iIn recent and exciting news, Samuel Katz has taken another defeat, losing on a motion for leave to file third amended complaint against Defendants Liberty Power Corp., LLC and Liberty Power Holdings, LLC.
First, let me briefly explain the background.
Plaintiffs Samuel Katz and Lynne Rhodes sued the Defendants for alleged violations of the Telephone Consumer Protection Act. The Plaintiffs moved to file a third amended complaint in order to add David Hernandez as a defendant to the lawsuit in the United States District Court, D. Massachusetts. Katz v. Liberty Power Corp., LLC, No. 18-CV-10506-ADB, 2023 WL 6201557 (D. Mass. Sept. 22, 2023). Hernandez opposed this motion, stating that the court lacked personal jurisdiction over himself.
Now, let’s turn to the amendment to the complaint.
Once a pleading has been amended at least once, you must either receive the opposing party’s written consent or obtain the court’s approval for amendment in accordance with Fed. R. Civ. P. 15(a)(2). And the court has the right to deny an amendment when it “would be futile, or reward, inter alia, undue or intended delay”.
Let’s focus on the “futile” aspect. What does “futile” mean? In layman’s terms, if the court believes that the amendment would fail to state a claim, they will deny the amendment.
As a legal standard, the court references Hamilton v. Young Mgmt., LLC, 646 F. Supp. 3d 235 (D. Mass. 2022). More specifically, the Hamitlon court states, “the court applies the prima facie standard and takes the specific facts affirmatively alleged by the plaintiff[s] as true, regardless of whether these facts have been disputed, and construes them in the light most favorable to the plaintiff[s].”
The plaintiffs here alleged that the court could exercise personal jurisdiction over “because they (the defendants) do business in the Commonwealth of Massachusetts … and because the wrongful acts alleged in this Complaint were committed in and/or caused injury in the Commonwealth of Massachusetts.” (Dkt. No. 369-1, ¶ 24).
The court then interpreted the Massachusetts Long-Arm Statute. For those of you unfamiliar with what this means, a long-arm statute is where a court can exercise personal jurisdiction over a non-resident defendant in a case.
The court looked at three, separate subsections of this long-arm statute: (A). Transacting any business in this commonwealth; (C). Causing tortious (or legal) injury by an act or omission in this commonwealth; [or] (D). Causing tortious injury in this commonwealth by an act or omission outside this commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this commonwealth[.] M.G.L. c. 223A, § 3(a), (c)-(d).
The court was quick to throw a strike on (A), as they stated that just because Hernandez’s official acts are relevant to personal jurisdiction, something “more than mere participation in the corporation’s affairs is required.” M-R Logistics, 537 F. Supp. 2d at 280.
Moving to subsection (B) and (C), the court found that there was no tortious injury inflicted, stating: “there is no dispute that Hernandez does not regularly conduct or solicit business in Massachusetts, nor does he engage in any persistent course of conduct here.” Katz v. Liberty Power Corp., LLC, No. 18-CV-10506-ADB, 2023 WL 6201557 (D. Mass. Sept. 22, 2023). Subsequently, the motion for leave to file a third amended complaint was denied.
Strike three!
Very interesting stuff. Although Hernandez was the former CEO of the defendant companies, the plaintiffs failed to prove a claim that Hernandez himself personally and directly participated in the sale of goods and services in Massachusetts. What a huge win for Martinez on this one, especially with all things considered!
