173 F. Supp. 3d 355
S.D. Miss.2016Background
- Plaintiff Braylon Jordan (a child) swallowed eight powerful rare-earth "Buckyballs" in April 2012, suffered extensive bowel injuries and lifelong medical needs; CPSC later banned and recalled the product.
- Defendant Maxfield & Oberton Holdings LLC (M&O) manufactured and sold millions of Buckyball sets (2009–2012); M&O dissolved in Dec. 2012 and distributed most assets to co-owners Craig Zucker and Jake Bronstein, leaving a small claims fund.
- Plaintiffs allege the dissolution and distributions were fraudulent transfers to avoid anticipated personal-injury claims and regulatory liability; only a fraction of funds remain to satisfy hundreds of claims.
- Six months after dissolution, Zucker formed Assemble LLC to sell a modified product; plaintiffs allege Assemble is a successor and part of the fraudulent scheme and that Assemble and Zucker used M&O intellectual property and similar marketing.
- Plaintiffs assert causes of action including civil conspiracy, RICO, and Uniform Fraudulent Transfer Act claims against M&O, Assemble, Zucker, Bronstein, and insurers; M&O was later revived for defense, and insurers’ motions are reserved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Successor liability / continuation (Assemble) | Assemble is a continuation of M&O, using same founder, IP, product design/marketing, and directing profits to Zucker’s defense fund | Assemble denies successor status, denies affiliation, and says it could not have caused Braylon’s 2012 injury | Denied Assemble’s motion to dismiss; pleadings plausibly allege Assemble is part of fraudulent scheme and a successor for purposes of claims |
| Personal jurisdiction over Zucker (individual) | Zucker’s control and use of Assemble’s funds for his legal defense and other allegations support alter-ego imputation of Assemble/M&O contacts | Zucker argues lack of minimum contacts with Mississippi | Denied Zucker’s motion; court finds plaintiffs’ allegations sufficient at motion-to-dismiss stage to impute Assemble’s contacts to Zucker |
| Personal jurisdiction over Bronstein (individual) | Bronstein, as 50% owner, participated in asset-stripping and used M&O as alter ego to avoid liabilities | Bronstein contends no minimum contacts with Mississippi and no specific involvement; allegations are conclusory and on information and belief | Partially granted: plaintiffs fail to make prima facie showing against Bronstein; court declines to impute M&O contacts to him and directs parties to consider transfer or consent to jurisdiction |
| RICO jurisdictional reach | Plaintiffs seek nationwide RICO jurisdiction to join defendants | Defendants argue ends-of-justice RICO jurisdiction unnecessary because alternative forums exist (New York, Delaware) | Court rejects exercising special RICO jurisdiction over Bronstein here given alternative forums; directs parties to address forum options |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual content to state a plausible claim)
- Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640 (5th Cir. 2002) (alter-ego/successor contacts can be imputed for jurisdictional purposes)
- Jarrete v. Dillard, 167 So.3d 1147 (Miss. 2015) (factors supporting finding that executive used corporation as alter ego)
- Thames & Co. v. Eicher, 373 So.2d 1033 (Miss. 1979) (piercing corporate separateness when individual treats corporation as non-existent)
- Int'l Shoe Co. v. State of Wash., 326 U.S. 310 (1945) (minimum contacts due process standard for personal jurisdiction)
- Guidry v. U.S. Tobacco Co., 188 F.3d 619 (5th Cir. 1999) (prima facie showing standard on jurisdictional challenge at dismissal stage)