Response to Defendants Motions to Dismiss 9-22-14 (Conformed)

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7 KELLY / WARNER, PLLC 8283 N. Hayden Road, Suite 229 Scottsdale, Arizona 85258 Daniel R. Warner, Esq. (AZ Bar # 026503) Email: [email protected] Aaron M. Kelly, Esq. (AZ Bar #025043) Email: [email protected] Tel: 480-331-9397 Fax: 1-866-961-4984 Attorneys for Plaintiffs

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

JOHN MONARCH, an individual; DIRECT OUTBOUND SERVICES LLC, a South Carolina limited liability company, Plaintiffs, v. RICHARD A. GORMAN and SACHA JAKMIAN, aka SACHA GORMAN, husband and wife; GORMAN ECONOMICS, LLC, a Delaware limited liability company; VANGUARD ECONOMICS, LLC, a Georgia limited liability company, dba AT COST FULFILLMENT, dba FULFILLMENT.COM; AT COST NUTRACEUTICALS, LLC, a Georgia limited liability company; BRAND.COM, INC., A Pennsylvania Corporation; JOHN DOES I-X; JANE DOES I-X; ABC PARTNERSHIPS I-X; DEF LIMITED LIABILITY COMPANIES I-X; and XYZ CORPORATIONS I-X, Defendants.

Case No. 2:14-cv-01655-SRB PLAINTIFFS CONSOLIDATED RESPONSE TO MOTIONS TO DISMISS FOR LACK OF PERSONAL JURISDICTION FILED BY DEFENDANTS RICHARD GORMAN (Doc 31), SACHA JAKMIAN (Doc 42), GORMAN ECONOMICS LLC (Doc 36), VANGUARD ECONOMICS LLC (Doc 32), AT COST NUTRACEUTICALS LLC (Doc 36), AND BRAND.COM INC. (Doc 20) (Assigned to the Honorable Susan R. Bolton)

Plaintiffs John Monarch (Monarch) and Direct Outbound Services LLC

(DOS) (collectively Plaintiffs), by and through undersigned counsel, respectfully

request that the Court deny the above-referenced Motions to Dismiss (the Motions)

Case 2:14-cv-01655-SRB Document 46 Filed 09/22/14 Page 1 of 19

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7 because (1) the Entity Defendants1 are alter egos and/or agents of each other, which were

controlled, directed, and used by Defendant Richard Gorman (Gorman), ACF, and

Sacha Gorman to engage in a defamation campaign against Plaintiffs; (2) the posting on

www.ripoffreport.com (ROR) was the heart of the defamation campaign given that the

posting can never be removed, among other reasons; and (3) pursuant to the forum

selection clause in RORs Terms of Service, Defendants, by and through their agent,

agreed to submit to the exclusive jurisdiction of the federal and state courts in the State of

Arizona for purposes of litigation in connection with ROR.

In the event it is unclear whether the Court has jurisdiction over some or all

Defendants, Plaintiffs respectfully request that the Court permit Plaintiffs to engage in

jurisdictional discovery. This Response is supported by the following Memorandum of

Points and Authorities and all filings in this matter, which are all hereby incorporated by

reference.

MEMORANDUM OF POINTS AND AUTHORITIES

I. BACKGROUND; RELEVANT FACTS.

In January of 2014, Plaintiffs discovered a number of websites containing content

that was created to defame and harm Plaintiffs. (Declaration of Monarch (Monarch

Decl.), 4, attached to Exhibit 1 hereto; see also Declaration of Aaron Kelly (Kelly

Decl.), 3, attached to Exhibit 2 hereto). The websites (Websites) that Defendants

purchased and used to defame Plaintiffs are http://www.johncmonarch.com,

http://ilyaputin.com/, http://johnmonarchsucks.com, and 1 Entity Defendants hereinafter collectively refers to Vanguard Economics LLC, aka Fulfillment.com and/or At Cost Fulfillment LLC, (collectively ACF); Gorman Economics LLC (GEC); At Cost Nutraceuticals LLC (ACN); and Brand.com Inc. (Brand).


