Eim v. CRF Frozen Foods LLC

          ORDER

          PHILIP A. BRIMMER Chief United States District Judge.

         This matter is before the Court on Defendants' R.D. Offutt Company, R.D. Offutt Farms Co., and R.D. Offutt Company-Northwest Joint Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Fed.R.Civ.P. 12(b)(2) [Docket No. 23]. The court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

         I. BACKGROUND^[1]

         On or about April 20, 2016, plaintiff became ill after consuming frozen vegetables grown, processed, packaged, and distributed by defendants CRF Frozen Foods, LLC, Costco Wholesale Corporation, R.D. Offutt Company, and R.D. Offutt Company-Northwest. Docket No. 4 at 6, ¶¶ 34-39. On April 23, 2016, CRF Frozen Foods LLC issued a recall of several types of frozen vegetables potentially contaminated by Listeria. Id. at 4, ¶ 9. After additional medical testing, doctors determined that plaintiff's symptoms were the result of a Listeria infection. Id. at 6, ¶ 40.

         Plaintiff filed this lawsuit in the District Court for Boulder County, Colorado on May 10, 2018. Docket No. 1-2 at 2. The complaint asserts seven claims against defendants CRF Frozen Foods LLC (“CRF”), Costco Wholesale Corporation (“Costco”), R.D. Offutt Company (“RDO Company”), R.D. Offutt Company - Northwest (“RDO Northwest”), R.D. Offutt Farms Co. (“RDO Farms”), and Does 1-25: (1) breach of express warranty; (2) breach of implied warranty for a particular purpose; (3) breach of implied warranty of merchantability; (4) violation of the Colorado Consumer Protection Act, Colo. Rev. Stat. § 6-1-101 et seq.; (5) strict product liability; (6) negligent product liability; and (7) negligence. Docket No. 4 at 7-14. On June 6, 2018, defendants CRF, RDO Company, RDO Northwest, and RDO Farms removed the case to this Court on the basis of diversity jurisdiction. Docket No. 1 at 3, ¶ 10.^[2] On July 3, 2018, defendants RDO Company, RDO Northwest, and RDO Farms (collectively, the “RDO defendants”) moved to dismiss the claims asserted against them for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2). Docket No. 23. Plaintiff filed a response to the motion on August 9, 2018, Docket No. 31, to which the RDO defendants replied on August 23, 2018. Docket No. 32.

         II. LEGAL STANDARD

         The purpose of a motion to dismiss under Rule 12(b)(2) is to determine whether the Court has personal jurisdiction over a defendant. The plaintiff bears the burden of establishing personal jurisdiction. Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1988). The plaintiff can satisfy its burden by making a prima facie showing. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008).^[3]The Court will accept the well-pleaded allegations of the complaint as true in determining whether plaintiff has made a prima facie showing that personal jurisdiction exists. AST Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). If the presence or absence of personal jurisdiction can be established by reference to the complaint, the Court need not look further. Id. The plaintiff, however, may also make this prima facie showing by putting forth evidence that, if proven to be true, would support jurisdiction over the defendant. Dudnikov, 514 F.3d at 1070. “[A]ny factual disputes in the parties' affidavits must be resolved in plaintiffs' favor.” Id.

         III. ANALYSIS

         “In determining whether a federal court has personal jurisdiction over a defendant, the court must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process.” Niemi v. Lasshofer, 770 F.3d 1331, 1348 (10th Cir. 2014); Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006) (quoting Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000)). The Colorado long-arm statute, Colo. Rev. Stat. § 13-1-124, has been construed to extend jurisdiction to the full extent permitted by the Constitution, so the jurisdictional analysis here reduces to a single inquiry of whether jurisdiction offends due process. See Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1276 (10th Cir. 2005); Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). Personal jurisdiction comports with due process where a defendant has minimum contacts with the forum state and where those contacts are such that assuming jurisdiction does not offend “traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945). Minimum contacts may be established under the doctrines of general jurisdiction or specific jurisdiction. Where general jurisdiction is asserted over a nonresident defendant who has not consented to suit in the forum, minimum contacts exist if the plaintiff demonstrates that the defendant maintains “continuous and systematic general business contacts” in the state. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998).

