ERIC J. MARKOVICH, Magistrate Judge.
This personal injury action involves a dispute between the Plaintiff, Blake Haines, and the Defendant companies: Get Air, LLC, Quality Foam & Fiber Products, Inc., and Pacific Urethanes, LLC. Haines was injured while performing a flip at Get Air Tucson, an indoor trampoline park, and is now a quadriplegic. Haines alleges Defendant Get Air, LLC produced a defective Employee Handbook ("EH") used by Get Air Tucson. Haines further alleges that Defendant Pacific Urethanes, LLC manufactured defective foam that Defendant Quality Foam & Fiber Products, Inc. defectively cut into blocks, which were used at Get Air Tucson. Haines' claims against the Defendant companies are based on negligence, products liability, and implied warranties.
Pending before the Court is Defendant Get Air, LLC's Motion to Dismiss. (Doc. 97). Get Air, LLC alleges that this Court lacks personal jurisdiction over it because Get Air, LLC has not engaged in any business in Arizona and because there are no facts supporting general or specific personal jurisdiction over it. Plaintiff contends that he has made a prima facie showing that the defective EH used by Get Air Tucson was created and supplied by Get Air, LLC and therefore Get Air, LLC purposefully directed its conduct at Arizona. (Doc. 102 at 14). Alternatively, Plaintiff argues that there remains a factual dispute regarding personal jurisdiction which must be resolved in his favor. Id. at 16.
Pursuant to the Rules of Practice of this Court, this matter was referred to the undersigned for a Report and Recommendation. (Doc. 25).
The motion has been fully briefed by the parties, and the Court heard oral arguments on June 6, 2016. The Court then allowed the parties additional time to conduct jurisdictional discovery, and the parties submitted supplemental briefs on January 17, 2017. (Docs. 154, 155). For the reasons stated below, the Magistrate Judge recommends that the District Court enter an ordering denying Get Air, LLC's Motion to Dismiss.
On September 8, 2013 Haines was at the Get Air Tucson indoor trampoline park and performed a move where he flipped multiple times off of a platform and into a foam pit. (Doc. 12 at 9). Haines "suffered catastrophic injuries from the maneuver, including fractured cervical vertebrae resulting in paralysis." Id. Following this incident, Haines filed suit in Pima County Superior Court on September 5, 2014 against the following defendants: Get Air Tucson, Inc.; Get Air Tucson Trampolines, LLC; Get Air Management, Inc.; Get Air, LLC; Trampoline Parks, LLC; Patti Goodell; Jacob Goodell; Kiersten Goodell; Scott Goodell; Alan McEwan Jr.; Val Iverson, individually and as owner or operator of Trampoline Parks, LLC; Jane and/or John Does #s 1-20; ABC Corporations 1-10; XYZ Partnerships 1-10; and ABC Limited Liability Corporations (LLCs) 1-10. (Doc. 6 Ex. 1). Haines alleged claims for negligence, negligent design, negligence in safety standards, negligent supervision, negligent hiring and training of personnel, piercing the corporate veil, and punitive damages. Id.
On January 5, 2015, Defendant Get Air Tucson Trampolines, LLC removed the case to this Court, alleging all parties were diverse and the amount in controversy exceeded $75,000.00. (Doc. 1 at 1-2). Get Air Tucson Trampolines, LLC stated its removal was timely because it was served on December 6, 2014 and 28 U.S.C. § 1446(b) requires removal within 30 days of service. Id. at 2-3. Get Air Tucson Trampolines, LLC did not indicate whether any of the other defendants joined or consented to the removal.
On January 13, 2015, Haines filed a Notice of Filing Amended Pleading Pursuant to LRCiv 15.1(b), averring that no defendant had filed an answer to his original Complaint. (Doc. 8). Haines' First Amended Complaint ("FAC") named Alicia Durfee and Scott Hansen as additional defendants, and alleged Durfee was a manager or supervisor at Get Air Tucson, and Hansen was an employee who was acting as a de facto manager at the time of Haines' injury. (Doc. 12 at 5-6).
