Court Applies Alter Ego Doctrine to Deny Motion to Dismiss For Lack of Personal Jurisdiction

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An Arizona district court recently relied on the alter ego doctrine to deny a motion to dismiss for lack of personal jurisdiction in a case involving breach of a partnership agreement and trademark infringement.

The plaintiff, Activator Methods International, Ltd. (Activator) and the defendant, Future Health Inc., an Iowa corporation (FHI), entered into a Shared Revenue Partnership Agreement (SRPA) allowing FHI to market Activator’s software program, develop Activator’s software application and use Activator’s trademarks. FHI allegedly failed to pay the fees required under the SRPA and, as a result, Activator terminated the SRPA. Shortly thereafter, FHI ceased doing business and an identically named company incorporated in Delaware (FHD) was formed and became the successor in interest to FHI. The plaintiff brought an action against FHI, FHD, and Steven and Jane Doe Kraus, husband and wife. Steven Kraus was the chief executive officer (CEO) and majority shareholder of FHI and FHD and negotiated and signed the SRPA in Arizona. The Krauses moved to dismiss for lack of personal jurisdiction.

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