ERIC F. MELGREN, UNITED STATES DISTRICT JUDGE.
Plaintiffs GCIU-Employer Retirement Fund and its Board of Trustees bring this action against two Irish companies, Coleridge Fine Arts and Jelniki Limited. Plaintiffs seek to collect withdrawal liability payments under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. and the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"). Defendants move for dismissal under Fed. R. Civ. P. 12(b)(2) asserting that the Court lacks personal jurisdiction. Because the Court finds that Defendants did not have sufficient minimum contacts with the forum and the exercise of personal jurisdiction would not comport with due process, the Court grants Defendants' Motion to Dismiss (Doc. 39).
Plaintiff GCUI-Employer Retirement Fund is a multiemployer pension plan. Plaintiff Board of Trustees is made up of the present trustees who are the named fiduciaries of the Fund. The Fund is primarily funded by contributions remitted by multiple participating employers as a result of negotiated collective bargaining agreements ("CBAs").
Plaintiffs allege the following facts in the Amended Complaint relating to Defendants' corporate structure. Defendant Coleridge Fine Arts ("CFA") is a corporation domiciled in the Republic of Ireland. CFA was established in Dublin, Ireland, on or
CFA owned Vile-Goller Fine Arts Printing and Lithographing Company ("Vile Goller"), a corporation organized in Missouri. In 1998, Vile Goller merged with Constable Hodgins Printing Company, Inc., a corporation organized in Kansas. The name of the surviving corporation became Greystone Graphics, Inc. ("Greystone").
Greystone was a corporation organized under the law of Kansas and also provided lithograph printing services. At the time of the merger, CFA acquired a 50 percent ownership interest in Greystone and retained the right to increase its ownership interest. In 2002, CFA acquired the remaining 50 percent ownership in Greystone. Plaintiffs also allege that CFA owns 100 percent of JDV, Co. JDV, Co. is allegedly an umbrella company that holds three companies: Greystone, Greystone Investment Company, and Coleridge Design and Imaging, Inc.
A CBA bound Greystone to make contributions to the Fund. On or about February 2011, Greystone ceased doing business and is now a defunct corporation. On April 15, 2013, a default judgment was entered by the United States District Court in the Central District of California against Greystone, JDV, Co., Greystone Investment Company, and Coleridge Design and Imaging, Inc. in the amount of $4,454,092.02 in withdrawal liability.
Plaintiffs filed suit in this Court on June 25, 2014, asserting that CFA was affiliated with Greystone and Coleridge Design and Imaging, Inc. and was liable for the withdrawal liability. Defendant CFA sought to quash allegedly defective service of process on it, but this Court denied Defendant's motion. Defendant CFA then filed a Motion to Dismiss asserting that the Court lacked personal jurisdiction over it. Plaintiffs then filed an Amended Complaint adding Jelniki as a Defendant and additional factual allegations. Defendant CFA withdrew its pending Motion to Dismiss.
Defendants CFA and Jelniki then filed a Motion to Dismiss (Doc. 39) for lack of personal jurisdiction based on the allegations in the Amended Complaint. In connection with this Motion to Dismiss, Defendants provide an affidavit. In this affidavit, Eugene Reynolds, a director and shareholder of CFA, states that CFA and Jelniki are separate Irish-registered companies that are not registered to conduct business and do not conduct business in Kansas. Reynolds avers that CFA and Jelniki never had direct control of the daily affairs of Greystone, did not have the authority to make business decisions related to Greystone, did not conduct business on behalf of Greystone, did not enter into contracts with Greystone, did not execute agreements in relation to the sale of Greystone, and did not acquire or purchase any of Greystone's property during the sale of Greystone's property. CFA and Jelniki had separate budgets, payroll, and business records from Greystone. CFA and Jelniki do not employ individuals in the United States, do not provide services to customers in the United States, do not have a designated agent for service of process in the United States, and have
Reynolds avers that Greystone never conducted business on behalf of CFA or Jelniki. Reynolds states that Jelniki only had an investment interest in CFA, which only had an investment interest in JDV, Co. He also avers that CFA operated in a different sector of the printing market than Greystone, and Jelniki and CFA only operated in Ireland while Greystone only operated in the United States. Mr. Reynolds also states that although he was an officer and board member of Greystone, any action that he took on behalf of Greystone was not at the direction or interest of either CFA or Jelniki. In a subsequent affidavit, Reynolds avers that CFA's and Jelniki's respective corporate documents are located in Ireland, and the vast majority of relevant witnesses would likely be located in Ireland.
