JENNIFER SHAWGO, an individual; JENNIFER SHAWGO BC LLC, a Minnesota limited liability company; MOLLY BJORNLIE, an individual; MOLLY BJORNLIE, LLC, a Minnesota limited liability company; AYESHA DAWLEY, an individual; DAWLEY, LLC, a Minnesota limited liability company; and CAITY PIKE, an individual; on behalf of themselves and all others similarly situated v. COUNTER BRANDS, LLC, a California limited liability company doing business as Beautycounter; THE CARLYLE GROUP INC., a Delaware corporation; COUNTER BRANDS, INC., a Delaware corporation doing business as Beautycounter; G2G NEWCO, INC., a Delaware corporation doing business as Beautycounter; and SUSAN GREGG RENFREW, an individual
Case No. 24-CV-0556 (PJS/TNL)
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA
March 31, 2025
Doc. 168
Pamela Abbate Dattilo, ECKLAND & BLANDO LLP; Nicholas J. Nelson, Aaron Mark Bostrom, Samuel W. Diehl, and Tara Kennedy, CROSSCASTLE PLLC, for plaintiffs.
Melanie Blunschi, Christina R. Gay, Andrew Brian Clubok, David J. Schindler, and Greg Swartz, LATHAM & WATKINS LLP; Amran Farah and Mark L. Johnson; GREENE ESPEL PLLP, for defendant The Carlyle Group Inc.
Plaintiffs Jennifer Shawgo, Mollie Bjornlie, Ayesha Dawley, Caity Pike, and their respective LLCs are independent contractors who sold Beautycounter products. Defendants Counter Brands, LLC (“LLC“), The Carlyle Group (“Carlyle“), Counter Brands, Inc. (“INC“), G2G Newco, Inc. (“G2G“), and Susan Gregg Renfrew (“Renfrew“) each owned or operated the Beautycounter enterprise at one time or another. Plaintiffs filed this putative class action against defendants after plaintiffs’ contracts to sell Beautycare products were terminated and disputes arose over the post-termination enforceability of non-solicitation clauses.
This matter is before the Court on motions brought by four of the five defendants. (One of the defendants—LLC—is defunct and in default.) Carlyle moves to compel arbitration or, alternatively, to dismiss the second amended complaint (“the complaint“). INC, G2G, and Renfrew move to compel arbitration and stay the proceedings or, alternatively, to dismiss, strike, or transfer.
For the reasons that follow, the Court dismisses all claims against all defendants (save LLC) for lack of personal jurisdiction.
A. The Parties
1. Plaintiffs
Beautycare is a multilevel-marketing enterprise in which independent contractors (called “consultants“) sell cosmetics and skin-care products directly to consumers. Consultants earn commissions from their own sales and from the sales of other consultants whom they recruit into the enterprise.
Plaintiffs are former Beautycounter consultants who were based in Minnesota. SAC, ECF No. 45 at 5–6 ¶¶ 1–11.1 Plaintiffs Shawgo, Bjornlie, and Dawley conducted their Beautycounter businesses through the plaintiff LLCs. See ECF Nos. 113 ¶ 12, 114 ¶ 13, 115 ¶ 12. Pike conducted her business personally.2 The business relationships between plaintiffs and Beautycounter terminated at various times between August 2022 and March 2023. SAC at 5–6 ¶¶ 2–11.
LLC was organized under Delaware law and maintained its headquarters in Santa Monica, California. Id. at 7 ¶ 12. From August 2022 until February 2024, LLC was registered to do business in Minnesota and maintained an agent to accept service of process in the state. ECF No. 165-1. In April 2024, however, LLC ceased operations after its secured creditors initiated an assignment for the benefit of creditors (“ABC“) under California law. Renfrew Decl., ECF No. 101 ¶ 29. An ABC allows an insolvent business to assign its assets to a third-party fiduciary, who then liquidates the assets and distributes the proceeds to the business‘s creditors. At that point, the insolvent business is typically dissolved. Renfrew Decl. ¶ 20. Roughly speaking, then, an ABC functions as a state-law version of a Chapter 7 bankruptcy proceeding.
