NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                _____________

                                    No. 16-3572
                                   _____________

                   MARK IV TRANSPORTATION & LOGISTICS,
                                               Appellant

                                          v.

          LIGHTNING LOGISTICS, INC.; TRAVELLER LOGISTICS, INC.;
          JOHN GREGORY O'RIORDAN; CROSSTOWN COURIER, INC.;
                            SCOTT EVATT*
                             _____________

                   On Appeal from the United States District Court
                            for the District of New Jersey
                           (D.C. Civ. No. 2-09-cv-06480)
                       District Judge: Honorable Esther Salas
                                   ______________

                     Submitted Under Third Circuit L.A.R. 34.1(a)
                                  March 27, 2017
                                 ______________

           Before: AMBRO, VANASKIE, and RESTREPO, Circuit Judges

                           (Opinion Filed: August 25, 2017)




      *
        Mark IV Transportation & Logistics is a New Jersey corporation whose correct
name is “Mark IV Transportation & Logistics, Inc.” Lightning Logistics was a
Tennessee limited liability company whose correct name is “Lightning Logistics, LLC.”
                                       ___________

                                        OPINION**
                                       ___________

VANASKIE, Circuit Judge.

       This appeal arises out of the failure of the now-defunct Lightning Logistics, LLC

(“Lightning”) to pay for delivery services rendered by Appellant Mark IV Transportation

& Logistics, Inc. (“Mark IV”). The issue presented by Mark IV is whether grounds exist

to pierce Lightning’s corporate veil and impose alter ego liability to establish personal

jurisdiction over defendants who are residents of Tennessee. Those defendants are

Appellees: Scott Evatt, former President of Lightning; John Gregory O’Riordan, a former

owner of Lightning; and Crosstown Courier, Inc. (“Crosstown”), Evatt’s current

company.

       The District Court held that Lightning was not a “sham or dummy” entity such

that its corporate veil should be pierced and alter ego liability imposed. Mark IV Transp.

& Logistics, Inc. v. Lightning Logistics, LLC, 

, *7 (D. N.J. Dec. 15,

2014). The District Court then granted Evatt and Crosstown’s motion to dismiss for lack

of personal jurisdiction. The District Court also, after requesting a supplemental letter

brief and holding a hearing on the matter, dismissed the claims against O’Riordan for

lack of personal jurisdiction. For the following reasons, we will affirm the orders of the

District Court.



       **
         This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
                                             2
                                            I.

       Mark IV is a New Jersey corporation that provides delivery services. Lightning

was a Tennessee LLC that provided logistical services to commercial shippers, including

arranging for delivery of packages by companies like Mark IV. Lightning was owned

and operated by Evatt and O’Riordan, both of whom are Tennessee residents. Evatt

currently owns and operates Crosstown, another Tennessee corporation that provides

courier services. In 2008, Mark IV agreed to provide “last mile” delivery services in

New Jersey for Lightning.1 Mark IV continued to provide delivery services for Lightning

until August of 2009. At that time, Mark IV was owed approximately $100,000 under its

agreement with Lightning.

       In December of 2009, Mark IV commenced this action against only Lightning. In

April of 2010, Lightning was administratively dissolved by the State of Tennessee. In

February of 2011, Mark IV filed an amended complaint, adding as defendants Evatt,

O’Riordan, Crosstown, and Traveller Logistics, Inc. (“Traveller”), the successor

corporation to Lightning. The District Court entered default judgment against Lightning

and then default judgment against Traveller as Lightning’s successor-in-interest.

Traveller itself was later dissolved. Mark IV then sought to impose personal liability on

Evatt, O’Riordan, and Crosstown as alter egos of Lightning.




       1
        “Last mile” delivery services consists of delivering packages over the final leg of
a shipment, such as from an airport or handling facility to the package’s ultimate
recipient.

                                             3
       After permitting discovery, the District Court determined that Mark IV had failed

to present evidence sufficient to warrant piercing the corporate veil of Lightning.

Because personal jurisdiction could be asserted over Evatt, O’Riordan, and Crosstown

only if the liability of Lightning could be imputed to them, the District Court dismissed

those parties for lack of personal jurisdiction.2 Mark IV filed this timely appeal.

                                             II.

       The District Court had jurisdiction pursuant to 28 U.S.C. § 1332, and our

jurisdiction arises under 28 U.S.C. § 1291. We exercise plenary review over the District

Court’s dismissal for lack of personal jurisdiction. D’Jamoos ex rel. Estate of Weingeroff

v. Pilatus Aircraft Ltd., 

, 101 (3d Cir. 2009).

                                            III.

