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CALIFORNIA CORPORATE & SECURITIES LAW

U.S. District Court Finds Personal Jurisdiction In Derivative Suit

I think it is beyond peradventure that a state enjoys personal jurisdiction over corporations incorporated within that state.  What about the personal jurisdiction over the corporation’s directors and officers?  That was the question addressed by U.S. District Judge Jennifer A. Dorsey in Sonoro Invest, S.A. v. Miller, 2017 U.S. Dist. LEXIS 9657 (D. Nev. Jan. 24, 2017).  The case was filed by a shareholder of a Nevada corporation as a derivative suit against four of the corporation’s directors and officers.  Three of the defendants moved to dismiss for lack of personal jurisdiction.  They argued that they did not live in Nevada and that their affiliations with Nevada were not so continuous and systematic that they are essentially at home in Nevada.  They also argued that the court lacks specific jurisdiction over them because their actions as officers and directors were not directed at or felt in Nevada, where the corporation is incorporated but conducts no operations.

Judge Dorsey, citing the Nevada Supreme Court’s holding in Consipio Holdings, BV v. Carlberg, 282 P.3d 751 (2012), ruled against the defendants:

I find that defendants’ purposeful acts designed to harm Abakan, a Nevada corporation, for their own personal benefit, combined with the notice that NRS § 78.135(1) provides and Nevada’s director-consent statute, are sufficient to confer personal jurisdiction over defendants for Sonoro’s derivative claims here. I also find that consideration of these reasonableness factors demonstrates that requiring Goss, Takkas, and Miller to defend Abakan’s derivative claims in this jurisdiction “does not offend traditional notions of fair place and substantial justice.” Nevada has an interest in adjudicating the derivative claims of a Nevada corporation to which Nevada law applies, and Sonoro plainly has an interest in obtaining convenient and effective relief and has selected this forum.

(footnotes omitted).  In a footnote, Judge Dorsey acknowledged that other judges in the District of Nevada were not enamored of Consipio:

I recognize that some judges in this district have criticized Consipio and declined to apply it. See Andes Industries Inc. v. Chen Sun Lan, 2014 WL 6611227 (D. Nev. Nov. 19, 2014) (Foley, J) (criticizing Consipio as inconsistent with Shaffer); Southport Lane Equity II, LLC v. Downey, 177 F. Supp. 3d 1286 (2016). But these cases are persuasive only; and Consipio remains the law in Nevada.

For more on Consipio, see the following posts:

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