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Beavers v. Riley Built, Inc.

United States District Court, W.D. Kentucky, Louisville Division

November 21, 2017

BRANDON BEAVERS, et al., Plaintiffs,
v.
RILEY BUILT, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          David J. Hale, Judge United States District Court.

         This lawsuit arises out of a dispute between business competitors. Plaintiffs Brandon Beavers; Beavers Hoof Care Services, LLC; and Extreme Chute Company, LLC sued Defendants Riley Built, Inc. and William S. Riley, alleging defamation and tortious interference with a prospective business advantage. (Docket No. 20) Defendants have moved to dismiss the claims, asserting lack of personal jurisdiction and failure to state a claim upon which relief may be granted. (D.N. 23) The Court finds that it has personal jurisdiction over Defendants, but only as to one of Plaintiffs' claims. However, the Court will dismiss that claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

         I. Background

         Defendant William S. Riley owns U.S. Patent No. 5, 669, 332 (the ‘332 Patent) for a “Portable Chute for Immobilizing an Animal, ” which describes a chute for immobilizing cattle for the purpose of trimming their hooves. (D.N. 20, PageID # 328) Riley founded Defendant Riley Built, Inc. to manufacture and sell these chutes. (Id., PageID # 329) Plaintiff Brandon Beavers bought chutes from Riley on three occasions in 2011 and 2012. (D.N. 23-1, PageID # 355) Beavers is the sole owner of Beavers Hoof Care Services, LLC and Extreme Chute Company, LLC. (D.N. 20, PageID # 326) Riley later learned through social media that Beavers had modified the chutes and was manufacturing chutes similar to Riley's. (D.N. 23-1, PageID # 356) He hired counsel and a private investigator to determine whether Beavers was infringing the ‘332 Patent. (Id.) At the conclusion of the investigation, Riley's counsel sent a cease-and-desist letter to Beavers Hoof Care and Mid State Hoof Trimming, a company owned by Extreme Chute sales and marketing manager John Cordrey. (D.N. 17, PageID # 286)

         Plaintiffs allege that subsequent to this letter, Defendants engaged in several acts that amount to defamation and tortious interference with a prospective business advantage. (D.N. 20, PageID # 335-36) In February 2014, Beavers and Cordrey began receiving phone calls from a man accusing them of infringing the ‘332 Patent. (Id., PageID # 331) Plaintiffs assert that the calls were from Riley's private investigator. (D.N. 24, PageID # 376) Around the same time, Beavers learned that Riley had posted the cease-and-desist letter on Riley Built's Facebook page, as well as on the Facebook pages of Mid State Hoof Trimming and Beavers Hoof Care. (D.N. 20, PageID # 330) Riley also posted a second letter to his page stating that Beavers and Cordrey were infringing his patent. (Id.)

         Plaintiffs further allege that in May 2014, Riley created a fake Facebook page under the name of “John Courdrey” and claimed to be a hoof trimmer from Eau Claire, Wisconsin. (Id., PageID # 331) Riley, via this fake page, posted comments on the Facebook pages of Mid State Hoof Trimming and Extreme Chute Company that alluded to the alleged infringement by Beavers and Cordrey. (Id., PageID # 331-32) The complaint also states that Mark Larson, a co-owner of Riley Built, visited Oak Ridge Welding, a fabrication shop in Cadiz, Kentucky, that was making components of Beavers's chutes. (Id., PageID # 332) While there, Larson told the employees of the shop that Beavers and Cordrey were infringing the ‘332 Patent and that they should stop building Beavers's chutes or they would be sued. (Id.) Plaintiffs also allege that potential purchasers declined to buy chutes after being contacted by Riley and Larson, who had informed them that the chutes infringed Riley's patent and harmed animals and that the potential purchasers might be sued for infringement. (Id., PageID # 333)