       Under the New Jersey Limited Liability Company Act, “[t]he law of the state or

other jurisdiction under which a foreign limited liability company is formed governs . . .

the liability of a member as member and a manager as manager for the debts, obligations,

or other liabilities of the company.” N.J.S.A. 42:2C-57(a)(2). Accordingly, as Lightning

was a Tennessee LLC, Tennessee law governs Mark IV’s alter ego theory of liability.

Generally, under Tennessee law, members, owners, employees, or other agents of an

LLC have no personal liability for the debts or obligations of the company. See Tenn.



       2
         O’Riordan appeared pro se before the District Court and filed an answer to Mark
IV’s Amended Complaint. Although O’Riordan was named as a defendant in the Second
Amended Complaint, he filed no answer or any other response. Mark IV then moved for
default judgment against O’Riordan. The District Court denied this motion, however,
and sua sponte dismissed the claims against O’Riordan.
                                             4
Code Ann. §§ 48-217-101(a)(l), 48-249-14(a)(l)(B). “To pierce the corporate veil,” and

impose liability on a member or parent company, “a court must be convinced that the

separate corporate entity ‘is a sham or a dummy’ or that disregarding the separate

corporate entity is ‘necessary to accomplish justice.’” CAO Holdings, Inc. v. Trost, 

, 88 (Tenn. 2010) (quoting Oceanics Sch., Inc. v. Barbour, 

,

140 (Tenn. Ct. App. 2003)).

       Because “there is a presumption of corporate regularity,” Tennessee courts have

warned that “[t]he principle of piercing the corporate veil [should] be applied with great

caution and not precipitately.” Muroll Gesellschaft M.B.H. v. Tenn. Tape, Inc., 

, 213 (Tenn. Ct. App. 1995). A number of factors are to be assessed in

determining whether the corporate veil should be pierced, including:

       (1) whether there was a failure to collect paid in capital; (2) whether the
       corporation was grossly undercapitalized; (3) the nonissuance of stock
       certificates; (4) the sole ownership of stock by one individual; (5) the use of
       the same office or business location; (6) the employment of the same
       employees or attorneys; (7) the use of the corporation as an instrumentality
       or business conduit for an individual or another corporation; (8) the diversion
       of corporate assets by or to a stockholder or other entity to the detriment of
       creditors, or the manipulation of assets and liabilities in another; (9) the use
       of the corporation as a subterfuge in illegal transactions; (10) the formation
       and use of the corporation to transfer to it the existing liability of another
       person or entity; and (11) the failure to maintain arms length relationships
       among related entities.

Pamperin v. Streamline Mfg., Inc., 

, 438 (Tenn. Ct. App. 2008) (quoting

Fed. Deposit Ins. Corp. v. Allen, 

, 397 (E.D. Tenn. 1984)). No one

factor is conclusive in this analysis, but it is necessary “that the equities substantially




                                               5
favor the party requesting the court to disregard the corporate status.” 

(citing 

–41).

       Mark IV argues that the failure of Evatt and O’Riordan to adhere to corporate

formalities in operating Lightning and Evatt’s alleged misuse of Lightning’s corporate

funds compel the piercing of its corporate veil. According to Mark IV, Evatt withdrew

$160,000 from Lightning’s line of credit. This withdrawal left Lightning unable to pay

Mark IV for the services it rendered pursuant to the contract. Mark IV also notes that

Lightning leased its office space from Crosstown and, on occasion, shared employees

with the company. We agree with the District Court, however, that, although Lightning

did operate informally and Evatt did draw on Lightning’s line of credit, the equities do

not weigh so substantially in Mark IV’s favor that Lightning’s corporate status should be

disregarded. 

.

       First, with regard to Lighting’s informal structure, Tennessee does not require

LLCs to adhere to corporate formalities to maintain their limited liability status. See

Tenn. Code Ann. § 48-217-101(e) (“The failure of an LLC to observe the usual company

formalities or requirements relating to the exercise of its LLC powers or management of

its business is not a ground for imposing personal liability on the members, governors,

managers, employees or other agents of the LLC.”); NVK Spinning Co., LTD. v. Nichols,

, *6 (W.D. Tenn. Jan. 2, 2014) (“Adherence to corporate formalities is

not required for an LLC to maintain its limited-liability status under the statute.”). Courts

may consider a failure to adhere to corporate formalities in their veil-piercing analyses,

but in the absence of other factors, such a failure does not make a business a “sham or

                                             6
dummy.” 

. As President of Lightning, Evatt had broad authority

to make decisions affecting the business. Misguided decisions typically do not warrant

piercing the corporate veil.