3. Defendant The Carlyle Group Inc. (“Carlyle“)
Carlyle is a global investment firm that is incorporated in Delaware and that maintains its principal place of business in the District of Columbia. SAC at 7 ¶ 16; Dumican Decl., ECF No. 71 ¶ 5. Carlyle does not have any offices, employees, or business operations in Minnesota. SAC at 7 ¶ 16; Dumican Decl. ¶¶ 4, 7–8. At various times, funds managed by Carlyle have acquired interests in various Minnesota-based companies, including a disinfectant company, a data-center company, and an e-discovery company. Dumican Decl. ¶¶ 12–14. Carlyle also has participated in financial
Carlyle has been sued in this case because, in May 2021, funds managed by Carlyle purchased a majority stake in LLC. Id. ¶ 9; Renfrew Decl. ¶ 3.
4. Defendant Counter Brands, Inc. (“INC“)
INC is a Delaware holding company that maintains its principal place of business in Santa Monica, California. SAC at 7 ¶ 13; Renfrew Decl. ¶¶ 13–14. INC owned LLC before Carlyle bought a majority stake in the company in May 2021. Renfrew Decl. ¶ 3. After the sale, INC continued to hold a minority interest in LLC. Id.
5. Defendant G2G Newco, Inc. (“G2G“)
G2G is a Delaware corporation that maintains its principal place of business in Pacific Palisades, California. Id. ¶¶ 21–22. G2G purchased some of LLC‘s assets during the ABC, including the right to do business as “Beautycounter.” Id. ¶ 29; SAC at 10 ¶ 31.
6. Defendant Susan Gregg Renfrew (“Renfrew“)
Renfrew founded LLC and later G2G, and she is a shareholder of INC. Renfrew Decl. ¶¶ 2–3. She served as Chief Executive Officer (“CEO“) of LLC from 2011 until approximately January 2022, and rejoined LLC as CEO in February 2024. Id. ¶ 2; SAC at
B. Beautycounter
As noted, Beautycounter3 is a multilevel-marketing enterprise that sells cosmetics and skin-care products. SAC at 11 ¶ 44. Rather than employ sales representatives, Beautycounter uses independent contractors known as “consultants” to market and sell its products directly to consumers. Id. at 11 ¶ 44, 16 ¶¶ 77–78. The individual plaintiffs first entered into contracts to serve as Beautycounter consultants between 2014 and 2017. See id. at 5–6 ¶¶ 2–11, 12 ¶¶ 47–48; ECF Nos. 14-3 at 1, 14-5 at 1; Hr‘g Tr., ECF No. 163 at 181. Initially, INC was the contracting party, but LLC later replaced INC in the contractual relationships. See Hr‘g Tr. at 181.
Beautycounter and plaintiffs appear to have enjoyed a harmonious relationship until about May 2021, when Carlyle acquired a majority interest in LLC. See SAC at 27 ¶ 167; Renfrew Decl. ¶ 3. Following that acquisition, the amount of money that plaintiffs were able to earn as Beautycounter consultants decreased significantly, leading to acrimony between Beautycounter and plaintiffs, and causing plaintiffs to
C. The Terminations and Ensuing Lawsuits
By March 2023, plaintiffs’ relationships with Beautycounter had been terminated, either by Beautycounter or by the plaintiff. Id. at 44–50 ¶¶ 269–316. Following the terminations, Beautycounter told plaintiffs that it would enforce a non-solicitation policy that was incorporated into their contracts and that purported to apply post-termination. Id. at 45 ¶¶ 270–274, 46–51 ¶¶ 288–319. Plaintiffs then filed the original complaint in this action in a Minnesota state court. See ECF No. 1-1. That action was removed to this Court in February 2024. ECF No. 1.
The attorneys who represent plaintiffs in this action also represent a group of former Beautycounter consultants in a similar action in California. SAC at 54 ¶ 332. In March 2024, the California court issued a temporary restraining order (“TRO“) restraining LLC from enforcing the non-solicitation provision. Id. at 54 ¶ 333. Following entry of the TRO, defense counsel warned plaintiffs’ counsel that, if the California litigation continued, “there could be a ‘bankruptcy.‘” Id. at 58 ¶ 361.
