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Goldco Direct, LLC v. Wilson

United States District Court, N.D. Alabama, Middle Division

March 27, 2019

GOLDCO DIRECT, LLC, Plaintiff,
v.
WARREN WILSON, WHOLESALE GOLD SILVER IRA, INC., And WILD WEST COINS, INC., Defendants.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE

         This matter now comes before the court on Defendant Warren Wilson's motion to dismiss and motion to transfer.[1] (Docs. 55-58). For the reasons discussed below, in addition to the reasons discussed on the record during the telephone conference held on March 7, 2019, the court will DENY Mr. Wilson's motion to dismiss and will DENY Mr. Wilson's motion to transfer.

         I. Background

         In three separate transactions between October 2016 and March 2018, Goldco Direct, LLC sold investment products to Barbara Clackum, a resident of Gadsden, Alabama, for a total price exceeding $400, 000. Within 24 hours of her final purchase for $159, 901.72, Ms. Clackum sought to cancel the order and requested a full refund. Goldco refunded her most recent purchase but did not agree to cancel or repurchase Ms. Clackum's first or second order.

         Goldco alleges that around this same time Ms. Clackum began working with Warren Wilson, president of Goldco competitor Wholesale Gold Silver IRA, Inc. and founder of Wild West Coins, Inc., and Keith Cope, an attorney licensed to practice law in California. Specifically, Goldco alleges that Mr. Wilson adopted the alias “Bruce Clackum, ” held himself out as the nephew of Barbara Clackum, and actively induced former Goldco employees to violate their nondisclosure agreements by providing him confidential Goldco customer information.

         Goldco alleges Mr. Wilson used this confidential customer information to defame Goldco by directly contacting Goldco's customers and encouraging them to initiate lawsuits against Goldco. Mr. Wilson also allegedly created the website www.goldcosucks.com to publish his claims that Goldco violated Alabama law when it declined to refund a “$300, 000 IRA transaction” five days after the transaction date. The record indicates that Goldco's customers were contacted by someone with a “205” area code, and the domain name www.goldcosucks.com was purchased using a credit card in the name of “B Clackum” with a shipping and billing address at Ms. Clackum's residence in Gadsden, Alabama. The website encouraged Goldco customers to contact their state attorney general about Goldco's actions and indicated that “Bruce Clackum” had already contacted the Alabama Attorney General's Office.

         Goldco alleges it was then presented an ultimatum: refund Ms. Clackum her purchase price or “Bruce Clackum” would send the website link to Goldco's customers, which included a forum in which they could complain about Goldco.

         Goldco originally filed this lawsuit against Barbara Clackum and Bruce Clackum, alleging conspiracy to commit RICO violations, violation of the Defend Trade Secrets Act, violation of the California Uniform Trade Secrets Act, and four additional common law torts. Goldco also requested injunctive relief and moved for a temporary restraining order to prohibit Defendants' further communication with any Goldco customers and further operation of the website. This court granted the preliminary injunction and later granted Goldco's request for a permanent injunction.

         After preliminary discovery to determine the actual identity of “Bruce Clackum, ” Goldco filed its first amended complaint, which removed Bruce Clackum as a defendant and added Warren Wilson, Wholesale Gold, and Wild West Coins. (Doc. 50). Goldco then moved to voluntarily dismiss Barbara Clackum, which this court granted, leaving only Mr. Wilson and his two business entities as defendants. Mr. Wilson subsequently moved the court to either dismiss him for lack of personal jurisdiction or to transfer the case to an appropriate jurisdiction in California. The court ordered Goldco to show cause why it should not grant Mr. Wilson's motion, and Goldco timely filed its response. (Docs. 59 and 63). Two days before a status conference in this case, Mr. Wilson filed a “Notice, ” which at least in part attempted to argue why dismissal or transfer is appropriate in this case. (Doc. 70). At the status conference, the parties further discussed Mr. Wilson's motion with this court. The parties have therefore fully briefed this issue, and the motion is ripe for review.

         II. Discussion

         Defendant Warren Wilson moves to dismiss Goldco's claims against him for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). When a defendant moves to dismiss for lack of personal jurisdiction, “the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant.” Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) (internal citations omitted). Mr. Wilson alternatively moves to transfer the case, presumably under 28 U.S.C. § 1404(a) and presumably to the United States District Court of the Central District of California.

         A. Motion to dismiss under Rule 12(b)(2)

         “In analyzing a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), [the court must] first determine whether the applicable statute potentially confers jurisdiction over the defendant, and then determine whether the exercise of jurisdiction comports with due process.” Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 942 (11th Cir. 1997) (citations omitted). Goldco's amended complaint brings claims pursuant to the RICO Act and asserts grounds for personal jurisdiction pursuant to RICO's nationwide service of process provision. The Eleventh Circuit has explicitly held that RICO's nationwide service of process provision can serve as the statutory basis for personal jurisdiction and that serving process on a United States resident satisfies the statutory basis for personal jurisdiction over that resident. Id. Mr. Warren is a United States resident, so the only remaining question is whether exercising personal jurisdiction in this case comports with due process.

         “[W]hen, as here, a federal statute provides the basis for jurisdiction, the constitutional limits of due process derive from the Fifth, rather than the Fourteenth, Amendment.” BCCI Holdings, 119 F.3d at 942 (citing In re Chase & Sanborn Corp., 835 F.2d 1341, 1344 (11th Cir. 1988)). “[T]o evaluate whether the Fifth Amendment requirements of fairness and reasonableness have been satisfied, courts should balance the burdens imposed on the individual defendant against the federal interest involved in the litigation. . . . As in other due process inquiries, the balancing seeks ...


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