Yellow Brick Road, LLC v. Childs
36 F. Supp. 3d 855
D. Minnesota2014Background
- Plaintiff Yellow Brick Road, LLC sues multiple defendants for investment fraud and conspiracy over a $300,000 escrow tied to a purported SBLC transaction.
- Plaintiff alleges a scheme involving Alicorn Capital, Berea, Inc., and others to obtain an SBLC and induce investment refunds.
- Plaintiff wired $300,000 to an escrow controlled by Busch Defendants; no operative SBLC was ever delivered.
- Defendants Botolino, Busch, Busch Law Center, Hall, and Childs move to dismiss for lack of personal jurisdiction; discovery followed.
- Court recommends dismissing with prejudice or without prejudice for these defendants; discovery was limited and did not establish Minnesota contacts.
- Underlying facts show alleged conspiracy with Minnesota-related actors but no demonstrable acts in Minnesota by the moving defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over Botolino | Plaintiff asserts conspiracy-based and minimum contacts. | Botolino lacks minimum contacts with Minnesota; no targeted acts. | No personal jurisdiction; grant Botolino’s dismissal. |
| Whether the Busch Defendants have personal jurisdiction | Plaintiff alleges conspiracy-related contacts with Minnesota. | Busch Defendants had no Minnesota contacts; no acts within the state. | No personal jurisdiction; grant Busch Defendants’ dismissal. |
| Whether Hall has personal jurisdiction | Hall participated in the alleged conspiracy with Minnesota actors. | Hall had no sufficient Minnesota contacts. | No personal jurisdiction; grant Hall’s dismissal. |
| Whether Childs has personal jurisdiction | Childs communicated with Minnesota residents; part of conspiracy. | Limited contacts; no acts directed at Minnesota. | No personal jurisdiction; grant Childs’s dismissal. |
Key Cases Cited
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (foundation of minimum contacts and due process in PJ)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (requires defendants to reasonably anticipate being haled into court)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (two-step minimum contacts and reasonableness analysis)
- Bell Paper Box, Inc. v. Trans Western Polymers, Inc., 53 F.3d 920 (8th Cir. 1995) (five-factor test for evaluating jurisdiction)
- Peterson v. Wallace, 622 F. Supp. 2d 791 (D. Minn. 2008) (conspiracy-based jurisdiction requires overt act in forum)
- Hunt v. Nevada State Bank, 172 N.W.2d 292 (Minn. 1969) (conspiracy-based jurisdiction considerations in Minnesota)
- Remmes v. Int’l Flavors & Fragrances, Inc., 389 F. Supp. 2d 1080 (N.D. Iowa 2005) (conspiracy-based jurisdiction framework)
- Aaron Ferer & Sons Co. v. Am. Compressed Steel Co., 564 F.2d 1206 (8th Cir. 1977) (minimum contacts require forum-related conduct)
- Digi-Tel Holdings, Inc. v. Proteq Telecommunications (PTE), Ltd., 89 F.3d 519 (8th Cir. 1996) (communications with forum residents alone insufficient)
- Calder v. Jones, 465 U.S. 783 (U.S. 1984) (effects test for jurisdiction when injury felt in forum)