In the original briefing of Defendants' Motion to Dismiss, Defendants briefed the personal jurisdiction issue by stating that the case was based on diversity. Because this case is actually premised on federal question, the Court ordered additional briefing by the parties to address relevant Tenth Circuit law. The additional briefing is complete, and the Court will now address Defendants' Motion to Dismiss on the basis of all the briefing.
A plaintiff opposing a motion to dismiss based on lack of personal jurisdiction bears the burden of showing that jurisdiction over the defendant is appropriate.
"The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party."
Plaintiffs bring a claim for withdrawal liability under ERISA and the MPPAA. Under the MPPAA, an employer incurs
As noted above, withdrawal liability in the amount of $4,454,092.02 was previously assessed against Greystone, JDV, Co., Greystone Investment Company, and Coleridge Design and Imaging, Inc. These companies are all apparently defunct. Plaintiffs seek to impose liability on Defendants CFA and Jelniki by arguing that Defendants are affiliated with Greystone. Plaintiffs allege that CFA owned 100 percent of Greystone and that CFA is a wholly-owned subsidiary of Jelniki. Thus, they assert that Defendants had control of Greystone such that Defendants should be treated as a single employer and are jointly and severally liable for Greystone's withdrawal liability. Defendants seek dismissal on the basis that they are not subject to personal jurisdiction because they had insufficient contacts with the forum and the exercise of personal jurisdiction would not comport with due process.
Plaintiff's federal MPPAA claim, brought under ERISA, is the only claim brought against Defendants. "Before a federal court can assert personal jurisdiction over a defendant in a federal question case, the court must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process."
In this case, Defendants are foreign corporations and were served in Ireland.
The first two requirements are met. Plaintiffs bring an ERISA and MPPAA claim, and Defendants are not subject to jurisdiction in any state court in the United States.
Due process allows a court to exercise personal jurisdiction over a non-resident defendant if the defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and
The minimum contacts standard can be satisfied either through specific jurisdiction or general jurisdiction.
Plaintiffs argue that this Court has specific personal jurisdiction over Defendants CFA and Jelniki because they purposefully directed activities toward the United States when they acquired Greystone (a Kansas-based company).
Generally, "a holding or parent company has a separate corporate existence [from its subsidiary] and is treated separately from the subsidiary in the absence of circumstances justifying disregard of the corporate entity."
Defendants provide an affidavit in which Eugene Reynolds, director and shareholder of CFA, avers that Defendants CFA and Jelniki never had direct control over the daily affairs of Greystone. Defendants, at all times, had separate budgets, payroll, and business records from Greystone. Defendants never had any authority to make business decisions related to Greystone and never conducted business on behalf of Greystone. Similarly, Greystone never conducted any business on behalf of Defendant. There simply is no evidence that corporate formalities were not observed or evidence that Defendants exercised control over Greystone.
Plaintiffs contend that Defendants' owners actively controlled and participated in the management and operations of Greystone. Plaintiffs direct the Court to several exhibits demonstrating that two individuals (Reynolds and Walsh) are the owners of and members of Defendants and also sat on Greystone's board of directors. These documents do not demonstrate that Defendants controlled the day-to-day activities of Greystone. Instead, they simply demonstrate that Defendants and Greystone had several common directors at one time. "The identity of officers and directors is insufficient to allow corporate veil piercing."
Plaintiffs also argue that Defendants expanded their printing business operations in the United States by conducting business through their subsidiary, Greystone. Again, Plaintiffs rely on several documents in an attempt to establish this fact, but the documents do not support Plaintiffs' contention. Although these documents may show that CFA was affiliated with Defendants, they do not show that Defendants controlled the daily activities of Greystone such that Defendants are subject to personal jurisdiction in the United States.