Renfrew founded G2G in April 2024, about three years after INC sold a majority stake in LLC to Carlyle. Id. at 54–55 ¶¶ 338–39; Renfrew Decl. ¶ 4. Days after founding G2G, Renfrew—who was serving as CEO of LLC (after being rehired by Carlyle)—sent an email to a group of consultants announcing that LLC would be winding down, that G2G would continue Beautycounter‘s business, and that the business arrangements between consultants and LLC would transfer to G2G. SAC at 55–56 ¶¶ 343–45. At about the same time, Carlyle announced that, in light of “significant near-term capital needs,” Carlyle had decided to sell its interest in LLC back to Renfrew. Id. at 56 ¶ 347.
At this point, LLC was insolvent; its secured debt alone exceeded the value of its assets. Dumican Decl. ¶ 10. In late April 2024, LLC‘s secured creditors arranged an ABC to liquidate LLC. Renfrew Decl. ¶ 29. LLC‘s assets were assigned to a third-party fiduciary, the fiduciary sold the assets, the proceeds were distributed among the secured creditors, and LLC was dissolved. Id. ¶ 29; Dumican Decl. ¶ 10. Some of LLC‘s assets were sold to G2G. Renfrew Decl. ¶ 29. Because the proceeds of the ABC were insufficient to pay the total amount that LLC owed to its secured creditors—much less any of the amount that LLC owed to its unsecured creditors—none of LLC‘s equity holders (including Carlyle and INC) recovered a penny in the ABC. Id. ¶ 20; Dumican
Following the liquidation of LLC‘s assets through the ABC, plaintiffs amended their complaint in this action to join INC, G2G, and Renfrew as defendants. See generally SAC. Plaintiffs allege that G2G is a mere continuation of LLC, and thus that G2G assumed the liabilities of LLC. See id. at 57 ¶ 352. Plaintiffs further allege that defendants orchestrated a fraudulent transfer of LLC‘s assets to G2G via the ABC in order to avoid liability to the plaintiffs in the Minnesota and California actions. Id. at 59 ¶ 364, 63 ¶¶ 383-84, 388. Based on these allegations, the complaint asserts numerous fraudulent-transfer, contract, tort, and other claims, mostly under California law.
II. ANALYSIS
A. Whether to First Decide Arbitrability or Personal Jurisdiction
Defendants4 urge the Court to decide whether this matter must be arbitrated before reaching any other issue. Plaintiffs, by contrast, ask the Court to decide whether it has personal jurisdiction over defendants before reaching the issue of arbitrability. Pl. Mem., ECF No. 155 at 21–22.5 All parties agree, though, that the Court may decide
B. Standard of Review
To survive a motion to dismiss under
A federal court sitting in diversity may exercise personal jurisdiction over a defendant only if doing so comports with both the long-arm statute of the state in which the federal court is located and the Due Process Clause of the Fourteenth Amendment. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 463 (1985). Because Minnesota‘s long-arm statute (
Courts recognize two types of personal jurisdiction: (1) general jurisdiction and (2) specific jurisdiction.
1. General Jurisdiction
A court that has general jurisdiction over a defendant may adjudicate any claim against that defendant, even if the claim has no connection to the forum state. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual‘s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011) (citation omitted). As a general matter, a corporation is
That said, when an LLC registers with the Minnesota Secretary of State and appoints an agent for service of process under
2. Specific Jurisdiction
In the absence of general jurisdiction, a court may exercise specific jurisdiction over a defendant who “purposefully avails itself of the privilege of conducting activities within the forum State, such as directing its activities at the forum or targeting forum residents.” Zazzle, 42 F.4th at 953 (quoting Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351, 359 (2021) (cleaned up) (other citation omitted)). The claim of the plaintiff against the defendant “must arise out of or relate to the defendant‘s contacts with the forum.” Ford, 592 U.S. at 592 (internal quotation marks omitted). “The contacts must be the defendant‘s own choice and not random, isolated, or fortuitous.” Id. In a multi-defendant case, “[e]ach defendant‘s contacts with the forum State must be assessed individually.” Calder v. Jones, 465 U.S. 783, 790 (1984) (citation omitted).