On January 23, 2015, Haines filed a Motion to Remand to State Court. (Doc. 17). Haines alleged two arguments in his motion: One, the federal court lacked subject matter jurisdiction because there was not complete diversity among the parties, and two, removal was procedurally improper because the removing party did not establish unanimity among all served defendants for removal. Id. at 1-2. Get Air Tucson Trampolines, LLC and the Goodell, Durfee, and Hansen defendants counter argued that Haines' addition of Hansen and Durfee as parties was a "thinly veiled attempt to avoid federal jurisdiction." (Doc. 19 at 1).
Following oral arguments on the Motion to Remand, the Court granted the Motion on April 15, 2015 and remanded this matter back to Pima County Superior Court. (Doc. 31). The Court concluded that the case was improperly removed to federal court because all properly served defendants had failed to join or consent to the removal, and because Haines properly added Hansen and Durfee as defendants in his FAC, which destroyed the Court's diversity jurisdiction.
Following remand, the Plaintiff and several defendants entered into a settlement agreement. The Superior Court then dismissed the defendants who were parties to the settlement agreement, leaving two remaining defendants: Get Air, LLC and Quality Foam & Fiber Products, Inc. (Doc. 32 Ex. 3).
On June 12, 2015 Defendant Get Air, LLC removed the case to this Court, alleging that all parties are diverse due to the Superior Court's dismissal of the non-diverse defendants, and that the amount in controversy exceeds $75,000.00. (Doc. 32 at 1-2). Defendant Quality Foam & Fiber Products, Inc. filed a notice consenting to and joining in the notice of removal. (Doc. 35). On July 2, 2015, the Court issued an order directing the Clerk to reopen the case and to recognize Plaintiff's Second Amended Complaint ("SAC") (filed in Superior Court) as the operative complaint in this matter. (Doc. 39).
On July 30, 2015 Defendant Get Air, LLC filed a Motion to Dismiss for lack of personal jurisdiction and failure to state a cause of action pursuant to Fed. R. Civ. P. 8 and Rule 12(b). (Doc. 43). On August 25, 2015 Plaintiff filed a Motion for Leave to Amend Complaint to add and clarify allegations specific to Defendant Get Air, LLC, and to add Pacific Urethanes, LLC as a products liability defendant. (Doc. 45). On February 8, 2016 the District Court entered an Order adopting the undersigned's Report and Recommendation, granting Plaintiff's Motion to Amend and denying Get Air, LLC's Motion to Dismiss as moot. (Doc. 83).
On February 8, 2016 Plaintiff filed his Third Amended Complaint ("TAC"), which names Pacific Urethanes, LLC as an additional products liability defendant. (Doc. 84). The TAC also alleges that Get Air, LLC developed defective safety rules and supplied them to Get Air Tucson.
On March 1, 2016, Defendant Get Air, LLC filed a Motion to Dismiss for lack of personal jurisdiction, arguing that it has not engaged in any business in Arizona, and that there are no facts supporting general or specific personal jurisdiction over it. (Doc. 97).
To establish a prima facie case for personal jurisdiction, the plaintiff must show that: (1) the forum state's long-arm statute confers jurisdiction over the nonresident defendant; and (2) the exercise of jurisdiction comports with principles of due process. Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). The Arizona long-arm jurisdictional statute provides that this Court "may exercise personal jurisdiction over parties, whether found within or outside this state, to the maximum extent permitted by the Constitution of this state and the Constitution of the United States." Ariz. R. Civ. P. 4.2(a). "Because the [state] Constitution imposes no greater restriction than does the U.S. Constitution, federal courts in [Arizona] may exercise jurisdiction to the fullest extent permitted by due process." Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (citing Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1997)). Thus, the due process analysis under Arizona state law and federal law is the same.