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7 johnmonarchdirectoutbound.com. (Monarch Decl. 5; Kelly Decl. 4). In addition to

the Websites, multiple posts (Posts) were created by Defendants to defame Plaintiffs,

including postings on ROR, slideshare.com, and pissedconsumer.com. (Monarch Decl.

6; Kelly Decl. 5).

Plaintiffs retained counsel to discover the identity of the person(s) who created the

Websites and Posts (collectively the Content). (Monarch Decl. 7; Kelly Decl. 6).

A Complaint was filed in Maricopa County Superior Court, case number CV2014-

001469 in order to seek the true identity of the person(s) who created the Content.

(Monarch Decl. 8 Kelly Decl. 7).

In response to a subpoena seeking the true identity of the person(s) who registered

the Websites, Namecheap.com (Namecheap) provided the username kinkarsaha, the

name Sumita Sarkhel, and an email address of [email protected]. (Monarch Decl.

10; Kelly Decl. 9). In addition to the Websites, the account also contained several other

URLs that were purchased by the account holder. (Monarch Decl. 11; Kelly Decl. 10).

Several of the URLs are used to sell dietary supplements on behalf of a company owned

by Justin Holland Singletary (Singletary). (Monarch Decl.13; Kelly Decl. 12).

Singletary is one of the owners of ACN and ACF. As stated in his Declaration,

Gorman is affiliated with ACF, GEC and Brand. See Gorman Declaration at 9 (Doc.

31-1). More specifically, however, Gorman is the co-founder of Brand and is the

purported sole owner of GEC. (Monarch Decl. 16; Kelly Decl. 15). Notably, GEC is

one of the co-owners of ACF. Id. The other co-owner is Creative Estates LLC, which is

solely owned by Singletary. Id.


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7 Gorman denies any ownership in ACN, which is purportedly owned by Singletary.

(Monarch Decl. 17; Kelly Decl. 16). However, ACN was curiously created 7 days after

the beginning of Defendants smear campaign against Plaintiffs, but both ACN and ACF

still share the same business address and engage in the same line of business. Id.

Similarly, in the past, GEC, ACN, ACF, and Brand (fka Reputation Changer LLC) all

shared the same address. (Monarch Decl. 18; Kelly Decl. 17).

In response to a subpoena seeking to discover the owner of the servers where the

offending Websites were being hosted, RamNode, LLC (Ramnode) provided the name

of Kinkar Saha, with an email address of [email protected] and IP address of

122.163.77.69. (Monarch Decl. 22; Kelly Decl. 21).

A company called CloudFlare, Inc. (Cloudflare) was also used in conjunction

with Ramnode to optimize the traffic going to the Website, among other reasons. In

response to a subpoena seeking to discover the owner of the servers where the offending

Websites were being hosted, Cloudflare also provided the name of Kinkar Saha, with an

email address of [email protected] and IP address of 122.163.63.174. (Monarch

Decl. 24; Kelly Decl. 24). In addition to the Websites, the account also contained

several other URLs that were hosted by Cloudflare, including, but not limited to,

brand.com, reputationchanger.com, atcostfulfillment.com, fulfillment.com,

atcostnutra.com, kinkarsaha.com, rich-gorman.net, directresponse.net,

directresponseagency.net, reputationchanger.net, reputationchanger.org, reputation-

changer.com, reputationchangersucks.com, richgormanonline.com, richgormanbio.com,

richgormansite.com, no2explodeextreme.com, reputationmanagementagency.com, and

richgormansexoffender.com. (Monarch Decl. 25; Kelly Decl. 25).


