United States District Court, D. Vermont
AND ORDER GRANTING DEFENDANT V.F. CORP.'S MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION, GRANTING IN PART
AND DENYING IN PART PLAINTIFFS' REQUEST FOR
JURISDICTIONAL DISCOVERY, DENYING AS MOOT V.F. CORP.'S
MOTION TO DISMISS CLAIMS OF WILLIAM AND LINDA VINCI PURSUANT
TO RULE 12(B)(6), AND GRANTING IN PART AND DENYING IN PART VF
OUTDOOR'S MOTION TO DISMISS CLAIMS OF WILLIAM AND LINDA
VINCI PURSUANT TO RULE 12(B)(6) (DOCS. 10 & 11)
Christina Reiss, District United States District Court Judge.
William and Linda Vinci (the "Vincis") and TNF
Gear, Inc. ("TNF") (collectively,
"Plaintiffs") bring state law claims against
Defendants V.F. Corp. ("VF") and VF Outdoor, LLC
("VF Outdoor") (collectively
"Defendants") arising out of the purchase and sale
of The North Face branded products. Pending before the court
are Defendant VF's motion to dismiss Plaintiffs'
claims against it for lack for personal jurisdiction pursuant
to Fed.R.Civ.P. 12(b)(2) (Doc. 10) and Defendants' motion
to dismiss the Vincis' personal claims for failure to
plead fraud with particularity and failure to state a claim
under Fed.R.Civ.P. 9(b) and 12(b)(6) (Doc. 11).
parties completed their briefing on August 17, 2017. The
court heard oral argument on October 19, 2017, whereupon it
took the pending motions under advisement. Plaintiffs are
represented by David E. Bond, Esq. Defendants are represented
by R. Jeffrey Behm, Esq.
The Allegations of the Amended Complaint.
Vincis are husband and wife and the sole shareholders of TNF,
a Vermont corporation with its principal place of business in
Burlington. In 2001, TNF opened The North Face Store @ KL
Sport in Shelburne, Vermont, which was later moved to College
Street in Burlington and then to 90 Church Street in
Burlington. TNF's store sold only The North Face branded
apparel purchased at wholesale. In their Amended Complaint,
Plaintiffs allege that until 2015, "The North Face was
positioned as a premium brand[, ]" and Defendants
required them to adhere to manufacturer approved pricing
plans that dictated correspondingly high retail prices. (Doc.
5 at 3, ¶ 11.) Plaintiffs allege that Defendants
"represented to Plaintiffs that these policies applied
to all retailers selling The North Face products."
Id. at ¶ 9.
early 2015, Plaintiffs placed their yearly order for winter
apparel, totaling approximately $1.2 million in merchandise.
In the fall of 2015, after Plaintiffs accepted delivery of
those products, Defendants allegedly dramatically reduced
their wholesale prices for sales made to third-party vendors.
These third-party vendors, in turn, sold the discounted
merchandise at significantly reduced retail prices to the
general public, in violation of the marketing policies with
which Defendants required Plaintiffs to comply. Plaintiffs
claim that they were unable to compete with the significantly
reduced prices, and that even if they could match them, they
were barred from doing so pursuant to their promise to adhere
to Defendants' manufacturer approved pricing plans.
Plaintiffs allege that they fell "deeply into debt[,
]" id. at 3, ¶ 13, and reported this to
Defendants who promised to "reign in" the
third-party discounters. Id. at 4, ¶ 14.
2016, Plaintiffs purchased $650, 000 in winter apparel
inventory, and in the fall of that year Defendants again
allegedly offered the same apparel to third-party vendors at
steep discounts. Plaintiffs allege that they were again
substantially underpriced by other retailers and were unable
to maintain profitability. "As a result of
Defendants' actions, the Vincis exhausted their savings
and their credit, and in under 20 months saw their business
go from a successful enterprise to the verge of
failure." Id. at 4, ¶ 17. The Vincis claim
they offered to sell their business to Defendants, but that
Defendants refused to entertain a fair market value purchase.
23, 2017, Plaintiffs filed this suit against VF, alleging
breach of contract, promissory estoppel, breach of the
implied covenant of good faith and fair dealing, and
fraudulent concealment under Vermont common law. On June 19,
2017, Plaintiffs amended their complaint to include VF
Outdoor as a Defendant, stating that VF Outdoor "is a
wholly-owned subsidiary of VF. On information and belief, [VF
Outdoor] is the owner of The North Face brand, and operates a
division under the tradename, 'The North Face.'"
Id. at 1, ¶ 4. The Amended Complaint includes a
jury demand and seeks $5 million in damages.
18, 2017, Defendants moved to dismiss all claims against VF
for lack of personal jurisdiction, arguing that Plaintiffs
have not established that VF has sufficient minimum contacts
with Vermont to subject it to suit in this state. In support
of their motion, Defendants included two affidavits, one from
VF Outdoor's Senior Credit Manager Lisa Long and one from
VF's Assistant Secretary and Assistant General Counsel
Mark Townsend. Ms. Long avers that VF Outdoor is a wholly
owned subsidiary of VF but that it is a "separate and
distinct entity[.]" (Doc. 10-1 at 1, ¶ 2.) She
further avers that VF "does not directly control
day-to-day operations of VF Outdoor, " that VF "has
had no regular contacts or dealings with William or Linda
Vinci or TNF Gear[, ] Inc. in Vermont[, ]" and that VF
"has not directly shipped or sold The North Face branded
products to any of the Plaintiffs in this case and has no
agreement with Plaintiffs." Id. at 1-2,
Townsend avers that VF "conducts business primarily
through its many subsidiaries around the world[, ]" but
that VF Outdoor "independently designs, procures,
markets and distributes branded outdoor and activity-based
lifestyle apparel, footwear, and related products for the
U.S. market, including for The North Face brand." (Doc.
