Redhawk Medical Products & Services L L C v. Advanced Energy Group L L C

6:25-cv-00598

W.D. La.

Nov 21, 2025

Check Treatment

REDHAWK MEDICAL PRODUCTS & SERVICES LLC v. ADVANCED ENERGY GROUP LLC ET AL

CASE NO. 6:25-CV-00598

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION

November 21, 2025

JUDGE DAVID C. JOSEPH; MAGISTRATE JUDGE CAROL B. WHITEHURST

REPORT AND RECOMMENDATION

Before the Court is Defendants’ Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant to Rules 12(b)(2); 12(b)(3); 12(b)(6), and 9(b). (Rec. Doc. 36). Plaintiff, Redhawk Medical Products & Services, LLC, opposed the motion (Rec. Doc. 38), and Defendants replied (Rec. Doc. 41). The motion was referred to the undersigned magistrate judge for review, report, and recommendation in accordance with the provisions of 28 U.S.C. §636 and the Court’s standing orders. Considering the evidence, the law, and the parties’ arguments, and for the following reasons, the Court recommends that Defendants’ Motion to Dismiss be denied.

Facts and Procedural History

Redhawk filed this suit May 2025 against Advanced Energy Group LLC (“AEG”), AEG Medical Supply, LLC (“AEG Medical”), and Coastal Group Partners, LLC (“Coastal”), based on an alleged fraudulent scheme involving the purchase of personal protective equipment (PPE) shortly after the Covid-19 pandemic. (Rec. Doc. 1). Defendants moved to dismiss the original complaint for lack of jurisdiction, improper venue, and failure to state claims, but Redhawk was permitted to amend the complaint. (Rec. Doc. 26-28). Defendants again moved to dismiss the amended complaint, but Redhawk was again permitted to amend. (Rec. Doc. 34). Redhawk filed its second amended complaint in September 2025. (Rec. Doc. 35). Defendants’ motion to dismiss this third complaint is now ripe for adjudication.

The pleadings indicate that Redhawk is an intermediary between medical equipment manufacturers, such as 3M, and purchasers of such products. Redhawk’s current dispute stems from its June 2021 dealings with N95 Shield, LLC, which agreed to purchase 500 million PPE products (3M Masks) from Redhawk for $950 million pursuant to a Sales and Purchase Agreement (“SPA”). N95 breached the SPA almost immediately when it failed to transfer the agreed upon deposit of $9.5 million into the designated escrow account. Following arbitration, Redhawk obtained an award totaling over $45 million, which represents the profit Redhawk would have made on the deal. This Court confirmed that award and entered judgment in Redhawk’s favor for $44,950,000 in damages, plus attorneys’ fees, costs, and interest. (Redhawk Medical Products & Services, LLC v. N95 Shield, LLC, Civil No. 23-CV-01021 (“Redhawk I”), Rec. Doc. 51; and allegations of Second Amended Complaint (“SAC”) ¶IV.48-59). Redhawk proceeded to execute the judgment, beginning with a judgment debtor exam. (Redhawk I, Rec. Doc. 52-88).

Soon after engaging in investigation for execution proceedings, Redhawk filed the instant suit seeking to recover the judgment against the defendant entities (N95 having become defunct in June 2022) based on information discovered during the execution proceedings. (SAC ¶60). Redhawk asserts numerous allegations regarding N95’s connections with Defendant entities and alleges that Defendants fraudulently intended to cut Redhawk out of the transaction with 3M in order to divert Redhawk’s profit to themselves. Redhawk asserts a cause of action for fraud. (SAC ¶V). Defendants move to dismiss Redhawk’s claims for lack of personal jurisdiction, improper venue, and for failure to state a claim.

Law and Analysis

I. Personal Jurisdiction

F.R.C.P. Rule 12(b)(2) is the vehicle by which a non-resident defendant may challenge the court’s personal jurisdiction over him. Redhawk, as the plaintiff, bears the burden of demonstrating jurisdiction by presenting facts sufficient to constitute a prima facie case of jurisdiction. Johnson v. TheHuffingtonPost.com, Inc., 21 F.4th 314, 317 (5th Cir. 2021), cert. denied, 143 S. Ct. 485, 214 L. Ed. 2d 277 (2022); Central Freight Lines Inc. v. APA Transport Corp., 322 F.3d 376, 380 (5th Cir.2003). In determining whether jurisdiction exists, the court must accept the plaintiff’s uncontroverted, non-conclusory allegations of fact. Johnson, 21 F.4th at 317. The court is not required to credit conclusory allegations, even if left uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868-69 (5th Cir. 2001).

