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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION BENJAMIN BURGESS, RHONDA BURGESS, HEIDI HOWARD, JOYCE MARTIN, BETH KARAMPELAS, TERRI DACY, and MICHAEL DACY, Individually and on behalf of all others similarly situated, Plaintiffs, v. RELIGIOUS TECHNOLOGY CENTER, INC., ASSOCIATION FOR BETTER LIVING AND EDUCATION INTERNATIONAL, NARCONON INTERNATIONAL, and NARCONON OF GEORGIA, INC., Defendants. ) ) ) ) ) ) Civil Action File No. ) ) 1:13-cv-02217-JOF ) ) ) ) ) ) ) ) ) ) )

MEMORANDUM IN SUPPORT OF DEFENDANT RELIGIOUS TECHNOLOGY CENTER, INC.S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION OR, ALTERNATIVELY, FOR FAILURE TO STATE A CLAIM Defendant Religious Technology Center, Inc. (RTC) has moved to dismiss Plaintiffs claims against it because the Court lacks personal jurisdiction over RTC. RTC is a non-profit religious corporation organized under the laws of California and located in California. RTC conducts no business and has no physical presence in Georgia. Contrary to Plaintiffs allegations, RTC does not own or control any of

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the other Defendants in this case and does not own any of the intellectual property associated with the Narconon program. RTC lacks the minimum contacts with Georgia constitutionally required for the exercise of personal jurisdiction over it, and Plaintiffs claims against RTC therefore must be dismissed. Alternatively, RTC, specially appearing, joins in the motions to dismiss filed on July 9, 2013, by Defendants Narconon International and Association for Better Living and Education International (Docs. 4 and 5) and moves the Court for an order dismissing Plaintiffs claims against RTC under Rule 12(b)(6) for failure to state a claim upon which relief can be granted on the grounds set forth therein. FACTUAL BACKGROUND A. Plaintiffs Allegations1 Plaintiffs have alleged claims of fraudulent misrepresentation, breach of contract, and related claims purportedly on behalf of a class of individuals who paid, on behalf of others, for drug and alcohol rehabilitation services provided by Defendant Narconon of Georgia, Inc. (NNGA). (Compl. 119.) Plaintiffs allege that in agreeing to pay for such drug and alcohol rehabilitation services, they relied upon certain alleged misrepresentations regarding the program made by
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On a motion to dismiss under Rule 12(b)(2), the allegations of the complaint are taken as true only to the extent they are uncontroverted. Exceptional Mktg. Group, Inc. v. Jones, 749 F. Supp. 2d 1352, 1357 (N.D. Ga. 2010).
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NNGA and Defendant Narconon International (NN International). (Id. 3, 7, 11, 14, 18.) The complaint alleges that the Narconon programs were established based upon the writings and technology, or tech, of L. Ron. Hubbard, the founder of the Church of Scientology. (Id. 39, 41.) Plaintiffs allege that NN International and NNGA are controlled by Defendant Association for Better Living and Education International (ABLE), which allegedly operates as an umbrella group that oversees the drug and alcohol rehabilitation . . . activities of the Church of Scientology and controls the time, manner, and method of International and NNGAs businesses. (Id. 24.) As to Defendant RTC, Plaintiffs acknowledge that RTC is a foreign, nonprofit corporation registered in the State of California with its headquarters in Los Angeles, California. (Id. 20.) The complaint alleges that RTC oversees Church of Scientology activities and serves as the final arbiter and enforcer of orthodoxy for all Scientology-related activities and organizations and also that RTC approves the activities of International and NNGA, and also licenses the technology used in Narconon centers through its subsidiary, ABLE. (Id. 21.) The complaint goes on to allege that RTC assumed control over the time, manner, and method of NNGAs operations, and RTC was doing business in the State of Georgia by and through its agents, ABLE, International, and NNGA. (Id. 22.)
