United States District Court, D. Minnesota
Scott Rilley, Michelle Kunza, Linda Gonzales and Michael Gonzales, individually and on behalf of the putative class, Plaintiffs,
Money Mutual, LLC, Selling Source, LLC, and PartnerWeekly, LLC, Defendants.
Michelle Drake, Esq., Jeffrey Laurence Osterwise, Esq., and
John G. Albanese, Esq., Berger & Montague, PC; and Mark
L. Heaney, Esq., Heaney Law Firm, LLC, counsel for
Christina Rieck Loukas, Esq., and Joseph M. Windler, Esq.,
Winthrop & Weinstine, PA; and Donald J. Putterman, Esq.,
Michelle L. Landry, Esq., and Tobias G. Snyder, Esq.,
Putterman Landry & Yu LLP, counsel for Defendants.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
matter is before the Court on the defendants' motion to
dismiss for lack of personal jurisdiction and motion to
dismiss for failure to state a claim. (Doc. No. 11.) For the
reasons discussed below, the Court denies the defendants'
motion to dismiss for lack of personal jurisdiction, and the
Court grants in part and denies in part the defendants'
motion to dismiss for failure to state a claim.
collectively operate a lead-generating business for various
payday lenders. Consumers would go to the defendants'
website to fill out an application, and then Defendants would
sell the application to lenders. The lenders would
independently decide whether to lend consumers money.
MoneyMutual, LLC, maintained the website and advertised
nationally on television and the Internet, but had no
employees or officers. Defendant PartnerWeekly, LLC, was
MoneyMutual's managing agent. PartnerWeekly would
purchase the advertising, operate the website, and contract
with lenders on behalf of MoneyMutual. Defendant Selling
Source, LLC, is the sole parent of MoneyMutual and
PartnerWeekly. Selling Source provided common services to the
subsidiaries (like legal and accounting), but did not operate
the day-to-day business. (Defs.' Memo. at 11.)
are consumer-borrowers and have filed a purported class
action against Defendants related to the payday loans.
Plaintiffs first filed their complaint in Minnesota state
court, naming only MoneyMutual as a defendant. MoneyMutual
moved to dismiss for lack of personal jurisdiction. In
Rilley v. MoneyMutual, LLC (Rilley I), the
Minnesota Supreme Court affirmed the finding of personal
jurisdiction. 884 N.W.2d 321');">884 N.W.2d 321 (Minn. 2016). After the United
States Supreme Court denied MoneyMutual's petition for
certiorari, 137 S.Ct. 1331, Plaintiffs amended the complaint
to add Defendants PartnerWeekly and Selling Source and to add
a claim for violating 18 U.S.C. § 1962(c) of the federal
Racketeer Influenced and Corrupt Organizations (RICO) Act.
Defendants then removed the case to federal court. (Doc. No.
relevant here, Plaintiffs have alleged in their Amended
Complaint (Doc. No. 1-2) claims for: (1) violating
Minnesota's payday-lending statutes, Minnesota Statute
§§ 47.60 and 47.601; (2) violating § 1962(c)
of the federal RICO Act;(3) violating the Minnesota Consumer
Fraud Act, Minnesota Statute § 325F.69 and the Minnesota
False Statement in Advertising Act, Minnesota Statute §
325F.67;(4) violating the Minnesota Uniform Deceptive Trade
Practices Act, Minnesota Statute § 325D.44; (5) unjust
enrichment; (6) civil conspiracy and aiding and abetting; and
(7) alter ego/piercing the corporate veil. Defendants have
moved to dismiss for lack of personal jurisdiction and for
failure to state a claim.
Motion to Dismiss for Lack of Personal Jurisdiction
seek to dismiss Plaintiffs' claims for lack of personal
jurisdiction. To survive a motion to dismiss for lack of
personal jurisdiction, a plaintiff must make a prima facie
showing that personal jurisdiction exists; that is, a
plaintiff must allege facts to support a reasonable inference
that defendant may be subjected to jurisdiction in the chosen
forum. Steinbuch v. Cutler, 518 F.3d 580, 585 (8th
Cir. 2008) (citing Dever v. Hentzen Coatings, Inc.,
380 F.3d 1070, 1072 (8th Cir. 2004)). If, as is the case
here, the defendant denies jurisdiction, the plaintiff bears
the burden of proving facts supporting personal jurisdiction.