Under the “effects test” applied by the United States Supreme Court in its decision in Calder, “personal jurisdiction can exist over a nonresident defendant who commits an intentional tort when its effect is felt primarily within the forum state.” Morningside Church, Inc. v. Rutledge, 9 F.4th 615, 620 (8th Cir. 2021). The test turns not on where the plaintiff experienced a particular injury or effect but, rather, on whether the defendant‘s allegedly tortious acts were “performed for the very purpose of having their consequences felt in the forum state.” Johnson v. Arden, 614 F.3d 785, 796–97 (8th Cir. 2010) (internal quotation marks omitted); see also Walden v. Fiore, 571 U.S. 277, 287 (2014) (“The crux of Calder was that the . . . ‘effects’ of the alleged [intentional tort] connected the defendant to [the forum state], not just to the plaintiff.“).
3. Individual Defendants
Plaintiffs argue that Carlyle is subject to general jurisdiction. Plaintiffs further argue that Carlyle is subject to specific jurisdiction because of its contacts with
Plaintiffs further argue that LLC consented to the general jurisdiction of the Minnesota courts by appointing an agent to accept service of process in Minnesota, and that G2G and Renfrew “inherited” LLC‘s consent. Alternatively, plaintiffs argue that G2G and Renfrew are subject to specific jurisdiction because they “inherited” LLC‘s business contacts with Minnesota and because both participated in the same fraudulent transfer as Carlyle.
a. LLC
As noted, plaintiffs argue that this Court has both general and specific jurisdiction over LLC, and that G2G and Renfrew somehow “inherited” that jurisdiction from LLC. The Court agrees with the first point. At the time that plaintiffs commenced this action in October 2023, LLC was still a going concern, it had registered with the Minnesota Secretary of State under
Even if the Court did not have general jurisdiction over LLC, the Court could exercise specific jurisdiction over LLC. When Beautycounter was operated by LLC,
b. INC
The complaint says almost nothing about INC, plaintiffs do not mention INC in their briefing regarding personal jurisdiction, and the information about INC in the record is limited: The individual plaintiffs originally entered into agreements with INC. See ECF Nos. 14-3 at 1, 14-5 at 1. LLC later stepped into INC‘s shoes. See SAC at 7 ¶ 14; Hr‘g Tr. at 181. INC is a holding company (not an operating company) that owned LLC prior to the sale to Carlyle. Renfrew Decl. ¶ 20. After that sale, INC maintained a minority interest in LLC. Id. INC is incorporated in Delaware and headquartered in California. Id. ¶¶ 13–14. INC has never maintained an office, hired an employee, or conducted any business in Minnesota. Id. ¶¶ 15–19.
c. Carlyle
i. General Jurisdiction
Carlyle is neither incorporated nor headquartered in Minnesota, nor does it have any offices or employees in Minnesota. Dumican Decl. ¶¶ 4–8. Obviously, Carlyle is not “essentially at home” in Minnesota, and therefore this Court cannot exercise general jurisdiction over it.
ii. Specific Jurisdiction for Non-Fraudulent-Transfer Claims
In arguing that this Court has specific jurisdiction over the claims that do not arise out of the alleged fraudulent transfer, plaintiffs rely on the United States Supreme Court‘s decision in Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351 (2021). Plaintiffs allege, and the record reflects, that Carlyle or Carlyle-operated funds have owned (and, in some cases, continue to own) interests in various companies that operate, own property, or do business in Minnesota. SAC at 7–8 ¶¶ 18–24. Those
Ford is inapposite. In Ford, the Supreme Court considered two lawsuits arising out of two car crashes that involved two different models of Ford cars and that occurred in two different states (Minnesota and Montana). Each plaintiff filed suit against Ford in the state in which the plaintiff‘s crash had occurred. Ford conceded that it had “purposefully availed itself” of the privileges of doing business in both Minnesota and Montana. Ford could hardly have argued otherwise, given that it had extensively advertised, marketed, and sold its cars in both states, and given that it had supported the resale markets for used Fords in both states. Ford, 592 U.S. at 362. Ford argued,
The Court rejected Ford‘s argument, emphasizing that the Court‘s “most common formulation of the rule [for specific jurisdiction] demands that the suit ‘arise out of or relate to the defendant‘s contacts with the forum.‘” Id. at 362 (emphasis in original). Because Ford had not sold the car that crashed in Minnesota in Minnesota, or the car that crashed in Montana in Montana, the Court agreed with Ford that a “strict causal” link between Ford‘s in-forum activities and the two accidents was missing. Id. But the Court nevertheless found that the car crashes “relate[d] to” Ford‘s activities in the forum states. Id. Specifically, the plaintiffs’ claims “relate[d] to” Ford‘s marketing and sales of new cars in both states, as well as to the company‘s support in both states of the resale market for its used cars (including the two models involved in the crashes).
