Daley v. Greystar Management Services LP

1 FILED IN THE U.S. DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 2 Jul 24, 2019 3 UNITED STATES DISTRICT COURT SEAN F. MCAVOY, CLERK EASTERN DISTRICT OF WASHINGTON 4 RYAN DALEY, an individual; and No. 2:18-cv-00381-SMJ 5 ISAAK CURRY, an individual, each on behalf of himself and all others ORDER DENYING DEFENDANT 6 similarly situated, GREYSTAR REAL ESTATE PARTNERS LLC’S MOTION TO 7 Plaintiffs, DISMISS FOR LACK OF PERSONAL JURISDICTION 8 v. 9 GREYSTAR REAL ESTATE PARTNERS LLC, a Delaware limited 10 liability company; GREYSTAR MANAGEMENT SERVICES LP, a 11 Delaware corporation; and GREYSTAR RS WEST LLC, a Delaware limited 12 liability company, 13 Defendants. 14 Before the Court, without oral argument, is Defendant Greystar Real Estate 15 Partners LLC’s (“GREP”) Motion to Dismiss for Lack of Personal Jurisdiction, 16 ECF No. 36. Plaintiffs Ryan Daley and Isaak Curry oppose the motion. ECF No. 17 37. Having reviewed the pleadings and the file in this matter, the Court is fully 18 informed and denies the motion because Plaintiffs have demonstrated facts that, if 19 true, would support exercising specific jurisdiction over GREP. 20 1 BACKGROUND 2 The complaint alleges that Plaintiffs and a putative class applied to rent units 3 in Spokane, Washington apartment complexes owned or managed by Defendants 4 individually and collectively. ECF No. 35 at 9. Plaintiffs paid Defendants 5 nonrefundable prospective tenant screening fees and Defendants obtained 6 prospective tenant screening reports on Plaintiffs. Id. at 9–10. Each application and 7 screening process occurred on the internet. Id. at 9. 8 Defendants’ standard disclosures listed four consumer reporting agencies 9 from which they might possibly obtain screening information about Plaintiffs. Id. at 10 10. But Defendants ultimately obtained such information from additional or 11 alternative sources not disclosed to Plaintiffs before they paid screening fees. Id. at 12 10–11. Further, Defendants failed to disclose whether they would accept 13 comprehensive reusable prospective tenant screening reports on Plaintiffs. Id. at 11. 14 The complaint asserts causes of action for violations of the Residential 15 Landlord-Tenant Act of 1973, chapter 59.18 of the Revised Code of Washington; 16 and unjust enrichment. Id. at 11–15. 17 GREP is a limited liability company incorporated in Delaware with its 18 principal place of business in South Carolina. ECF No. 19 at 1. GREP is “a parent 19 corporation with subsidiaries,” id., including Defendants Greystar Management 20 Services LP and Greystar RS West LLC, ECF No. 35 at 5–6. The complaint alleges 1 GREP’s subsidiaries are its agents and all acts they perform are done on its behalf 2 and at its direction. Id. Further, the complaint alleges GREP does not distinguish 3 between itself and its subsidiaries in materials it makes available online or in print. 4 Id. at 7. Indeed, GREP represents to the public that it is a manager of residential 5 properties in Washington. Id. In a 2015 lawsuit over property management practices 6 in Washington, specifically tactics used to collect charges from former tenants after 7 they moved out, one of GREP’s subsidiaries, also involved as a defendant here, had 8 answered the complaint stating the correct defendant was “Greystar Real Estate 9 Partners, LP.” Id. at 6. Defendants have not materially altered the scope of their 10 functions and responsibilities since 2015. Id. at 7. 11 The complaint alleges Defendants maintain websites for all their rental 12 properties. Id. at 14. These websites advertise Defendants’ rental properties and 13 provide information for prospective tenants. Id. Despite local property managers 14 operating their own websites, prospective tenants were directed to GREP’s 15 website—greystar.com—for application and payment processing. Id. at 4. GREP 16 owned or operated that website until sometime around February 2019, when title 17 vested in Greystar Worldwide LLC. Id.; ECF No. 30 at 2. Thus, GREP controlled 18 the disclosures provided to prospective tenants on that website. ECF No. 35 at 8. 