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LLC v. UP Trading, LLC

United States District Court, N.D. Ohio, Eastern Division

December 28, 2017

M11 MOTORS, LLC, PLAINTIFF,
v.
UP TRADING, LLC, et al., DEFENDANTS.

          MEMORANDUM OPINION AND ORDER

          HONORABLE SARA LIOI UNITED STATES DISTRICT JUDGE

         Before the Court is the motion to dismiss for lack of personal jurisdiction filed by defendant Cars Universal, Inc. (“Cars Universal”). (Doc. No. 10 [“MTD”].)[1] Plaintiff M11 Motors, LLC (“M11”) has filed its opposition brief (Doc. No. 14 [“Opp'n”]), and Cars Universal has filed its reply (Doc. No. 15 [“Reply”]). For the reasons set forth herein, the motion to dismiss for lack of personal jurisdiction is granted.

         I. BACKGROUND

         M11 filed its complaint against Cars Universal and Up Trading on June 28, 2017. M11 is an Ohio limited liability company with its principal place of business in North Olmsted, Ohio. It is in the business of selling and servicing new and used motor vehicles and is an authorized dealer for the sale and service of new Mercedes-Benz branded vehicles, which it sells in Massachusetts and surrounding states. (Complaint, Doc. No. 1 [“Compl.”] ¶ 1.)

         Cars Universal is an Oregon corporation with its principal place of business in Oregon. Up Trading is an Ohio limited liability company with its principal place of business in Akron, Ohio.[2]Both are in the business of exporting vehicles purchased in the United States for resale in foreign markets. (Id. ¶¶ 2, 3.)

         M11 acquires its inventory of new Mercedes-Benz vehicles directly from Mercedes-Benz USA, LLC (“MBUSA”). As part of the dealership agreement, MBUSA requires M11 to agree not to sell new Mercedes-Benz vehicles for export. (Id. ¶ 5.) If M11 violates this contractual requirement, MBUSA imposes a monetary chargeback and also reduces the number of vehicles allocated to be sold to M11. (Id. ¶¶ 7, 8.) M11 requires all of its customers to sign a non-export agreement, making an affirmative representation that the customer will not export the vehicle and that the customer is not acquiring the vehicle for export purposes. (Id. ¶ 10.)

         In Count III of its complaint, M11 alleges that Up Trading conspired with two of M11's employees (non-parties Larry Marcus [“Marcus”] and Sean King [“King”]) to purchase at least five new vehicles for subsequent export, in a scheme to defraud M11 in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”). (Id. ¶¶ 18, 20, 21-22.) In Count I, M11 alleges that, when purchasing each vehicle, Up Trading signed non-export agreements with M11, fraudulently misrepresenting that it would not export any of the purchased vehicles. (Id. ¶ 11.) In Count II, M11 alleges that, by later exporting the vehicles, Up Trading breached the non-export agreement. (Id. ¶ 14.) Finally, in Count VI, M11 asserts a claim of unfair trade practices under Massachusetts law.

         As to Cars Universal, in Count IV, M11 alleges that Cars Universal conspired with two of M11's employees (non-parties Danny Kaboub [“Kaboub”] and King) to purchase from M11 at least 36 new Mercedes-Benz vehicles for export, using straw buyers/agents who were allegedly indemnified by Cars Universal, in a scheme to defraud M11, in violation of RICO. (Id. ¶¶ 26, 27, 33, 34-35.) In Count V, M11 alleges that Cars Universal, as the principal of the agents who purchased the vehicles that were later exported, breached the non-export agreements signed by each straw purchaser. (Id. ¶ 39.) Finally, the state law claim in Count VI is also leveled against Cars Universal.

         II. DISCUSSION

         M11 bears the burden of showing that this Court has personal jurisdiction over Cars Universal. CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6th Cir. 1996); Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). When a district court rules on a motion to dismiss for lack of jurisdiction without conducting an evidentiary hearing, it must consider the pleadings and affidavits in the light most favorable to plaintiff. CompuServe, 89 F.3d at 1262. To defeat the motion, plaintiff need only make a prima facie showing of jurisdiction. Id.

         “To meet its burden of establishing personal jurisdiction, plaintiff must show both (1) that the defendant is amenable to service of process . . .; and (2) that the exercise of personal jurisdiction would not deny the defendant due process.” Tradesmen Int'l, LLC v. Tradesmen Staffing, LLC, No. 5:15-CV-1368, 2017 WL 2620660, at *2 (N.D. Ohio June 16, 2017) (citations omitted). Although Ohio's long-arm statute is typically the starting point, in the instant case, M11 asserts personal jurisdiction over Cars Universal “by reason of the provisions of 18 USC § 1965(b).” (Compl. ¶ 3.) This statutory section provides:

(b) In any action under section 1964 of this chapter [for civil remedies for RICO violations] in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof.

         “In deciding when the ‘ends of justice require' national service, courts are to consider the legislative history of RICO. Courts have found that Congress intended the ‘ends of justice' language to provide a means for ‘plaintiffs to bring all members of a nationwide RICO conspiracy before the court in a single trial.'” Iron Workers Local Union No. 17 Ins. Fund v. Philip Morris Inc., 23 F.Supp.2d 796, 803 (N.D. Ohio 1998) (citation omitted); see also Butcher's Union Local No. 498 v. SDC Invest., Inc., 788 F.2d 535, 539 (9th Cir. 1986).

         But “the right to nationwide service in RICO suits is not unlimited.” Butcher's Union, 788 F.2d at 539. “For nationwide service to be imposed under section 1965(b), the court must have personal jurisdiction over at least one of the participants in the alleged multidistrict conspiracy and the plaintiff must show that there is no other district in which a ...


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