Due process requires that a nonresident defendant have sufficient "minimum contacts" with the forum state such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations and citation omitted). "The party seeking to invoke the court's jurisdiction bears the burden of establishing that jurisdiction exists." Scott, 792 F.2d at 927 (citing Data Disc, Inc., 557 F.2d at 1285). Analysis of whether the Court has specific jurisdiction
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)). "The plaintiff bears the burden of satisfying the first two prongs two of the test." Id. (citation omitted). "`Purposeful availment' and `purposeful direction' are distinct tests, the former to be applied to contract claims and the latter to tort claims." Planning Grp. of Scottsdale, L.L.C. v. Lake Mathews Mineral Properties, Ltd., 226 Ariz. 262, 266 (2011). "For tort claims, the court considers whether the defendant `purposefully direct[ed] his activities or consummate[d] some transaction with the forum or resident thereof.'" Id. at 267 (quoting Schwarzenegger, 374 F.3d at 802).
"When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff is `obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction.'" Scott, 792 F.2d at 927 (quoting Amba Marketing Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)); see also Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). "If the district court decides the motion without an evidentiary hearing . . . `then the plaintiff need only make a prima facie showing of the jurisdictional facts.'" Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008) (quoting Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). "Uncontroverted allegations in the plaintiff's complaint must be taken as true" and "`[c]onflicts between the parties over statements contained in affidavits must be resolved in the plaintiff's favor.'" Id. (quoting Schwarzenegger, 374 F.3d at 800). However, "[t]he mere allegations of a complaint, when contradicted by affidavits, are not enough to confer personal jurisdiction over a nonresident defendant." Chem Lab Products, Inc. v. Stepanek, 554 F.2d 371, 372 (9th Cir. 1977) (citing Taylor v. Portland Paramount Corp., 383 F.2d 634, 639 (9th Cir. 1967)).
To overcome Defendant Get Air, LLC's motion to dismiss, Plaintiff must show that Get Air, LLC "purposefully direct[ed] [its] activities or consummate[d] some transaction with the forum or resident thereof." Planning Grp. of Scottsdale, L.L.C., 226 Ariz. at 266 (quoting Schwarzenegger, 374 F.3d at 802).
Get Air, LLC contends that this Court lacks personal jurisdiction over it because Get Air, LLC is a Utah limited liability corporation company whose only business prior to February 2016 was the operation of a trampoline park (Get Air Roy) in Roy, Utah. (Doc. 97 at 6). Get Air, LLC states that "[g]enerally, it has conducted no business in Arizona and, specifically, it was not involved in the design, construction or operation of the Get Air Tucson trampoline park in any way." Id. Get Air, LLC further argues that "there is no evidence that any member, manager, or employee of Get Air, LLC (i) drafted or created the Get Air, LLC Handbook with the knowledge or intent that it was to `apply to trampoline park customers, including Get Air Tucson customers,' or (ii) `supplied' the Get Air, LLC Handbook to Get Air Tucson." Id. at 7. In its supplemental memorandum, Get Air, LLC states that the jurisdictional discovery confirms that there is no evidence that Get Air, LLC conducted business in Arizona sufficient for this Court to exercise personal jurisdiction over it:
(Doc. 155 at 2-3).
