Personal Wealth Partners, LLC v. Ryberg

Background

Personal Wealth Partners, LLC (PWP), a Minnesota limited liability company that provides investment advice, employed Gary Dean Ryberg from January 2016 through November 2021. Ryberg is domiciled in North Dakota. PWP hired him to serve clients through its Williston, North Dakota office. Kestra Investment Services, LLC, which the opinion identifies as a Texas limited liability company, employed Ryberg beginning when he resigned from PWP.

PWP alleged that Ryberg was required to keep certain information confidential, including client data. PWP assigned him approximately 325 clients and gave him access to its client records. PWP alleged that, after Ryberg joined Kestra, he encouraged PWP clients to transfer their accounts to him and that PWP lost 115 client accounts and 30 percent of its investment assets to Kestra.

PWP asserted ten claims, including breach of contract, breach of loyalty and confidentiality duties, interference with contracts and prospective business relationships, violations of the Minnesota Trade Secrets Act, misappropriation of trade secrets, and unfair competition. PWP had also sought a preliminary injunction and temporary restraining order, but the court denied that request on January 18, 2022.

Venue analysis

Ryberg moved to transfer the case or, alternatively, dismiss it under Federal Rule of Civil Procedure 12(b)(3), which permits dismissal for improper venue. Kestra separately moved to dismiss for lack of personal jurisdiction and failure to state a claim.

The court analyzed the federal venue statute, 28 U.S.C. § 1391. It rejected venue based on where defendants reside because Ryberg is a natural person domiciled in North Dakota, not Minnesota, and that provision requires all defendants to reside in the state where the district is located.

The court also concluded that Minnesota was not a proper venue based on where a substantial part of the events occurred. Ryberg worked in North Dakota, accessed client information there, and allegedly transferred confidential information and clients from PWP to Kestra while working there. The court noted that only five of Ryberg’s approximately 525 clients may have lived in Minnesota at some point, that he had little contact with those clients after they moved there, and that he did not solicit clients in Minnesota. His Minnesota contacts included receiving compensation and benefits from PWP, attending two holiday parties and one work-related meeting, servicing five or fewer Minnesota clients, and sending his resignation letter to Minnesota.

The court explained that the venue inquiry focuses on the defendant’s relevant activities in the forum, not merely on the effect those activities had on the plaintiff there. It found that the events underlying PWP’s claims occurred in North Dakota and that Minnesota lacked a sufficient connection to the dispute.

Ruling

The court granted Ryberg’s motion to transfer venue and ordered the Clerk of Court to transfer the action to the United States District Court for the District of North Dakota under 28 U.S.C. § 1406(a), which permits transfer when venue is improper and transfer serves the interests of justice.

Because it granted the transfer motion, the court declined to consider Kestra’s motion to dismiss and Ryberg’s alternative arguments for dismissal under Rule 12(b)(6), the rule addressing failure to state a legally sufficient claim. The opinion does not state a ruling on the merits of PWP’s underlying claims.