In determining whether personal jurisdiction is proper, a district court sitting in diversity, as in this case, applies the law of the forum state in which it sits. Fed. R. Civ. P. 4(e). The Louisiana Long-Arm Statute provides that this Court may exercise personal jurisdiction over any nonresident so long as the basis for such jurisdiction is consistent with the United States Constitution. Fed. R. Civ. P. 4(e). Consequently, the limits of the Louisiana Long-Arm statue are coextensive with the limits of constitutional due process. Alonso v. Line, 02-2644 (La. 05/20/03), 846 So.2d 745, cert. denied, 540 U.S. 967 (2003); Petroleum Helicopters, Inc. v. Avco Corp., 513 So.2d 1188, 1192 (La. 1987). This Court need only determine whether subjecting Defendants to suit in Louisiana would be consistent with the Due Process Clause of the Fourteenth Amendment. See, e.g., Walk Haydel & Associates, Inc. v. Coastal Power Production Co., 517 F.3d 235, 242-43 (5th Cir. 2008).

The exercise of personal jurisdiction over a nonresident defendant satisfies due process when: (1) the defendant has purposefully availed itself of the benefits and protections of the forum state by establishing minimum contacts with that state, and (2) the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.1999). In other words, due process is satisfied when the defendant’s connection with Louisiana is such that the defendant should reasonably anticipate being haled into court in Louisiana. Id.

Minimum contacts may give rise to either specific jurisdiction or general jurisdiction. Redhawk relies upon specific jurisdiction as the basis for jurisdiction over Defendants. Specific jurisdiction applies when a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities. Walk Haydel, 517 F.3d at 243. Whether specific jurisdiction exists is a three-step inquiry. First, the court must determine whether the defendant has minimum contacts with the forum state or, in other words, whether the defendant has purposefully directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there. Nuivo Pignone, SpA v. STORMAN ASIA M/V, 310 F.3d 374, 378 (5th Cir.2002). Random, fortuitous, or attenuated contacts are insufficient. Moncrief Oil Int‘l v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir.2007). However, “[a] single act by a defendant can be enough to confer personal jurisdiction if that act gives rise to the claim being asserted.” Lewis v. Fresne, 252 F.3d 352, 358–59 (5th Cir.2001).

Second, the court must determine whether the plaintiff’s cause of action arises out of or results from the defendant’s contacts with the forum. Nuivo Pignone, 310 F.3d at 378. Finally, if the plaintiff satisfies the first two prongs, the burden shifts to the defendant to defeat jurisdiction by showing that the forum state’s exercise of jurisdiction would be unfair or unreasonable. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir.2006).

A. Prongs One and Two: Minimum Contacts

Defendants presented evidence that 1) AEG Medical Supply LLC was a Nevada limited liability company, now dissolved, whose sole member was Michael Zarkovacki, a citizen of South Carolina (Rec. Doc. 19; 36-3); 2) Coastal Group Partners, LLC, is a Wyoming limited liability company, whose sole member is Michael Zarkovacki (Rec. Doc. 19; 36-3); and 3) Advanced Energy Group, LLC is a Nevada limited liability company, whose sole member is Dr. Hamid Mohammadi, a citizen of Virginia (Rec. Doc. 19; 36-4). Defendants attest that they have never had contact with Louisiana, have never availed themselves of Louisiana courts, have never contracted with or met directly with anyone at Redhawk, do not own, lease, or have any interests in any Louisiana property, and have not otherwise been involved in any Louisiana contract or occurrence. (Rec. Doc. 36-3 and 36-4). All Defendants attest they have never had and currently do not have any ownership interest in N95 Shield, LLC. (Rec. Doc. 36-3, ¶9; Rec. Doc. 36-4, ¶8).

Redhawk alleges fraud, which dictates a particular minimum contacts test:

Importantly, the minimum-contacts test for personal jurisdiction in fraud differs from that in contract. A forum State’s exercise of jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the defendant that creates the necessary contacts with the forum. The proper focus of the minimum contacts inquiry in intentional-tort cases is the relationship among the defendant, the forum, and the litigation.

Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 490 (5th Cir. 2018) (cleaned up).