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7 This single Cloudflare account comingles URLs for Brand, ACN, ACF, GEC, and

Gorman; a single fee is paid for all the URLs; and the URLs are maintained by Kinkar

Saha (Kinkar). (Monarch Decl. 26; Kelly Decl. 26). Notably, even though Brand

paid $500,000.00 for brand.com, Brand has still elected to comingle the URL with

those owned by ACF, ACN, GEC, and Gorman. Id.

While researching Kinkar, it was discovered that he listed himself as the Software

Development Manager for Brand on his linkedin.com profile. (Monarch Decl. 27; Kelly

Decl. 28). Furthermore, in his description for his employment with Brand, Kinkar states

it takes years to build a solid reputation and seconds to destroy it. Id. Nowadays after

someone meets you the first thing they do is Google your name or your companies

name. Notably, he specifically mentions becom[ing] the victim of . . . a RipOffReport.

Id. It was further discovered that Kinkar was listed as Brands Chief Technology

Officer on brand.com. (Monarch Decl. 28; Kelly Decl. 28).

In response to a subpoena seeking the true identity of the poster, ROR stated the

applicable post was made on January 15, 2014, by Mary H. Jones, who used

[email protected] for the email address in connection with the ROR post, as well

as the IP address of 166.137.12.47. (Monarch Decl. 30; Kelly Decl. 30).

In response to a subpoena seeking the true identity of the poster, Slideshare.com

(Slideshare) stated that the post was made on January 15, 2014, by

JohnMonarchsColdMeal, with an email address of [email protected], and an IP

address of 166.137.12.47. (Monarch Decl. 34; Kelly Decl. 34). Notably, the metadata

of the content that was posted on Slideshare was examined, which revealed that the

document was created by Gorman of GEC. (Monarch Decl. 35; Kelly Decl. 35).


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7 Significantly, the same email address and IP address were used in connection with

both the ROR post and the Slideshare post. (Monarch Decl. 36; Kelly Decl. 36).

Accordingly, the same person(s) made the posts on ROR and Slideshare. Id.

Upon researching the Websites further, it was discovered that johncmonarch.com

contained a post that was made on January 15, 2014 -- which is the same day the posts

were made on Slideshare and ROR. (Monarch Decl. 37; Kelly Decl. 37). Curiously,

however, the posting on johncmonarch.com already referenced the newly created posting

on Slideshare. Id.

Additionally, the posting on johncmonarch.com states that Brand has an audiotape

of Monarchs friend prank calling Brand. (Monarch Decl. 38; Kelly Decl. 38). How

would the poster have such information unless the poster was associated with Brand? Id.

Furthermore, the posting incorrectly alleges that Monarch has attacked ACF. Id.

The ROR posting and the posing on http://johnmonarchsucks.com/ are very

similar; both postings provide the same detailed list of steps Monarch allegedly takes to

scam customers. (Monarch Decl. 39; Kelly Decl. 39). However, one could easily

discern that the language was purposefully changed so that it would not be exactly the

same. Id.

Based upon the foregoing, it appears that the owner of the Websites, specifically

johncmonarch.com, is the same person who posted on Slideshare and ROR, or was

responsible for or was working with the person(s) who posted on Slideshare and ROR.

(Monarch Decl. 40; Kelly Decl. 40). Given that the majority of the Content was

posted on the same day, as well as the nature and similarity of the Content, it is clear that


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7 the poster(s) intended this to be one big smear campaign against Plaintiffs, with the ROR

posting being the heart of the campaign. (Monarch Decl. 41; Kelly Decl. 41).

ROR postings generally rank extremely high in search engine results and are often

the most damaging type of posting. (Kelly Decl. 42). It is not uncommon to see a ROR

posting rank higher in the search engine results than a persons own website. And in this

case, the ROR post ranks higher than Monarchs own linkedin.com page. (Monarch Decl.

42). Additionally, ROR postings are impossible to get removed and can be very

difficult to get de-indexed from the search engine results. (Monarch Decl. 42; Kelly

Decl. 42).

When considering all of the circumstances, it appears that Gorman and ACN hired

and/or used Brand as its agent to complete the smear campaign against Plaintiffs.

