Paige v. Digital Business Networks Alliance, LLC

Background

Michele Paige, proceeding without a lawyer, sued Digital Business Networks Alliance, Inc. (DBNA), OFS Portal, LLC (OFS), McGinnis Lochridge LLP (McGinnis), and Phillip Schmandt. She alleged that DBNA’s board elected her as treasurer and secretary, that she performed work for DBNA, and that she was not paid. Her Second Amended Complaint asserted 12 causes of action: wage and final-check claims under New York Labor Law; breach of contract; detrimental reliance; quantum meruit; unjust enrichment; fraudulent conveyance; conversion or trover; defamation; intentional infliction of emotional distress; retaliation under New York Labor Law § 215; and a whistleblower claim under New York Labor Law § 740.

The defendants filed motions to dismiss under Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction over them. The court considered the Second Amended Complaint and the documents attached to or referenced in it, applying the rules for reviewing a self-represented plaintiff’s pleading.

Personal jurisdiction

The court concluded that it could not exercise general personal jurisdiction over any defendant under New York Civil Practice Law and Rules § 301. The court found that McGinnis and Schmandt had not been plausibly alleged to have a continuous and systematic business presence in New York. It also found that OFS and DBNA were not plausibly alleged to be at home in New York. The court rejected allegations that the defendants did business throughout the United States, including New York, as insufficient to establish general jurisdiction in New York.

The court also rejected specific personal jurisdiction under New York Civil Practice Law and Rules § 302. It found that Paige had not shown that the defendants purposefully transacted business in New York in a way substantially related to her claims. The court noted that Paige identified herself as a Florida resident, that her work from New York was not alleged to have been directed at New York, and that communications with her while she was in New York were not enough by themselves.

The court found no basis for jurisdiction under the provisions concerning tortious acts committed in New York or outside New York, or under the provision concerning New York real property. It also rejected Paige’s arguments that the defendants had consented to or waived personal jurisdiction. The defendants’ removal of the case from state court did not waive their ability to raise personal-jurisdiction defenses.

Because contract, quasi-contract, and New York Labor Law claims were not tort claims for purposes of the relevant jurisdiction provisions, the court dismissed Paige’s contract, unjust-enrichment, quantum-meruit, wage, final-check, and retaliation claims for lack of personal jurisdiction. The court found that detrimental reliance was an element of a fraud claim rather than a separate legal theory for recovery, so it did not state a claim for relief. The court dismissed the fraudulent-conveyance claim because Paige did not identify the statutory authority supporting it and the court was unaware of a separate New York common-law claim that had not been replaced by the New York Debtor and Creditor Law.

The court also found no personal jurisdiction over the conversion claim because Paige did not allege that the defendants exercised control over DBNA funds in New York. It rejected jurisdiction based on alleged financial injury in New York because economic consequences felt in New York, without more, did not establish a direct injury there. Finally, the court found that the defamation and intentional-infliction-of-emotional-distress claims were based on the same email and that both claims sounded in defamation, for which the cited New York jurisdiction provisions did not provide a basis.

Jurisdictional discovery

Paige requested discovery concerning jurisdiction. The court denied that request, finding that she had not made a sufficient initial showing of personal jurisdiction and had offered conclusory assertions rather than specific facts or evidence showing jurisdictional activity in New York.

Disposition

Judge Kenneth M. Karas granted defendants’ motions to dismiss and dismissed the Second Amended Complaint. The court allowed Paige to file a third amended complaint within 30 days of the opinion. The new complaint must replace, rather than supplement, the Second Amended Complaint and include all claims, defendants, and factual allegations she wants the court to consider. The court stated that her claims may be dismissed with prejudice if she does not timely file the third amended complaint and cautioned that duplicative claims may also be dismissed.