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Specifically, the complaint alleges that RTC is the branch of the Church of Scientology that holds the rights to Hubbards writings, or technology and that RTC licenses the technology to ABLE, which licenses the material to International. (Id. 64.) In addition, the complaint alleges that the Narconon centers are run according to exacting standards of RTC and in strict compliance with the Hubbard/Narconon technology as allegedly required by RTC. (Id. 65, 71.) Plaintiffs also allege that RTC, through its agent, ABLE, requires Narconon centers to pay money to the Church of Scientology; that RTC produce[s] marketing and promotional materials for use by the Narconon centers; and that RTC approve[s] and/or, recommend[s] certain claims for the Narconon centers to use in promoting their services. (Id. 69, 72.) B. RTCs Evidence As shown in the accompanying Declaration of RTCs President, Warren McShane (attached hereto as Exhibit A), the complaints only accurate allegation as to RTC is that RTC is a California nonprofit corporation located in Los Angeles. The rest of Plaintiffs allegations regarding RTCincluding those concerning RTCs alleged involvement in the Narconon centersare demonstrably untrue. RTC is a non-profit religious corporation organized and existing under the laws of the state of California. (McShane Decl. 3.) RTC was established in 1982
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to own the trademarks associated with the religious services and products of the Church of Scientology. (Id. 4.) RTC accomplishes its religious purpose by authorizing the use and supervision of the Scientology religious trademarks by Church of Scientology International, also located in California. (Id.) While RTC owns the religious marks associated with the Church of Scientology, L. Ron Hubbards secular marks, including the Narconon mark, are owned by ABLE. (Id. 5.) ABLE licenses Narconon and its other secular marks to secular social betterment organizations, including NN International. (Id.) RTC does not own, nor has it ever owned, any of the secular trademarks, including the Narconon trademarks. (Id. 6.) Likewise, RTC does not own any of the technology used in the Narconon drug treatment and education programs. (Id.) RTC has never entered into any contract or license with ABLE, nor with NN International or NNGA, and has never received any money from ABLE or its licensees, including NN International and NNGA. (Id. 6, 7, 10.) Further, contrary to the allegations in the complaint, RTC is not the parent of ABLE, and ABLE is not a subsidiary of RTC. (Id. 8.) RTC and ABLE have no common ownership, board members, or officers. (Id.) Neither ABLE, NN International, nor NNGA has ever been an agent of RTC. (Id. 9.) RTC does not control, and has no authority to control, ABLE or ABLEs licensees to pay money
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to RTC from the operations of NNGA. (Id. 10.) RTC has never managed or controlled the activities of ABLE, NN International or NNGA. (Id. 14.) RTC has never issued any directives, rules or guidelines to NNGA, and has never exercised control over any of its operations, including those related to student intake and staffing. (Id.) And RTC has not reached out to or availed itself of the protections of the state of Georgia in any way. RTC does not conduct any business or operate in the state of Georgia, and it has not contracted with any Georgia residents or committed any acts in Georgia. (Id. 11.) RTC has not recruited Georgia residents, directly or through any intermediary, for any staff position inside or outside Georgia. (Id.) RTC is not a resident of the state of Georgia and is not required to maintain and does not maintain a registered agent for service of process in the state of Georgia. (Id. 12.) RTC has no real or personal property in Georgia and maintains no office or place of business in Georgia and no mailing address or telephone listing in Georgia. (Id.) RTC does not maintain any bank accounts in Georgia. (Id.) RTC does not have any officers, directors, staff, servants, or agents in Georgia. (Id.) RTC has filed no lawsuits in Georgia and has never been sued in Georgia other than in this case. (Id.)

