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Inc. v. Air Cleaning Equipment, Inc.

United States District Court, D. Delaware

January 9, 2018

BRASURE'S PEST CONTROL, INC., Plaintiff,
v.
AIR CLEANING EQUIPMENT, INC., ROBERT CLEMENS, AND KEVIN YOW, Defendants.

          MEMORANDUM ORDER

         Defendants Robert Clemens and Kevin Yow filed a motion to dismiss Plaintiffs complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (D.I. 5; see also D.I. 11). The matter was referred to a Magistrate Judge (D.I. 17), who issued a Report and Recommendation recommending that Defendants' motion be granted (D.I. 18). Plaintiff objects to the Magistrate Judge's finding that this Court cannot properly exercise jurisdiction under the Delaware long-arm statute. (D.I. 19 at 3). Defendants have responded. (D.I. 20). I review the objection to the Report and Recommendation de novo. 28 U.S.C. § 636(b)(1).

         I. LEGAL STANDARD

         When reviewing a motion to dismiss pursuant to Rule 12(b)(2), a court must accept as true all allegations of jurisdictional fact made by the plaintiff and resolve all factual disputes in the plaintiffs favor. Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003). Once a jurisdictional defense has been raised, the plaintiff bears the burden of establishing, with reasonable particularity, that such minimum contacts have occurred between the defendant and the forum sufficient to support jurisdiction. Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). To meet this burden, the plaintiff must produce "sworn affidavits or other competent evidence, " since a Rule 12(b)(2) motion "requires resolution of factual issues outside of the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984).

         The personal jurisdiction analysis involves both a statutory and constitutional inquiry. Shoemaker v. McConnell, 556 F.Supp.2d 351, 354 (D. Del. 2008). First, the court must consider whether a defendant's actions come within any of the provisions of the state long-arm statute. See Intel v. Broadcom, 167 F.Supp.2d 692, 700 (D. Del. 2001). Second, the court must determine whether exercising jurisdiction over the defendant in the forum comports with the Due Process Clause of the Constitution. Id.

         With respect to the first step, the court applies the law of the state in which the district court is located. See Id. Delaware's long-arm statute authorizes jurisdiction over a nonresident when, among other things, that party or its agent:

(1) Transacts any business or performs any character of work or service in the State; (2) Contracts to supply services or things in this State; (3) Causes tortious injury in the State by an act or omission in this State; (4) Causes tortious injury in the State or outside the State by an act or omission outside the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State....

10 Del. C. § 3104(c)(1)-(4). "With the exception of (c)(4), the long-arm statute requires a showing of specific jurisdiction." Phunware, Inc. v. Excelmind Grp. Ltd., 117 F.Supp.3d 613, 622 (D. Del. 2015) (citation omitted). Subsection (c)(4), on the other hand, confers general jurisdiction, such that while a general presence in Delaware is necessary to assert jurisdiction, the contacts of the nonresident (or its agent) need not relate to the instant litigation. See Reach & Assocs., P.C. v. Dencer, 269 F.Supp.2d 497, 505 (D. Del. 2003). The court should interpret the language of these provisions liberally, as "conferring jurisdiction to the maximum extent of the Due Process clause." Jeffreys v. Exten, 784 F.Supp. 146, 151 (D. Del. 1992). Further, the Delaware long-arm statute is a "single act" statute, whereby even one transaction engaged in by the nonresident in Delaware establishes jurisdiction. Eudaily v. Harmon, 420 A.2d 1175, 1180 (Del. 1980).

         With respect to the second step, Due Process is satisfied if the court finds the existence of "minimum contacts" between the nonresident defendant and the forum state, "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted).

         II. DISCUSSION

         Plaintiff makes only one objection: that the Magistrate Judge erroneously relied upon the fiduciary shield doctrine in recommending that Defendants' motion be granted. (See generally D.I. 19). Incorporating by reference its arguments from previous briefing, Plaintiff purports to object generally to the Magistrate Judge's finding that this Court cannot properly exercise jurisdiction pursuant to subsections (c)(1), (c)(2), or (c)(4) of the Delaware long-arm statute. (Id. at 3). Plaintiffs effort to use incorporation by reference to renew other arguments is insufficient. See Fed. R. Civ. P. 72(b)(2) (requiring "specific written objections"). Further, Plaintiff requests that decision on the motion be stayed until it has the opportunity to take jurisdictional discovery. (D.I. 19 at 3).

         a. The Fiduciary Shield Doctrine

         "The fiduciary shield doctrine is a judicially created doctrine that immunizes acts performed by an individual in the individual's capacity as a corporate employee from serving as the foundation for the exercise of personal jurisdiction over that individual." Res. Ventures, Inc. v. Res. Mgmt. Int'l, Inc., 42 F.Supp.2d 423, 433-34 (D. Del. 1999) (citation omitted). However, the doctrine is not an absolute bar to personal jurisdiction over a corporate employee. Id. at 434. Instead, the court should "consider all forum related contacts of [Defendants], even those taken in their fiduciary capacities." Id.

         In finding jurisdiction lacking under subsection (c)(1) of the Delaware long-arm statute, the Magistrate Judge referred to the fiduciary shield doctrine, explaining, "Any contacts the individual defendants may have had with Delaware occurred solely in connection with [Air Cleaning Equipment ("ACE")]. This situation suggests application of the corporate shield doctrine...." (D.I. 18 at 8-9).

         Plaintiff argues the Magistrate Judge's finding "mis-interprets the allegations of the Amended Complaint, and [] misapplies the law as it pertains to these defendants." (D.I. 19 at 2). According to Plaintiff, the Magistrate Judge erroneously found that Defendants' alleged "acts of misrepresentation and omission which resulted in the sale of goods to Delaware were acts completed in the regular course of employment." (Id. at 2-3). Those acts could not have been made in the regular course of employment, Plaintiff ...


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