19 In this context, the complaint alleges the following key points relevant here: 20 // 1 • GREP is “engaged in the business of managing rental properties in Washington State,” id. at 3; ECF No. 37 at 3; 2 • GREP “and its agents and employees are in the business of renting or leasing residential real estate in Washington State,” ECF No. 35 at 3; 3 ECF No. 37 at 3; • GREP “uses its website for online leasing of residential properties in 4 Washington State,” ECF No. 35 at 4; ECF No. 37 at 3; • GREP is “an owner, lessor, sublessor, or the designated representative 5 of the owner, lessor, or sublessor, or an agent, resident manager, or a designated property manager for multiple dwelling units, or the 6 property of which the dwelling unit is a part, throughout Washington State,” ECF No. 35 at 4; ECF No. 37 at 3; and 7 • GREP “substantially controls its subsidiary’s activities by engaging in property management and corresponding services for all its 8 subsidiary’s properties nationwide, including instituting uniform procedures for property management and tenant relations,” ECF No. 35 9 at 4; ECF No. 37 at 3. 10 LEGAL STANDARD 11 On a motion to dismiss for lack of personal jurisdiction under Federal Rule 12 of Civil Procedure 12(b)(2), the plaintiff bears the burden of showing the Court has 13 jurisdiction over the defendant. Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 14 F.3d 668, 671 (9th Cir. 2012). Where, as here, the Court holds no evidentiary 15 hearing, the plaintiff “need only make a ‘prima facie showing of jurisdictional facts 16 to withstand the motion to dismiss.’” Id. at 671–72 (quoting Pebble Beach Co. v. 17 Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006)). To make this showing, the plaintiff 18 “need only demonstrate facts that if true would support jurisdiction over the 19 defendant.” Harris Rutsky & Co. Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 20 1129 (9th Cir. 2003) (quoting Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 1 2001)). Further, the Court “resolves all disputed facts in favor of the plaintiff.” 2 Wash. Shoe, 704 F.3d at 672. 3 “Federal courts ordinarily follow state law in determining the bounds of their 4 jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). 5 “Washington’s long-arm statute extends jurisdiction over a defendant to the fullest 6 extent permitted by the Due Process Clause of the Fourteenth Amendment.” Wash. 7 Shoe, 704 F.3d at 672 (citing Wash. Rev. Code § 4.28.185). Therefore, the relevant 8 issue is whether exercising personal jurisdiction over a defendant in Washington 9 satisfies due process principles. See id. 10 Due process principles require that a defendant “have certain minimum 11 contacts with [the forum state] such that the maintenance of the suit does not offend 12 traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 13 326 U.S. 310, 315 (1945) (internal quotation marks omitted); accord BNSF Ry. Co. 14 v. Tyrrell, 137 S. Ct. 1549, 1558 (2017). Elaborating on this guide, the Supreme 15 Court has distinguished between “general or all-purpose jurisdiction” and “specific 16 or case-linked jurisdiction.” BNSF Ry., 137 S. Ct. at 1558. 17 A. General jurisdiction 18 The Court may assert general jurisdiction over a foreign corporate defendant 19 if its affiliations with the forum state are so “continuous and systematic” as to render 20 it “essentially at home” there. Id. (quoting Daimler, 571 U.S. at 127). A corporate 1 defendant’s place of incorporation and principal place of business are the 2 paradigmatic fora in which it is considered at home. Id. But in an exceptional case, 3 a corporate defendant’s operations in another forum may be so substantial and of 4 such a nature as to render it essentially at home there as well. Id. This inquiry does 5 not focus solely on the magnitude of a corporate defendant’s in-state contacts but 6 rather calls for an appraisal of all its activities in their entirety because an entity that 7 operates in many places can scarcely be deemed at home in all of them. Id. at 1559. 