Here, plaintiffs rely on Ford in arguing that, because Carlyle acquired interests in some businesses in Minnesota, this Court can exercise specific jurisdiction over any lawsuit that relates to any business acquired by Carlyle. But if the fact that a defendant conducts some activities in Minnesota means that the courts of Minnesota have specific jurisdiction over claims arising out of similar activities conducted by the defendant anywhere in the world, the distinction between general jurisdiction and specific jurisdiction would collapse. Plaintiff‘s argument also ignores the requirement—reaffirmed by the Supreme Court in Ford—that a court cannot exercise specific jurisdiction over a defendant unless the claim against it “arise[s] out of or relate[s] to the defendant‘s contacts with the forum.” Id. at 362. Carlyle‘s contacts with Minnesota—such as its involvement in discussions about buying the Minnesota Timberwolves and Minnesota Lynx—have no connection whatsoever with the alleged conduct that gave rise to this lawsuit. Accordingly, plaintiffs have failed to make a prima facie showing that this Court can exercise specific jurisdiction on this basis.
That leaves the fraudulent-transfer claims. Plaintiffs argue that all of the defendants participated in the fraudulent transfer of LLC‘s assets to G2G and that the purpose of the fraudulent transfer was to render LLC judgment proof in this litigation. Thus, say plaintiffs, this Court can exercise specific jurisdiction over the fraudulent-transfer claims, as the defendants’ wrongful acts were “performed for the very purpose of having their consequences felt in [Minnesota].” Johnson, 614 F.3d at 796.
The Court disagrees. The main problem for plaintiffs is the utter implausibility of their claim that defendants somehow engineered the transfer of LLC‘s assets to G2G through an ABC in order to render LLC judgment proof in this litigation. All of the evidence in the record is to the contrary.
To begin with, the ABC was not initiated by Carlyle or any other equity holder, but by LLC‘s secured creditors, who foreclosed on their debt and forced LLC into the ABC. Renfrew Decl. ¶ 29. Obviously, the secured creditors were not acting to protect LLC; they were acting to protect themselves. It was in the interests of everyone—LLC, its secured creditors, its unsecured creditors, and its equity holders—that LLC‘s assets be sold for the highest possible price. And it was the fiduciary‘s legal duty to collect as much money as possible for LLC‘s assets. Anyone who claimed that “Carlyle” was
Moreover, according to Carlyle’ sworn (and uncontradicted) affidavit, at the time of the ABC, “Beautycounter‘s secured debt substantially exceeded its assets.” Dumican Decl. ¶ 10. In other words, the transfer of LLC‘s assets did not render it judgment proof; LLC was judgment proof before the ABC was initiated by its secure creditors. That Carlyle‘s counsel warned plaintiffs’ counsel that “there might be a bankruptcy” if litigation continued following the issuance of the California TRO merely confirms that LLC was in terrible financial condition. Plaintiffs’ claim that the ABC was initiated to render LLC judgment proof is unsupported by any evidence and simply makes no sense.
Equally unsupported—and equally nonsensical—are plaintiffs’ allegations (made upon “information and belief“) that Carlyle and LLC “did not receive a reasonably equivalent value for the transfer of [LLC‘s] assets to G2G . . . and Renfrew.” SAC at 59 ¶ 364, 63 ¶ 388, 90–94 ¶¶ 519–48. Plaintiffs maintain that if G2G had paid adequate consideration to Carlyle and LLC, then LLC would have been left with “at least enough funds to pay its lawyers in this action.” Id. at 63 ¶ 388. Again, though, LLC‘s assets belonged to an insolvent entity. They were not sold by Carlyle or LLC; they were sold by an independent fiduciary as part of an ABC initiated by LLC‘s secured creditors. That fiduciary was legally required to sell LLC‘s assets at the highest possible
It is also illogical to believe that Carlyle would participate in a scheme that would render one of its co-defendants judgment proof. Carlyle is at risk of being held jointly and severally liable with LLC. If that happens, and if LLC is judgment proof, then Carlyle (which is not judgment proof) will have to pay the entire judgment. What possible reason would Carlyle have for putting itself in such a position?