Plaintiff argues that there are sufficient minimum contacts in this case to support personal jurisdiction based on Get Air, LLC allegedly disseminating the EH to Get Air Tucson. (Doc. 102 at 4). Specifically, Plaintiff notes that in its original motion to dismiss, Get Air, LLC included affidavits from Val Iverson and Jacob Goodell stating that the EH was created by Jessica Bybee as a manager for Get Air, LLC, and that Get Air Tucson used the EH to provide standard employment information but not for safety procedures. (Doc. 102 at 7-8). Then, Plaintiff notes, in its second motion to dismiss, Get Air, LLC changed its argument to claim that the EH used by Get Air Tucson was actually created by Amy Iverson on behalf of Trampoline Parks, LLC, not Get Air, LLC. (Doc. 102 at 2-3). In Plaintiff's supplemental memorandum, he contends that the EH used by Get Air Tucson was first developed by Jessica Bybee and then reviewed and edited by Amy Iverson, an independent contractor for Trampoline Parks, LLC, at the direction of Joan Iverson, a member of Get Air, LLC, and that Amy admitted that the work she did was for Get Air, LLC, not Trampoline Parks, LLC. (Doc. 154 at 5). Plaintiff also questions why, if the EH was allegedly produced by Amy on behalf of Trampoline Parks, LLC, the EH is called the "Get Air, LLC Employee Handbook" and refers to Get Air, LLC throughout the document. (Doc. 102 at 12). Plaintiff further notes that Jacob Goodell testified that the EH he brought to Tucson came directly from Get Air, LLC. (Doc. 154 at 6). Plaintiff contends that it does not matter who created the EH used by Get Air Tucson, or what version of the EH Get Air Tucson used, because "either way, it came directly from, and was a product of, Get Air, LLC." (Doc. 154 at 9).
In its first motion to dismiss, Get Air, LLC included affidavits from Val Iverson and Jacob Goodell stating that the Get Air, LLC EH was created by Jessica Bybee in her capacity as manager and on behalf of Get Air, LLC. (Doc. 43 at 13 ¶ 11; 40 ¶ 11). Jacob Goodell further stated that Get Air Tucson used the Get Air, LLC EH to provide standard employment information to its employees, but did not use it as a way to train its employees on safety procedures. (Doc. 43 at 40 ¶¶ 14, 16). Get Air, LLC stated that "[a]lthough there is evidence that the operators of the Get Air Tucson trampoline park adopted and used Get Air Roy's employee manual as the Get Air Tucson employee manual, there is no evidence that any member of Get Air, LLC knew or intended Get Air Tucson would use its employee manual as Get Air Tucson's employee manual." (Doc. 43 at 5). Thus, the essence of Get Air, LLC's first motion to dismiss was that while Get Air, LLC created the EH, it did not know that Get Air Tucson was going to use it, and that even so, Get Air Tucson did not use the EH to train its employees on safety procedures.
In its second motion to dismiss, Get Air, LLC presents a new argument: the EH used by Get Air Tucson was not created by Get Air, LLC, but by Amy Iverson, a contractor for Trampoline Parks, LLC, and the EH was provided to Get Air Tucson by Trampoline Parks, LLC. (Doc. 97 at 7). Get Air, LLC further states that Amy Iverson prepared the EH using a version of the EH previously prepared by the manager of Get Air Roy, Jessica Bybee.
Get Air, LLC's second motion to dismiss also includes an affidavit from Amy Iverson, who states that she worked as an independent contractor for Trampoline Parks, LLC and served as its Director of Human Resources from autumn 2012-autumn 2013. (Doc. 97-1 at 2 ¶ 3). In her capacity as Director of Human Resources for Trampoline Parks, she "develop[d] a generic Employee Handbook that could be used at any trampoline park that was operated by a Get Air business entity, including Get Air Tucson." Id. at ¶ 7. Amy explained that:
Id. at ¶ 8. Amy further states that this new, generic EH was provided to personnel at Get Air Tucson "as part of Trampoline Parks' support work." Id. at ¶ 9. Amy also prepared PowerPoint slides in 2013 on employee and management training that Trampoline Parks, LLC provided to Get Air Tucson, and states that the PowerPoints refer to yet another version of the EH and not the Get Air, LLC EH.
Following the Court's order allowing additional jurisdictional discovery in this matter, the parties submitted supplemental briefs with transcripts of the depositions.