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ARGUMENT AND CITATION OF AUTHORITY I. PLAINTIFFS CLAIMS AGAINST RTC SHOULD BE DISMISSED BECAUSE THE COURT LACKS PERSONAL JURISDICTION OVER RTC. In the context of a motion to dismiss for lack of personal jurisdiction in which no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, nonresident defendant. Exceptional Mktg. Group, Inc. v. Jones, 749 F. Supp. 2d 1352, 1357 (N.D. Ga. 2010) (citation omitted). Although [t]he facts presented in the plaintiffs complaint are taken as true to the extent they are uncontroverted, if the defendant submits affidavits challenging the allegations in the complaint, the burden shifts back to the plaintiff to produce evidence supporting jurisdiction. Id. A federal court sitting in diversity undertakes a two-step inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Diamond Crystal Brands, Inc. v. Food Movers Intl, 593 F.3d 1249, 125758 (11th Cir. 2010) (citation omitted). Although courts in Georgia have previously read the Georgia long-arm statute as coextensive with constitutional due process, the Eleventh Circuit and the Georgia Supreme Court have since made clear that the
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Georgia statute imposes independent obligations that a plaintiff must establish for the exercise of personal jurisdiction that are distinct from the demands of procedural due process, requiring the two-step inquiry. Id. at 1259 (discussing Innovative Clinical & Consulting Servs., LLC v. First Natl Bank, 279 Ga. 672, 620 S.E.2d 352 (2005)). As discussed below, exercise of jurisdiction over RTC is not appropriate under the Georgia long-arm statute and would violate constitutional due process. A. RTC Is Not Subject to the Georgia Long-Arm Statute.

The Georgia Long-Arm Statute, O.C.G.A. 9-10-91, provides for personal jurisdiction over nonresidents only in limited circumstances: A court of this state may exercise personal jurisdiction over any nonresident . . . as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he or she were a resident of this state, if in person or through an agent, he or she: (1) Transacts any business within this state; (2) Commits a tortious act or omission within this state, except as to a cause of action for defamation of character arising from the act; (3) Commits a tortious injury in this state caused by an act or omission outside this state if the tortfeasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state; [or]
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(4) Owns, uses, or possesses any real property situated within this state; ... O.C.G.A. 9-10-91. Although the complaint does not specify the provision of the long-arm statute on which Plaintiffs rely, it is clear based on the facts testified to by Mr. McShane that none of the provisions can be met. 1. RTC Transacts No Business in Georgia and Does Not Own, Use or Possess Real Property in Georgia.

The first and fourth sections of the statute are easily disposed of. RTC conducts no, and has never transacted any, business in the state of Georgia. (McShane Decl. 11.) Likewise, RTC neither owns, uses, nor possesses and has never owned, used, or possessedreal property in Georgia. (Id. 12.) Jurisdiction therefore cannot be had based upon either of these provisions of 910-91. 2. RTC Has Committed No Tortious Act, Omission or Injury in Georgia.

The evidence submitted by RTC establishes that jurisdiction cannot be founded upon the second or third sections of the statute. Although Plaintiffs make certain allegations purporting to tie RTC to ABLE, NN International, and the
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operation of NNGA, each of these allegations is entirely refuted by the declaration of RTCs president. Contrary to the allegations in the complaint, RTC does not own the Narconon mark or any of the marks or technology used in the Narconon program. The Narconon marks are owned by defendant ABLE. (McShane Decl. 47.) RTC is not a parent corporation of ABLE and has no common ownership, board members, or officers with ABLE. (Id. 8.) In short, RTC owns and licenses the religious marks associated with the Church of Scientology, and ABLE owns and licenses the secular marks used in various social programs, including Narconon. RTC licenses the religious marks to the Church of Scientology International, which is located in California, and RTC collects no fees from the licensing of its marks. (Id. 4.) RTC has no authority over or participation in the Narconon programs, including the program run by NNGA. It does not manage or control the activities of ABLE, NN International or NNGA. RTC has never issued directives, rules or guidelines to NNGA, and RTC has never exercised control over any of the operations of NNGA. It has no ownership over the Narconon technology and receives no revenue or other benefits from the Narconon programs. (Id. 6, 9, 10, 14.)