8 B. Specific jurisdiction 9 The Court may assert specific jurisdiction over a defendant if its “suit-related 10 conduct” creates a “substantial connection” with the forum state. Walden v. Fiore, 11 571 U.S. 277, 284 (2014). The defendant must personally create minimum contacts 12 with the forum state itself, not merely with persons who reside there. Id. at 284–85. 13 Further, the suit must arise out of or relate to the defendant’s contacts with the forum 14 state. Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1780 (2017). In 15 other words, there must be an affiliation between the forum state and the underlying 16 controversy—principally, an activity or occurrence that took place in the forum and 17 is therefore subject to the state’s regulation. Id. 18 // 19 // 20 // 1 There are three requirements for the Court to exercise specific jurisdiction 2 over a defendant: (1) the defendant must either “purposefully direct”1 its activities 3 toward the forum or “purposefully avail”2 itself of the privileges of conducting 4 activities in the forum; (2) the claim must “arise[] out of or relate[] to” the 5 defendant’s forum-related activities; and (3) exercising jurisdiction over the 6 defendant must “comport with fair play and substantial justice” in that it is 7 “reasonable.” Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1068 (9th 8 Cir. 2017) (quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 9 2002)). The plaintiff bears the burden of establishing the first two requirements and, 10 if he or she does so, the burden shifts to the defendant to present a compelling case 11 that exercising jurisdiction over it would be unreasonable. Id. at 1068–69. 12 // 13 1 Under “the purposeful direction test,” “[t]he defendant must have ‘(1) committed 14 an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.’” Axiom Foods, 874 15 F.3d at 1069 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 803 (9th Cir. 2004)). 16 2 “A showing that a defendant purposefully availed himself of the privilege of doing business in a forum state typically consists of evidence of the defendant’s actions 17 in the forum, such as executing or performing a contract there.” Schwarzenegger, 374 F.3d at 802. “By taking such actions, a defendant ‘purposefully avails itself of 18 the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’” Id. (quoting Hanson v. Denckla, 357 U.S. 19 235, 253 (1958)). “In return for these ‘benefits and protections,’ a defendant must— as a quid pro quo—‘submit to the burdens of litigation in that forum.’” Id. (quoting 20 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)). 1 DISCUSSION 2 GREP argues that Plaintiffs fail to establish either general or specific 3 jurisdiction. ECF No. 36 at 8–13. GREP claims that it conducts no business in, 4 derives no revenue from, has no offices or employees in, has no customers in, and 5 directs no advertising toward Washington. Id. at 2. GREP contends that the parent- 6 subsidiary relationship between it and its Washington companies does not qualify to 7 impute the subsidiaries’ contacts to the parent. Id. at 10–11. In support, GREP 8 submits the declaration of its tax director, Marie Parnell, and the declaration of its 9 marketing director, Greg Benson. ECF Nos. 19, 30. 10 Plaintiffs dispute GREP’s factual assertions and suggest the issue of personal 11 jurisdiction is intertwined with the underlying merits of this case. See ECF No. 37 12 at 2. Plaintiffs contend GREP “makes a number of factual assertions that are 13 seemingly contradicted by basic research on the topic.” Id. at 4. In support, Plaintiffs 14 present five exhibits. ECF No. 38 at 2–3; ECF Nos. 38-1 to -5. 15 Exhibit A is an address listing, retrieved on May 17, 2019 from 16 mapquest.com, identifying the Seattle, Washington office location of “Greystar 17 Real Estate Partners.” ECF No. 38-1 at 2; see also ECF No. 38 at 2. 