Finally, even setting aside the implausibility of plaintiffs’ fraudulent-transfer claims, neither the allegations of the complaint nor the evidence in the record suggest that defendants “uniquely or expressly aimed [their actions] at [Minnesota].” If defendants had indeed fraudulently transferred LLC‘s assets to G2G, defendants would have harmed not only the plaintiffs to this action, but all of LLC‘s secured creditors, all of LLC‘s unsecured creditors (including the plaintiffs in the related California action), and all of LLC‘s equity holders (including Carlyle and INC). As far as the record reflects, none of these creditors or equity holders—save the plaintiffs in this action—are located in Minnesota. And that means that the impact of the alleged fraudulent transfers would have been felt almost entirely outside of Minnesota. Plaintiffs have thus failed to plead, let alone show, that the allegedly fraudulent transfers were “uniquely or expressly aimed” at Minnesota. See Total Grain Mktg., LLC v. Ctr. Ethanol Co., LLC, No. 4:24 CV 73 RWS, 2024 WL 4345765, at *3 (E.D. Mo. Sep. 30, 2024)
For these reasons, the Court finds that it lacks personal jurisdiction over Carlyle and dismisses all of the claims against it.
d. Renfrew
Plaintiffs appear to argue that both Renfrew and G2G “inherited” LLC‘s consent to general jurisdiction in Minnesota in the form of its now-lapsed registration with the Minnesota Secretary of State, even though LLC‘s Minnesota registration was revoked several months before either Renfrew or G2G were added as defendants to this lawsuit. See Pl. Mem. at 27–28; ECF No. 165-1; ECF No. 47. Plaintiffs also appear to argue that Renfrew and G2G “inherited” LLC‘s contacts with Minnesota, so that, if those contacts give this Court specific jurisdiction over LLC, they necessarily give this Court specific jurisdiction over Renfrew and G2G.
Unsurprisingly, plaintiffs cite no authority supporting their theories of “inherited” jurisdiction. Generally speaking, one party cannot “inherit” another party‘s consent or contacts with only narrow exceptions, such as a purchaser‘s express or implied assumption of a seller‘s liabilities, a merger, or a fraudulent transfer. See, e.g., Panther Pumps & Equip. Co. v. Hydrocraft, Inc., 566 F.2d 8, 24–25 (7th Cir. 1977) (citations
Plaintiffs also argue that Renfrew, like Carlyle, participated in a fraudulent transfer of LLC‘s assets to G2G in order to render LLC judgment proof in this Minnesota action. This argument is implausible as to Renfrew for the same reasons that it is implausible as to Carlyle.
For these reasons, the Court finds that it lacks personal jurisdiction over Renfrew and dismisses all of the claims against her.
e. G2G
Plaintiffs argue that G2G participated in the fraudulent transfer of LLC‘s assets from LLC to G2G and therefore this Court has personal jurisdiction over the fraudulent-transfer claims. For reasons the Court has already explained, this argument is implausible. The record reflects merely that “G2G purchased some of . . . LLC‘s assets in [the ABC] arranged and directed by the secured creditors of . . . LLC.” Renfrew Decl. ¶ 29. None of the evidence in the record suggests that G2G in any way “facilitated” the ABC, or that the consideration G2G paid for some of LLC‘s assets was inadequate.