         Plaintiffs filed this action seeking declaratory judgment of non-infringement against Defendants. (D.N. 13) Plaintiffs further alleged state-law claims of defamation and tortious interference with a prospective business advantage. (Id.) Defendants moved for dismissal of all claims, primarily on the ground that the Court lacked subject-matter jurisdiction. (D.N. 14) The Court dismissed the patent claims but allowed amendment of the complaint to correct jurisdictional allegations in support of Plaintiffs' state-law claims. (D.N. 17) Plaintiffs filed a Second Amended Complaint reasserting their previous claims of defamation and tortious interference. (D.N. 20)

         Defendants now move to dismiss these claims, asserting lack of personal jurisdiction and failure to state a claim upon which relief may be granted. (D.N. 23) The Court finds that Plaintiffs have failed to establish that this Court has personal jurisdiction over Defendants under Kentucky's long-arm statute as to the majority of their claims. Accordingly, the Court will dismiss those claims without prejudice. The Court further finds that as to the remaining claim, Plaintiffs have failed to state a claim upon which relief may be granted. The Court will therefore dismiss this claim with prejudice.

         II. Personal Jurisdiction

         The burden is on Plaintiffs to show that personal jurisdiction exists as to each defendant. See Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). When the Court resolves a Rule 12(b)(2) motion solely on written submissions, a plaintiff's burden is “relatively slight, ” and “the plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal.” AlixPartners, LLP v. Brewington, 836 F.3d 543, 548-49 (6th Cir. 2016) (quoting Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007)). “[T]he pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and the district court should not weigh ‘the controverting assertions of the party seeking dismissal.'” Air Prods., 503 F.3d at 549 (quoting Theunissen, 935 F.2d at 1459). Here, Plaintiffs have not requested jurisdictional discovery; nor are there factual disputes necessitating an evidentiary hearing. The Court will therefore resolve the motion on the parties' written submissions.

         “A federal court sitting in diversity may exercise jurisdiction over an out-of-state defendant only to the extent that a court of the forum state could do so.” Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 148 (6th Cir. 1997). Because this is a diversity action, the Court applies Kentucky law to determine whether it has personal jurisdiction over Defendants. See Id. Under Kentucky law, the Court must first look to Kentucky's long-arm statute to determine whether “the cause of action arises from conduct or activity of the defendant that fits into one of the statute's enumerated categories.” Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 57 (Ky. 2011). If the statutory requirements are met, the Court must then apply the constitutional due process test “to determine if exercising personal jurisdiction over the non-resident defendant offends his federal due process rights.” Id. Caesars clarified that “Kentucky's long-arm statute is narrower in scope than the federal due process clause.” Cox v. Koninklijke Philips, N.V., 647 F. App'x 625, 628 (6th Cir. 2016) (citing Caesars, 336 S.W.3d at 55-57).

         A. Kentucky Long-Arm Statute

         The Kentucky long-arm statute provides, in relevant part:

(2)(a) A court may exercise personal jurisdiction over a person who acts directly or by agent, as to a claim arising from the person's: . . .
2. Contracting to supply services or goods in this Commonwealth;
3. Causing tortious injury by an act or omission in this Commonwealth; [or]
4. Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth, provided that the tortious injury occurring in this Commonwealth arises out of the doing or soliciting of business or a persistent course of conduct or derivation of substantial revenue within the Commonwealth[.]

Ky. Rev. Stat. § 454.210(2)(a). For purposes of the statute, the term “person” includes nonresident commercial entities. § 454.210(1).

         Plaintiffs assert that the Court may exercise personal jurisdiction over Defendants because they “(1) contracted to supply goods in the Commonwealth and this cause of action arises from the sale of those goods; (2) caused tortious injury by an act in the Commonwealth; and (3) caused a tortious injury in the Commonwealth by an act outside the Commonwealth.” (D.N. 24, PageID # 380) Thus, the case implicates subsections (2), (3), and (4) of the long-arm statute.

         1. Contracting to Supply ...


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