In support of its position that Defendants established sufficient minimum contacts with Louisiana, Redhawk argues that N95 was a shell company which Defendants used to gain direct access to Redhawk’s wholesalers, thereby circumventing Redhawk’s agreement and cutting it out of the deal. Redhawk attached its WhatsApp messages with N95 between March 8, 2021, and December 2021. These messages confirm that AEG, AEG Medical, and Coastal were somehow involved in the deal between Redhawk and N95. N95 stated that AEG would “proof up” the products, that AEG would expect a buyer intermediary commission, that there was a relationship between N95 and AEG set forth in a memorandum of understanding, that as of November 12, 2021, “N95 Shield is 1/3 of COASTAL GROUP PARTNERS” (as written), and that AEG Medical was an affiliate of AEG. (Rec. Doc. 38-3). In other email correspondence, N95’s counsel (also Defendants’ counsel) advised that N95 was an intermediary who secured funding from a third party, presumably one of the Defendants (Rec. Doc. 38-4), which, Redhawk argues, shows that N95 was an unfunded shell company. Redhawk alleges that the foregoing evidence demonstrates Defendants’ alleged scheme to circumvent Redhawk’s agreement to directly access Redhawk’s PPE wholesalers.

In a factually similar case, the court in North Texas Opportunity Fund LP v. Hammerman & Gainer Int‘l, Inc. (“NTOF”) noted:

For intentional tort claims, foreign communications directed at the forum can create personal jurisdiction “[w]hen the actual content of communications with a forum gives rise to intentional tort causes of action.” Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th Cir.1999). In fact, even wholly foreign activity that only has “consequences or effects within the forum will establish minimum contacts if the tortious conduct is purposefully or expressly aimed at the forum state.” Dontos, 582 Fed.Appx. at 344–45; Calder, 465 U.S. at 789, 104 S.Ct. 1482 (finding personal jurisdiction “proper in California based on the ‘effects’ of [the parties‘] Florida conduct in California”). Where parties are “participants in an alleged wrongdoing intentionally directed at a [forum State’s] resident, [ ] jurisdiction over them is proper on that basis.” Calder, 465 U.S. at 790, 104 S.Ct. 1482.

N. Texas Opportunity Fund L.P. v. Hammerman & Gainer Int‘l, Inc., 107 F. Supp. 3d 620, 628 (N.D. Tex. 2015).

In that case, the court found the foreign defendants were subject to personal jurisdiction in Texas where the plaintiff alleged the Louisiana defendants’ communications with it (a Texas entity) constituted fraudulent misrepresentation (an intentional tort) and where the applicable purchase agreement designated application of Texas law. Id. at 629. Likewise, in this case, Redhawk alleges that Defendants’ communications (through the alleged shell company of N95) were in furtherance of the alleged fraud and that the SPA between Redhawk (Louisiana citizen) and N95 designated Louisiana as governing law. Although the precise nature of Defendants’ relationship with N95 is unclear at this early stage, Redhawk’s evidence is sufficient to show that AEG, AEG Medical, and Coastal were involved in negotiation of the deal at the heart of the alleged scheme. Redhawk’s claims are based solely on Defendants’ alleged intentional sabotage of that deal. Considering Defendants’ obvious connections to the Redhawk-N95 deal, a deal intimately connected to Louisiana through its signatory, Redhawk, and its choice of law provision, the Court finds minimum contacts satisfied. See also Trois, 882 F.3d at 491 (participation in a single phone call in which allegedly fraudulent comments were made sufficient to confer personal jurisdiction).

B. Prong Three: Whether Exercise of Jurisdiction Would be Unfair or Unreasonable

Because Redhawk has shown sufficient minimum contacts arising from the Redhawk-N95 deal, the burden shifts to Defendants to show that the exercise of jurisdiction would be unfair or unreasonable.

To show that an exercise of jurisdiction is unreasonable once minimum contacts are established, the defendant must make a compelling case against it. It is rare to say the assertion is unfair after minimum contacts have been shown. The standards to be used are the traditional notions of fair play and substantial justice. The interests to balance in this determination are the burden on the defendant having to litigate in the forum; the forum state’s interests in the lawsuit; the plaintiff’s interests in convenient and effective relief; the judicial system’s interest in efficient resolution of controversies; and the state’s shared interest in furthering fundamental social policies.

If a cause of action for fraud committed against a resident of the forum is directly related to the tortious activities that give rise to personal jurisdiction, an exercise of jurisdiction likely comports with the due process clause, given the obvious interests of the plaintiff and the forum state.

Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 215 (5th Cir. 1999).

