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Rodriguez v. Whole Foods Market Inc.

United States District Court, D. Arizona

July 16, 2019

Jacqueline Rodriguez, Plaintiff,
Whole Foods Market Incorporated, Defendant.


          Honorable Susan M. Brnovich, United States District Judge.

         Pending before the Court is Defendant Whole Foods Market Incorporated's Motion to Dismiss. (Doc. 17, “Mot.”). Plaintiff Jacqueline Rodriguez filed an opposition. (Docs. 22, 24, “Resp.”), and Defendant filed a Reply, (Doc. 26, “Reply”). Also pending before the Court is Plaintiff's Motion for Joinder of Parties, (Doc. 23), to which Defendant filed a Response, (Doc. 27).

         For the reasons below, the Court will grant Defendant's Motion, (Doc. 17), and grant in part and deny in part Plaintiff's Motion, (Doc. 23).

         I. BACKGROUND

         On October 23, 2018, Plaintiff Jacqueline Rodriguez filed a complaint alleging six counts against Defendant Whole Foods Market, Inc. (“WFMI”) (Doc. 1, “Complaint”). The allegations in Plaintiff's complaint involve a Whole Foods store in Flagstaff, Arizona (the “Store”). Plaintiff alleges that Defendant WFMI is liable for her claims involving the Store. The allegations include “Negligent Infliction of Emotional Distress, False Advertising, Strict Liability, Breach of Warranty, Food Fraud, and Misrepresentation.” (Complaint). Plaintiff alleges that this Court has jurisdiction pursuant to 28 U.S.C. § 1332.

         WFMI filed the instant Motion to Dismiss, requesting dismissal because WFMI is not a proper party and because the Court lacks personal jurisdiction. Defendant also requests to dismiss Plaintiff's counts of “false advertising” and “food fraud” pursuant to Rule 12(b)(6). Plaintiff then filed a motion requesting permission to join two additional parties-Mrs. Gooch's Natural Food Markets Inc. (“Mrs. Gooch's”) and Whole Foods Market Services Inc. (“WFM Services”). (Doc. 23).


         A. Legal Standard

         Although the Defendant's motion invokes both Rules 12(b)(2) and 12(b)(6), the Court need not reach the Rule 12(b)(6) arguments because the Defendant's Rule 12(b)(2) jurisdictional argument is dispositive. See McGeachy v. Pinto Valley Mining Corp., No. 2:16-cv-03348 JWS, 2017 WL 3130639, at *2 (D. Ariz. July 24, 2017) (“Although the [defendants'] motion invokes both Rule 12(b)(2) and (b)(6), the court need not reach the Rule 12(b)(6) argument because the [defendants'] Rule 12(b)(2) jurisdictional argument is dispositive.”).

         A motion to dismiss for lack of personal jurisdiction may be brought pursuant to Rule 12(b)(2). Fed.R.Civ.P. 12(b)(2). Plaintiffs bear the burden of establishing personal jurisdiction. Ziegler v. Indian River Cty., 64 F.3d 470, 473 (9th Cir. 1995). “In resolving a Rule 12(b)(2) motion, the court may consider evidence outside the pleadings, including affidavits and other materials submitted on the motion.” Lindora, LLC v. Isagenix Int'l, LLC, 198 F.Supp.3d 1127, 1135 (S.D. Cal. 2016) (citing Daimler AG v. Bauman, 571 U.S. 117, 123 (2014)). Where the motion is based on written materials rather than an evidentiary hearing, “the plaintiff need only make a prima facie showing of jurisdictional facts.” Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). In determining whether the plaintiff has met this burden, uncontroverted allegations in the plaintiff's complaint must be taken as true, and “conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.” AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996).

         “Where . . . there is no applicable federal statute governing personal jurisdiction, the district court applies the law of the state in which the district court sits.” Dole Food Co. v. Watts, 303 F.3d 1104, 1110 (9th Cir. 2002). Arizona exerts personal jurisdiction to the “maximum extent permitted by the Arizona Constitution and the United States Constitution.” Ariz. R. Civ. P. 4.2(a); see also A. Uberti and C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995). Therefore, the analyses of personal jurisdiction under Arizona law and federal due process are the same. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).

