Ventures v. King
131 F. Supp. 3d 677
W.D. Ky.2015Background
- Finance Ventures, an MLM based in Daviess County, Kentucky, and its founder Rick Maike sued former IBO Charles "Chuck" King for defamation, tortious interference, breach of contract, injunctive relief and punitive damages based on statements on a website and YouTube videos and King’s organization of a paid group arbitration/ refund scheme.
- King operated www.i2gfullrefund.com and YouTube channels encouraging IBOs to join group arbitration against Finance Ventures, solicit refunds, and contact Kentucky law enforcement; King was previously an IBO who signed Finance Ventures’ IBO Agreement.
- Plaintiffs allege King made defamatory statements in five thematic categories (Songstagram/gaming, bait‑and‑switch, trade name fraud, selling illegal investments, and shutdown of Bidxcel) and that those statements harmed Plaintiffs in Kentucky.
- King moved to dismiss for lack of personal jurisdiction and argued the IBO arbitration clause bars the claims; Plaintiffs moved for partial summary judgment on defamation.
- The Court found personal jurisdiction proper in Kentucky, held the arbitration clause did not bind Maike and did not bar Finance Ventures’ tort (defamation and interference) and injunctive claims, but dismissed Finance Ventures’ breach of contract claim as arbitrable; denied Plaintiffs’ partial summary judgment on defamation without prejudice to renew after discovery; denied King’s 12(b)(6) dismissal attack.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over King | King’s web posts, interactive site, and solicitation caused tortious injury in Kentucky and constitute persistent conduct subject to KRS 454.210 | King argued insufficient contacts with Kentucky to support jurisdiction | Court: specific jurisdiction exists—Kentucky long‑arm and due process satisfied (focal point of harm in Kentucky; persistent online conduct aimed at Kentucky) |
| Whether Maike must arbitrate | Maike is a plaintiff seeking relief in court | King argued arbitration clause applies to bar claims | Court: Maike is not a signatory and not bound by IBO arbitration clause; not compelled to arbitrate |
| Whether Finance Ventures’ claims must be arbitrated | Finance Ventures seeks to litigate torts and injunctive relief in court (and argues a carve‑out allows court suits to safeguard reputation) | King argues broad arbitration clause covers disputes related to IBO relationship and bars suit | Court: Tort claims (defamation; tortious interference) and injunctive relief are not dependent on the IBO contract and survive in court; breach of contract claim must be arbitrated and is dismissed from this forum |
| Summary judgment / dismissal of defamation | Plaintiffs: King’s statements are defamation per se; King must prove truth; move for partial summary judgment | King: challenges truth of allegations and sought dismissal | Court: Denied both summary judgment and 12(b)(6) dismissal; case too early for summary judgment (insufficient discovery); Rule 12(b)(6) standard requires accepting Plaintiffs’ allegations |
Key Cases Cited
- Theunissen v. Matthews, 935 F.2d 1454 (6th Cir. 1991) (plaintiff must make evidentiary showing for personal jurisdiction and court may decide on affidavits, allow discovery, or hold hearing)
- Compuserve, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996) (prima facie showing standard for jurisdiction when decided on written submissions)
- Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883 (6th Cir. 2002) (web interactivity informs purposeful availment in jurisdiction analysis)
- Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51 (Ky. 2011) (Kentucky long‑arm requires connection between alleged tort and statutory predicate)
- Calder v. Jones, 465 U.S. 783 (U.S. 1984) (defendants who expressly aim tortious conduct at forum where harm is felt may be subject to jurisdiction)
- Air Products & Controls, Inc. v. Safetech Intern., Inc., 503 F.3d 544 (6th Cir. 2007) (Southern Machine test for specific jurisdiction and reasonableness factors)
- Linden v. Griffin, 436 S.W.3d 521 (Ky. 2014) (doubts about arbitration scope resolved in favor of arbitration)
- NCR Corp. v. Korala Associates, Ltd., 512 F.3d 807 (6th Cir. 2008) (claims that can be maintained without reference to contract are likely outside arbitration scope)
- Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d 498 (6th Cir. 2007) (arbitration scope principles; relation to contract determines arbitrability)