Plaintiffs also argue that G2G is a “mere continuation” of “Beautycounter” (by which plaintiffs presumably mean LLC) and therefore Minnesota courts have personal jurisdiction over G2G for the same reasons that they have personal jurisdiction over
Minnesota does not recognize the “mere continuation” theory of successor liability. See Stoebner v. Opportunity Fin., LLC, 562 B.R. 368, 381 (D. Minn. 2016), aff‘d, 909 F.3d 219 (8th Cir. 2018) (noting Minnesota “follow[s] the traditional corporate law rule that a purchaser-successor does not ordinarily assume the seller-predecessor‘s liabilities simply by purchasing the predecessor‘s assets,” unless the purchaser-successor contractually assumes liability or liability is permitted by statute) (collecting cases)). Plaintiffs do not plead that G2G contractually assumed LLC‘s liabilities, nor do they point to a statute or judicial decision that imposes LLC‘s liability on G2G. Hence, plaintiffs fail to show that, under Minnesota law, G2G is subject to personal jurisdiction as a mere continuation of LLC.
Although California does recognize the “mere continuation” theory of liability, plaintiffs fare no better under California law. Under California law, “[t]o be a mere continuation . . . courts require evidence of one or both of the following factual elements: (1) a lack of consideration for acquisition of the former corporation‘s assets to be made available to creditors, or (2) one or more persons were officers, directors, or
Plaintiffs have pleaded, and the record reflects, that LLC and G2G have officers and shareholders in common. See SAC at 9 ¶ 25, 57 ¶ 351, 57 ¶ 351; Renfrew Decl. ¶¶ 2-4. As discussed above, however, the limited evidence in the record provides no reason to believe that G2G tendered inadequate consideration in exchange for LLC‘s assets. Accordingly, on this record, plaintiffs have failed to make a prima facie showing that G2G is subject to personal jurisdiction as the “mere continuation” of LLC.
For these reasons, the Court finds that it lacks personal jurisdiction over G2G and dismisses all of the claims against it.
* * * * *
The Court has found that it cannot exercise personal jurisdiction over any of the defendants, save the now-defunct and in-default LLC. The Court was inclined to transfer this action to California. As plaintiffs say, “[t]his case involves a transfer under California law of California assets of business entities . . . headquartered in, and
ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS HEREBY ORDERED THAT:
- The motion of defendant The Carlyle Group Inc. to compel arbitration, or to dismiss plaintiffs’ second amended complaint [ECF No. 68] is GRANTED IN PART:
- Defendant‘s motion to dismiss the complaint pursuant to
Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction [ECF No. 68] is GRANTED. - Defendant‘s motion to compel arbitration under the Federal Arbitration Act,
9 U.S.C. § 1 et seq. , [ECF No. 68] is DENIED AS MOOT. - Defendant‘s motion to dismiss the complaint pursuant to
Fed. R. Civ. P. 12(b)(1) [ECF No. 68] is DENIED AS MOOT.
- Defendant‘s motion to dismiss the complaint pursuant to
- Defendant‘s motion to dismiss the complaint pursuant to
Fed. R. Civ. P. 12(b)(6) [ECF No. 68] is DENIED AS MOOT.
- Defendant‘s motion to dismiss the complaint pursuant to
- The motion of defendants Counter Brands, Inc.; G2G Newco, Inc.; and Susan Gregg Renfrew to compel arbitration and stay proceedings, or to dismiss, strike, or transfer [ECF No. 98], is GRANTED IN PART:
- Defendants’ motion to dismiss the complaint pursuant to
Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction [ECF No. 98] is GRANTED. - Defendants’ motion to compel arbitration and stay proceedings pursuant to the Federal Arbitration Act,
9 U.S.C. § 1 et seq. , [ECF No. 98] is DENIED AS MOOT. - Defendants’ motion to transfer pursuant to
Fed. R. Civ. P. 12(b)(3) and28 U.S.C. § 1404(b) [ECF No. 98] is DENIED AS MOOT. - Defendants’ motion to dismiss pursuant to
Fed. R. Civ. P. 12(b)(6) [ECF No. 98] is DENIED AS MOOT. - Defendants’ motion to strike pursuant to
Fed. R. Civ. P. 12(f) [ECF No. 98] is DENIED AS MOOT.
- Defendants’ motion to dismiss the complaint pursuant to
The second amended complaint [ECF No. 45] is DISMISSED WITHOUT PREJUDICE as to defendants The Carlyle Group Inc.; Counter Brands, Inc.; G2G Newco, Inc.; and Susan Gregg Renfrew.
Dated: March 31, 2025
s/Patrick J. Schiltz
Patrick J. Schiltz, Chief Judge
United States District Court