(Monarch Decl. 43; Kelly Decl. 43). There have been other cases where people have

alleged that Brand defames its clients competition as part of the reputation management

services provided. (Monarch Decl. 43; Kelly Decl. 44). Furthermore, given that

Gorman is the co-founder of Brand, and was able to comingle various URLs and

accounts associated with all Defendants, it is likely that he was able to control and use

Brand as his agent to complete the smear campaign against Plaintiffs. Id. In addition to

his personal motives for retaliation against Monarch (as alleged in the Second Amended

Complaint), Gorman, along with ACF and ACN, had financial motives to destroy

Plaintiffs as direct competitors. (Monarch Decl. 44; Kelly Decl. 45).

Brand, through Kinkar (its officer), registered the Websites, hosted the Websites,

and made the postings, including the postings on ROR and Slideshare. (Monarch Decl.

45; Kelly Decl. 46). Notably, in his Declaration, Gorman, under the penalty of perjury,


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7 stated that he did not post any information on the website known as

www.ripoffreport.com . . . . See Gorman Decl. 6. Accordingly, as alleged in the

Second Amended Complaint (SAC), upon information and belief, the defamatory

content on ROR was posted by an agent of Gorman, GEC, ACF, ACN, and Brand.

(Monarch Decl. 46; Kelly Decl. 47). Pursuant to RORs Terms of Service, anyone

who posts content on ROR must agree to submit to the exclusive jurisdiction of the

federal and state courts in the State of Arizona in connection with ROR or this

Agreement. Defendants, by and through their agent, agreed to submit to the exclusive

jurisdiction of the federal and state courts in the State of Arizona for purposes of

litigation related to their smear campaign against Plaintiffs in connection with ROR; Id.

therefore, all motions to dismiss should be denied.

II. ARGUMENT.

A. Legal standard applicable in reviewing a motion to dismiss for lack of personal jurisdiction.

When a defendant moves, prior to trial, to dismiss a complaint for lack of personal

jurisdiction, the plaintiff must come forward with facts, by affidavit or otherwise,

supporting personal jurisdiction. Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.1986)

(quoting Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir.1977)).

Because there is no statutory method for resolving the question of personal

jurisdiction, the mode of determination is left to the trial court. Data Disc, 557 F.2d at

1285 (citing Gibbs v. Buck, 307 U.S. 66, 7172, 59 S.Ct. 725, 83 L.Ed. 1111 (1939)).

Where a court resolves the question of personal jurisdiction using motions and supporting

affidavits, the plaintiff must make only a prima facie showing of jurisdictional facts

through the submitted materials in order to avoid a defendant's motion to dismiss. Id. In


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7 determining whether the plaintiff has met that burden, the uncontroverted allegations

in [the plaintiff's] complaint must be taken as true, and conflicts between the facts

contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes

of deciding whether a prima facie case for personal jurisdiction exists. Rio Props., Inc.

v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir.2002).

To establish personal jurisdiction over a nonresident defendant, a plaintiff must

show that the forum state's long-arm statute confers jurisdiction over the defendant and

that the exercise of jurisdiction comports with constitutional principles of due process.

Id.; Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir.1995).

Arizona's long-arm statute allows the exercise of personal jurisdiction to the same extent

as the U.S. Constitution. See Ariz. R. Civ. Proc. 4.2(a); Cybersell v. Cybersell, 130 F.3d

414, 416 (9th Cir.1997). Thus, a court in Arizona may exercise personal jurisdiction over

a nonresident defendant so long as doing so accords with constitutional principles of due

process. Cybersell, 130 F.3d at 416. Due process requires that a nonresident defendant

have sufficient minimum contacts with the forum state so that maintenance of the suit

does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v.

Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

However, [t]he Court need not resolve all of these arguments [regarding

minimum contacts] because the existence of a forum selection clause in this case

renders personal jurisdiction and venue proper in this Court. Productive People, LLC

v. Ives Design, CV-09-1080-PHX-GMS, 2009 WL 1749751 (D. Ariz. June 18,

2009)(emphasis added). A contract's forum selection clause alone is sufficient to

confer personal jurisdiction and venue, Chan v. Soc'y Expeditions, Inc., 39 F.3d 1398,


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7 140607 (9th Cir.1994), and [a]t the initial stage of litigation, a party seeking to

establish jurisdiction need only make a prima facie showing by alleging facts which, if

true, would support the court's exercise of jurisdiction, New Moon Shipping Co., Ltd. v.

MAN B & W Diesel AG, 121 F.3d 24, 29 (2d Cir.1997). Productive People, LLC, CV-

09-1080-PHX-GMS, 2009 WL 1749751 (emphasis added); see also ZengerMiller, Inc.

v. Training Team, GmbH, 757 F.Supp. 1062, 1069 (N.D.Cal.1991) ([T]he court need not

embark on a minimum contacts' analysis where the defendants have consented to []

jurisdiction.).

B. Plaintiffs may enforce the forum selection clause in RORs Terms of Service against all Defendants.

In diversity cases, federal law determines the validity of a forum selection clause.

ManettiFarrow, 858 F.2d at 513 (9th Cir.1988). The U.S. Supreme Court has held that

forum selection clauses are presumptively valid and should only be set aside if the party

challenging enforcement can clearly show that enforcement would be unreasonable and

unjust. M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d

513 (1972). The party opposing enforcement bears a heavy burden to prove the

unreasonableness of a forum selection clause. See Argueta v. Banco Mexicano, S.A., 87

F.3d 320, 325 (9th Cir.1996).

It is well settled in the Ninth Circuit and this District that a forum selection clause

may be enforced by a non-party to the contract against those that are bound to the

contract. See Productive People, LLC, CV-09-1080-PHX-GMS, 2009 WL 1749751 (

[T]hird-party beneficiary status is not required for non-parties to benefit from or be

bound by forum selection clauses.); see also ManettiFarrow, Inc. v. Gucci Am., Inc.,


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7 858 F.2d 509, 514 n. 5 (9th Cir.1988) (explaining that both parties and non-parties may

benefit from and be subject to forum selection clauses).

Productive People, LLC v. Ives Design is extremely illustrative given the

comparable facts and circumstances. In Productive People, LLC, Judge Snow permitted

the plaintiff to enforce a forum selection contained in GoDaddys terms of service

agreement against the defendants because the defendants agreed that, [f]or the

adjudication of disputes concerning the use of any domain name registered with Go

Daddy, You agree to submit to jurisdiction and venue in the U.S. District Court for the

District of Arizona located in Phoenix, Arizona. Productive People, LLC, CV-09-1080-

PHX-GMS, 2009 WL 1749751. Judge Snow held that defendants argument regarding

the intent of the agreement to only be between GoDaddy and defendant was without

merit because the case clearly involved a dispute[ ] concerning the use of [a] domain

name registered with [GoDaddy.com] as required by the plain language of the terms of

service agreement. Id.

Similarly, just as in that case, Defendants, by and through their agent, agreed to

submit to the exclusive jurisdiction of the federal and state courts in the State of Arizona

in connection with ROR or this Agreement. Just as in Productive People, LLC,2 the

first part of the forum selection clause in RORs Terms of Service is a choice of law

clause, the second part is a provision governing disputes arising out of or relating to this 2 The first sentence is a choice of law clause, and thus it is not applicable here. The second sentence is a forum selection clause governing disputes relating to or arising out of [the] Agreement, and it provides that those disputes shall be brought in the Maricopa County Superior Court. The third sentence is a forum selection clause governing a different kind of disputethose concerning the use of any domain name registered with Go Daddyand it provides that such disputes may be brought in the federal district court in Arizona. Productive People, LLC, CV-09-1080-PHX-GMS, 2009 WL 1749751.


