Greg Wasson established a Delaware corporation that became a special purpose acquisition company (SPAC) and engaged in merger discussions with a target company prior to the SPAC's launch. Following the launch, Wasson created a second Delaware entity, a limited liability company (LLC) serving as a subsidiary of the SPAC, to facilitate the merger, which was executed as a forward triangular merger between the target company and the LLC. The plaintiff has filed a lawsuit against Wasson concerning his actions related to this merger. Wasson has moved to dismiss the claims on the grounds of lack of personal jurisdiction in Delaware as well as on the merits. The court denied the motion regarding personal jurisdiction, stating that to establish jurisdiction, two criteria must be met: valid service of process and compliance with due process standards. Under the Delaware Long Arm Statute, forming a Delaware entity qualifies as transacting business in the state, which supports service of process for claims related to that entity's formation. Wasson’s creation of both Delaware entities fulfills this requirement and establishes sufficient contact with the state to sustain personal jurisdiction. The court noted that individuals who create Delaware entities with the intention of engaging in transactions should anticipate being subject to litigation in Delaware. The allegations in the plaintiff's complaint support the inference of personal jurisdiction over Wasson, leading to the denial of his motion. The facts are based on the plaintiff's complaint and its incorporated documents, with all allegations taken as true at this stage of the proceedings.
P3 Health Group Holdings, LLC (“P3”) is a Delaware limited liability company focused on population healthcare management. Chicago Pacific, a private equity fund, provided initial capital and has controlled P3 since its inception, including the right to appoint members to the governing board. Hudson Vegas Investment SPV, LLC (“Hudson”) later became P3's second-largest investor, also obtaining the right to appoint board members.
In August 2020, P3 explored going public, with a potential merger involving another Chicago Pacific portfolio company discussed at a September board meeting. Wasson, an executive, met with the board on November 1, 2020, to consider a SPAC merger, leading to discussions of a three-way merger involving Wasson’s future SPAC, P3, and the other portfolio company (the "Original Deal Structure"). Confidential information was exchanged, and by December, preparations for the Original Deal Structure were underway, culminating in the formation of Foresight Acquisition Corp., which conducted an IPO in January 2021 and began trading on NASDAQ.
However, P3's LLC agreement mandated Hudson's approval for transactions involving Chicago Pacific affiliates. Hudson disapproved of the Original Deal Structure, prompting P3, Wasson, and Chicago Pacific to develop an alternative strategy. They opted for a merger solely between P3 and Foresight (the "New Deal Structure"), circumventing the need for Hudson's consent by excluding the other portfolio company.
Wasson, Chicago Pacific, and the Company aimed to merge the Company with another Chicago Pacific portfolio company following the merger with Foresight, which would eliminate Hudson’s consent right. By late March 2021, they had a letter of intent valuing the post-merger entity at $3.3 billion, indicating that the Company would not survive the merger and that Hudson would lose certain rights under the new governing agreements. Hudson objected, but the Board approved the transaction. Subsequently, Foresight reduced the Company’s valuation by about one third, and Chicago Pacific proceeded without full Board discussion. Wasson incentivized two Chicago Pacific Managers to support the deal by offering them participation in another SPAC.
On May 20, 2021, the Company notified the Board of two meetings regarding the merger, with a vote planned for May 23. The merger involved a complex "Up-C" structure, with the Company merging into a new subsidiary of Foresight, NewCo. Due to funding tensions, the vote was delayed until May 25, when the Board approved the merger with Hudson’s representatives abstaining.
On June 11, 2021, Hudson filed a lawsuit seeking a preliminary injunction against the merger. After expedited discovery, the court denied Hudson's request on September 14, 2021, ruling that Hudson did not demonstrate a reasonable likelihood of success on claims that could not be resolved post-merger. The merger closed on December 3, 2021, after which Hudson filed an amended complaint, including Count XI, alleging that Wasson improperly interfered with Hudson’s rights. Wasson moved to dismiss Count XI, arguing both on the merits and lack of personal jurisdiction in the court. This decision addresses Wasson's jurisdictional challenge.
Wasson has filed a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2). The plaintiff must demonstrate a valid basis for the court's jurisdiction, which involves two requirements under Delaware law: a valid method of service and sufficient minimum contacts with the state. Service of process can be executed on any nonresident who transacts business in Delaware. A single act can establish jurisdiction if the claim arises from that transaction, and forming a Delaware entity qualifies as such an act. Delaware courts have consistently ruled that incorporation in Delaware constitutes sufficient business activity to confer personal jurisdiction.
Once a valid service method is established, the court evaluates whether the defendant has sufficient minimum contacts with Delaware, considering factors such as the state's interest in the dispute and the plaintiff's need for effective relief. Forming a Delaware entity creates adequate contact, making personal jurisdiction justifiable for claims connected to that formation. Wasson, having created two Delaware entities related to a merger, should have anticipated potential jurisdiction in Delaware for disputes arising from these actions. Consequently, Wasson is subject to personal jurisdiction in Delaware, and his motion to dismiss is denied.