18 Exhibit B is a January 22, 2018 press release, retrieved on June 3, 2019 from 19 the website of Business Wire Inc., discussing the apartment units that “Greystar 20 Real Estate Partners, LLC” acquired in Seattle, as well as others it owned or 1 managed in the Seattle metropolitan area or surrounding region. ECF No. 38-2 at 2 2–3; see also ECF No. 38 at 2. The webpage reads, in full, 3 SEATTLE—(BUSINESS WIRE)—Funds managed by Greystar Real Estate Partners, LLC (“Greystar”), a global leader in the investment, 4 development, and management of high-quality rental housing properties, today announced the acquisition of Zig Apartments, the 5 brand new, 170-unit, core asset. The property also includes 5,018 square feet of retail space. Completed in the summer of 2017 with a full 6 amenity package and luxury finishes, the asset is extremely well- located at 550 Broadway in Seattle’s First Hill neighborhood, offering 7 Class A living with immediate access to the city’s burgeoning tech hub and a vibrant mix of shopping, dining and entertainment options. 8 “Zig Apartments offers Greystar a rare opportunity to acquire a best-in- 9 class multifamily asset in the strategic gateway market of Seattle. The property will greatly benefit from the city’s robust employment growth 10 and resulting positive rental trends,” said Kevin Kaberna, Executive Director and leader of Greystar’s US Investment platform. “This core 11 plus acquisition is indicative of Greystar’s continued commitment to acquiring core assets in up-and-coming areas of gateway markets where 12 we can deliver maximum returns and outstanding value to our investors.” 13 Seattle leads the country in year-over-year job growth and has reached 14 a record high of almost 1.7 million jobs. For the past seven years, an average of nearly 61,000 jobs have been added to the market annually. 15 The asset’s location at the heart of First Hill, the city’s foremost medical community, and adjacent to the Central Business District (CBD), South 16 Lake Union and Capitol Hill neighborhoods uniquely positions it to capitalize on this continued growth. With an address on Broadway, one 17 of the most transit connected street in Seattle, Zig earns a Transit Score of 100 and Walk Score of 97. 18 As the nation’s largest apartment operator, Greystar currently owns 19 2,206 units in the Seattle Metro Area and manages 21,186 additional units in the region. 20 1 About Greystar 2 Greystar is a leading, fully integrated multifamily real estate company offering expertise in investment management, development and 3 property management of rental housing properties globally. Headquartered in Charleston, South Carolina with offices throughout 4 the United States, Europe, Latin America and Asia-Pacific, Greystar operates in over 130 markets globally and is the largest operator of 5 apartments in the United States, managing over 420,000 units, with an aggregate estimated value of approximately $80 billion. Greystar also 6 has a robust institutional investment management platform dedicated to managing capital on behalf of a global network of institutional investors 7 with over $23 billion in gross assets under management including more than $8 billion of developments that have been completed or are 8 underway. Greystar was founded by Bob Faith in 1993 with the intent to become a provider of world class service in the rental housing real 9 estate business. To learn more about Greystar, visit www.greystar.com. 10 ECF No. 38-2 at 2–3. 11 Exhibit C is a December 1, 2018 job posting, retrieved on May 17, 2019 from 12 the website of “Greystar Real Estate Partners, LLC,” advertising a vacancy and 13 accepting applications for a fulltime position as a service technician in Bellevue, 14 Washington. ECF No. 38-3 at 2–3; see also ECF No. 38 at 2. The employment 15 opportunity fell under the “Job Category” of “Construction/DevelopmentǀGeneral 16 LaborǀMaintenance/RenovationsǀProperty Management/Real Estate.” ECF No. 38- 17 3 at 2. 18 Exhibit D is an apartment listing, retrieved on May 13, 2019 from 19 Zillow.com, advertising a Seattle building with units for rent by the “Verified 20 Source” of “Greystar Real Estate Partners, LLC.” ECF No. 38-4 at 2; see also ECF 1 No. 38 at 3. 2 Exhibit E is a January 24, 2018 press release, retrieved on June 3, 2019 from 3 the website of Connect Commercial Real Estate, again discussing the apartment 4 units that “Greystar Real Estate Partners, LLC” acquired in Seattle. ECF No. 38-5 5 at 2–3; see also ECF No. 38 at 3. 