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7 Agreement which shall be subject to the exclusive venue of the federal and state courts

in the State of Arizona, and the third part is a provision governing a different kind of

dispute -- those in connection with ROR or this Agreementand it provides that such

disputes may be brought in the federal and state courts in the State of Arizona.3

Accordingly, because Gorman and ACN, by and through their hired agent (Brand),

agreed to submit to the exclusive jurisdiction of the federal and state courts in Arizona for

purposes of litigation in connection with ROR, all motions to dismiss should be denied.

Additionally, enforcement of the applicable forum selection clause in this matter would

be both reasonable and economical.

Defendants should not get the benefits of posting on ROR without the burdens.

ROR will not provide any information without being subpoenaed, and in many cases,

ROR routinely objects when subpoenaed and requires the plaintiff to obtain a court order

(from an Arizona court) before it will disclose the identity of the anonymous poster.

(Kelly Decl. 48). Therefore, in fairness, Defendants should be required to litigate this

case in Arizona as they agreed.

3 Compare RORs Terms of Service (You agree that Arizona law (regardless of conflicts of law principles) shall govern this Agreement, that any dispute arising out of or relating to this Agreement shall be subject to the exclusive venue of the federal and state courts in the State of Arizona, and that you submit to the exclusive jurisdiction of the federal and state courts in the State of Arizona in connection with ROR or this Agreement.), with GoDaddys Term (Except for disputes concerning the user of a domain name registered with Go Daddy, You agree that the laws and judicial decisions of Maricopa County, Arizona, shall be used to determine the validity, construction, interpretation and legal effect of this Agreement. You agree that any action relating to or arising out of this Agreement shall be brought in the courts of Maricopa County, Arizona. For the adjudication of disputes concerning the use of any domain name registered with Go Daddy, You agree to submit to jurisdiction and venue in the U.S. District Court for the District of Arizona located in Phoenix, Arizona.).


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7 Furthermore, because Plaintiff is alleging agency and alter ego, this District

appears to be the most logical place to litigate these issues for purposes of judicial

economy. Otherwise, the litigation would be three times as burdensome as it would be

spread throughout several districts, including Pennsylvania, Delaware, and Georgia.

C. Because the Entity Defendants are alter egos and/or agents of each

other, which were controlled, directed, and used by Gorman, ACF, and Sacha Gorman when consenting to RORs Terms of Service, Defendants are bound by the applicable forum selection clause.

The Ninth Circuit has held that if a plaintiff shows that a defendant corporation is

the alter ego of an individual defendant such that the corporate form may be disregarded,

then a finding of personal jurisdiction over one supports a finding of personal jurisdiction

over the other. Barba v. Seung Heun Lee, CV 09-1115-PHX-SRB, 2009 WL 8747368

(D. Ariz. Nov. 4, 2009).

Under Arizona law,

The corporate fiction will be disregarded when the corporation is the alter ego of a person, and when to observe the corporation would work an injustice. . . . Arizona courts consider various factors to determine whether the requisite unity of interest and ownership exists, such as commingling of personal and corporate funds and assets, failure to keep funds from various entities separate, and unauthorized diversion of corporate funds or assets for non-corporate purposes. . . . The doctrine of piercing the corporate veil is typically applied when a plaintiff seeks recovery against the assets of a corporate shareholder or director. . . . But courts have, in certain instances where justice so required, applied the doctrine to reach a non-shareholder, non-director party with unity of interest and ownership to a tortfeasor.

Barba, CV 09-1115-PHX-SRB, 2009 WL 8747368. In alleging alter ego liability under

the pleading standard of Rule 8(a), the plaintiff must do more that make conclusory

statements regarding an alter ego relationship between individual and corporate


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7 defendants; the plaintiff must allege specific facts supporting application of the alter ego

doctrine. Whitney v. Wurtz, No. C045232 PVT, 2006 WL 83119, at *2 (N.D.Cal.