Defendants offered no argument or evidence that subjection to this Court’s jurisdiction would be unfair or unreasonable. Modern technology and electronic communications obviate historic problems of communications, testimony, and evidence from other states. The Fifth Circuit has found that even though U.S. litigation would place a burden on a German defendant, “once minimum contacts are established, the interests of the forum and the plaintiff justify even large burdens on the defendant.” Id. at 215. Moreover, in Wien Air, Texas “clearly ha[d] an interest because the dispute involve[d] a corporation whose principal place of business is in Texas, and the corporation allegedly was defrauded.” Id. The same reasoning applies to the instant case. The Court finds Defendants failed to overcome their burden to show jurisdiction is unfair or unreasonable. Defendants’ motion to dismiss for lack of personal jurisdiction should be denied.

II. Venue

Defendants next urge the Court to dismiss Redhawk’s claim for improper venue. In considering a motion to dismiss for improper venue under F.R.C.P. Rule 12(b)(3), the court may consider (1) the complaint alone; (2) the complaint supplemented by the undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009). The court must review all facts in the light most favorable to the plaintiff. Id. at 237. If the court finds that venue is improper, §1406(a) requires the court to “dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.” As applicable to this case, venue is proper in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or if there is no district in which an action may otherwise be brought, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action. 28 U.S.C. § 1391(b)(2) and (3).

Redhawk relies upon §1391(b)(3), arguing that venue follows personal jurisdiction in this case, where Defendants’ contacts with Louisiana are as discussed above. Initially, §1391(b)(3) renders venue appropriate only where no other district in which the action may be brought exists. The parties impliedly agree that neither (b)(1) (venue proper in a judicial district in which any defendant resides, if all defendants are residents of the state) nor (b)(2) (venue proper in a judicial district where a substantial part of events or property giving rise to the claim occurred) apply, but the Court finds a closer analysis of venue under (b)(2) is warranted.

Under (b)(2), “for venue purposes, it is sufficient that a substantial part of the events occurred in this district, even if a greater part of the events occurred elsewhere.” Burkitt v. Flawless Recs., Inc., No. CIV. A. 03-2483, 2005 WL 6225822, at *6 (E.D. La. June 13, 2005). In a fraud case, the Fifth Circuit instructs the district court to consider the direction of the allegedly fraudulent communication: “[D]irection of fraudulent misrepresentations alone can be enough to establish venue for a fraud claim where that claim derives from the communications.” Trois, 882 F.3d at 494, citing Siragusa v. Arnold, No. 3:12-CV-04497-M, 2013 WL 5462286, at *3 (N.D. Tex. Sept. 16, 2013). Thus, because “the misrepresentations directed at Texas [we]re a substantial part of the events giving rise to the alleged fraud,” venue was proper in Texas. Id. See also Apollo Holding Co., LLC v. Roe, No. CV 24-2773, 2025 WL 1474738, at *7 (E.D. La. May 22, 2025) (“[W]hile the Separation Agreement and Amendment were not executed in Louisiana, a substantial part of the events giving rise to the claim that Plaintiffs were fraudulently induced to sign those agreements – Roe’s alleged misrepresentation that he was retiring – was directed to Plaintiffs in Louisiana.”) and Pierce v. Aircraft Fin. Corp. LLC, 512 F.Supp.3d 753, 765 (S.D. Tex. 2021) (relying on Trois to find venue proper where defendants allegedly targeted misrepresentations).

Redhawk alleges that Defendants used N95 as a shell company to gain information pertaining to Redhawk’s wholesalers and then cutting Redhawk out of the deal. In other words, Redhawk alleges that the SPA and N95’s involvement were the vehicle for Defendants’ fraudulent scheme to deprive Redhawk of profit in Louisiana. Construing Redhawk’s allegations as true and in its favor, and considering Redhawk’s submitted WhatsApp correspondence with N95, the Court finds that a substantial part of the events giving rise to the claims arose in this this district such that venue is proper under §1391(b)(2), obviating discussion of venue under §1391(b)(3).¹

III. Sufficiency of Claims under Rule 12(b)(6) and Rule 9(b).

“In diversity cases, a federal court must apply federal procedural rules and the substantive law of the forum state.” Hyde v. Hoffmann-La Roche, Inc., 511 F.3d 506, 510 (5th Cir. 2007). The defendant may challenge the complaint for failing to state a claim by filing a motion to dismiss under F.R.C.P. Rule 12(b)(6). When considering a motion to dismiss for failure to state a claim, the district court must limit itself to the contents of the pleadings, including any attachments and exhibits thereto. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000); U.S. ex rel. Riley v. St. Luke‘s Episcopal Hosp., 355 F.3d 370, 375 (5th Cir.2004). The court must accept all well-pleaded facts as true and view them in the light most favorable to the plaintiff. In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir.2007). Conclusory allegations and unwarranted deductions of fact are not accepted as true. Kaiser Aluminum & Chemical Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982); Collins v. Morgan Stanley, 224 F.3d at 498. The law does “not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007). The allegations must be sufficient “to raise a right to relief above the speculative level,” and “the pleading must contain something more …than…a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.” Id. at 555 (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004)).

