First, I mentioned in my response to the Defendant's motion to dismiss that since I made a claim in the complaint related to market securities then there is a nationwide personal jurisdiction authorized under 15 USC & 78aa.
The judge ruling (see ruling page6 link) answered that by claiming that the due process constitutional requirement are not satisfied here.
There are clear examples of circuit courts emphasizing that with laws like that 15 USC & 78aa minimum contact is sufficient to satisfy personal jurisdiction if occurred in any place in the entire country.I can point to several more citations for that in addition to what I mentioned in my response to the motion filed by the Defendant.In fact,the citations requiring minimum contacts within the forum state with regard to 15 USC & 78aa ,if any ,are the ones that seems to be harder to find in comparison with those that shows minimum contact anywhere in the country with regard to 15 USC & 78aa is valid to establish personal jurisdiction.
In addition, the citation mentioned by the judge (future tech. today,inc v. osf health care sys, 218, F. 3d 1247, 1251 (11th circuit. 2000)) with his response to the nationwide personal jurisdiction authorized under 15 USC & 78aa was not suitable for being used because it had nothing to do with 15 USC & 78aa or any other nationwide personal jurisdiction authorizing statute there.
In fact, because of substantial differences, this citation cited by the court is a very weak citation for this court's purpose on personal jurisdiction in this case even if there were no nationwide personal jurisdiction here.
First,in that case services were provided by a plaintiff in Florida to a defendant outside Florida while in this case services are provided by the Defendant outside Florida to the corporation (Defendant Onteco) in Florida.
Second, in that case the contact with the forum state was not part of the business the defendant was running.That defendant was running a health care business in other states and contacted Florida to obtain services related to computer system preparation for Y2k. In this case ,on the other hand, the contact of the Defendant with Florida was part of its line of business which is to be a transfer agent for corporations.
Third, related to the above,in that case the cause of action did not arise from an availment by the defendant to the forum state for a direct pecuniary benefit while in this case the contact with the forum state by the Defendant was for the purpose of seeking pecuniary benefit through its line of business of being a transfer agent and from that contact the cause of action arose.
In that case the plaintiff was needed to apply the constitutional self availment requirement on a defendant who contacted it in Florida to obtain service (Y2K computer preparation) for something that is not related directly to the defendant's business (health care) which was not being marketed in the forum state(Florida).
Contrast that with my case here where the Defendant's contact with the forum state (Florida) was for working as a transfer agent and that is the business it was running which is being a transfer agent for corporations
So the question is ,even if we put aside the nationwide personal jurisdiction argument, how could any honest person compare that case to mine or see enough similarities between the two for a citation like that in the court order?
In addition, despite all these differences, in that case "The Court held an evidentiary hearing on the issue of personal jurisdiction or lack thereof."
http://scholar.google.com/scholar_case?case=14539753277299345488&q=future+tech.+today,inc+v.+osf+healthcare+sys&hl=en&as_sdt=2,43&as_vis=1
and this did not happen or given as an option here despite the fact that the court itself set a status conference for this month.
Anyway going back to the issue of constitutionally sufficient minimum contact, there is a sufficient minimum contact with the forum state here and the court is wrong in claiming that there isn't. Let's look at that minimum contact in the form of the due process factors mentioned in the court citation and see how it applies
1-Purposeful availment of the forum state.
The Defendant,Action Stock Transfer Corporation, was the transfer agent of Defendant Onteco Corporation,a corporation that has been always located in Florida. Since Defendant Action was in the business of being a transfer agent for corporations that means it availed itself ,through a process that was directly related to obtaining a pecuniary benefit,to the forum state (Florida) and thereby invoking its laws.The Defendant has been the transfer agent of Defendant Onteco corporation from the end of 2009 or earlier.
2- the cause of action arises out of defendant's activities
The cause of action against, Defendant Action,the transfer agent, is related to all the shares it permitted to be sold in the market in violation of the waiting period imposed by 17 C.F.R § 230.144 (rule 144). Restricted shares seeking access to the market go through the transfer agent of a corporation in order to achieve that access.Defendant Action allowed (according to Defendant Onteco Corporation SEC filings) those restricted shares to enter the market while it was clear from the issuing date that those shares were still under the waiting period restrictions of rule 144.
