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Vistage Worldwide, Inc. v. Knudsen

United States District Court, S.D. California

January 7, 2020

VISTAGE WORLDWIDE, INC., Plaintiff,
v.
VIRGINIA KNUDSEN, et al., Defendants. AND RELATED COUNTERCLAIM.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PROTECTIVE ORDER [ECF NO. 25]

          HON. JILL L. BURKHARDT, UNITED STATES MAGISTRATE JUDGE

         Before the Court is a motion for protective order filed by Defendants TGMV, LLC (“TGMV”), Leaders Edge Consulting, Inc. (“Leaders Edge”), and Virginia Knudsen (“Knudsen) (collectively, “Defendants”). (ECF No. 25.) Defendants seek a protective order denying jurisdictional discovery propounded by Plaintiff Vistage International, Inc. (“Vistage” or “Plaintiff”) in response to TGMV's motion to dismiss for lack of personal jurisdiction. (Id. at 1-2.) Plaintiff filed an opposition. (ECF No. 30.) On October 24, 2019, the Court held a hearing on the motion and ordered supplemental briefing. (ECF No. 32.) Both parties filed supplemental briefs in accordance with the Court's order. (ECF Nos. 33, 34.)

         For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART the motion for protective order.

         I. BACKGROUND

         On July 19, 2019, Plaintiff commenced this action against Defendants. (ECF No. 1.) Plaintiff alleges, among other things, that (1) Knudsen breached a December 2012 Master Services Agreement (“MSA 1”) and a Statement of Work (“SOW”), and (2) Knudsen and Leaders Edge breached an October 2013 Master Services Agreement (“MSA 2”) and 2018 Transition Agreements. (Id. at ¶¶ 13-15, 26, 36-59.) With respect to TGMV, Plaintiff asserts claims for consumer fraud, tortious interference with contractual relations, tortious interference with prospective economic advantage, misappropriation of trade secrets, and unjust enrichment. (Id. at ¶¶ 69-75, 86-115.)

         Plaintiff alleges that the action was properly filed in this Court because the underlying agreements contain a forum selection clause stating that “any and all actions or proceedings seeking to enforce any provision of this agreement shall be brought in the courts of the State of California, County of San Diego, including federal courts located therein.” (Id. at ¶ 5; see also ECF No. 1-2 at 7, 24.) Plaintiff further alleges that specific jurisdiction exists as to TGMV, which is not a party to the underlying agreements, for the following reasons:

(1) it was formed in part by Knudsen, and therefore, TGMV had actual and/or imputed knowledge that her conduct in forming and operating BOAR would harm Vistage; (2) TGMV knew or reasonably should have known that the conduct of Knudsen to form, develop, and/or operate BOAR based on the allegations within this complaint would damage Vistage, a company with its principal place of business in San Diego County, California; (3) the conduct of Knudsen relative to BOAR is nonetheless imputed to TGMV, because BOAR maintains no separate existence; and (4) the forum selection clause may nonetheless be enforced against TGMV because the alleged conduct of TGMV, by and through its agent Knudsen, is closely tied to the contractual relationships and breaches alleged herein. Manetti-Farrow, Inc. V. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988).

(ECF No. 1 at ¶ 6.)

         On August 12, 2019, TGMV filed a motion to dismiss for lack of personal jurisdiction. (ECF No. 8.) That motion remains pending, and no opposition has been filed. (See ECF No. 41.) In support of its motion to dismiss, TGMV attaches the declaration of Todd Nigro, one of its managers. (ECF No. 8-1.) Mr. Nigro represents, among other things, the following:

• The four managers and members of TGMV are:
o Todd Nigro of Nigro Development LLC;
o Guy Wells of Wells Cargo Inc.;
o Michael Reiss of Southern Nevada Chiropractic; and
o Virginia Knudsen of Leaders Edge Consulting, Inc.
• All four of the managers/members reside and work in Las Vegas.
• TGMV adopted the tradename “BOAR”.
• TGMV has always maintained its separate identity as a Nevada limited liability company in good standing with the State of Nevada.
• TGMV operates under its own EIN, with bank accounts and records separate and apart from any other entity or person.
• TGMV is wholly owned by its members, and no one else. Specifically, the company is neither a member or manager of Leaders Edge, nor is TGMV a parent, subsidiary or affiliate of Leaders Edge.
• TGMVs principal place of business is located at 9115 W. Russell Road, Suite 210, Las Vegas, Nevada 89148. TGMV has never had any other place of business.
• TGMV is not registered as a foreign entity to do business in California and has never done any business with Vistage.
• TGMV has never entered into any agreement, oral or written, with Vistage. Specifically, TGMV has never agreed or consented to San Diego as the forum for any disputes between TGMV and Vistage.
• The articles of organization were filed on March 12, 2018.
• At the time the articles of organization were filed, personal development coaching was the intended business plan and purpose.

(Id.; see also ECF No. 25-1.)

         On September 17, 2019, Plaintiff served a Federal Rule of Civil Procedure 30(b)(6) deposition notice on TGMV “on the issue of personal jurisdiction within the state of California.” (ECF No. 25-2.) The deposition was noticed for October 21, 2019 in Las Vegas, Nevada. (Id. at 3.) The notice set forth the following topics for examination:

1. The formation and operation of TGMV, including its incorporation, structure, purpose for incorporation, owners, investors, capitalization, principal place of business, all physical locations, employees, business partners, independent contractors, and/or agents.
2. To the extent different than the prior category, the formation and operation of the business of BOAR, including its structure, purpose, owners, investors, capitalization, principal place of business, all physical locations, employees, business partners, independent contractors, and/or agents.
3. TGMV's business, where and how it conducts that business, and whether any of its business operations touch California.
4. To the extent different from the prior category, TGMV's operation of BOAR, where and how it conducts that business, and whether any of its business operations touch California.
5. TGMV's use of, association with, engagement of, employment of, agency with, and/or any other business relationship with Virginia Knudsen.
6. TGMV managers/members/owners' association with, engagement of, employment of, agency relationship with, and/or any other business relationship with Virginia Knudsen.
7. TGMV's knowledge of Virginia Knudsen's relationship with Vistage Worldwide, Inc. (“Vistage”) in 2018 and to the present.
8. TGMV's knowledge, review, consideration, analysis and understanding of the contracts existing between Virginia Knudsen, Leaders Edge, and Vistage in 2018 and to the present, generally, and relative to choice of venue provisions that may be found therein.
9. All contact(s) TGMV has with the state of California since its formation and to the present.
10. All funding, resources, ownership, contractors, materials, know-how, and/or other things pertaining to TGMV ...

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