PHILADELPHIA – The U.S. District Court for the Eastern District of Pennsylvania recently granted in part a motion to dismiss a fraud case filed by a professional baseball player who claims he signed a contract to play for a Japanese team that later withdrew the contract.
In the April 22 ruling, U.S. District Judge Chad F. Kenney granted a motion by Tokyo-based Rakuten Inc. to be dismissed from the complaint but denied a motion to dismiss filed by Rakuten's subsidiary, Rakuten Baseball, which owns the Tohoku Rakuten Golden Eagles.
Zachary Lutz, a professional baseball player, played for the Golden Eagles in 2014, court filings said.
In his lawsuit, Lutz said he had injured his thumb and was renegotiating his contract for the 2015 baseball season. At the time of the negotiations, he was in Pennsylvania. He claims things seemed to be going smoothly after he received a contract from the team to sign for the new season.
In his suit, Lutz claims he was in communication with Golden Eagles’ Assistant General Manager Akihoto Sasaki, and Lutz later signed on to a $700,000 contract plus bonuses and reimbursement for expenses.
The lawsuit claims the team later withdrew the contract and cut all communication. By this time, Lutz and his wife had already bought a new home in Pennsylvania, under the impression the contract would go through.
Lutz then signed a contract with a different team, the Doosan Bears of the Korean Baseball Organization, for a salary of $550,000, court filings said. Lutz then filed the lawsuit claiming fraud, naming the Rakuten baseball team and the parent company as defendants.
Rakuten then filed the motion to dismiss, claiming the court lacked jurisdiction and Lutz failed to adequately state plausible claims for relief.
In ruling on the motions, the court determined it has specific jurisdiction over Rakuten Baseball and pointed out the organization performed negotiations in Pennsylvania through emails and texts during Lutz’s time in the state. It also noted that Rakuten Baseball knew that Lutz resided in Pennsylvania permanently.
However, the court said it doesn’t have specific jurisdiction over the parent company, Rakuten, since “there are no allegations, and nothing in the record suggests, that this litigation arises out of Rakuten’s contacts with Pennsylvania.”
The ruling said Lutz also failed to show that the court had general jurisdiction over Rakuten, noting that Lutz didn’t show that Rakuten did any business in Pennsylvania.
The court determined it had jurisdiction over Rakuten Baseball, but not its parent company, Rakuten, and said Rakuten Baseball has until May 6 to file an answer to the lawsuit.
The ruling also said Lutz was able to overcome the defendants’ claim that the lawsuit was outside of the two-year statute of limitation, particularly in reference to his fraud claims. The court said Rakuten Baseball’s statute argument came too early because it’s not clear when the statute of limitations period actually began. The court said Lutz properly pleaded his fraud, promissory estoppel and negligent misrepresentation claims against the defendants.