United States District Court, D. Arizona
ORDER
Honorable Steven P. Logan, United States District Judge
Plaintiff
Best Western International Incorporated (the
“Plaintiff”) filed suit against Twin City Lodging
LLC, Percy Pooniwala, and Santha Kondatha alleging multiple
causes of action related to the termination of a Best Western
Membership Agreement (the “Membership
Agreement”). (Doc. 1 at 2) The Defendants moved to
dismiss the Plaintiff's claims against them (the
“Motion”). (Doc. 18) The Court's ruling is as
follows.
I.
Background
The
Plaintiff is a non-profit corporation that serves its
members, who are independent owners and operators of Best
Western branded hotels. (Doc. 1 at 3) On September 29, 2016,
Twin City Lodging LLC and Pooniwala executed the Membership
Agreement, by which they joined the community of members
operating Best Western branded hotels. (Doc. 1 at 2) On
August 31, 2017, Kondatha executed an “Application for
Change in Voting Member/Voter Registration Card”
through which he agreed to be bound by the Membership
Agreement in exchange for designation as a voting member of
the organization. (Doc. 1 at 2; Doc. 1-2 at 21)
On July
26, 2018, the Plaintiff notified Twin City Lodging LLC, Percy
Pooniwala, and Santha Kondatha that their membership with the
Plaintiff had been terminated for failure to abide by the
terms and conditions of certain regulatory documents. (Doc. 1
at 12) Following the termination of Twin City Lodging
LLC's membership status, the Plaintiff alleges that Twin
City Lodging LLC continued to operate while unlawfully using
Best Western exterior signage, internet advertising, and
other branded items. (Doc. 1 at 12) The Plaintiff initiated
this lawsuit seeking damages for breach of contract and
trademark infringement, among other claims. (Doc. 1 at 14-18)
The defending parties filed the Motion seeking to dismiss
that Plaintiff's claims pursuant to Federal Rules of
Civil Procedure 12(b)(2) and 12(b)(6). (Doc. 18)
II.
Legal Standard
A.
12(b)(2)
A
plaintiff bears the burden of establishing personal
jurisdiction. Repwest Ins. Co. v. Praetorian Ins.
Co., 890 F.Supp.2d 1168, 1184-85 (D. Ariz. 2012). When a
defendant moves to dismiss a complaint for lack of personal
jurisdiction, “the plaintiff is ‘obligated to
come forward with facts, by affidavit or otherwise,
supporting personal jurisdiction'” over the
defendant. Cummings v. W. Trial Lawyers Assoc., 133
F.Supp.2d 1144, 1151 (D. Ariz. 2001). In the absence of an
evidentiary hearing on the issue of personal jurisdiction, a
plaintiff must only make “a prima facie showing of
jurisdictional facts through the submitted materials”
in order to avoid dismissal for lack of personal
jurisdiction. Data Disc, Inc. v. Sys. Tech. Assocs.,
Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). Because no
applicable federal statute governing personal jurisdiction
exists, Arizona's long-arm statute applies. Terracom
v. Valley Nat'l Bank, 49 F.3d 555, 559 (9th Cir.
1995). Arizona's long-arm statute provides for personal
jurisdiction to the extent permitted by the Due Process
Clause of the United States Constitution. Ariz. R. Civ. P.
4.2(a).
Absent
traditional bases for personal jurisdiction (i.e., physical
presence, domicile, and consent), the Due Process Clause
requires that a nonresident defendant have certain minimum
contacts with the forum state such that the exercise of
personal jurisdiction does not offend traditional notions of
fair play and substantial justice. See Doe v. Am.
Nat'l Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997)
(citing International Shoe Co. v. Washington, 326
U.S. 310, 316 (1945)). “In determining whether a
defendant had minimum contacts with the forum state such that
the exercise of jurisdiction over the defendant would not
offend the Due Process Clause, courts focus on ‘the
relationship among the defendant, the forum, and the
litigation.'” Brink v. First Credit Res.,
57 F.Supp.2d 848, 860 (D. Ariz. 1999). If a court determines
that a defendant's contacts with the forum state are
sufficient to satisfy the Due Process Clause, then the court
must exercise either “general” or
“specific” jurisdiction over the defendant.
Doe, 112 F.3d at 1050. The nature of the
defendant's contacts with the forum state will determine
whether the court exercises general or specific jurisdiction
over the defendant. Doe, 112 F.3d at 1050-51.
B.
12(B)(6)
To
survive a motion to dismiss, a complaint must contain
“a short and plain statement of the claim showing that
the pleader is entitled to relief” such that the
defendant is given “fair notice of what the . . . claim
is and the grounds upon which it rests.” Bell Atl.
Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting
Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41,
47 (1957)). The Court may dismiss a complaint for failure to
state a claim under Federal Rule 12(b)(6) for two reasons:
(1) lack of a cognizable legal theory, and (2) insufficient
facts alleged under a cognizable legal theory. Balistreri
v. Pacificia Police Dep't, 901 F.2d 696, 699 (9th
Cir. 1990).
In
deciding a motion to dismiss, the Court must “accept as
true all well-pleaded allegations of material fact, and
construe them in the light most favorable to the non-moving
party.” Daniels-Hall v. Nat'l Educ.
Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). In
comparison, “allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable
inferences” are not entitled to the assumption of
truth, and “are insufficient to defeat a motion to
dismiss for failure to state a claim.” Id.;
In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th
Cir. 2010). A plaintiff need not prove the case on the
pleadings to survive a motion to dismiss. OSU Student
All. v. Ray, 699 F.3d 1053, 1078 (9th Cir. 2012).
III.
Analysis
Defendants
Pooniwala, Kondatha, and Twin City Lodging LLC move to
dismiss all of the Plaintiff's claims because (i) the
Complaint does not state any plausible claim against
Defendant Pooniwala, (ii) the Complaint does not state any
plausible claim against Defendant Kondatha, (iii) the
Plaintiff fails to comply with Minnesota Franchise Act, and
(iv) the Court does not have personal jurisdiction over
Pooniwala, Kondatha, or Twin City Lodging LLC. (Doc. 18 at 2)
The Parties filed a stipulation to dismiss Defendant
Pooniwala. (Doc. 24; Doc. 23 at 2) Therefore, the Court will
...