Ordinarily, in ruling on a Rule 12(b)(6) motion, the Court is limited to the allegations of the complaint and any exhibits attached thereto; however, the court may also consider documents attached to the defendant’s motion if they are referenced in the complaint and central to the plaintiff’s claims. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). The Court is also permitted to take judicial notice of public records as well as facts which are not subject to reasonable dispute in that they are either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011). The Fifth Circuit has also sanctioned consideration of certain documents which were attached to the plaintiff’s opposition, where no party questioned the authenticity of the documents and the documents are sufficiently referenced in the complaint. Walch v. Adjutant Gen.‘s Dep‘t of Texas, 533 F.3d 289, 294 (5th Cir. 2008).

In addition to Rule 12(b)(6) considerations, Rule 9(b) requires fraud claimants to state with particularity the circumstances constituting fraud. “At a minimum, Rule 9(b) requires that the plaintiff specify the particulars of time, place, and contents of the false representations.” Williams v. WMX Techs., Inc., 112 F.3d 175, 179 (5th Cir. 1997). Defendants contend Redhawk’s allegations fail the specificity test and improperly lump all Defendants into single allegations.

Redhawk’s twenty-two page complaint alleges in detail that, beginning in 2021, Defendants orchestrated N95’s participation in the SPA, intentionally failed to fund the transaction outlined in the SPA by manipulating their bank deposits and intentionally misrepresenting that N95 had the required funds to complete the transaction when they knew this was untrue, though making it appear as if N95 had the funding, and fabricated letters of attestation in December 31, 2024 in furtherance of the scheme, all for the purpose of obtaining insider information from Redhawk’s supplier, 3M. (Rec. Doc. 35, ¶IV). In other words, Redhawk alleges that N95 was Defendants’ pawn in a scheme to usurp Redhawk’s supplier information and cut Redhawk out of a profitable deal, all as carried out through correspondence directed to Redhawk in Louisiana. Because of the alleged scheme, Redhawk alleges that it was thereafter precluded from future transactions with 3M because of the failed SPA. The Court finds Redhawk’s allegations withstand both Rule 12(b)(6) and Rule 9(b).

That the complaint does not specify which particular Defendant was responsible for which particular communication or act is not fatal, because such facts are “peculiarly within [Defendants’] knowledge, [and] fraud pleadings may be based on information and belief.” Tuchman v. DSC Commc‘ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994). Circumstances involving multiple inter-related corporate entities, the relationships of which the plaintiff would not be expected to know, are common in cases involving such sophisticated transactions. Redhawk properly pled upon information and belief facts based on communications with N95 showing that the Defendant entities were related. (¶IV.3-4; 9; 18). Redhawk cannot be expected to know the inter-workings and relationship nuances of the related entities at this stage of the proceedings. See NTOF, supra, at 633, finding similar fraud claims sufficiently pled under Rule 9(b). The Court recommends that Defendants’ motion to dismiss for improper venue be denied.

IV. Collateral Estoppel

Defendants last rely on the doctrine of collateral estoppel, arguing that Redhawk’s failure to raise these claims in the arbitration proceedings against N95 preclude litigation of the claims here. Defendants appear to assert both claim preclusion and issue preclusion as bars to this suit.²

The rule of res judicata encompasses two separate but linked preclusive doctrines: (1) true res judicata or claim preclusion and (2) collateral estoppel or issue preclusion. Claim preclusion, or res judicata, bars the litigation of claims that either have been litigated or should have been raised in an earlier suit. The test for res judicata has four elements: (1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; and (4) the same claim or cause of action was involved in both actions. In order to determine whether both suits involve the same cause of action, this Court uses the transactional test. Under the transactional test, a prior judgment‘s preclusive effect extends to all rights of the plaintiff with respect to all or any part of the transaction, or series of connected transactions, out of which the original action arose. What grouping of facts constitutes a “transaction” or a “series of transactions” must be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage. If a party can only win the suit by convincing the court that the prior judgment was in error, the second suit is barred. The critical issue is whether the two actions are based on the same nucleus of operative facts.

Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005) (clean up).