See Wells Dairy, Inc. v. Food Movers Int'l,
Inc., 607 F.3d 515, 518 (8th Cir. 2010) (quotation
omitted). Once a defendant offers affidavits to challenge
personal jurisdiction, “facts, not mere allegations,
must be the touchstone” in determining whether personal
jurisdiction exists. Dever, 380 F.3d at 1072
(citation omitted); see also Abbasi v. Leading Edge
Aviation Servs., Inc., Civ. No. 16-295, 2016 WL 4007571,
at *3 (D. Minn. July 26, 2016).
The Court has Personal Jurisdiction.
jurisdiction is a two-step analysis: the Court must have
statutory and constitutional authority for exercising
jurisdiction over the defendant. Charles Alan Wright, Arthur
R. Miller & Edward H. Cooper, 4A Fed. Prac. &
Proc. § 1069 (4th ed. 2017).
Rule of Civil Procedure 4(k) provides that a court can
exercise jurisdiction over a defendant if: (1) jurisdiction
is allowed under the state long-arm statute; (2) the party is
served within 100 miles of the courthouse; or (3) service is
allowed under a federal statute. Plaintiffs argue that the
Court has statutory jurisdiction under the federal RICO Act
and under Minnesota's long-arm statute, Minnesota Statute
§ 543.19. Under the federal RICO Act, a court can
exercise jurisdiction over a person in any district where the
defendant “resides, is found, has an agent, or
transacts his affairs.” 18 U.S.C. § 1965(a).
Courts have interpreted § 1965(a) as allowing courts to
exercise nationwide personal jurisdiction so long as it
comports with due process. See ESAB Grp., Inc. v.
Centricut, Inc., 126 F.3d 617, 626 (4th Cir. 1997).
Likewise, Minnesota's long-arm statute “extend[s]
the personal jurisdiction of Minnesota courts as far as the
Due Process Clause of the federal constitution allows.”
Rilley I, 884 N.W.2d at 327 (alterations in the
original). Thus, the analysis for personal jurisdiction under
both statutes collapses into whether constitutional due
process allows the Court to exercise jurisdiction over
United States Supreme Court has explained that constitutional
due process requires that a defendant have “certain
minimum contacts” with the forum state such that
“maintenance of the suit 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 omitted). A defendant's
conduct and connection with the forum state must be such that
the defendant “should reasonably anticipate being haled
into court there.” World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980). “It is
essential in each case that the defendant has purposefully
availed itself of the privilege of conducting activities
within the forum state, thus invoking the benefits and
protections of its laws.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475 (1985) (quoting Hanson
v. Denckla, 357 U.S. 235, 253 (1958)).
federal statute dictates whether the court has personal
jurisdiction, courts' due-process analysis is pursuant to
the Fifth Amendment's Due Process Clause instead of the
Fourteenth Amendment. ESAB, 126 F.3d at 626
(“The due process constraint on service under [a
federal statute] is not, however, grounded in the Fourteenth
Amendment, which circumscribes service under state process
pursuant to [a state long-arm statute].”) Under the
Fifth-Amendment analysis, courts evaluate whether the
defendant has sufficient contacts with the United States.
See Id. at 627; see also In re Fed. Fountain,
Inc., 165 F.3d 600, 601-02 (8th Cir. 1999) (en banc).
The inquiry is still a per-claim, per-defendant inquiry.
ESAB, 126 F.3d at 627. Here, Plaintiffs have brought
a claim against Defendants under the RICO Act, which allows
for nationwide personal jurisdiction. Thus, the question for
the Court is whether Defendants have sufficient minimum
contacts with the United States instead of any particular
state. See Id. at 626-27; see also Wright
& Miller § 1068.1. Here, there is no question that
Defendants-all U.S. companies-have minimum contacts with the
United States. The Court can therefore properly exercise
jurisdiction over Defendants for the RICO
the Court turns to the remaining state-law claims. When a
court has personal jurisdiction over a defendant for one
claim, the court can usually exercise personal jurisdiction
over the defendant for similar claims that arise out of the
same common nucleus of operative facts. See, e.g.,
Action Embroidery Corp. v. Atl. Embroidery, Inc.,
368 F.3d 1174, 1181 (9th Cir. 2004); ESAB, 126 F.3d
at 628; Aviva Life & Annuity Co. v.