Val Iverson testified that during the time period of Blake's injury, Trampoline Parks, LLC's business was manufacturing trampoline parks, and Get Air, LLC's business was a trampoline park in Roy, Utah. (Doc. 154 Ex. 2 at 18:7-19:7). In 2013, his wife, Joan Iverson, was helping him run Get Air, LLC; the "Get Air leadership team" refers to himself and his wife; Joan and Val Iverson were the only two members of Get Air, LLC in 2013. Id. at 26:6-8; 31:8-14; 54: 21-23. Joan was never an employee of Trampoline Parks, LLC. Id. at 31:18-21. He does not remember himself or his wife giving Amy Iverson the assignment to review the EH. Id. at 21:1-11. Amy was an independent contractor and drafted items that he needed. Id. at 34:4-9. He did not know that Amy drafted an EH based on the one Jessica created; he does not remember discussing an EH with Jessica or giving her a list of safety rules to put in the EH; he does not remember meeting with Amy, Joan, and Jessica about the EH. Id. at 51:15-23; 53:1-17; 65:4-8; 66:2-5; 93:1-16. Val does not know of an EH that just says "Get Air" and not "Get Air, LLC;" when they first opened, they had a 2-3 page pamphlet but he does not know if Get Air, LLC was on it. Id. at 46:18-22; 61:1-8. He does not know if there is a Trampoline Parks, LLC EH. Id. at 61:21-23. Val did not learn that Get Air Tucson was using the EH until this lawsuit was filed. Id. at 47:3-15; 48:23-49:3. The first time he saw any version of the EH was when attorney David Bell showed him a few days prior to the deposition. Id. at 72:1-9. He does not recall seeing one when he signed his affidavits. Id. at 72:10-13. Val stated that he did not know anything about the operations of Get Air Tucson; his "total involvement" was building and investing in the park. Id. at 43:10-13.
Jessica Bybee
Amy Iverson testified that she did work for Get Air, LLC during the time period of autumn 2012-autumn 2013; when Val and Joan Iverson asked her to help them, she did. (Doc. 154 Ex. 1 at 22:19-23:5; 27:23). They asked her to read their EH and she revised it to use in other parts of the business. Id. at 23-24; 28:1-3. The EH dated 5/16/13 was not what she got from Val and Joan Iverson to review, it was a different version. Id. at 29:19-25. The version she was given to review was a completed version, drafted by Jessica Bybee, and Amy got it in late 2012. Id. at 30:7-11; 31:1-3. She does not know if the version she got from Jessica had safety rules in it. Id. at 69:21-23. Amy does not know what version of the EH was provided to Get Air Tucson. Id. at 36:5-9; 48:20-23. She has no knowledge of how the EH got to Tucson, but the version Get Air Tucson had would have been created by her. Id. at 43:22-44:3. She has a version of the EH where the safety rules are on page 12 on her computer; she was not asked to produce it for this lawsuit. Id. at 52.
Jacob Goodell testified that he did not know which version of the EH made its way to Get Air Tucson, but he is the one who took it there. (Doc. 154 Ex. 5 at 25:19-22). He walked over to Get Air Roy and asked them for the manual they were using, then he had it reprinted and took it to Tucson.
Elyana Garcia, a former employee of Get Air Tucson who was working on the date of Blake's injury, testified that she was shown the EH during her training:
(Doc. 154 Ex. 3 at 38:22-24; 39:6-9). Elyana remembered being shown the list of safety rules in the EH. Id. at 39:15-40:6. When shown the EH dated 5/16/13, Elyana stated that it looked familiar to her but she had not paid attention to the date of the document during her training. Id. at 39:1-6. The EH was not available to her to review, it was just something that the trainer skimmed through with her and checked off as she completed her training. Id. at 45:1-6.
Scott Hansen, a former employee of Get Air Tucson, testified that he received an EH when he started, around August 31, 2015. (Doc. 154 Ex. 6 at 31:3-12). He only received one copy; he does not recall the date on it, but he still has the EH.