As noted above, Plaintiffs are essentially relying upon corporate affiliation. Corporate affiliation in no way demonstrates that Defendants purposefully directed activities toward the United States. There is no evidence or allegations of Defendants transacting business in the United States or Kansas or purposefully directing activities toward the United States or Kansas. Quite simply, there are no allegations, nor
In this case, however, Plaintiffs bring suit under ERISA and assert that Defendants are jointly and severally liable for Greystone's withdrawal liability because they should be considered a "single employer." Plaintiffs direct the Court's attention to a United States District Court for the District of Columbia case, Pension Benefit Guaranty Corporation v. Asahi Tec Corporation,
In contrast, Defendants direct the Court to a Seventh Circuit case, GCIU-Employer Retirement Fund v. Goldfarb Corp.,
Although Goldfarb involved the same cause of action and there are several similar facts to the facts in this case, it is not entirely on point. In Goldfarb, the plaintiff sought to impose liability upon the defendant through the foreign defendant's contacts with its subsidiary's lenders.
Although the opinion in Goldfarb is not entirely on point, the Court finds the Seventh Circuit's opinion in Goldfarb, and its opinion in Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp.,
The plaintiff, in Reimer, acknowledged that generally corporate ownership alone is insufficient to establish personal jurisdiction.
The Seventh Circuit rejected this argument and stated that "constitutional due process requires that personal jurisdiction cannot be premised on corporate affiliation or stock ownership alone where corporate formalities are substantially observed and the parent does not exercise an unusually high degree of control over the subsidiary."
In both Reimer and Goldfarb, the Seventh Circuit found that "in actions seeking withdrawal liability, ERISA's broad `definition of corporate affiliation as an element of withdrawal liability does not confer personal jurisdiction on the basis of such affiliation.'"
As noted above, Defendants do not employ individuals in the United States, do not provide services to customers in the United States, and have never litigated claims in the United States. Greystone did not conduct business on behalf of Defendants, and Defendants did not conduct business on behalf of Greystone. Defendants and Greystone had separate budgets, payroll, and business records. Instead, Plaintiffs primarily rely upon corporate affiliation (or Defendants' alleged status as controlled group members under ERISA) for the basis of personal jurisdiction. ERISA's statute premising liability on controlled group status is simply insufficient to demonstrate minimum contacts establishing personal jurisdiction. To the extent that Plaintiffs allege that Defendants directly controlled Greystone's daily affairs, their allegations are belied by the evidence. Thus, the Court finds that there are not sufficient minimum contacts by Defendants, and the exercise of personal jurisdiction does not comport with due process.
Finally, even though the Court has already concluded that the exercise of jurisdiction does not comport with due process, the Court will also address the Fifth Amendment constitutional concerns as out-lined by the Tenth Circuit in Peay. In federal question cases, a defendant must demonstrate constitutionally significant inconvenience in order to avoid the exercise of personal jurisdiction over it.
In this case, as previously discussed, Greystone's contacts (as a subsidiary of Defendant CFA) with Kansas are insufficient to establish Defendants' contacts with the forum. In addition, there are no other contacts by Defendants with the United States or Kansas. With regard to the second factor, it would be inconvenient for Defendants (Irish corporations) to defend this suit in the United States, particularly when the evidence demonstrates that these corporations do not have offices or representatives in the United States. As to the judicial economy factor, it does not weigh in any party's favor. With regard to the fourth factor, discovery would proceed in the United States, but all of Defendants' documents and witnesses would likely be in Ireland.
Finally, the Court denies Plaintiffs' request to stay Defendants' Motion to Dismiss to permit Plaintiffs to conduct jurisdictional discovery. There would be no benefit of permitting additional discovery because the evidence demonstrates that Defendants were not engaged in Greystone's daily affairs. As noted by the Seventh Circuit in Reimer, "[f]oreign nationals usually should not be subjected to extensive discovery in order to determine whether personal jurisdiction over them exists."