         Under the Due Process Clause, “[a]lthough a nonresident's physical presence within the territorial jurisdiction of the court is not required, the nonresident generally must have certain minimum contacts . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Walden v. Fiore, 571 U.S. 277, 283 (2014) (citations and internal quotation marks omitted). A court may assert general or specific jurisdiction over the nonresident defendant. Cybersell v. Cybersell, 130 F.3d 414, 416 (9th Cir. 1997). General jurisdiction exists when the defendant has “continuous and systematic” contacts with the forum state, whereas specific jurisdiction exists when the controversy arises from or is related to the defendant's contact with the forum state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 (1984).

         An alter ego theory may be considered in a personal jurisdiction analysis. “The existence of a parent-subsidiary relationship is insufficient, on its own, to justify imputing one entity's contacts with a forum state to another for the purpose of establishing personal jurisdiction.” Ranza v. Nike, Inc., 793 F.3d 1059, 1070 (9th Cir. 2015). “The alter ego test is designed to determine whether the parent and subsidiary are ‘not really separate entities,' such that one entity's contacts with the forum state can be fairly attributed to the other.” Id. at 1071 (quoting Doe v. Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001)). “In narrow circumstances federal courts will find that a corporation is the alter ego of another by piercing the corporate veil and attributing a subsidiary's contacts with the forum state to its parent company for jurisdictional purposes.” Corcoran v. CVS Health Corp., 169 F.Supp.3d 970, 983 (N.D. Cal. 2016) (citations, alterations, and internal quotation marks omitted); see also Ranza, 793 F.3d at 1071 (“[T]he veil separating affiliated corporations may also be pierced to exercise personal jurisdiction over a foreign defendant in certain limited circumstances.”). “To allow a court to impute a subsidiary corporation's contacts with a forum to the parent, the plaintiff must make a prima facie showing that the ‘parent and subsidiary are not really separate entities . . . .” Monje v. Spin Master Inc., No. CV-09-1713-PHX-GMS, 2013 WL 2390625, at *4 (D. Ariz. May 30, 2013) (quoting Unocal Corp., 248 F.3d at 926). In a diversity case, such as this one, state law is applied to determine whether a parent company should be treated as the alter ego of a subsidiary for jurisdictional purposes. See Hambleton Bros. Lumber Co. v. Balkin Enters., 397 F.3d 1217, 1227 (9th Cir. 2005) (noting that in diversity actions, federal courts must apply state law when evaluating alter ego status).

         Under Arizona law, “corporate status will not be lightly disregarded.” Chapman v. Field, 602 P.2d 481, 483 (Ariz. 1979). “The alter-ego status is said to exist when there is such unity of interest and ownership that the separate personalities of the corporation and owners cease to exist.” Dietel v. Day, 492 P.2d 455, 457 (Ariz.Ct.App. 1972). A plaintiff “must prove both (1) unity of control and (2) that observance of the corporate form would sanction a fraud or promote injustice.” Gatecliff v. Great Republic Life Ins. Co., 821 P.2d 725, 728 (1991) (citing Dietel, 492 P.2d at 457). Unity of control occurs when a parent exerts “substantially total control over the management and activities” of its subsidiary. Id. “Substantially total control” can be shown by, among other things: “stock ownership by the parent; common officers or directors; financing of subsidiary by the parent; payment of salaries and other expenses of subsidiary by the parent; failure of subsidiary to maintain formalities of separate corporate existence; similarity of logo; and plaintiff's lack of knowledge of subsidiary's separate corporate existence.” Id. “Isolated occurrences of some of these factors are not enough to establish an alter ego liability.” Morgan v. Freightliner of Ariz. LLC, No. CV-16-00498-TUC-CKJ, 2018 WL 3957745, at *4 (D. Ariz. Aug. 17, 2018). “To be held responsible for actions of its subsidiary, the parent must actually exercise this control so that the subsidiary becomes ‘a mere instrumentality.'” Taeger ...

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