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Afshari v. Montana Black Gold

United States District Court, E.D. Kentucky, Central Division, Lexington

June 21, 2018

BEN AFSHARI, Plaintiff,
v.
MONTANA BLACK GOLD, BLACK GOLD ARCHERY LLC, BOWTECH INC., and NORWEST EQUITY PARTNERS, Defendants.

          OPINION AND ORDER

          KAREN K. CALDWELL UNITED STALES DISTRICT JUDGE

         This matter is before the Court on Defendants Montana Black Gold, Black Gold Archery LLC, Bowtech Inc., and Norwest Equity Partners motion to dismiss for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. (DE 11.) For the reasons set forth below, this matter is dismissed pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction over the Defendants.

         I. Background

         Plaintiff Ben Afshari, a resident of Fayette County, Kentucky, is an inventor of archery products, some of which he has patented. (Compl. ¶¶ 14, 18, DE 1.) During the course of his career, he was the victim of patent infringement that left his patent portfolio worthless. This ultimately led Afshari to file for Chapter 7 bankruptcy. See Chapter 7 Voluntary Petition, In re Afshari, No. 14-51879 (Bankr. E.D. Ky. Aug. 14, 2014). During the course of his bankruptcy proceedings, Afshari informed the creditors that Montana Black Gold was one of the largest in fringers on his patents, but the United States Trustee did not pursue the company for the alleged infringement. During these proceedings, Afshari was also engaged in a lawsuit against Bear Archery Inc. for infringement, which he settled after the close of his bankruptcy case. (Compl. ¶ 18.)

         Following his bankruptcy, Afshari sought to revive some of his expired patents and pursue infringers. In January 2016, Afshari, proceeding pro se, filed a complaint against Montana Black Gold, Inc. and Sight Inc. alleging that these companies were infringing on his '321 Patent. (Compl. ¶ 18); see also Compl., Afshari v. Mont. Black Gold, Inc., No. 16-CV-00031-JMH (E.D. Ky. Jan. 28, 2016). In response to that lawsuit, Mike Ellig, who is not named as a defendant, sent Afshari a letter that is central to this current suit.

         In the letter, Ellig asserted that Afshari's '321 Patent was invalid for lack of novelty. The letter also alleged that Afshari committed fraud during his bankruptcy proceedings by stating that the '321 Patent did not have any value, despite the fact that Afshari was, at the time, suing Bear Archery for infringement of the '321 Patent, and planned to bring a similar suit against Montana Black Gold. Finally, the letter stated that, if Afshari continued with his claim of infringement, "we" would file an inter partes review to invalidate the '321 Patent. Ellig signed the letter as "Founder, Black Gold". (Compl. Ex. F, DE 1-1, at 35-37.)

         In June 2016, the United States Trustee moved to reopen Afshari's bankruptcy case to administer a newly-discovered asset. (Compl. ¶ 22); see Motion to Reopen, In re Afshari, No. 14-51879 (Bankr. E.D. Ky. June 6, 2016). As a result of these proceedings, the licensees of Afshari's patents received a letter that the Trustee intended to sell his patents to Black Gold Archery LLC, which Afshari claims led to rumors that damaged his reputation in the archery community. (Compl. ¶ 25.) The United States Trustee sought to sell the patent, but the bankruptcy court denied the motion because the Trustee could not revoke the technical abandonment of the patent which occurred when the case was closed. Order Denying Motion to Sell, In re Afshari, No. 14-51879 (Bankr. E.D. Ky. July 18, 2017).

         After his bankruptcy case was reopened, Afshari initiated another action in this Court, alleging that the letter sent by Ellig constituted blackmail, defamation, intentional infliction of emotional distress, and wrongful interference with economic advantage. Afshari v. Ellig, No. 5:16-193-KKC, 2017 WL 4080690, at *2 (E.D. Ky. Sept. 14, 2017). Afshari's original complaint in that action named only Ellig as a defendant. He later added three corporate defendants: Montana Black Gold Inc., Sight Inc., and Black Gold Archery LLC. Id. That action was dismissed for lack of personal jurisdiction. Id. at *4.

         This action raises similar claims as the previous action, although it names different defendants. Afshari names Montana Black Gold, Black Gold Archery LLC, Bowtech Inc., and Norwest Equity Partners ("NEP") as Defendants. The Defendants share a corporate relationship. Montana Black Gold is an assumed name, registered in Oregon and Montana, of Black Gold Archery.[1] BowTech, where Ellig is currently a team member, owns Black Gold Archery. NEP, through a holding company, owns a minority stake in Bowtech. (Compl. ¶¶ 4-5.)

         Afshari asserts a number of federal and state law claims. He alleges that the Defendants violated, and conspired to violate, the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1961, et seq., the Hobbs Act, 18 U.S.C. § 1951, the Civil Rights Act, 42 U.S.C. § 1983, and that they committed extortion and made threats in violation of 42 U.S.C. §§ 873, 875-76. Under state law, he alleges tortious interference, abuse of the legal process, and intentional infliction of mental and psychological stress. (Compl. ¶ 33.) He seeks $15, 300, 000 for damage to his business and well-being as a result of his inability to participate in the archery industry.

         The Defendants have moved to dismiss this matter for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. (DE 11.) A response and reply have been filed by the parties and this matter is now ripe for review.

         II. Analysis

         Defendants' have moved to dismiss this matter for lack of personal jurisdiction pursuant Federal Rule of Civil Procedure 12(b)(2). The plaintiff bears the burden of establishing the court's personal jurisdiction over each defendant. Serras v. First Term. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989). When the Court rules on the issue of personal jurisdiction without conducting an evidentiary hearing, the plaintiff may not rest on his pleadings, but must set forth, "by affidavit or otherwise [, ]... specific facts showing that the court has jurisdiction." Id. (alterations in original) (quoting Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974). This burden is "relatively slight and the plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal. Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (internal citations omitted) (first quoting Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988); then quoting Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). The Court must consider the pleadings and affidavits "in a light most favorable to the plaintiff and "should not weigh 'the controverting assertions of the party seeking dismissal."' Id. (citing Theunissen, 935 F.2d at 1459).

         When a case involves a federal question, "personal jurisdiction over a defendant exists 'if the defendant is amenable to the service of process under the [forum] state's long-arm statute and if the exercise of personal jurisdiction would not deny the defendant[ ] due process."' Bird v. Parsons,289 F.3d 865, 871 (6th Cir. 2002) (alterations in original) (quoting Mich. Coal, of Radioactive Material Users, Inc. v. Griepentrog,954 F.2d 1174, 1176 (6th Cir. 1992)). This analysis is the same as if the Court were sitting in diversity. See Fed. R. Civ. P. 4(k)(1)(A); see also 4 Charles Alan Wright et al., Federal Practice and Procedure ยง 1068.1 (4th ed. 2018) ("[W]ith one exception the Rule 4(k) framework does not treat federal question cases differently than cases where a federal court adjudicates state-created rights based on diversity of citizenship jurisdiction."). Exercise of personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment if the defendant has ...


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