SHERMAN, Texas (LN) — U.S. District Judge Sean D. Jordan on Thursday denied EFD Sports’ motion to file a third amended complaint, refusing to allow the plaintiff to sue three individual defendants because they did not purposefully avail themselves of Texas’s benefits.
EFD Sports, a Texas LLC that developed boxing analytics technology called StrikeTec, sued Bally’s Corporation after the sports betting company allegedly terminated a joint development project and failed to pay for work completed.
The dispute began in early 2021 when Soo Kim, the chief information officer of Standard General, Bally’s largest shareholder, contacted EFD Sports owner Wes Elliot via LinkedIn to inquire about the technology.
Elliot traveled to California to negotiate a deal with Bally’s team lead Adi Dhandhania and other executives to integrate StrikeTec into Bally’s sports betting system.
After Bally’s pulled out of the project, EFD Sports sued in Texas state court, and Bally’s removed the case to federal court based on diversity jurisdiction.
In its third amended complaint, EFD Sports added Sina Miri, Sam Miri, and Dhandhania as individual defendants, alleging they tortiously interfered with the contract and conspired to gain control over the project.
The complaint alleged that the individuals participated in Zoom calls and emails regarding the licensing agreement and that Sam Miri, who had previously sought employment with EFD Sports, led efforts to interfere with the deal after being rejected for a job.
Jordan denied the motion to amend, finding the proposed complaint futile because it failed to establish a prima facie case for personal jurisdiction over the individual defendants.
The judge noted that the defendants did not visit Texas, did not target their actions toward the state, and merely participated in communications assigned to them by Kim.
“EFD Sports’s own allegations make this point apparent: Dhandhania and Sina ‘sent emails, participated in phone calls, and Zoom meetings wherein representations and promises were made by Soo Kim,’ ” Jordan wrote.
The court found that the defendants’ contacts with Texas were fortuitous, stemming only that EFD Sports is a Texas company, which is insufficient to establish minimum contacts under due process standards.
Jordan also rejected the argument that the defendants’ communications regarding the contract constituted purposeful availment, citing Fifth Circuit precedent that merely contracting with a forum resident is insufficient to subject a nonresident to jurisdiction.
“The existence of contacts between the Individual Defendants and a resident of Texas is not proof of the existence of substantial or meaningful connection between the Individual Defendants and Texas itself,” the judge wrote, citing Walden v. Fiore.
The court further observed that negotiations, the proof of concept, and preparation of the licensing agreement all occurred outside Texas, and the project involved sports betting, which is illegal in the state.
EFD Sports’s motion for leave to file a second amended complaint was denied as moot because the third amended complaint superseded it.
The court also struck a supplemental motion for leave to file the third amended complaint because EFD Sports had not sought leave to file the supplemental motion itself.
Jordan is a George W. Bush appointee.