 2012, Plaintiff filed suit against Defendant, alleging three causes of action: 1) false imprisonment; 2) civil conspiracy; and 3) conspiracy under 42 U.S.C. § 1983.


A. Personal Jurisdiction

When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant. See Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir. 2003). However, this demonstration requires that the plaintiff " make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Doe v. Unocal, 248 F.3d 915, 922 (9th Cir. 2001) (internal citations omitted). In such cases, " we only inquire into whether [the plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction." Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995). Moreover, " for the purpose of this demonstration, the court resolves all disputed facts in favor of the plaintiff." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).

" Where, as here, no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the court sits." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). California's long-arm statute has the same due process requirements as the federal long-arm statute. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004). The Due Process Clause requires that nonresident defendants have " minimum contact" with the forum state such that the exercise of personal jurisdiction " does not offend traditional notions of fair play and substantial ...

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