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RTC has not committed any acts in Georgia, tortious or not, and therefore does not fall under 9-10-91(2). See Anderson v. Deas, 279 Ga. App. 892, 632 S.E.2d 682 (2006) (holding that jurisdiction under subsection 2 of the Georgia long-arm statute must be founded upon evidence of a defendants conduct occurring within Georgia). And 9-10-91(3) is likewise inapplicable, as any alleged tortious injury in Georgia could not have been caused by any act of RTC, which has no control over ABLE or any of the Narconon entities or the operations of NNGA. Moreover, RTC does not regularly do[] or solicit[] business, or engage[] in any other persistent course of conduct in Georgia or derive any revenue from goods used or consumed or services rendered in Georgia, as required by 90-1091(3). See Sol Melia, SA v. Brown, 301 Ga. App. 760, 688 S.E.2d 675 (2009) (holding that jurisdiction under section 3 of the Georgia long-arm statute must be founded upon business, course of conduct, or revenue derived by a defendant from conduct in Georgia). Plaintiffs therefore cannot establish even a prima facie case that the tortious acts alleged in the complaint were in any way committed by RTC, whether inside or outside of Georgia. See Exceptional Mktg. Group, 749 F. Supp. 2d at 1357 (noting that the plaintiff bears the burden to produce evidence supporting jurisdiction where allegations of complaint are controverted). As
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Plaintiffs cannot establish personal jurisdiction over RTC in Georgia under any provision of the Georgia long-arm statute, this motion should be granted and the claims alleged against RTC dismissed. B. Constitutional Due Process Prohibits the Court From Exercising Personal Jurisdiction Over RTC.

The exercise of personal jurisdiction over RTC also would violate constitutional due process, as RTC does not have minimum contacts with Georgia and has not purposely availed itself of the protections of the state. As the Supreme Court has long held, due process requires that individuals have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (citation omitted); see also Diamond Crystal, 593 F.3d at 1267. Jurisdiction therefore may be exercised consistent with the Constitution only if (1) the non-resident defendant has minimum contacts with the forum resulting from an affirmative act on its part such that it could reasonably anticipate being haled into the courts of the forum state and (2) it would be fair and reasonable to require the non-resident to defend a suit in the forum. Burger King, 471 U.S. at 47477. The requisite minimum contacts can be established only if the defendant is subject to general or specific jurisdiction in the forum state, and it must be shown that the defendant has purposefully directed activities in the forum or of the forums residents. Id. A
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defendant may not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts . . . or of the unilateral activity of another party or a third person. Id. at 475 (citations omitted). In this case, neither requirement can be met. First, Plaintiffs do not even allege facts to show that RTC has continuous and systematic business contact with Georgia such that general jurisdiction would be appropriate. Sol Melia, 301 Ga. App. at 767, 688 S.E.2d at 681. Indeed, RTC has no contacts with Georgia sufficient to permit the Court to exercise jurisdiction over RTC. RTC does not conduct any business or operate in the state of Georgia, nor does any of its staff, and it has not contracted with any Georgia residents or committed any acts in Georgia. (McShane Decl. 11.) RTC has not recruited Georgia residents, directly or through any intermediary, for any staff position inside or outside Georgia. (Id.) RTC is not a resident of the state of Georgia, it is not required to maintain a registered agent for service of process in the state of Georgia, and it does not maintain any agent in Georgia. (Id. 12.) RTC has no real or personal property in Georgia and maintains no office or place of business in Georgia and no mailing address or telephone listing in Georgia. (Id.) RTC does not maintain any bank accounts in Georgia. (Id.) RTC does not have any officers,

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directors, staff, servants, or agents in Georgia. (Id.) RTC has filed no lawsuits in Georgia and has never been sued in Georgia other than in this case. (Id.) And specific jurisdiction also is lacking. For specific jurisdiction, the defendant must have purposefully directed activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities. Diamond Crystal, 593 F.3d at 1267 (quoting Burger King, 471 U.S. at 47273). In other words, the defendant must have purposefully availed itself of the privilege of conducting activitiesthat is, purposefully establishing contacts in the forum state and there must be a sufficient nexus between those contacts and the litigation. Id. Even if such a nexus is shown, jurisdiction is not proper if it would violate traditional notions of fair play and substantial justice. Id; see also Sol Melia, 301 Ga. App. at 76364, 688 S.E.2d at 679 (Jurisdiction exists if (1) the nonresident defendant has purposefully done an act or consummated a transaction in Georgia, (2) the cause of action arises from or is connected with the act or transaction, and (3) the Georgia courts exercise of jurisdiction does not offend traditional fairness and substantial justice. (citation omitted)). Here, RTC has committed no acts in Georgia, tortious or otherwise, and has not engaged in any business in the state. Plaintiffs claims against RTC are based on their allegations that RTC licensed trademarks through ABLE to NN
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International and NNGA and controlled the activity of these entities through its alleged subsidiary ABLE, but these allegations are patently incorrect. As discussed above, RTC does not own the trademarks used or associated with Narconon, and RTC has no ownership of any of the other Defendants. RTC has no authority to control ABLE or its licensees to pay money to RTC or any church of Scientology. (McShane Decl. 410.) Plaintiffs claims therefore cannot arise out of RTCs activities in Georgia, as the alleged activities simply do not exist. Given the complete lack of any contacts with the forum, the exercise of jurisdiction over RTC in Georgia would plainly offend notions of traditional fairness and substantial justice. Finally, as there is neither general nor specific jurisdiction over RTC in Georgia, the Court need not consider whether the exercise of jurisdiction comports with traditional principles of fair play and substantial justice. See Burger King, 471 U.S. at 476. For the reasons discussed above, however, it would be unreasonable to hale RTCa California entity with no minimum contacts in Georgiaacross the country to defend against Plaintiffs lawsuit. Because RTC lacks any contacts with this forum, it is neither fair nor reasonable to hale this nonresident across the nation to defend this suit.

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II.

ALTERNATIVELY, PLAINTIFFS CLAIMS AGAINST RTC SHOULD BE DISMISSED BECAUSE THE COMPLAINT FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED. Alternatively, RTC specially appears and joins in the motions to dismiss

under 12(b)(6) filed by ABLE and NN International. For the reasons stated therein, RTC asks that the claims against it be dismissed for failure to state a claim upon which relief can be granted. CONCLUSION Because Plaintiffs cannot establish personal jurisdiction over RTC in Georgia, Plaintiffs claims against RTC should be dismissed. Alternatively, the claims against RTC should be dismissed for failure to state a claim. Respectfully submitted, this 9th day of July, 2013. /s/ John H. Fleming John H. Fleming (263250) Valerie S. Sanders (625819) Stacey M. Mohr (619207) SUTHERLAND ASBILL & BRENNAN LLP 999 Peachtree Street, NE, Suite 2300 Atlanta, Georgia 30309-3996 john.fleming@sutherland.com valerie.sanders@sutherland.com stacey.mohr@sutherland.com 404.853.8000 (T) 404.853.8006 (F) Attorneys for Defendant Religious Technology Center, Inc.
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CERTIFICATE OF COMPLIANCE Pursuant to L.R. 7.1D, the undersigned counsel hereby certifies that the foregoing Memorandum in Support of Defendant Religious Technology Center, Inc.s Motion to Dismiss for Lack of Personal Jurisdiction or, Alternatively, for Failure to State a Claim complies with the font and point selections approved by the Court in L.R. 5.1C. This document was prepared on a computer using the Times New Roman font (14 point). /s/ John H. Fleming John H. Fleming

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CERTIFICATE OF SERVICE I hereby certify that I have on this day electronically filed the foregoing document with the Clerk of Court using the CM/ECF system which will automatically send e-mail notification of such filing to all attorneys of record. This 9th day of July, 2013. /s/ John H. Fleming John H. Fleming