3-Reasonable foreseeability
Why would someone working as a transfer agent corporation would not see that if it causes injury to shareholders through violation of the law that it couldn't be held responsible where it caused that injury?
In addition, it is reasonable that a transfer agent corporation should expect that it could be part of a lawsuit against a corporation it is representing where that corporation reside.
Besides,also applies to 1 and 3 above is that "parties who "reach out beyond one state and create continuing relationships and obligations with citizens of another state" are subject to regulation and sanctions in the other State for the consequences of their activities" (Burger King Corp. v. Rudzewicz, 471 US 462 - Supreme Court 1985).
Lets now direct our attention to Florida's long arm requirement (Fla. Stat. § 48.193).
Fla. Stat. § 48.193(b) states that the state's long arm personal jurisdiction applies on an entity " "Committing a tortious act within this state (Florida)". The Defendant committed a tortious act and that is why Fla. Stat. § 48.193(b) apply here. The Defendant ,by allowing restricted shares to enter the market despite the restriction imposed by SEC Rule 144 ,committed a tortious act that caused the share price of Defendant Onteco Corporation (a Florida resident corporation) to go lower and
affected the total market value of Defendant Onteco Corporation (a Florida resident corporation) and that in turn affected the Plaintiff as a major owner.
Notice that the Plaintiff do not need a derivative standing to apply that.The same claim can be made about any other object. So,because of my ownership of the object (in this case a corporation) in Florida the injury happened to me in Florida although I am not in Florida.
The court order cited that "the alleged tort must have caused an injury in Florida" from the Horizon Aggressive Growth, l.p. v. Rothstein-kass for the Fla. Stat. § 48.193(b) to apply.This seems to have been misused here since it is about the "injury" not the "injured".
So combining this with the constitutionally suffeint minimum contact discussed above shows that even without nationwide personal jurisdiction Florida's personal jurisdiction apply on the Defendant.
Now,lets turn our attention to answering other claims or arguments raised by the court order:
On page 3 the court stated:
"Plaintiff named Defendant Action in his complaint, alleging that both Defendant Action and Defendant Onteco intentionally diluted Plaintlff''s shares"
While based on the claims in the complaint one may make such a direct claim against defendant Action,it was not what I (the plaintiff) directly accused defendant Action of and is not what I based my personal jurisdiction argument on in my answer to the defendant's motion to dismiss.
In "count II" of my complaint and what my personal jurisdiction response was based on (as mentioned earlier) that the defendant allowed restricted shares to enter the market in violation of the waiting period requirement of rule 144.
This statement by the judge suggest that inside he can see clearly real depth of the tort done here.
On page 5 the court stated:
"Here,Plaintiff names Defendant Action as a "transfer agent" for Defendant Onteco, but Plaintiff does not explain the responsibilities of a transfer agent or the relation between a transfer agent and Defendant Onteco"
It is not clear what level of explanation and for what purpose the court was seeking for these things in order to see that personal jurisdiction apply on the Defendant here .It also does not seem to represent one whole thing with the content around it showing the argument it supposedly support.The Plaintiff claimed, in "count II" of the complaint, a transfer agent responsibility related to allowing restricted shares to enter the market and that is sufficient knowledge for the purpose of establishing personal jurisdiction based on the claims in the complaint.In addition in the Plaintiff 's answer to the Defendant's complaint the Plaintiff said: "A transfer agent is responsible for arranging for the restricted shares to inter the market". The court could have asked the plaintiff about whatever explanations it needs for things that were implied in the complaint.Moreover, definition for the "transfer agent" is not hard to find in other sources like over the Internet.
Finally, if there were still doubts the court needed "construe the facts in the light most favorable to the plaintiff " (from the same court citation future tech. today,inc v. osf healthcare sys although other citations can be provided if needed) especially when the Defendant did not base its objection on personal jurisdiction on contesting the responsibility/and or role claimed on it in the complaint with regard to restricted share access to the market.
Also on page 5 the court stated:
"In addition, Plaintiff f has not sufficiently alleged that Defendant Action "committed a substantial aspect of the alleged tort in Florida." See Musiker, 960 F. Supp. at 296. Here, there are no allegations that Defendant Action committed a tortious act ..."