Jan.11, 2006) (finding complaint established a cognizable alter ego theory by alleging

individual defendants used assets of the corporation for their personal use, controlled,

dominated and operated corporation as their individual business and alter ego without

holding of director's or shareholder's meetings, and caused monies to be withdrawn

from the funds of defendant corporation and distributed to themselves without any

consideration to the corporation).

Moreover, an officer or shareholder need not be the sole shareholder to have unity

of control over a corporation. See Firstmark Capital Corp. v. Hempel Financial Corp.,

859 F.2d 92, 93 (9th Cir.1988) (defendant president and chief executive officer who

owned 95% of the stock in the corporation was found to have unity of control). There

is unity of control when a defendant CEO disregard[s] corporate formalities and use[s]

corporate funds for his own ... personal purposes ... [and] ma[kes] all the important

management decisions for [the corporation] including those that result[ ] in the corporate

activity that underlies the alter ego and fraud judgment. Id.

Similar to the plaintiffs allegations in Barba v. Seung Heun Lee, Plaintiffs are

alleging in this case that: Gorman had access to and used the resources of GEC, ACF,

ACN, and Brand (company resources) to post defamatory statements about Plaintiffs

(see SAC 10); Gorman hired and/or directed Brand, which is a reputation management

company, to post defamatory statements about Plaintiffs (see SAC 11); the company

resources utilized included shared hosting accounts, shared domain registrar accounts,

shared employees, and office addresses (see SAC 64); the comingling of the company


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7 resources has created a unity of interest and ownership between and among the

Defendant Companies such that the separate personalities of the Defendant Companies

no longer exist (see SAC 65); Gorman conspired with the other Defendants to transfer

assets and ownership interests in the Defendant Companies for no value, and/or less than

fair market value, with the intent to defraud Plaintiffs (see SAC 80); the Defendant

Companies all use the same staff, management, employees, web hosting accounts,

servers, and share the same type of business/transactions (see SAC 81); Gorman still

controls or is involved with the Defendant Companies (see SAC 84); and Defendants

have completely disregarded the corporate formalities relating to the Defendant

Companies (see SAC 85). Furthermore, as stated above, Plaintiffs have come forward

with additional facts in support of the allegations set forth in the SAC.

Accordingly, Plaintiffs have established a prima facie case that supporting

personal jurisdiction over the Defendants. Again, when considering all of the

circumstances, it appears that Gorman and ACN hired and/or used Brand as its agent to

complete the smear campaign against Plaintiffs. Brand, through Kinkar (its officer),

registered the Websites, hosted the Websites, and made the postings, including the

postings on ROR and Slideshare. Therefore, as alleged in the SAC, because Gorman and

ACN, by and through their hired agent (Brand), agreed to submit to the exclusive

jurisdiction of the federal and state courts in Arizona for purposes of litigation in

connection with ROR, all motions to dismiss should be denied.

In Arizona, to create an agency relationship, there must be a manifestation of

consent by the alleged principal to the alleged agent that the agent shall act on his behalf

and subject to his control and consent by the agent to act on behalf of the principal and


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7 subject to his control. Dawson v. Withycombe, 216 Ariz. 84, 163 P.3d 1034, 1050

(Ariz.Ct.App.2007). The Ninth Circuit has distinguished between the pleading

requirements for an agency relationship in non-fraud based claims under Rule 8(a) and

fraud based claims under Rule 9(b). Generally, as a matter of law, allegations of agency,

vicarious liability, and/or respondeat superior are not required in the complaint.

Greenberg v. Sala, 822 F.2d 882, 886 (9th Cir.1987). Thus, even if a plaintiff knows that

a defendant did not personally commit the wrongful act alleged, the plaintiff may allege

that the defendant is legally responsible for the act without going into the theories which

support the ultimate fact. Id. Just as the plaintiffs in Barba, the Plaintiffs in this case

were not required to plead facts supporting the elements of agency for their non-fraud

based claims. Barba, CV 09-1115-PHX-SRB, 2009 WL 8747368. In any event,

however, Plaintiffs did explain the basis for the agency liable and the roles of each

Defendant.