6 Plaintiffs present these exhibits in support of the following allegations in the 7 complaint: 8  GREP is “engaged in the business of managing rental properties in Washington State,” ECF No. 35 at 3; ECF No. 37 at 3; 9  GREP “and its agents and employees are in the business of renting or leasing residential real estate in Washington State,” ECF No. 35 at 3; 10 ECF No. 37 at 3;  GREP “uses its website for online leasing of residential properties in 11 Washington State,” ECF No. 35 at 4; ECF No. 37 at 3;  GREP is “an owner, lessor, sublessor, or the designated representative 12 of the owner, lessor, or sublessor, or an agent, resident manager, or a designated property manager for multiple dwelling units, or the 13 property of which the dwelling unit is a part, throughout Washington State,” ECF No. 35 at 4; ECF No. 37 at 3; and 14  GREP “substantially controls its subsidiary’s activities by engaging in property management and corresponding services for all its 15 subsidiary’s properties nationwide, including instituting uniform procedures for property management and tenant relations,” ECF No. 16 35 at 4; ECF No. 37 at 3. 17 GREP dismisses Plaintiffs’ exhibits as “hearsay statements by third parties, 18 which include unverified information that is contradictory to the evidence provided 19 through affidavit by persons of knowledge.” ECF No. 42 at 2. GREP further argues 20 Plaintiffs’ exhibits are “refuted and opposed by actual documentation, including 1 leases, property management agreements, and further declaration.” Id. Indeed, the 2 evidence GREP submits in reply could explain away the significance of Plaintiffs’ 3 exhibits. See ECF No. 43 at 1–3; ECF Nos. 43-1 to -5. But at this stage, the Court 4 must resolve all disputed facts in Plaintiffs’ favor. See Wash. Shoe, 704 F.3d at 672. 5 As long as Plaintiffs demonstrate facts that, if accepted as true, would support 6 personal jurisdiction over GREP, then Plaintiffs have made the required prima facia 7 showing of jurisdictional facts and the Court must deny GREP’s motion to dismiss 8 it from this case. See id. at 671–72; Harris Rutsky & Co., 328 F.3d at 1129 (quoting 9 Unocal, 248 F.3d at 922). Plaintiffs have met their burden. Their exhibits, if 10 accepted as true, demonstrate GREP itself created substantial real estate contacts 11 with and purposefully directed its property leasing and rental management activities 12 toward Washington,3 and thereby purposefully availed itself of the privileges of 13 doing business in Washington.4 Plaintiffs’ claims arise out of or relate to those same 14 real estate contacts and property leasing and rental management activities in 15 Washington. And, under these circumstances, exercising personal jurisdiction over 16 17 3 This consists of GREP’s intentional act of allegedly engaging in property leasing and rental management activities in Washington, expressly aimed at real estate 18 located there, and causing harm that it knows is likely to be suffered by tenants or prospective tenants in Washington. 19 4 This consists of GREP’s actions in Washington that make it an alleged owner, landlord, or manager of apartment units located there, and which invoke the benefits 20 and protections of Washington’s property laws. 1 ||GREP in Washington is reasonable and comports with fair play and substantial 2 ||justice.° Therefore, Plaintiffs have demonstrated facts that, if true, would support 3 || exercising specific jurisdiction over GREP. 4 Accordingly, IT IS HEREBY ORDERED: 5 Defendant Greystar Real Estate Partners LLC’s Motion to Dismiss for 6 Lack of Personal Jurisdiction, ECF No. 36, is DENIED. 7 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and 8 || provide copies to all counsel. 9 DATED this 24th day of July 2019. 10 Ao nerd S#LVADOR MEND@ziA, JR. 11 United States District Jtalge 12 13 14 15 16 17 18 19 0 > GREP does not argue otherwise and, therefore, has not met its burden on this issue. ORDER DENYING DEFENDANT GREYSTAR REAL ESTATE PARTNERS LLC’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION -