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Appeal No.

18-3195

UNITED STATES COURT OF APPEALS


FOR THE EIGHTH CIRCUIT

_______________________________________________________________

Lee Michael Pederson,

Plaintiff / Appellant,

v. PLAINTIFF / APPELLANT'S

Phillip Frost, OPKO Health, Inc., Brian APPEAL BRIEF

Keller, and CoCrystal Pharma, Inc.

Defendants / Appellees.

_______________________________________________________________

APPEAL FROM THE

UNITED STATES DISTRICT COURT OF MINNESOTA

BRIEF OF PLAINTIFF / APPELLANT

LEE MICHAEL PEDERSON

Date: December 1, 2018 Plaintiff/Appellant’s Signature


/s/ Lee Pederson
Lee Michael Pederson
Pro se
MN Atty. No. 225605
2126 Lyndale Ave S #6
Minneapolis, MN 55405
952-836-7949
LeeMPete@aol.com
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SUMMARY OF THE CASE / REQUEST FOR ORAL ARGUMENT

Billionaire Phillip Frost is the head of a white-collar gang that specializes in

market manipulation and securities frauds.1 Starting in 2013, the Frost gang

committed a pump and dump (P&D) securities fraud at a company called BioZone

(now Defendant CoCrystal).2 Leading up to the P&D fraud, the Frost gang looted

BioZone's assets by various means, including fraudulent asset transfers.3 In doing

so, they lied to and manipulated Plaintiff Lee Pederson to the detriment of

Pederson and others. Pederson brings tort claims against Frost and others for fraud

and tortious interest with a business relationship.

This case presents a complex and outrageous set of facts. The Defendants

exploited the out-of-the ordinary nature of Pederson's allegations to mislead the

district court and obtain a dismissal based on lack of personal jurisdiction.

After briefing and oral arguments in the district court were concluded, the

SEC filed charges against Frost and his gang for securities fraud. 4 The SEC

charges bring a fresh clarity and perspective about the Frost gang and their actions

that was not available to the district court. The Eighth Circuit reviews the issue of

jurisdiction de novo. Plaintiff requests that oral arguments be held.

1
Complaint, para 3.
2
Complaint, generally.
3
Complaint, para 91 et seq.
4
SEC v Honig et al. (see Procedural Note in addendum)
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I. TABLE OF CONTENTS

Summary of the Case …………………………………………….. 2

I. Table of Contents ……………………………………………… 3

II. Table of Authorities …………………………………………... 4

III. Jurisdictional Statement ……………………………………… 7

IV. Statement of the Issue Presented for Review ……………….. 7

V. Statement of the Case ………………………………………… 8

VI. Summary of the Argument ………………………………….. 12

VII. Argument …………………………………………………... 13

A. Introduction ………………………………………………….. 13

B. Eighth Circuit Standard for a Motion to Dismiss under FCRP 12(b)(2)

……………... 13

C. Plaintiff's Prima facie Case …………………………………... 18

D. Due Process - Essential Facts ………………………………… 19

E. Due Process - The Eighth Circuit Five-Factor test …………… 21

F. Calder Effects Test ……………………………………………. 28

G. Purposeful Availment ………………………………………… 29

H. Summary and Conclusion of the Argument …..………….….. 34

VIII. Relief Sought ……………………………………………….. 35

IX. Certificates of Compliance …………………………………… 36

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II. TABLE OF AUTHORITIES

Cases:

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ……………………………… 30

Bell Atlantic Corp. v. Twombly, 555 U.S. 544 (2007) ………………. 30

Burger King v. Rudzewicz, 471 U.S. 462 (1985) ……………….…….7, 26, 34

Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100


(8th Cir. 1996) ……………………………………………………….. 22

Calder v. Jones, 465 U.S. 783 (1984) ……………………………….. 28

Daimler AG v. Bauman, 571 U.S. (2014) …………………………... 17

Dakota Indus. Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384


(8th Cir. 1991) ………………………………………………..……… 22, 29

Dever v. Henzen Coatings, Inc., 380 F.3d 1070


(8th Cir. 2004) ……………………………………………..………… 8, 21, 22

Epps v. Stewart Info. Servs. Corp., 327 F.3d 642


(8th Cir. 2003) ……………………………………………………….. 14

Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820


(8th Cir. 2014) …………………………………..…………………… 32, 33

Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290


240 N.W.2d 814, 816 (1976) ………………………………………… 15

Helicopteros Nacionales de Columbia, S.A. v. Hall,


466 U.S. 408, 414 n.8 (1984) ……………………………………….. 17

Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) ………………….. 8, 16

Johnson v. Arden, 614 F.3d 785 (8th Cir. 2010) …………………….. 29

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Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565
(Minn. 2004) …………………………………………………………. 15

K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588
(8th Cir. 2011) ……………………………………………………….. 8, 14

Kopperud v. Agers, 312 N.W.2d 443, 445 (Minn.1981) …………….. 27

Marquette Nat’l Bank v. Norris, 270 N.W.2d 290


(Minn. 1978) …………………………………………………………. 15

Myers v. Casino Queen, Inc., 689 F.3d 904 (8th Cir. 2012) …..……. 16, 33

Northrup King Co. v. Compania Productora Semillas Algodoneras


Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir.1995) …………………… 26

Rilley v Money Mutual 884 N.W.2d 321 (Minn. 2016) ………..


…………………… 7, 15, 16, 24, 25, 26, 27, 34

SoftBrands Mfg., Inc. v. Missing Link Consulting, Inc., No.


Civ. 04–3900, 2004 WL 2944112, at *7 (D.Minn. Dec. 20, 2004) ….. 27

Stanton v. St. Jude Med., Inc., 340 F.3d 690


(8th Cir. 2003) ………………………………………………………... 33

Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408


(Minn. 1992) ………………………………………………………….. 16

Viasystems, Inc. v. EBM-Papst St. George Gmbh & Co.,


646 F.3d 589 (8th Cir. 2011) …………………………………..………17, 18, 19

Walden v. Fiore, 134 S.Ct. 1115 (2014) ………………….……… 17, 25, 28, 34

Wessels, Arnold & Henderson v. Nat’l Med. Waste, Inc.,


65 F.3d 1427 (8th Cir. 1995) ………………………………………….. 25

Wiles v. Capitol Indem. Corp., 280 F.3d 868 (8th Cir. 2002) ...………. 30

World-Wide Volkwagen Corp. v. Woodson, 444 U.S. 286 (1980) ……. 25

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Statute:

Minn. Stat. § 543.19 (2014), PERSONAL JURISDICTION


OVER NONRESIDENTS ……………………………………… 7, 14, 15, 16, 17

Rules:

Federal Rule of Civil Procedure 4(k)(1)(A) ………………………………. 14

Federal Rule of Civil Procedure 12(b)(2) ………………………………. 13, 14, 30

Commentary:

Ides and Grossi, "The Purposeful Availment Trap" in The Federal


Courts Law Review, Vol. 7, Issue 1, 2013 ………………………………… 33

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III. JURISDICTIONAL STATEMENT

A. The district court has subject-matter jurisdiction based on diversity.

Plaintiff / Appellant asserts that the district court has personal jurisdiction over the

Defendants based upon the Minnesota long-arm statute, Minn. Stat. 543.19

PERSONAL JURISDICTION OVER NONRESIDENTS. The case stands

dismissed for lack of personal jurisdiction, which is the sole issue on appeal.

B. The case is on appeal from the United States District Court of Minnesota.

C. A Judgement and an Order dismissing the claims were issued by the

district court on September 27, 2018. Plaintiff filed a timely Notice of Appeal on

October 11, 2018.

D. This appeal is from a final order and judgment of the district court that

dismissed all of Plaintiff / Appellant's claims.

IV. STATEMENT OF THE ISSUE PRESENTED FOR REVIEW

The only issue on appeal is whether the Defendants are subject to specific

personal jurisdiction in Minnesota under the Minnesota long-arm statute for the

tortious actions alleged in the complaint. The Eighth circuit reviews the issue of

jurisdiction de novo.

The most apposite cases are:

Rilley v MoneyMutual, 884 N.W.2d 321 (Minn. 2016)

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K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011)

Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)

Dever v. Henzen Coatings, Inc., 380 F.3d 1070, 1073-74 (8th Cir. 2004)

V. STATEMENT OF THE CASE

This case arises out of a pump and dump (P&D) securities fraud carried out

by the Defendants and others (the "Frost gang").5 In conjunction with the P&D

fraud, Defendants Frost, Keller and Opko looted the assets of Defendant CoCrystal

(formerly known as BioZone) for the benefit of Frost, Opko and others. 6 During

this looting of assets and in order to carry out their scheme, Defendants lied to and

manipulated Plaintiff Pederson over the course of a year. 7 The lies and

manipulation caused out-of-pocket damages to Pederson as well as damage to

Pederson's reputation and career.8

Plaintiff Lee Pederson is a United States Patent Attorney with specialized

skills and experience in an area of pharmaceutical science known as drug delivery

technology. 9 Pederson began working with a California company called BioZone

in about 2000.10 Pederson wrote and prosecuted patent applications for BioZone

5
SEC v Honig et al.
6
Complaint, para 91 et seq.,for example.
7
Complaint, para 45, for example.
8
Complaint, paras 286 et seq., for example.
9
Complaint, para 21.
10
Complaint, para 22.
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on a drug delivery technology called QuSomes®. 11 In addition, Pederson worked

with BioZone on business development, licensing, and other matters.12 Pederson

worked for BioZone as an outside counsel at a reduced rate, 13 and BioZone

promised Pederson continuing and increased employment, and greatly increased

compensation as BioZone became more successful. 14

By about 2010, BioZone had revenues of about $15 million per year.15 New

developments in QuSome technology promised explosive growth for the company,

and BioZone sought investments to help fund expansion. 16 Patents were a key

component of BioZone's expansion strategy, and Pederson handled a portfolio of

about 100 domestic and international patents and patent applications for

BioZone.17

Billionaire Phillip Frost targeted BioZone for a takeover so that Frost and his

gang could use BioZone for a pump and dump (P&D) securities fraud and make

tens of millions of dollars in illegal profits.18 Lured by Frost's false promise of

investment capital, Pederson traveled from Minnesota to Miami in early 2011 for a

11
Complaint, para 25.
12
Complaint, para 45.
13
Complaint, para 28.
14
Complaint, para 27.
15
Complaint, para 36.
16
Complaint, para 29.
17
Complaint, para 71.
18
Complaint, generally.
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series of meeting with Frost and his gang. 19 Pederson was one of five BioZone

representatives at the Miami meetings. 20

The result of the Miami meetings was a fraudulent promise by Frost and his

gang to invest $8 million dollars in BioZone, to be followed by a public offering

for total funding to BioZone of $15 million.21 Based on that fraudulent promise

(the "Big Lie") and with the cooperation of BioZone insider Brian Keller, Frost and

his gang took control of BioZone by mid-2011.22 Frost and Keller then used the

Big Lie to manipulate Pederson to Pederson's detriment.23 The promised funding

never materialized. 24

In late February of 2012, Frost and his gang executed a fraudulent transfer of

BioZone's assets to Defendant Opko.25 When Pederson became aware of the

fraudulent nature of the transfer, he attempted to have it undone. 26 However, Frost

and his gang were intent on pursuing their fraudulent scheme, so Pederson had no

choice other than to resign from representation of BioZone in about June of 2012. 27

19
Complaint, paras 31-33, for example.
20
Complaint para 35.
21
Complaint, para 37.
22
Complaint, para 42 et seq.
23
Complaint, generally.
24
Complaint, generally.
25
Complaint, paras 99 et seq.
26
Complaint, paras 116, 117.
27
Complaint, paras 118 et seq.
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Frost and his gang began their P&D securities fraud at BioZone in

September of 2013,28 resulting in millions of dollars of illegal profits for the Frost

gang.29 BioZone was just one of a number of companies where the Frost gang

carried out similar P&D securities frauds. 30 Frost and his gang committed many

frauds against many people in the course of their P&D securities fraud

operations. 31 Pederson is one of many individuals harmed by Frost and his gang.

Complex frauds like the BioZone P&D take a long time to develop, and

even longer to investigate and decipher by outsiders. After a multi-year

investigation, on September 7, 2018, the SEC filed charges against Frost and his

gang for securities frauds at BioZone and other companies. 32 The facts alleged in

the SEC complaint against Defendants Frost, Keller, and Opko (among other SEC

defendants) closely mirror the allegations in the present complaint.

Plaintiff Pederson brings claims of fraud and tortious interference with a

business relationship against the Defendants. Pederson initiated the present lawsuit

in late 2017 by serving Defendant Keller under the Minnesota Rules of Civil

Procedure. The Defendants then removed the case to Minnesota District Court and

filed a Motion to Dismiss. The Defendants filed declarations to contest personal

28
Complaint, para 118, for example.
29
Complaint, para 39, for example.
30
SEC press release. (see Procedural Note in addendum)
31
Complaint, para 278.8, for example.
32
SEC press release and SEC v Honig et al.
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jurisdiction. Plaintiff Pederson filed a declaration in support of a finding of

jurisdiction. After briefing and oral arguments, the District Court dismissed the

case for lack of jurisdiction. Plaintiff has appealed to the Eighth Circuit.

VI. SUMMARY OF PLAINTIFF'S ARGUMENT

Pederson has alleged claims of (1) fraud and (2) tortious interference with a

business relationship against the Defendants. The complaint and Pederson's

declaration provide detailed support for all the elements of Pederson's claims. The

District Court did not rule on the validity of Pederson's underlying claims.

Therefore, Plaintiff's allegations are presumed to be true.

The Eighth Circuit reviews the sole issue of jurisdiction de novo. In doing

so, the Court must view the Plaintiff's allegations in a light most favorable to the

Plaintiff, including (1) Pederson's allegations of the Frost gang's P&D operations at

a number of companies;33 (2) Pederson's allegations of the Frost gang's P&D

operation at BioZone;34 (3) Pederson's allegations of tortious acts against Pederson

by the Defendants in the course of Defendants' P&D operation at BioZone;35 and

33
Complaint, para 8 and SEC v Honig et al., generally.
34
Complaint, generally.
35
Complaint, generally.
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(4) Pederson's allegations of Defendants' acts supporting a finding that Minnesota

has jurisdiction over the Defendants in this case.36

The Defendants are subject to jurisdiction in Minnesota under the Minnesota

long-arm statute because they committed acts outside Minnesota causing injury or

property damage in Minnesota. Because Plaintiff's underlying claims are

presumed to be true by this Court, the issue of jurisdiction comes down to a due

process analysis. Due process considerations support a finding of jurisdiction of

Minnesota over the Defendants in this case.

VII. ARGUMENT

A. Introduction

In using their Big Lie to manipulate Pederson, the Defendants committed

acts outside Minnesota causing injury or property damage in Minnesota and

therefore giving rise to jurisdiction in Minnesota. Such acts by Defendants

included hundreds of emails and phone calls based upon the Big Lie. 37

B. Eighth Circuit Standard for a Motion to Dismiss under FCRP 12(b)(2)

To survive a motion to dismiss for lack of personal jurisdiction brought

under Fed. R. Civ. P. 12(b)(2), a plaintiff must make a prima facie showing of

36
Complaint, paras 14.1 - 14.6, for example.
37
Complaint, para 278.13, for example.
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personal jurisdiction by pleading sufficient facts to support a “reasonable inference

that the defendants can be subjected to jurisdiction within the state.” K-V Pharm.

Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011). “Although the

evidentiary showing required at the prima facie stage is minimal, the showing must

be tested, not by the pleadings alone, but by the affidavits and exhibits supporting

or opposing the motion.” Id. at 592 (internal citation and quotation marks omitted).

The court must view the evidence in a light most favorable to the plaintiff and

resolve factual conflicts in the plaintiff’s favor; however, plaintiff carries the

burden of proof and that burden does not shift to defendants. Epps v. Stewart Info.

Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003).

Pederson met this burden with his complaint and declaration, so the

Defendants' Rule 12(b)(2) motion should have failed. However, the Defendants

misled the district court with a false narrative, and the district court granted the

Defendants' motion. Re-examination of the issue of jurisdiction when properly

affording the Plaintiff's right to have his allegations viewed in a favorable light will

result in the conclusion that Defendants are subject to jurisdiction in Minnesota.

Federal Rule of Civil Procedure 4(k)(1)(A) provides that a court can exercise

jurisdiction over a nonresident defendant if jurisdiction is allowed under the state

long-arm statute. The Minnesota long-arm statute says,

Minn. Stat. 543.19 PERSONAL JURISDICTION OVER


NONRESIDENTS.
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§Subdivision 1. Personal jurisdiction. As to a cause of action arising
from any acts enumerated in this subdivision, a court of this state with
jurisdiction of the subject matter may exercise personal jurisdiction
over any foreign corporation or any nonresident individual, or the
individual's personal representative, in the same manner as if it were a
domestic corporation or the individual were a resident of this state.
This section applies if, in person or through an agent, the foreign
corporation or nonresident individual:
(1) owns, uses, or possesses any real or personal property situated in
this state; or
(2) transacts any business within the state; or
(3) commits any act in Minnesota causing injury or property damage;
or
(4) commits any act outside Minnesota causing injury or property
damage in Minnesota, subject to the following exceptions when no
jurisdiction shall be found:
(i) Minnesota has no substantial interest in providing a forum; or
(ii) the burden placed on the defendant by being brought under the
state's jurisdiction would violate fairness and substantial justice.

The Minnesota Supreme Court recently addressed the state's long-arm

statute. In Rilley v Money Mutual, 884 N.W.2d 321 (Minnesota 2016), the Court

said,

“Whether personal jurisdiction exists is a question of law,


which we review de novo.” Juelich v. Yamazaki Mazak Optonics
Corp., 682 N.W.2d 565, 569 (Minn. 2004). When reviewing a motion
to dismiss for lack of personal jurisdiction, we determine whether,
taking all the factual allegations in the complaint and supporting
affidavits as true, the plaintiff has made a prima facie showing of
personal jurisdiction. Marquette Nat’l Bank v. Norris, 270 N.W.2d
290, 292 (Minn. 1978); Hardrives, Inc. v. City of LaCrosse, 307
Minn. 290, 293, 240 N.W.2d 814, 816 (1976).
Minnesota’s long-arm statute, Minn. Stat. § 543.19 (2014),
provides that personal jurisdiction shall not be found over a
nonresident defendant if it would “violate fairness and substantial
justice.” We have held that Minnesota’s long-arm statute “extend[s]
the personal jurisdiction of Minnesota courts as far as the Due Process
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Clause of the federal constitution allows.” Valspar Corp. v. Lukken
Color Corp., 495 N.W.2d 408, 410 (Minn. 1992). Therefore, “when
analyzing most personal jurisdiction questions, Minnesota courts may
simply apply the federal case law.” Rilley at 326-327.

The Eighth Circuit applies a foreseeability standard when evaluating

whether jurisdiction is appropriate over a tortious act occurring in another state

with actionable consequences in Minnesota. Myers v. Casino Queen, Inc., 689

F.3d 904, 911 (8th Cir. 2012). Under this standard, if a defendant can reasonably

foresee his or her actions having consequences felt in Minnesota, jurisdiction is

authorized. Id.

The Defendants lied to and manipulated Pederson for over a year regarding

matters concerning Pederson's professional career, personal financial decisions,

and representation of clients. It was reasonably foreseeable that such lies and

manipulation would have consequences felt in Minnesota.

Plaintiff asserts Minnesota's jurisdiction over all the Defendants based on

Minnesota Statute 543.19(4). Since section 543.19(4)(i) is not at issue, the sole

issue before the Court is due process under section 543.19(4)(ii). As the

Minnesota Supreme Court stated in Rilley, the federal case law applies.

In order to subject a defendant to a court’s personal jurisdiction, due process

requires that the defendant have certain minimum contacts with the state, such that

the maintenance of the suit does not offend “traditional notions of fair play and

substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945).
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Specific, or “conduct-linked,” jurisdiction involves suits “arising out of or

related to the defendant’s contacts with the forum.” Daimler AG v. Bauman, 571

U.S. (2014); Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408,

414 n.8 (1984). For a Minnesota court to exercise specific jurisdiction over an out-

of-state defendant, two requirements must be met: 1) jurisdiction must be allowed

by the Minnesota long-arm statute; and 2) the reach of the long-arm statute must

comport with due process. Viasystems, Inc. v. EBM-Papst St. George Gmbh & Co.,

646 F.3d 589, 593-94 (8th Cir. 2011). Minnesota’s long-arm statute authorizes,

inter alia, personal jurisdiction over defendants who either in person or through an

agent commit a tort causing injury within the state. Minn. Stat. § 543.19.

“For a State to exercise jurisdiction consistent with due process, the

defendant’s suit-related conduct must create a substantial connection with the

forum State.” Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). In other words, “the

relationship must arise out of contacts that the "defendant himself’ creates with the

forum State.” Id. at 1122 (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475

(1985)).

Further, “[e]ven if personal jurisdiction over a defendant is authorized by the

forum state’s long-arm statute, jurisdiction can be asserted only if it comports with

the strictures of the Due Process Clause.” Viasystems, 646 F.3d at 594. “The

touchstone of the due-process analysis remains whether the defendant has

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sufficient minimum contacts with [the forum state] such that the maintenance of

the suit does not offend traditional notions of fair play and substantial justice.” Id.

(brackets in original and internal quotation marks omitted).

C. Plaintiff's prima facie case

In addition to plaintiff's 91-page amended complaint ("Complaint"), the

Plaintiff submitted a sworn declaration to the district court supporting the

substantive and jurisdictional bases of Plaintiff's case.38

The facts as alleged show that Defendants conspired together to carry out a

P&D securities fraud that generated millions of dollars in illegal profits for the

Defendants and their associates.39 In conjunction with the P&D fraud, the

Defendants also conspired to loot the assets of Defendant corporation BioZone

(BZNE/COCP/CoCrystal) for the benefit of Defendants Frost and Opko.40 Such

looting included the fraudulent transfer of rights to drug delivery technologies and

formulations.41

Defendants fraudulently used Pederson's services to carry out their looting of

BioZone's assets.42 Defendant Keller and non-party Elliot Maza (a named

38
Pederson declaration of February 2018.
39
Complaint, paras 4-5, for example.
40
Complaint, paras 91 et seq.
41
Complaint, paras 99 et seq.
42
Complaint, paras 91 et seq.
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defendant in SEC v Honig) together manipulated Pederson to carry out Defendants'

scheme.43 During the course of this manipulation Keller and Maza directed

hundreds of phone calls and emails to Pederson in Pederson's capacity as an

attorney.44

The fraudulent manipulation of Pederson using the Big Lie caused out-of-

pocket losses to Pederson45, as well as substantial damage to Pederson's reputation

and career. 46 These injuries were suffered by Pederson in Minnesota. 47

D. Due process - essential facts

“The touchstone of the due-process analysis remains whether the defendant

has sufficient minimum contacts with [the forum state] such that the maintenance

of the suit does not offend traditional notions of fair play and substantial justice.”

Viasystems, 646 F.3d at 594.

Jurisdictional due process is essentially a common-sense issue. The basic

question is whether the actions of the defendant(s) should subject them to the

jurisdiction of a particular court. In this case, we consider jurisdiction of the State

of Minnesota and defendants' actions relating to the State of Minnesota.

43
Complaint, para 278.2, for example.
44
Complaint, para 278.13, for example.
45
Complaint, para 81, for example.
46
Complaint, para 286 et seq, for example.
47
Complaint, para 286 et seq, for example.
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Plaintiff Pederson is a resident of Minnesota.48 Defendant Frost is an

individual resident of Florida. 49 Defendant Keller is a resident of California. 50

Defendant Opko is a Delaware Corporation with a principle place of business in

Florida.51 Defendant CoCrystal is a Delaware corporation with a principle place of

business in Georgia. 52 Collectively the defendants conspired to commit and

committed fraudulent acts directed at Pederson in Minnesota and causing damage

in Minnesota. The fraudulent acts included hundreds of phone calls and emails

directed at Pederson.53

Plaintiff submits to this Court that a common-sense analysis could end right

here. Defendants were scattered around the country and they joined together to

defraud the Plaintiff in Minnesota. It should not offend any notion of fair play or

justice that the Defendants be held accountable in Minnesota for their purposely

fraudulent actions directed at the Plaintiff in Minnesota.

Turning to legal analysis, but not away from common-sense, the following

factual allegations are especially pertinent to the question of jurisdiction:

48
Complaint, para 15.
49
Complaint, para 16.
50
Complaint, para 18.
51
Complaint, para 17.
52
Complaint, para 19.
53
Complaint, para 278.13 for example.
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1. Defendants directed hundreds of phone calls and emails to Pederson in order to

fraudulently manipulate Pederson using the Big Lie. 54

2. As a result of Defendants' tortious actions, Pederson suffered injury in

Minnesota. 55

3. Defendants acted in concert, directly and by agency, to mislead and defraud

Plaintiff.56

4. Plaintiff is a Minnesota attorney residing in Minnesota. 57

5. Defendants fraudulently manipulated Plaintiff in Plaintiff's capacity as a

Minnesota attorney, thereby availing themselves of the benefits and protections of

Minnesota law (e.g., confidentiality and attorney/client privilege).58

6. Defendant Opko was registered to do business in Minnesota through a

subsidiary.59

E. Due process - The Eighth Circuit Five-Factor test

In the Eighth Circuit, a five-factor test is applied to determine whether

sufficient contacts exist to support the exercise of personal jurisdiction under the

Due Process clause. Dever v. Henzen Coatings, Inc., 380 F.3d 1070, 1073-74 (8th

54
. Complaint,
para 278.13 for example
55
Complaint, para 286 et seq.
56
Complaint, paras 14.1 - 14.5, for example.
57
Complaint, paras 15 and 21, for example.
58
Complaint, para 278.2, for example.
59
Opko Reg. with Minn. Sec. of State. (see Procedural Note in addendum)
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Cir. 2004); Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1390

(8th Cir. 1991). The five factors are: (1) the nature and quality of the contacts with

the forum state; (2) the quantity of the contacts; (3) the relationship

of the cause of action to the contacts; (4) the interest of the forum state in

providing a forum for its residents; and (5) the convenience or inconvenience to the

parties. Dever, 380 F.3d at 1073-74 (quoting Burlington Indus., Inc. v. Maples

Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996)). Applying the five-factor test to

Pederson's allegations results in a clear determination that due process is not

offended by subjecting the Defendants to jurisdiction in Minnesota.

(1) The nature and quality of Defendant’s contacts with the forum state.

(a) Defendant Keller's and Defendant BioZone's contacts with Minnesota go

back to 2007, when Pederson began work for BioZone as a solo patent attorney. 60

Pederson and Keller had a close and trusting working relationship that developed

over a period of years.61 During the Big Lie period, Keller was in regular,

frequent, systematic and continuous communication with Pederson regarding

BioZone's patent and other legal issues while Keller was acting as an agent for

BioZone, Frost and Opko. 62 During the Big Lie period, Keller abused Pederson's

60
Complaint, para 22.
61
Complaint, para 24, for example.
62
Complaint, para 14.3, for example.
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trust and used the Big Lie to manipulate Pederson to the detriment of Pederson and

others.63

(b) Non-party Elliot Maza was in frequent contact with Pederson during the

Big Lie period as an officer of BioZone and as an agent of Frost and Opko. 64 Maza

abused his position as an officer of BioZone to manipulate Pederson to the

detriment of Pederson and others. 65

(c) Both Keller and Maza acted as agents for Frost, Opko, and BioZone.66

(d) Both Keller and Maza contacted Pederson in Pederson's capacity as a

Minnesota attorney, thereby purposely availing all the Defendants of the benefits

and protections of Minnesota law.67

(e) Defendant Frost contacted Pederson once by phone in an attempt to get

Pederson to betray his confidentiality with non-party Nian Wu.68

(f) Through its subsidiary Opko Labs, LLC, Defendant Opko was registered

to conduct business in Minnesota.69

(2) The quantity of contacts.

63
Complaint, para 278.2, for example.
64
Complaint, para 278.2, for example.
65
Complaint, para 278.2, for example.
66
Complaint, paras 14.1 - 14.5, for example.
67
Complaint, paras 14.1 - 14.5, for example.
68
Complaint, para 106.
69
Opko Reg. with Minn. Sec. of State. (see Procedural Note in addendum)
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During the Big Lie period lasting over a year, Keller had hundreds of

telephone and email contacts with Pederson.70 Maza also had many contacts with

Pederson.71 Frost initiated contact with Pederson on one occasion. 72 All these

contacts were in the context of Pederson's capacity as an attorney for BioZone. 73

(3) The source and connection of the cause of action with those specific contacts.

Pederson's claims are for fraud and tortious interference. After a decade of

trusted communication with Pederson, Keller joined with the Frost gang to defraud

Pederson.74 Keller contacted Pederson many times in order to lie to Pederson and

to manipulate Pederson, thereby forming the basis for Pederson's tort claims.

Keller's contacts with Pederson caused injury to Pederson. 75

Frost and Maza also used the Big Lie to manipulate Pederson to help Frost

and Opko loot BioZone's corporate assets.76 Maza contacted Pederson in order to

lie to Pederson and manipulate Pederson, thereby forming the basis of Pederson's

tort claims. Maza's contacts with Pederson caused injury to Pederson.

The court in In Rilley v Money Mutual, 884 N.W.2d 321 (Minnesota 2016)

said, "This case raises the question of what contacts a defendant must have with

70
Complaint, para 278.13, for example.
71
Complaint, para 278.13, for example.
72
. Complaint, para 106
73
Complaint, para 106, for example.
74
Complaint, para 278.2, for example.
75
Complaint, generally.
76
Complaint, generally.
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Minnesota before our courts can exercise specific personal jurisdiction over that

defendant." Rilley at 324. Rilley involved an allegedly illegal payday lending

operating outside Minnesota, but targeting Minnesota residents by email, TV ads,

and Google Adwords advertisements. Distinguishing the case from Walden, the

court found that, "MoneyMutual's commercial solicitations of over 1,000 loan

applicants with known Minnesota addresses were not “random, fortuitous, or

attenuated” contacts with forum residents, but rather constituted “intertwined”

contacts with both Minnesota residents and the state of Minnesota." Riley at 329.

The court also said, "

"The most reasonable approach is to simply apply the


traditional minimum contacts analysis by considering the quantity,
nature, and quality of the email contacts, and whether those contacts
establish a “substantial connection” between the defendant, the forum,
and the litigation, such that the defendant “purposefully availed”
himself of the forum and “reasonably anticipate[d] being haled into
court” there. Walden, ––– U.S. at ––––, 134 S.Ct. at 1121 (quoting
World–Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559); Burger
King, 471 U.S. at 472–74, 105 S.Ct. 2174; Wessels, 65 F.3d at 1432.
The unique characteristics of email as a form of communication
necessarily require a district court to consider whether the defendant
was aware of the plaintiff's location or at least had reason to believe
that the email would be received in a particular jurisdiction.

Here, MoneyMutual's solicitation of and transactions with over 1,000


Minnesotan loan applicants via email demonstrates a “purposeful
direction” of litigation-related conduct at Minnesota. Significantly,
when MoneyMutual sent emails matching applicants to lenders in its
network, those applicants had already completed an online application
that showed they were Minnesota residents. Thus, MoneyMutual
clearly knew or should have known that emails to these applicants
likely would be opened in Minnesota. Similarly, when MoneyMutual
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sent follow-up emails encouraging prior applicants to seek additional
loans, MoneyMutual had sufficient information to know that the
applicants were Minnesota residents and that the emails likely were to
be opened in Minnesota.
Despite the electronic, email-based nature of these relationships, these
contacts demonstrate “purposeful direction” toward Minnesota and a
“purposeful availment” of the benefits of doing business in a
Minnesota forum—namely, a profitable pool of low-income
Minnesota residents that MoneyMutual could match with its payday-
lending network to generate lead fees. In other words, MoneyMutual
availed itself of a Minnesota forum because it profited by selling lead
information to payday lenders about Minnesota residents. These facts,
demonstrating a “purposeful availment” of the Minnesota forum,
should have caused MoneyMutual to reasonably anticipate being
haled into court in Minnesota. Thus, MoneyMutual's emails to
respondents are contacts with Minnesota that support the exercise of
personal jurisdiction." Rilley at 332-333 (footnotes omitted).
In finding that sufficient contacts existed to warrant jurisdiction in

Minnesota, the Rilley court concluded,

"In determining whether a defendant has sufficient “minimum


contacts,” we consider the contacts alleged by the plaintiff in the
aggregate and not individually, by looking at the totality of the
circumstances.” Northrup King Co. v. Compania Productora Semillas
Algodoneras Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir.1995). After
a thorough review, we conclude that minimum contacts with
Minnesota exist and support the exercise of personal jurisdiction in
this case.

"MoneyMutual sent over 1,000 emails to known Minnesotans,


soliciting them to apply for payday loans. These emails were the
culmination of transactions between MoneyMutual and Minnesota
residents through which Minnesota residents provided their personal
information to MoneyMutual in return for being matched with a
payday lender. By engaging in these transactions and knowingly
matching Minnesota residents with payday lenders, MoneyMutual
purposefully availed itself of the Minnesota market and Minnesota

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forum and should have “reasonably anticipate[d] being haled into
court” in Minnesota. Burger King, 471 U.S. at 474, 105 S.Ct. 2174.
These contacts alone are sufficient to support a finding of personal
jurisdiction." Rilley at 337.

(4) The interest of the forum state.

Plaintiff Pederson is a resident of Minnesota. The Defendants come from

multiple states including Florida, California, Delaware and Georgia. The

Defendants acted together to purposely commit torts against Pederson. The

Defendants caused injuries in Minnesota. Minnesota has an interest in providing a

forum for its residents that are harmed by conspiracies of out-of-state persons and

entities from multiple jurisdictions that conduct frauds in Minnesota remotely

through telephone and email.

In considering the interests of the forum state, the court in Rilley said,

"Here, the reasonableness factors also point toward the exercise of


personal jurisdiction over MoneyMutual. Minnesota has a strong
interest in protecting its residents from predatory lending, enforcing
consumer protection laws, and providing a forum for litigating
violations of its payday-lending statutes. See, e.g., SoftBrands Mfg.,
Inc. v. Missing Link Consulting, Inc., No. Civ. 04–3900, 2004 WL
2944112, at *7 (D.Minn. Dec. 20, 2004) (“Minnesota has an interest
in providing a forum for its citizens to enforce consumer protection
suits.”); Kopperud v. Agers, 312 N.W.2d 443, 445 (Minn.1981)
(“Minnesota has an obvious interest in providing a forum since
Minnesotans were defrauded.”)." Rilley at 338.

(5) The convenience of the parties.

Defendants and their attorneys come from many jurisdictions including

California, Delaware, Georgia, Florida, New York and Minnesota. There is no


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special inconvenience to Defendants because of jurisdiction in Minnesota.

However, by denying jurisdiction in Minnesota, Pederson would be forced to

pursue multiple lawsuits in multiple jurisdiction because of the acts of Defendants

acting in concert against Pederson.

Each and every factor of the five-factor tests weighs heavily in favor of

finding jurisdiction in Minnesota. The quality of the Defendants' contacts with

Minnesota is that the contacts were used to commit intentional frauds against

Pederson and others. The contacts numbered in the hundreds. There is a direct

connection between the contacts and Pederson's underlying claims for fraud and

tortious interference. Minnesota has an interest in providing a forum for Plaintiff

and persons similarly situated. Even the convenience of the parties factor weighs

in favor of Plaintiff. Holding the Defendants accountable in a Minnesota court

does not “offend traditional notions of fair play and substantial justice” under the

Due Process Clause.

F. Calder Effects Test

In addition to the Eighth Circuit's five-factor test, when the cause of action

involves a tortious act, the court should consider the “effects test” of Calder v.

Jones, 465 U.S. 783, 789-90 (1984). See Walden, 134 S. Ct. at 1123. Under the

Calder effects test, a defendant’s tortious acts can serve as a source of personal

jurisdiction only where the plaintiff makes a prima facie showing that the
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defendant’s acts (1) were intentional, (2) were uniquely or expressly aimed at the

forum state, and (3) caused harm, the brunt of which was suffered—and which the

defendant knew was likely to be suffered—[in the forum state]. Johnson v. Arden,

614 F.3d 785, 796 (8th Cir. 2010). The Calder effects test does not replace the

Eighth Circuit’s five-factor test for personal jurisdiction, but “requires the

consideration of additional factors when an intentional tort is alleged.” Dakota

Indus., Inc., 946 F.2d at 1391.

The cause of action here is based upon the commission of tortious acts.

Pederson alleges that Defendants used hundreds of emails and phone calls to

manipulate Pederson as part of Defendants' scheme to loot BioZone's assets.

These allegations show that the Defendants directed fraudulent acts to Pederson in

Minnesota, with the intention that Pederson rely on the Big Lie when making

decisions affecting his career, finances, and representation of his clients. As a

result, Pederson suffered injuries in Minnesota. The alleged contacts are more than

sufficient to hold the Defendants subject to hold the Defendants subject to legal

action in Minnesota under the Calder effects test.

G. Purposeful availment

The district court relied upon a "purposeful availment" analysis in reaching a

finding that the Minnesota court did not have jurisdiction over the Defendants.

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However, the reasoning of the district court may have been unduly influenced by a

false narrative put forth by the Defendants to mislead the court.

In Defendants' Memorandum of Law in Support of their Motion to Dismiss

Plaintiff's Amended Complaint, the Defendants stated to the district court,

"To survive a motion to dismiss under Federal Rule of Civil


Procedure 12(b)(6), a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 555 U.S. 544, 570 (2007), and contain more than threadbare
accusations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim has
“facial plausibility” when the “factual content allows the court to draw
the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 555 U.S. at 555). A court need not
accept as true “threadbare recitals of a cause of action’s elements,
supported by mere conclusory statements” and the reviewing court
must “draw on its experience and common sense” in determining
plausibility. Id. at 663-64 (citing Twombly, 555 U.S. at 555-56); see
also Wiles v. Capitol Indem. Corp., 280 F.3d 868, 870 (8th Cir. 2002)
(courts are “free to ignore legal conclusions, unsupported conclusions,
unwarranted inferences and sweeping legal conclusions cast in the
form of factual allegations.”)."77

By citing Twombly and Iqbal, Defendants clearly intended to convey the

false implication that Plaintiff's allegations are implausible and unreasonable.

Defendants reinforced this notion by using the phrases "threadbare accusations,"

"threadbare recitals," and "mere conclusory statements," and by saying that courts

are "free to ignore legal conclusions, unsupported conclusions, unwarranted

inferences and sweeping legal conclusions cast in the form of factual allegations.”

77
District Court document 62 at pp. 33-34
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Defendants furthered their false implication that Defendant Frost's wealth,

power and reputation outweigh Pederson's allegations during oral arguments.

Defendants opened their remarks by saying,

"Mr. Pederson alleges in a very lengthy pleading that there was


some type of a criminal organization allegedly being run by my client,
Dr. Phil Frost.
Dr. Frost is an executive with a company called Opko Health
located in Miami, Florida. He's a billionaire. He made most of his
money through a company that manufactured generic pharmaceutical
drugs to compete with name-brand pharmaceutical products and then
he's had numerous other investments over the years. He's a very well-
known person in Miami, an entrepreneur, a philanthropist. The
Science Museum, for example, is named after him in Miami.
The plaintiff alleges, without much detail, Dr. Frost is
supposedly a mastermind of a criminal organization that involved the
other defendants and nonparties who are not named here.
While the allegations are pretty unclear, the gist of it seems to
be that Mr. Pederson alleges that Dr. Frost and Opko, working with
the other alleged co-conspirators, committed a fraud on Mr. Pederson
…"78

After disparaging Plaintiff's credibility, Defendants went on to distort and

mischaracterize Plaintiff's allegations to the district court, both in their briefs and at

oral argument. Defendants intentionally presented the district court with a false

narrative in an effort to mislead the court into believing that the Plaintiff's

allegations about the Defendants' frauds were implausible.

The SEC charged Defendants Frost, Keller and Opko with securities fraud

only after briefing and oral arguments were completed in the district court for the

78
Transcript, District Court document 79 at pp. 8-9.
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present case.79 Besides Frost, Keller and Opko, 17 other individuals and entities,

including Elliot Maza, were also charged by the SEC in the same case.80 The SEC

alleged that the Frost gang received at least $27 million from P&D securities

frauds at three companies, including Defendant Cocrystal/BioZone. 81 Because of

the timing, no evidence of the SEC complaint against Frost and others was

presented to the district court.

The district court dismissed Plaintiff's complaint, relying on the Defendants'

Memorandum of Law in Support of their Motion to Dismiss, which put forth a

purposeful availment analysis used in the Fastpath case. The Defendants argued,

"Put simply, no Defendant purposely availed himself/itself of the privilege of

conducting business in Minnesota such that any Defendant should reasonably

expect to be haled into court in that jurisdiction,"82 and the district court adopted

the Defendants' purposeful availment argument.

The district court's reliance on Fastpath was misplaced. The facts of the

present case are easily distinguished from the facts in Fastpath. Fastpath was a

79
SEC v Honig et al. was filed on September 7, 2018.
80
Frost, Keller and Opko are named as defendants in both the SEC complaint and
the Plaintiff's complaint. Frost is the trustee for SEC defendant Frost Gamma
Investment Trust. Frost is part-owner of SEC defendant Southern Biotech. Other
SEC defendants that are mentioned in the present complaint include Barry Honig,
Michael Brauser, Elliot Maza and John Ford.
81
Cocrystal/BioZone was referred to as "Company A" in the complaint.
82
District Court document 62, page 17.
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contract case between an Iowa plaintiff and California defendant, involving the

alleged breach of a mutual confidentiality agreement. Fastpath did not involve any

tort claims. There is practically no similarity between the facts of the present case

and the facts of Fastpath in light of the five-factor test.

It is questionable that the purposeful availment standard used in Fastpath is

even a requirement for a finding of jurisdiction in the present case, which involves

intentional torts and section 4 of the Minnesota long arm statute.83 A 2013

commentary on purposeful availmant says,

"The minimum contacts test requires no more than that the


nonresident defendant have connections with the forum state, such
that he or she would be on reasonable notice of being sued there. As
we will show, purposeful availment is not implicit in this due-process
driven standard. In fact, purposeful availment sometimes operates in
a manner that defeats jurisdiction when the fundamental principles
have, in fact, been satisfied. To put it bluntly, purposeful availment is
an unnecessary and sometimes pernicious appendage to due process
analysis." Ides, Allan and Grossi, Simona, "The Purposeful
Availment Trap" at 7 Fed.Cts.Law Rev. 113 (2013)

Whether or not purposeful availment is a standard for proving jurisdiction,

the facts of the present case still satisfy such a standard. The Defendants' contacts

with Pederson in Minnesota were certainly not "random, fortuitous, or attenuated"

or a product of "the unilateral activity of another party or a third person.” Stanton,

83
Myers v. Casino Queen, Inc., 689 F.3d 904 (8th Cir. 2012) involved both a claim
for negligence and the Missouri long-arm statute. In Myers, this court conducted a
due process analysis without even mentioning the concept of purposeful availment.
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340 F.3d at 693–94 (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.

Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985)). The Defendants' suit-related conduct

created a substantial connection with the forum State. Walden v. Fiore, 134 S. Ct

1115, 1121, 188 L. Ed. 2d 12 (2014). The relationship arose out of contacts that

the Defendants themselves created with the forum State. Id. at 1122 (quoting

Burger King, 471 U.S. at 475, 105 S. Ct. at 2183–84). The Defendants' phone calls

and emails were "purposefully directed" at the forum. See Rilley at 331. In the

present case, the Defendants conspired and acted together to commit torts against

the Plaintiff in Minnesota, thereby causing injury in Minnesota. Under such

circumstances, the Defendants should reasonably anticipate being haled into a

Minnesota court.

The court in Rilley found purposeful availment in the facts of that case.

"MoneyMutual sent over 1,000 emails to known Minnesotans


… By engaging in these transactions and knowingly matching
Minnesota residents with payday lenders, MoneyMutual purposefully
availed itself of the Minnesota market and Minnesota forum and
should have “reasonably anticipate[d] being haled into court” in
Minnesota. Burger King, 471 U.S. at 474, 105 S.Ct. 2174. These
contacts alone are sufficient to support a finding of personal
jurisdiction." Rilley at 337.

Adding another layer to meeting the purposeful availment standard in this

case, the Defendants purposely availed themselves of the benefits and protection of

Minnesota law by using Pederson's services as an attorney to further their frauds.

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The district court's ruling was an anomaly, and very likely the result of the

false and misleading narrative put forth by the Defendants that the court did not

have to view the Plaintiff's allegations in a favorable light. In any event, the Eighth

Circuit reviews the issue of jurisdiction de novo, and is free to apply its own

analysis differently than the district court, while viewing the allegations in the light

most favorable to the Plaintiff

H. Summary and Conclusion of Argument

Defendants acted in concert, individually and under principles of agency to

commit intentionally tortious acts against Pederson. Each of the Defendants is

subject to jurisdiction under the Minnesota long-arm state because they committed

acts outside Minnesota causing injury or property damage in Minnesota. Due-

process considerations support jurisdiction in Minnesota because each defendant

has sufficient minimum contacts with Minnesota such that the maintenance of the

suit does not offend traditional notions of fair play and substantial justice.

VIII. RELIEF SOUGHT

Plaintiff / Appellant Pederson prays that the Court enter an order vacating

the district court's order and judgment and remanding this case to the district court

for further proceedings.

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IX. CERTIFICATES OF COMPLIANCE

I certify that this Appeal Brief conforms to type-volume limitations for

Replies filed under Rule 27. The length of the Appeal Brief is 7,642 words. This

Appeal Brief was prepared using Microsoft Word 2010 and the word processing

program has been applied specifically to include all text, including headings,

footnotes, and quotations for word count purposes.

I also certify under Rule 28 that the brief and addendum have been scanned

for viruses and are virus-free.

Respectfully submitted,

Date: December 1, 2018 Plaintiff/Appellant’s Signature


/s/ Lee Pederson

Lee Michael Pederson


Pro se
MN Atty. No. 225605
2126 Lyndale Ave S #6
Minneapolis, MN 55405
952-836-7949
LeeMPete@aol.com

36

Appellate
Appellate
Case: 18-3195
Case: 18-3195
Page: 36
Page:Date
36 Filed:
Date12/01/2018
Filed: 12/11/2018
Entry ID:
Entry
4731735
ID: 4734669
RESTRICTED

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