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Cataraha v. Elemental Prism LLC

United States District Court, D. Montana, Great Falls Division

July 17, 2018

STEPHANIE CATARAHA, as the personal representative of the Estate of STEPHEN HAMILTON, Plaintiff,
v.
ELEMENTAL PRISM, LLC, Herb Stomp, Defendants.

          ORDER ON DEFENDANT'S MOTION TO DISMISS

          Brian Morris United States District Court Judge.

         Defendant Elemental Prism, LLC, d/b/a Herb Stomp, (“Elemental Prism”), moves this Court to dismiss the Complaint (Doc. 1) of Plaintiff Estate of Stephen Hamilton (“Estate”) for lack of personal jurisdiction over them. (Doc. 3 at 1-2.)

         I. BACKGROUND

         The Estate alleges in the Complaint that Elemental Prism, an Oregon limited liability company that sells herbal botanicals, spices, and other natural products, violated M.C.A. § 27-1-719 (2) and (3) by selling “a dangerous and defective product unreasonably dangerous to its users and consumers.” (Doc. 1 at 2.) The Estate alleges that Elemental Prism sells Kratom, an herb that can be fatal if ingested. Id. The Estate alleges that Elemental Prism extensively marketed Kratom for external use only. Id. The Estate alleges that Elemental Prism knew or should have known, however, that users and consumers like Stephen Hamilton ingested Kratom for pain relief. Id.

         The Estate alleges that Hamilton purchased quantities of Kratom from Elemental Prism in March of 2017. Id. Hamilton died on March 25, 2017. Id. The Estate alleges that an overdose of mitragynine, a substance found in Kratom, caused Hamilton's death. Id. The Estate further alleges that Elemental Prism failed to warn consumers of these dangers. Id. The Estate alleges that Elemental Prism's violation of M.C.A. § 27-1-719 constituted the legal cause of the death of Hamilton. Id.

         II. LEGAL STANDARD

         Federal courts generally look to state law to determine the bounds of their jurisdiction over parties. Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (internal quotation and citation omitted). Montana follows a two-step test for determining whether a Montana court may exercise personal jurisdiction over a nonresident defendant. Milky Whey, Inc. v. Dairy Partners, LLC, 342 P.3d 13, 17 (Mont. 2015). The Court first must determine whether personal jurisdiction exists under M.R. Civ. P. 4(b)(1). Id. A party may be “found within the state of Montana” and subject to general jurisdiction, or specific jurisdiction may exist if the claim for relief arises from any of the acts listed in Rule 4(b)(1)(A-G). Id. The second step requires the court to determine whether the exercise of personal jurisdiction conforms with “the traditional notions of fair play and substantial justice embodied in the due process clause.” Cimmaron Corp. v. Smith, 67 P.3d 258, 260 (Mont. 2003) (citing Threlkeld v. Colorado, 16 P.3d 359, 361 (Mont. 2000)).

         When opposing a defendant's motion to dismiss for lack of personal jurisdiction, “the plaintiff bears the burden of establishing that jurisdiction is proper.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (citation omitted); Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Plaintiffs cannot “rest” on the bare allegations of the Complaint. Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977). They must “come forward with facts, by affidavit or otherwise, supporting personal jurisdiction.” Id.

         III. DISCUSSION

         A. General Jurisdiction

         To be “found” within Montana for the purpose of general jurisdiction, “it is necessary that the defendants' activities are ‘substantial' or ‘systematic and continuous.'” Milky Whey, Inc., 342 P.3d at 17 (citation omitted). The Supreme Court has clarified this to mean that a state court may exercise general jurisdiction over out-of-state corporations when their “affiliations with the state are so ‘continuous and systematic' as to render them essentially at home in the forum state.” BNSF Ry. Co. v. Tyrrell, __U.S.__, 137 S.Ct. 1549, 1558 (2017) (citation omitted).

         Elemental Prism is registered as an Oregon limited liability company and maintains its principal place of business in Portland, Oregon. (Doc. 4 at 8.) Elemental Prism conducts business in Montana through online sales. Elemental Prism cannot be said to be “at home” in Montana, for purposes of establishing general personal jurisdiction within the parameters established in Tyrrell. Further, the Estate does not allege or argue that general jurisdiction exists over Elemental Prism. (Doc. 10 at 4.) The Estate argues instead that this Court possesses “long-arm jurisdiction” because Elemental Prism transacted business and committed torts in Montana. M.R. Civ. P. 4(b)(1)(A) and (B). (Docs. 16, 21.) The Court will focus its analysis on the former provision.

         B. Specific Jurisdiction

         The Estate primarily relies on 4(b)(1)(B) to establish personal jurisdiction, but the more pertinent section would be 4(b)(1)(A). A defendant may be subject to specific jurisdiction under Rule 4(b)(1)(A) if the claim arises from its “transaction of any business within Montana.” M.R. Civ. P. 4(b)(1)(A). The “transacting business” provision requires “far fewer contacts with the forum state than are necessary to support general jurisdiction on the theory that the defendant is ‘doing business' in the forum state.” Milky Whey, Inc., 342 P.3d at 18 (citing 4A Wright & Miller, § 1069.3 at 156-61). Factors to be considered when analyzing this provision include “the defendant company's local negotiations for various types of commercial transactions, the solicitation of business within the state, prior litigations in the forum, the presence of agents in the state, and the existence of ongoing contractual relationships with residents of the forum state.” Id.

         The Montana Supreme Court determined in Milky Whey, Inc. that the court lacked specific jurisdiction because the defendant never sold any product or engaged in the performance of any service in Montana. Id. at 19. The defendant also did not engage in e-commerce. Id. The defendant operated a website, but the plaintiff did not allege that it had interacted with the website in any way.

         The Montana Supreme Court determined in Nelson, by contrast, that the defendant had transacted business in Montana. The court cited the defendant's lengthy contractual relationship with another Montana business, its negotiation of a contract with the Montana plaintiff, and its arrangement of a contractual relationship between two Montana businesses. Id. at 20 (citing Nelson v. San Joaquin Helicopters, 742 P.2d 447, 450 (Mont. 1987)). These factors established a relationship that proved more extensive than “a few phone calls back and forth between the parties.” Id. These factors proved sufficient to find “purposeful interjection into Montana” by the defendant and the transaction of business in Montana. Id.

         The Estate cites Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997), to support personal jurisdiction. (Doc. 21 at 2.) There the district court addressed whether the defendant's conducting of electronic commerce with Pennsylvania residents constituted the purposeful availment of doing business in Pennsylvania. Id. at 1126. The district court concluded that it did. The contact had not been random or fortuitous. The defendant chose to process Pennsylvania residents' applications despite being under no obligation to ...


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