10-2 at 1, ¶ 3.) He further avers that VF "has few,
if any, regular, direct contacts with persons in
Vermont" and that VF "has not directly shipped or
sold The North Face branded products to any of the Plaintiffs
in this case and has no agreement with Plaintiffs."
Id. at 2, ¶4.
opposed the motion to dismiss on jurisdictional grounds and
included an affidavit from William Vinci, wherein he avers
that "[t]hroughout the course of my dealings with VF
Outdoor and VF, and based on my review of publicly
available information, I have never been able to tell where
one business begins and the other ends." (Doc. 14-1 at
4, ¶ 11.) He further avers that "[p]ersonnel with
whom I regularly interacted seemed to frequently switch jobs
from one company to the other[, ]" and that when he
communicated with both VF and VF Outdoor employees, he
uniformly received email replies from
"vfc.com" addresses with signatures that
"described the correspondent's affiliation as simply
'The North Face."' Id. at 4-5, ¶
11- Mr. Vinci also references a Fortune Magazine article
published in February 2017 and attached to his affidavit
which he characterizes as proof that VF "itself was
responsible for the decision to clear extra unsold
merchandise through outlet stores." Id. at 5,
Conclusions of Law and Analysis.
VF's Motion to Dismiss for Lack of Personal
the absence of a federal statute specifically directing
otherwise, and subject to limitations imposed by the United
States Constitution, [courts] look to the law of the forum
state to determine whether a federal district court has
personal jurisdiction over a foreign corporation."
Brown v. Lockheed Martin Corp., 814 F.3d 619, 624
(2d Cir. 2016) (citing Fed.R.Civ.P. 4(k)(1)(A) (federal
courts may exercise personal jurisdiction over a defendant
"who is subject to the jurisdiction of a court of
general jurisdiction in the state where the district court is
located")); see also Metro. Life Ins. Co. v.
Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)
("[T]he amenability of a foreign corporation to suit in
a federal court in a diversity action is determined in
accordance with the law of the state where the court sits,
with federal law entering the picture only for the purpose of
deciding whether a state's assertion of jurisdiction
contravenes a constitutional guarantee") (alteration in
original) (internal quotation marks omitted). "On a Rule
12(b)(2) motion to dismiss for lack of personal jurisdiction,
the plaintiff bears the burden of showing that the court has
jurisdiction over the defendant." Metro. Life Ins.
Co. at 566.
are two types of personal jurisdiction: general personal
jurisdiction and specific personal jurisdiction. A
corporation is subject to general personal jurisdiction in a
particular forum when '"the continuous corporate
operations within a state [are] so substantial and of such a
nature as to justify suit against it on causes of action
arising from dealings entirely distinct from those
activities.'" Goodyear Dunlop Tires Operations.,
S.A. v. Brown, 564 U.S. 915, 924 (2011) (quoting
Int'l Shoe Co. v. Washington, 326 U.S. 310, 318
(1945)). For a corporation, "the paradigm forum for the
exercise of general jurisdiction is ... one in which the
corporation is fairly regarded as at home." Id.
personal jurisdiction, by contrast "aris[es] out of or
relate[s] to the defendant's contacts with the
forum." Id. at 923-24 (quoting Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S.
408, 414 n.8 (1984)). "As a rule in these cases, [the
Supreme Court] has inquired whether there was 'some act
by which the defendant purposefully avail[ed] itself of the
privilege of conducting activities within the forum State,
thus invoking the benefits and protections of its
laws.'" Id. at 924 (quoting Hanson
v. Denckla, 357 U.S. 235, 253 (1958)). "[A]
State may authorize its courts to exercise [specific]
personal jurisdiction over an out-of-state defendant if the
defendant has 'certain minimum contacts with [the State]
such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial
justice.'" Id. at 923 (quoting Int
7 Shoe, 326 U.S. at 316 (internal quotation marks
omitted)). Thus, where a plaintiff asserts the court's
specific personal jurisdiction over a defendant, the court
must first determine if the defendant has sufficient minimum
contacts to establish jurisdiction. Only if minimum contacts
exist must the court then decide if the exercise of
jurisdiction would be reasonable under the circumstances.
See Metro. Life Ins. Co., 84 F.3d at 567-68. As the
Second Circuit has explained:
[I]n resolving questions of personal jurisdiction in a
diversity action, a district court must conduct a two-part
inquiry. First, it must determine whether the plaintiff has
shown that the defendant is amenable to service of process
under the forum state's laws; and second, it must assess
whether the court's assertion of jurisdiction under these
laws comports with the requirements of due process.
Ehrenfeld v. Mahfouz, 489 F.3d 542, 547 (2d Cir.
2007) (quoting Metro. Life Ins., 84 F.3d at 567).
Vermont, state courts may exercise personal jurisdiction over
a non-resident defendant "to the full extent permitted
by the . . . Due Process Clause" of the Fourteenth
Amendment. State v. Atl. Richfield Co.,2016 VT 22,
¶ 10, 201 Vt. 342, 349, 142 A.3d 215, 220; see also
In re Roman Catholic Diocese of Albany, N.Y., Inc., 745
F.3d 30, 38 (2d Cir. 2014) ("Vermont's long-arm
statute reflects a clear policy to assert jurisdiction over
individual defendants to the full extent permitted by the Due
Process Clause.") (internal citation, footnote, and
quotation marks omitted). As a result, "the first part
of [the] inquiry-the interpretation of the Vermont law
governing service of process- merges with the second part of