       Evatt’s withdrawal of funds does not require a different result. Courts may pierce

the corporate veil “when the corporation is liable for a debt but is without funds to pay

the debt, and the lack of funds is due to some misconduct on the part of the officers and

directors.” In re Steffner, 

, 755–56 (Bankr. E.D. Tenn. 2012) (quoting VP

Bldgs., Inc. v. Polygon Grp., No. M2001–00613–COA–R3–CV, 

, *4

(Tenn. App. Jan. 8, 2002). Evatt used Lighting’s line of credit to secure a loan for

Crosstown, but, as the District Court noted, nothing in the record suggests that the line of

credit was designated exclusively for paying creditors. In Steffner, the owner of a single

member LLC transferred funds from the company to another entity he owned just one

day before a garnishment was served on the LLC. 

. The

Bankruptcy Court declined to pierce the LLC’s corporate veil as there was “no evidence .

. . that the transfer resulted in a permanent inability for [the LLC] to meet its financial

obligations.” 

Here, as in Steffner, the withdrawal did not rise to the level of

misconduct necessary for disregarding corporate status. 

       The same is true of the sharing of resources and personnel. In Steffner, the

Bankruptcy Court declined to pierce the LLC’s corporate veil despite the fact that the two

companies “operated out of the same building . . . and used the same bank, attorneys, and

accounts.” 

the case in Steffner, Lightning and Crosstown were “formed at

different times and for different purposes” such that Lightning could not be considered a

                                               7
“sham or dummy” even if it did rent office space from Crosstown.3 

756.

Because the facts do not support piercing Lightning’s corporate veil or the imposition of

alter ego liability, the District Court properly dismissed the claims against Evatt and

Crosstown for lack of personal jurisdiction.

       Mark IV also argues that the District Court erred in sua sponte dismissing the

claims against O’Riordan. Mark IV correctly notes that O’Riordan did not raise the

issue of personal jurisdiction and that he filed an answer to Mark IV’s Amended

Complaint. O’Riordan, who was not represented by counsel during the District Court

proceedings,4 also filed a “Preliminary Statement” regarding Mark IV’s motion for

default judgment, but never submitted an answer or any other response to the Second

Amended Complaint. After a hearing on the issue, the District Court dismissed the

claims for lack of personal jurisdiction, noting that O’Riordan “never answered the

Second Amended Complaint, or sought an extension of time to do so, or filed any other

application or pleading in [the] matter.” (App. 8.)

       “[W]hen a court is considering whether to enter a default judgment, it may dismiss

an action sua sponte for lack of personal jurisdiction.” In re Tuli, 

, 712 (9th

Cir. 1999); accord Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 

, 771 (10th Cir. 1997); D'Onofrio v. Il Mattino, 

, 436 (E.D. Pa.

2006); see also Prudential Ins. Co. of Am. v. Bramlett, 

, *1 (D. N.J.


       3
         Crosstown was formed approximately 10 years before Lightning was established.
Moreover, unlike Lightning, Crosstown’s principal business was in “last mile” delivery
services.
       4
         O’Riordan has not participated in this appeal, either through counsel or pro se.
                                               8
July 6, 2010) (“Before entering default judgment, the Court must address the threshold

issue of whether it has personal jurisdiction and subject matter jurisdiction over the

parties.”). As explained in Allaham v. Naddaf, 

, *3 (E.D. Pa. May 28,

2015):

         [I]n contrast to the general rule that personal jurisdiction is waivable, a court
         considering a motion for a default judgment must sua sponte ensure that an
         exercise of personal jurisdiction over each defaulting defendant is proper.
         Compare Jasper v. Bexar Cnty. Adult Det. Ctr., 

, 719 (3d
         Cir. 2009) (noting the general rule that “because personal jurisdiction may
         be conferred by consent of the parties . . . a court may not sua sponte dismiss
         for want of personal jurisdiction”) (internal quotation marks and citation
         omitted), with AnnexTelecom Co. v. Brown, 

, *1 (E.D.Pa.
         Oct. 14, 2014) (asserting that “the [c]ourt may only grant a motion for default
         judgment if it has ... personal jurisdiction over the parties against whom a
         judgment for affirmative relief is sought”) (citation omitted), and Pars
         Tekstil Sanayi Tic, A.S. v. Dynasty Designs, Inc., 

, *1
         (E.D. Pa. Aug. 13, 2008) (confirming that “[a] district court may not enter a
         default judgment unless it is satisfied that it has personal jurisdiction over the
         defendant”) (citation omitted). “In reviewing its personal jurisdiction, the
         court does not assert a personal defense of the parties; rather, the court
         exercises its responsibility to determine that it has the power to enter the
         default judgment.” Williams v. Life Sav. & Loan, 

, 1203 (10th
         Cir. 1986).

Because the District Court sua sponte addressed the lack of personal jurisdiction in the

context of a motion for default judgment, dismissal of O’Riordan was proper.

                                                IV.

         For the foregoing reasons, we will affirm the December 15, 2014 and August 10,

2016 Orders of the District Court.




                                                 9