         Specific jurisdiction is present only if the lawsuit “aris[es] out of or relat[es] to the defendant's contacts with the forum.” Bristol-Myers Squibb Co. v. Superior Court of Calif., San Francisco Cty., 137 S.Ct. 1773, 1780 (2017). The specific jurisdiction analysis is two-fold. First, the Court must determine whether a defendant has such minimum contacts with Colorado that the defendant “should reasonably anticipate being haled into court” here. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Within this inquiry, the Court must determine whether the defendant purposefully directed its activities at residents of the forum, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985), and whether plaintiff's claim arises out of or results from “actions by . . . defendant . . . that create a substantial connection with the forum State.” Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 109 (1987) (internal quotations omitted). Second, if defendant's actions create sufficient minimum contacts, the Court must consider whether the exercise of personal jurisdiction over defendant offends “traditional notions of fair play and substantial justice.” Id. at 105.

         The parties' dispute in this case focuses on the “minimum contacts” requirement. The RDO defendants are a group of related entities involved in the production and distribution of agricultural products. See Docket No. 4 at 3, ¶¶ 4-5; Docket No. 23-1 at 1, ¶ 3 (stating that RDO Company is the parent company of RDO Northwest); Docket No. 23-2 at 2, ¶ 4 (stating that RDO Farms is a parent company of RDO Northwest); Docket No. 23-3 at 1, ¶ 3 (stating that RDO Northwest is a subsidiary of RDO Company and RDO Farms). According to declarations submitted by the RDO defendants, the RDO defendants are not registered to do business in Colorado, do not maintain a physical presence in Colorado, do not maintain agents for service of process in Colorado, and do not have any employees in Colorado. Docket No. 23-1 at 2, ¶¶ 9-13; Docket No. 23-2 at 2, ¶¶ 10-14; Docket No. 23-3 at 2-3, ¶¶ 12-17.^[4] While plaintiff does not dispute these assertions, she argues that the Court may exercise personal jurisdiction over the RDO defendants based on their subsidiaries' contacts with Colorado. See Docket No. 31 at 1 (arguing that “R.D. Offutt Company has purposely directed its activities in the State of Colorado through its subsidiaries”).^[5] Plaintiff focuses on three sets of corporate relationships: (1) the relationship between RDO Company and CSS Farms LLC (“CSS Farms”); (2) the relationship between RDO Company, Farm Fresh Direct LLC (“Farm Fresh Direct”), and Growers Sales and Marketing, LLC d/b/a Farm Fresh Direct of America; and (3) the relationship between the RDO defendants and CRF. See Docket No. 31 at 4-5.

         A. RDO Defendants' Relationship With CSS Farms

         Plaintiff asserts that RDO Company “built a seed potato operation in Colorado City, Colorado around 2006 called CSS Farms, ” which grew seeds for Frito-Lay, a company whose “products [are] widely distributed to Colorado consumers.” Docket No. 31 at 4.^[6] In support of these assertions, plaintiff cites a 2006 article from Agweek which states that

[t]he company recently built a seed potato operation in Colorado City, Colo., that provides disease-free stem cuttings for his potato operations nationwide as well as for others. Half of the seed grown for potato snack giant Frito-Lay comes from Offutt's CSS Farms.

Docket No. 31-2 at 2. Defendants respond that the minimum contacts between CSS Farms, “a farming company Ron Offutt once held a partial interest in, ” subsidiaries of RDO Farms, and Colorado residents do not “even remotely relate to the events that gave rise to this litigation.” Docket No. 32 at 5. Defendants also submit a declaration from Loren Stahl, Director of Risk Management for RDO Company, clarifying the relationship between the various RDO defendants and CSS Farms. See Docket No. 32-2. According to the declaration, the only connection between the RDO defendants and CSS Farms is the fact that Ron Offutt once held an ownership interest in CSS Farms. See Id. at 3-4.^[7] However, Mr. Stahl states that Mr. Offutt “sold his entire interest in CSS Farms LLC in August 2007.” Id. at 3, ¶ 10.

         The Court finds that plaintiff has failed to make a prima facie showing of either general or personal jurisdiction based on the RDO defendants' relationship with CSS Farms. Though not clear, the Court interprets plaintiff's response as asserting three theories of personal jurisdiction based on RDO Company's relationship with CSS Farms: (1) a direct availment theory, under which RDO Company has sufficient direct contacts with Colorado because it “built” CSS Farms; (2) an agency theory, under which CSS Farms' contacts with Colorado as agent for RDO Company can be imputed to RDO Company; and (3) ...