Davis, 20 F.Supp.3d 694, 703 n.7 (S.D. Iowa 2014)
(collecting cases). Here, Plaintiffs' state-law claims
arise out of the same common nucleus of operative facts: All
of Plaintiffs' claims relate to Defendants' role in
facilitating payday loans. Indeed, Defendants averred as much
when they removed the case to federal court. (Doc. No. 1
¶¶ 15-18 (“This Court has supplemental
jurisdiction over the remaining state law claims in this
action, because such claims are closely related to and arise
out of the same set of operative facts as the federal law
claim.”).) Thus, the Court has pendent personal
jurisdiction over Defendants for the state-law claims as
arguments to the contrary are unpersuasive. Much of
Defendants' briefing focuses on the Minnesota long-arm
statute, which does not affect the Court's analysis under
RICO and the Fifth Amendment. ESAB, 126 F.3d at
626-27 (finding jurisdiction under RICO and the Fifth
Amendment, even though it also concluded that the district
court did not have jurisdiction under South Carolina's
long-arm statute). In response to Plaintiffs' RICO
argument, Defendants point to Burkhart v. Medserv
Corp., where the district court concluded that the Fifth
Amendment still requires contacts with the forum state. 916
F.Supp. 919, 922 (W.D. Ark. 1996). But in In re Federal
Fountain, Inc., the full Eighth Circuit rejected that
argument and concluded that the inquiry under the Fifth
Amendment is whether the defendant has minimum contacts with
the United States. 165 F.3d at 601-02.
Defendants argue that Plaintiffs' RICO claim cannot
establish jurisdiction because it fails as a matter of law.
To exercise jurisdiction pursuant to the RICO Act, Plaintiffs
must allege a colorable RICO claim. Republic of Pan. v.
BCCI Holdings (Lux.) S.A., 119 F.3d 935, 941 (11th Cir.
1997). A colorable claim is a lower pleading standard than
required under Rule 12(b)(6): “[T]the court should
dismiss for lack of jurisdiction only if the right claimed is
so ‘insubstantial, implausible, foreclosed by prior
decisions of this Court, or otherwise devoid of merit as not
to involve a federal controversy.'” Id.
(internal quotation marks omitted) (quoting IUE AFL-CIO
Pension Fund v. Herrmann, 9 F.3d 1049, 1055 (2d Cir.
1993)). The moving party has the “high burden” of
showing that the claim is not colorable. See
Herrmann, 9 F.3d at 1056-57.
Defendants have failed to show that Plaintiffs' RICO
claim is not colorable. To start, Defendants seem to
acknowledge that Plaintiffs' claim is colorable because
they used that claim as a basis for the Court's
jurisdiction in their removal papers. (Doc. No. 1 at ¶
14 (“The United States District Court for the District
of Minnesota has original jurisdiction over Plaintiffs'
claims pursuant to 28 U.S.C. § 1331 because this action
constitutes a claim by Plaintiffs for violation of a federal
statute. Plaintiffs specifically allege a claim under the
Racketeer Influenced and Corrupt Organizations Act (18
U.S.C.§ 1962).”).) But apart from that, Defendants
have not shown how Plaintiffs' RICO claim is so
implausible that the Court does not have subject matter
jurisdiction over the claim, which would be necessary to
preclude the Court from exercising personal jurisdiction
pursuant to RICO. See Republic of Pan., 119 F.3d at
942 n.9; see also Herrmann, 9 F.3d at 1056-57. Thus,
the Court has personal jurisdiction over all three defendants
for all of Plaintiffs' claims and therefore denies
Defendants' Motion to Dismiss for Lack of Personal
Motion to Dismiss for Failure to State a Claim
also move pursuant to Rule 12(b)(6) to dismiss
Plaintiffs' claims for: (1) violating Minnesota's
payday-lending statutes, Minnesota Statute §§ 47.60
and 47.601; (2) violating § 1962(c) of the federal RICO
Act; (3) violating Minnesota Consumer Fraud Act, Minnesota
Statute § 325F.69 and Minnesota False Statement in
Advertising Act, Minnesota Statute § 325F.67; (4)
violating Minnesota Uniform Deceptive Trade Practices Act,