D. In the event the Court is unclear whether it has jurisdiction over the Defendants, Plaintiffs respectfully request that the Court permit Plaintiffs to engage in jurisdictional discovery.

The Court has broad discretion to permit or deny [jurisdictional] discovery. Calix

Networks, Inc. v. WiLan, Inc., No. C0906038CRB (DMR), 2010 WL 3515759, at *3

(N.D.Cal. Sept. 8, 2010) (quoting Laub v. U.S. Dep't of the Interior, 342 F.3d 1080, 1093

(9th Cir.2003)). [W]here pertinent facts bearing on the question of jurisdiction are

controverted or where a more satisfactory showing of the facts is necessary, discovery is

warranted. Id. A plaintiff need only present a colorable basis for jurisdiction in order to

obtain discovery, id. at *4 (citations omitted), and a court abuses its discretion in denying

discovery when it might well demonstrate jurisdictionally relevant facts, id. at *3


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7 (quoting Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122,

1135 (9th Cir.2003)).

Based upon the foregoing, Plaintiffs have alleged enough to raise a reasonable

expectation that discovery will produce evidence of an alter ego and/or agency

relationship among some or all Defendants, including to the extent there are questions

related to the forum selection clause at issue. Accordingly, in the event it is unclear

whether the Court has jurisdiction over some or all Defendants, Plaintiffs respectfully

request that the Court permit Plaintiffs to engage in jurisdictional discovery, including, as

to all facts and circumstances related to the hallmarks of alter ego among Defendants, as

well the agency relationship between and among Defendants, especially as such

relationship pertains to the posting on ROR and the agreement to the forum selection

clause at issue.

III. CONCLUSION.

WHEREFORE, based upon the foregoing, Plaintiffs respectfully request that the

Court enter an order denying the Motions and awarding such other and further relief as

the Court finds reasonable and necessary.

RESPECTFULLY SUBMITTED this 22nd day of September, 2014

KELLY / WARNER, PLLC By: /s/ Daniel R. Warner Daniel R. Warner, Esq.

8283 N. Hayden Road Suite 229 Scottsdale, Arizona 85258 Attorneys for Plaintiffs


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7

CERTIFICATE OF SERVICE

I hereby certify that, on the same date set forth above, I electronically transmitted the foregoing document to the Clerks Office using CM/ECF System for filing and distribution to the following registered participants of the CM/ECF System, who will also be served copies of the attached document by U.S. first class mail or electronic mail:

Clarice A. Spiker [email protected] Mark D. Zukowski [email protected] JONES, SKELTON & HOCULI, P.L.C. 2901 North Central Avenue, Suite 800 Phoenix, Arizona 85012 Attorneys for Defendant Brand.com, Inc.

Alicyn M. Freeman [email protected] BROENING OBERG WOODS & WILSON, P.C. 1122 East Jefferson P. O. Box 20527 Phoenix, Arizona 85034 Attorneys for Defendants Gorman Economics LLC, Sacha Gorman, and At Cost Nutraceuticals LLC William H. Doyle [email protected] THE DOYLE FIRM, P.C. 1313 East Osborn Road, Suite 220 Phoenix, Arizona 85014 Attorneys for Defendant Richard A. Gorman Richard H. Rea [email protected] FARLEY, SELETOS & CHOATE 2400 West Dunlap, Suite 305 Phoenix, Arizona 85021 Attorneys for Defendant Vanguard Economics, LLC


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7 I hereby certify that, on the same date, I served the attached/foregoing document

by First Class United States Mail or electronic mail on the following, who are not registered participants of the CM/ECF System: N/A /s/ Jill J. Loy Employee Kelly / Warner, PLLC


Documents

Response to Defendants Motions to Dismiss 9-22-14 (Conformed)