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Griggers v. Shopf

United States District Court, S.D. Indiana, Indianapolis Division

March 27, 2018

LARRY GRIGGERS, RC MANAGEMENT HOLDINGS, LLC, Plaintiffs,
v.
JUDITH A. SHOPF, Defendant.

          ORDER

          Hon. Jane Magnus-Stinson, Chief Judge United States District Court.

         Presently pending before the Court is Defendant Judith Shopf's Motion to Dismiss, in which she alleges that this Court lacks in personam jurisdiction over her, and that Plaintiffs Larry Griggers and RC Management Holdings, LLC (“RC Management”) have failed to state a claim upon which relief can be granted. [Filing No. 13.] Ms. Shopf seeks to dismiss Plaintiffs' Amended Complaint for declaratory relief related to the sale of Mr. Griggers' ownership interests in several Ruth's Chris restaurants to RC Management. [Filing No. 12.] Ms. Shopf's Motion is fully briefed[1]and is now ripe for the Court's review. For the reasons stated herein, the Court DENIES Ms. Shopf's Motion.

         I.

         Applicable Legal Standard

         A. Federal Rule of Civil Procedure 12(b)(2)

         When a defendant moves to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(2), “[t]he plaintiff bears the burden of showing that personal jurisdiction over the defendant exists.” Claus v. Mize, 317 F.3d 725, 727 (7th Cir. 2003). When, as here, the Court “rules on a defendant's motion to dismiss based on the submission of written materials, without the benefit of an evidentiary hearing . . . the plaintiff ‘need only make out a prima facie case of personal jurisdiction.'” Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (quoting Hyatt Int'l. Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002)). Accordingly, “[o]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.” Id. at 782-83. Factual disputes, however, are resolved in the plaintiff's favor. Id.

         “A federal district court's personal jurisdiction over a defendant is established in a diversity-jurisdiction case . . . only so long as the defendant is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.” Northern Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). Indiana Trial Rule 4.4(A) serves as Indiana's long-arm provision and expands personal jurisdiction to the full extent permitted by the Due Process Clause. See LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 965-66 (Ind. 2006). “Thus, the statutory question merges with the constitutional one-if [Indiana] constitutionally may exercise personal jurisdiction over a defendant, its long-arm statute will enable it to do so.” Northern Grain, 743 F.3d at 492.

         “The federal constitutional limits of a court's personal jurisdiction in a diversity case are found in the Fourteenth Amendment's due-process clause.” Id. “[F]ederal constitutional law draws a sharp and vital distinction between two types of personal jurisdiction: specific or case-linked jurisdiction, and general or all-purpose jurisdiction.” Abelesz v. OTP Bank, 692 F.3d 638, 654 (7th Cir. 2012). “If the defendant's contacts are so extensive that it is subject to general personal jurisdiction, then it can be sued in the forum state for any cause of action arising in any place. More limited contacts may subject the defendant only to specific personal jurisdiction, in which case the plaintiff must show that its claims against the defendant arise out of the defendant's constitutionally sufficient contacts with the state.” uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d 421, 425 (7th Cir. 2010).

         B. Federal Rule of Civil Procedure 12(b)(6)

         Under Rule 12(b)(6), a party may move to dismiss a claim that does not state a right to relief. The Federal Rules of Civil Procedure require that a complaint provide the defendant with “fair notice of what the . . . claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). In reviewing the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all permissible inferences in favor of the plaintiff. See Active Disposal Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011). A Rule 12(b)(6) motion to dismiss asks whether the complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). The Court will not accept legal conclusions or conclusory allegations as sufficient to state a claim for relief. See McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011). Factual allegations must plausibly state an entitlement to relief “to a degree that rises above the speculative level.” Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

         II.

         Background

         A. The Proposed Sale

         Since 1994, Larry Griggers has been Chairman and CEO of various Ruth's Chris entities in Indiana and Missouri, including Palomar Indy, Inc., (“Palomar”), Pinnacle Management, Inc., (“Pinnacle”), Sizzle, LLC, (“Sizzle”), and Bacchus, LLC, (“Bacchus”), (collectively, “the Ruth's Chris entities”). [Filing No. 10 at 2.]

         Ryan Rans, a member of RC Management, made an offer to purchase Mr. Griggers' ownership interests in the Ruth's Chris entities. [Filing No. 10 at 3.] Mr. Rans is also an existing investor, co-franchisee, and Board member of the Ruth's Chris entities. [Filing No. 10 at 2.]

         B. The Franchisor's Rights

         Mr. Griggers' transfer of ownership and management of the Ruth's Chris entities was subject to preapproval by a Ruth's Chris franchisor (the “Franchisor”). [Filing No. 10 at 3.] The transfer was also subject to a right of first refusal in favor of the Franchisor. [Filing No. 10 at 3.] After Mr. Rans made the offer to purchase Mr. Griggers' ownership interests in the Ruth's Chris entities, Mr. Griggers notified the Franchisor of the prospective sale and the Franchisor elected against exercising its right of first refusal. [Filing No. 10 at 3.] In addition, the Franchisor approved Mr. Rans as a successor to Mr. Griggers under certain conditions. [Filing No. 10 at 3.]

         C. Shareholders' and Unitholders' Rights

         Mr. Griggers' transfer of ownership and management of the Ruth's Chris entities was also subject to a right of first refusal by other shareholders and unitholders of the Ruth's Chris entities. [Filing No. 10 at 3.] Each of the Ruth's Chris entities has the following nearly identical language in its respective governing documents:

Offer for Sale; Notice of Proposed Sale. If any [Shareholder/Unitholder] (the “Transferring Party”) desires to Transfer any of his … [Shares/Units] in any transaction …, such Transferring Party shall first deliver written notice of such desire to do so (the “Notice”) to the other [Shareholders/Unitholders] … [specifying] … (i) the name and address of the party to whom the Transferring Party proposes to Transfer the Units (the “Offeror”), (ii) the number of [Shares/Units] the Transferring Party proposes to Transfer …, (iii) the consideration per [Share/Unit] offered by the Offeror to the Transferring Party for the proposed Transfer, and (iv) all other material terms and conditions of the proposed transaction. The Notice shall be accompanied by a copy of the offer from the Offeror to the Transferring Party or such other evidence of the offer that is reasonably satisfactory to the other [Shareholders/Unitholders].
Option to Purchase. (a) The other [Shareholders/Unitholders] shall have the option to purchase all but not less than all of the [Shares/Units] Proposed for Transfer. [The Shareholders/Unitholders] shall have the first option … to purchase all or any part of the [Shares/Units] Proposed for Transfer for the consideration per [Share/Unit] and on the terms and conditions specified in the Notice. The First Option must be exercised no later than thirty (30) days after such Notice has been delivered….

[Filing No. 10 at 6.]

         Notice of the proposed transfer was sent to the shareholders and unitholders of the Ruth's Chris entities as follows:

• Palomar's shareholders were provided notice of the proposed transfer on August 9, 2017 and were provided thirty days within which to exercise a right of first refusal;
• Pinnacle's shareholders were provided notice of the proposed transfer on August 9, 2017 and were provided thirty days within which to exercise a right of first refusal;
• Sizzle's eligible unitholders were provided notice of the proposed transfer on August 9, 2017 and were provided thirty days within which to ...

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