This case easily overcomes res judicata/claim preclusion, as Defendants were not parties to Redhawk I. Indeed, Defendants’ position rests on the conclusion that Redhawk contracted only with N95, a separate and distinct entity. Nevertheless, Defendants rely on Fifth Circuit jurisprudence stating that complete identity of the parties is not required. Defendants’ cited cases, however, are distinguishable and do not apply to this case, where Defendants have shown no privity with N95. (e.g. Vines v. Univ. of Louisiana at Monroe, 398 F.3d 700, 707 (5th Cir. 2005), finding sufficient privity between EEOC and former employees in separate proceedings involving ADEA claims). Likewise, Redhawk’s claims in Redhawk I (breach of contract) differ significantly from its claims for fraud in this suit. (See Redhawk I, Rec. Doc. 1.). Claim preclusion does not apply to this case.

Issue preclusion, or collateral estoppel, “precludes a party from litigating an issue already raised in an earlier action between the same parties only if: (1) the issue at stake is identical to the one involved in the earlier action; (2) the issue was actually litigated in the prior action; and (3) the determination of the issue in the prior action was a necessary part of the judgment in that action.” Petro-Hunt, L.L.C. v. United States, 365 F.3d 385, 397 (5th Cir. 2004). “[T]he legal standard used to assess the issue must be the same in both proceedings[;] [h]owever, the actual claims and the subject matter of each suit may differ.” Next Level Commc‘ns LP v. DSC Commc‘ns Corp., 179 F.3d 244, 250 (5th Cir. 1999). “Unlike claim preclusion, the doctrine of issue preclusion may not always require complete identity of the parties.” Id. However, “[t]he fundamental rationale of issue preclusion dictates the clearly settled requirement that it be limited to matters that have been actually decided.” Wright & Miller, § 4420 Issue Preclusion—Actually Decided, 18 Fed. Prac. & Proc. Juris. § 4420 (3d ed.)

Defendants argue, unconvincingly, that Redhawk’s claims in this suit are somehow repackaged, previously arbitrated claims based on N95’s breach of the SPA. The Court is not persuaded. The arbitrator did not consider any allegations that the SPA transaction was a sham designed to cut Redhawk out of the deal, as Redhawk alleges in this suit. In fact, Redhawk contends that its efforts to collect on the judgment confirming the arbitration award uncovered the alleged financial scheme outlined in the complaint in this suit. (Rec. Doc. 35, ¶IV.60). Redhawk further points out that the arbitrator did not award damages for lost opportunity, but, rather, construed Redhawk’s claim as one for breach of contract and awarded damages for Redhawk’s lost profit. (Redhawk I, Rec. Doc. 51, p. 6-7). Collateral estoppel does not protect Defendants from Redhawk’s claims in this suit.

Conclusion

For the reasons discussed herein, the Court recommends that Defendants’ Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant to Rules 12(b)(2); 12(b)(3); 12(b)(6), and 9(b) (Rec. Doc. 36) be DENIED.

Under the provisions of 28 U.S.C. § 636(b)(1)(C) and Fed. R. Civ. P. 72(b), parties aggrieved by this recommendation have fourteen days from service of this report and recommendation to file specific, written objections with the Clerk of Court. A party may respond to another party’s objections within fourteen days after being served with of a copy of any objections or responses to the district judge at the time of filing.

Failure to file written objections to the proposed factual findings and/or the proposed legal conclusions reflected in the report and recommendation within fourteen days following the date of its service, or within the time frame authorized by Fed. R. Civ. P. 6(b), shall bar an aggrieved party from attacking either the factual findings or the legal conclusions accepted by the district court, except upon grounds of plain error. See Douglass v. United Services Automobile Association, 79 F.3d 1415 (5th Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C. §636(b)(1).

THUS DONE in Chambers, Lafayette, Louisiana on this 21st day of November, 2025.

CAROL B. WHITEHURST

UNITED STATES MAGISTRATE JUDGE

Notes

Having found personal jurisdiction proper, the Court notes that under the circumstances of this case, whether venue is derived from (b)(2) or (b)(3) is likely a distinction without substance.

Defendants state that “[t]he law requires parties to bring all claims arising out of a single transaction or occurrence in a single proceeding” and further argue regarding identity of parties, citing res judicata cases and urging the Court to consider that the underlying facts are the same. (Rec. Doc. 36-1, p. 15-17). These arguments evoke res judicata. Defendants also cite cases on issue preclusion. (Id.). Under either analysis, Defendants’ arguments fail.