Because the motion to dismiss is based on written materials, Plaintiff's burden is to make a prima facie showing of jurisdictional facts by affidavit or otherwise. Schwarzenegger, 374 F.3d at 800; Scott, 792 F.2d at 927. Plaintiff argues that he has made the necessary showing here because "[a]t the very least, there remains a factual dispute, which must be resolved in Plaintiff's favor." (Doc 102 at 16). The Court agrees. While Amy Iverson testified that she was only employed by Trampoline Parks, LLC, she also testified that she did work for Get Air, LLC, and that Val and Joan Iverson, the sole members of Get Air, LLC, gave her the assignment to work on the Get Air, LLC EH. There is no testimony that Trampoline Parks, LLC asked Amy to create the Get Air, LLC EH, nor would this be logical because Trampoline Parks, LLC was in the business of designing and constructing trampoline parks, and as such its business would not include the day to day operations of running a trampoline park. While there is testimony from Amy and Jessica that, in retrospect, the EH should have been titled "Get Air EH" instead of "Get Air, LLC EH," there is no explanation as to why the name "Get Air, LLC" was never removed from the EH, or why no one ever directed Amy or Jessica to change the name. Further, there is testimony from Amy, Jessica, and Jacob that Amy's role in revising the EH was to make it applicable to other Get Air parks, not just the park in Roy, Utah run by Get Air, LLC. This supports a finding that Get Air, LLC purposefully directed its activities at Arizona by creating a generic EH with the specific intent that it would be used at other Get Air parks. In addition, Jacob testified that he took the EH from "Get Air Roy or Get Air, LLC," underscoring the confusion by the parties in this case as to whether Get Air Roy and Get Air, LLC were separate entities or one and the same. Likewise, Amy testified that she was confused about whether her work was for Trampoline Parks, LLC or Get Air, LLC because "in my mind, it was all the same thing;" she was given assignments by Val and did what he needed her to do.
Even if Val Iverson did not have personal knowledge that the EH was taken from Get Air Roy/Get Air, LLC to Get Air Tucson, it is clear from the testimony before the Court that Val and Joan Iverson's intent in having Amy Iverson revise the EH was to create a generic version of the EH to be used at other Get Air parks, not just Get Air Roy. Thus, it is conceivable and foreseeable that the Get Air, LLC EH would make its way to other parks in other states, including Get Air Tucson.
Furthermore, Val Iverson did have personal knowledge that the Get Air park was being built in Tucson because he was an investor and developer in Get Air Tucson. At the time of Blake's injury, Val Iverson was a member of Get Air, LLC, a member of Trampoline Parks, LLC, and an investor in Get Air Tucson Trampolines, LLC. (Doc. 97 Ex. 1; Doc. 154 Ex. 2 at 9:22-24).
Finally, to the extent that Val Iverson claims that he does not recall any meetings with Jessica or Amy where he directed them to create an EH, the Court finds that this testimony is undermined by the testimony from Amy and Jessica. Even Jacob testified that he knew that Val and Joan asked Amy to review the EH prepared by Jessica, and that Amy's purpose in revising the EH was so that it could be used for future parks. Conflicts in the testimony must be resolved in the plaintiff's favor, and here the Court finds that the weight of the testimony supports a finding that Val and Joan Iverson, the sole members of Get Air, LLC, directed Amy Iverson to revise the EH drafted by Jessica Bybee and create a generic Get Air, LLC EH to be used at future Get Air parks.
As to the last two prongs of the personal jurisdiction test, the Court finds that it is clear that Plaintiff's claims arise out of and relate to Get Air, LLC's contacts with Arizona because Plaintiff's claims against Get Air, LLC are based on the allegedly defective safety rules in the EH. The Court further finds that Get Air, LLC has had sufficient minimum contacts with Arizona such that this Court's exercise of jurisdiction over it is reasonable.
Accordingly, the Magistrate Judge RECOMMENDS that the District Court enter an order DENYING Get Air, LLC's Motion to Dismiss. (Doc. 97).
Pursuant to 28 U.S.C. §636(b), any party may serve and file written objections within fourteen days after being served with a copy of this Report and Recommendation. A party may respond to another party's objections within fourteen days after being served with a copy thereof. Fed. R. Civ. P. 72(b). No reply to any response shall be filed. See id. If objections are not timely filed, then the parties' rights to de novo review by the District Court may be deemed waived. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc).