That is simply not true.
First the plaintiff mentioned in the complaint that defendant Action Stock Transfer Corporation was the transfer agent of defendant Onteco Corporation (point 6 in the "Parties" section)
That means that points 43,44,47,48,55,56 which all contain claims related to violation of rule 144 imply defendant's Action involvement because it is the transfer agent of defendant Onteco corporation.
In point 43 of the complaint the plaintiff mentioned how he "was able to exceed the 373,014,903 shares reported by the company as outstanding as of November 14, 2011" to the equivalent of 427,781,420 .The difference represent a number of restricted shares allowed by the defendant to enter the market in violation of Rule 144.
In point 44 of the complaint the Plaintiff mentioned how despite that he alone was holding well over what should be allowed to enter the market according to rule 144, "not only there was still trading" volume there but there was a very disproportionately big volume ..".Any indication of additional shares existing in the market is an indication of violation of Rule 144.
In point 45 of the complaint the Plaintiff mentioned how the "increased in the volume accompanied the price per share going lower and lower to close at less than 5 cents a share on 03/02/2012".
In point 47 of the complaint the Plaintiff mentioned how he "again exceeded the second number of shares reported as outstanding by the company on 1/17/2012 (point#38).On 3/21/2012 the Plaintiff filed a SEC Form 4 showing an ownership of 771,738,420 (pre-reverse split counting) after 64 days from the date where the company reported the 745,634,893 (745,635 post-split counting) outstanding in its 8-k filing of 1/17/2012" selling these access shares in the market was a violation of Rule 144 that involves defendant transfer agent.
In point 48 of the complaint the Plaintiff pointed out how despite that he "did not sell any shares of his holding (except for the one occurrence described in point#44 above) of more than the share outstanding number reported on 1/17/2012 and over double the one reported on 11/17/11 (point#38) of shares,this time the market volume was more in the millions than less and reached numbers like 30 and 36 millions (30 and 36 billion of shares in pre-reverse split counting)".That point shows violation of rule 144 indicated by the number of shares the plaintiff was able to buy in the open market and suggested violation through that huge volume number.
In point 55 of the complaint the Plaintiff mentioned how a defendant Onteco's Corporation filing with the SEC implied a change in the number of shares in the market equivalent to 50,703,778,000 on 4/16/2012 from 745,634,893 on 1/17/2012. The plaintiff doesn't know any amount of this difference of 49958143107 shares (67 times that entire second number) except through violations of rule 144 which involves defendant Onteco.
These actions by the defendant clearly shows that it committed a tortious action and a "substantial aspect of the alleged tort in Florida".
Also on page 5, the court claimed that there are no allegations in the complaint that the defendant "even had a substantial relation with the forum state".
The defendant had a substantial relation related to the cause of action as shown earlier.
Also on page 5 the court stated:
"Plaintiff, a Tennessee resident, has also not incurred an injury in the state of Florida"
We showed earlier that the plaintiff was injured in Florida through his ownership.
Finally,on page 6 the court stated:
"Furthermore, Plaintiff 's complaint does not allege that this forum would "comport with traditional notions of fair play and substantial justice" because there is not strong state interest in bringing both Plaintiff and Defendant Action to Florida."
There is no strong state interest in holding someone who did a tortious act,especially an act with the magnitude and audacity described in the complaint, that affect someone who invest in a corporation resident in the state accountable for his action?
Nevertheless,state interest,is one of the factors which also include how most of the all the other defendant are located in Florida and how much it is needed to deal with the complaint justly and appropriately to combine all the named defendants under one lawsuit".In addition,the fact that the choice of this forum is far from being the most convenient to the plaintiff and not in the state where he resides clearly comport with traditional notions of fair play and substantial justice" here.
In fact ,in comparison with other cases,what seem far from comporting with "traditional notions of fair play and substantial justice" is the court's quoting "haling people into Florida courts from al1 over the country" for a case like this.
Finally,one can easily notice how the court's opinion was written in a fragmented,confusing and distracting manner that makes it hard to believe that if a judge honestly believe in the position he is taking he would write something like this even if he was under a long starvation of food and sleep.
Here is a link to the complaint (this ruling is related to Defendant Action Stock Transfer Corporation)
