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concluding defendant did not expressly aim his torts at Pennsylvania where plaintiff had nationwide business and defendant did not target plaintiff's "strictly Pennsylvania accounts"
Summary of this case from Kim v. KimOpinion
CIVIL ACTION NO. 01-CV-1974
October 23, 2003
MEMORANDUM AND ORDER
Presently before this Court is Defendant James L. Moore's Renewed Motion to Dismiss (Doc. No. 37). For the following reasons, Defendant's Motion will be granted.
Background
This action arises out of a contract dispute between Plaintiff Directory Dividends, Inc. ("Plaintiff"), a Pennsylvania corporation, and Defendant Pacific Bell Directory ("PacBell"), a California corporation. Plaintiff and PacBell entered into a contract under which Plaintiff agreed to act as the sales manager for one of PacBell's advertising programs (the "PacBell Ride-Along Program"). (Am. Compl. ¶ 30.) Plaintiff alleges that PacBell breached that contract and that all of the Defendants conspired to defame Plaintiff and interfere with Plaintiff's other business contracts ultimately forcing Plaintiff out of business.
Many of Plaintiff s allegations focus on the conduct of James L. Moore ("Moore"), who was employed as the managing director/general manager of national advertising for Southwestern Bell Yellow Pages, SBC Communications, Inc., and/or SBC Directory Operations, Inc. (collectively, "SBC"), and had operational authority over the PacBell Ride-Along Program. (Id. ¶¶ 9, 25.) Moore worked for SBC in St. Louis, Missouri. (Def.'s Mot., Ex. "A" ¶ 2.) Plaintiff contends that Moore conspired against Directory Dividends while he was employed by SBC. (Am. Compl. ¶¶ 9, 34.) Moore testified that while he was employed by SBC, he twice flew to Pennsylvania to meet with Plaintiff on PacBell's behalf. (Pl's Mot. Ex. "B" at 8-10.) He has never lived or worked in Pennsylvania. (Pl's Mot. Ex. "A" ¶ 4.) Moore is now retired from SBC and lives in Missouri. (Id. ¶¶ l-2.)
Plaintiff filed a complaint in the Court of Common Pleas of Chester County, Pennsylvania, asserting eight causes of action against Moore. Defendants removed the action to this Court on the basis of diversity jurisdiction. Moore contends that he has few contacts with Pennsylvania and moves to dismiss the case for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Moore also moves to dismiss the case for failure to state a claim under Rule 12(b)(6).
The eight causes of action are conspiracy, tortious interference with contracts and prospective economic relationship, prima facie tort, intentional tort, bad faith, defamation, false light, and defamation per se in the form of commercial disparagement.
Rule 12(b)(2)
A 12(b)(2) motion "requires resolution of factual issues, outside the pleadings, i.e. whether in personam jurisdiction actually lies." Savin Corp. v. Heritage Copy Prods., Inc., 661 F. Supp. 463, 466 (M.D. Pa. 1987) (citing Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66 (3d Cir. 1984)). When the defense of lack of personal jurisdiction is raised, the plaintiff must prove, by a preponderance of the evidence, that jurisdiction is proper. Imo Indus., Inc. v. Kiekert AG, 155 F.3d 254, 257 (3d. Cir. 1998). "[I]t is well established that in deciding a motion to dismiss for lack of jurisdiction, a court is required to accept the plaintiff's allegations as true, and is to construe disputed facts in favor of the plaintiff." Toys "R " Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003) (citing Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d Cir. 2001)).
Rule 4(e) permits a district court to assert personal jurisdiction over a non-resident to the extent allowed under the law of the state where the court sits. Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (citing Pennzoil Prod. Co. v. Colelli Assocs., Inc., 149 F.3d 197, 200 (3d Cir. 1998)). Under Pennsylvania's long-arm statute, 42 Pa. Cons. Stat. Ann. § 5322(b), Pennsylvania courts may' "exercise personal jurisdiction over nonresident defendants to the constitutional limits of the due process clause of the fourteenth amendment.'" Id. (quoting Mellon Bank (East) PSFS, Nat'lAss'n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992)). "Due process requires that the defendant have 'minimum contacts' in the forum state, and that the exercise of jurisdiction comport with 'traditional notions of fair play and substantial justice.' Id. (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, (1945)). The required "minimum contacts must have a basis in 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).
The exercise of personal jurisdiction over a defendant may be based on either a defendant's general contacts or claim-specific contacts. Remick, 238 F.3d at 255. At issue in this case is specific jurisdiction. To assert a claim of specific jurisdiction over a defendant, the plaintiff has the burden of showing that each of its causes of action arises out of a defendant's forum-related activities, "such that the defendant 'should reasonably anticipate being haled into court'" in that forum. Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prod. Co., 75 F.3d 147, 151 (3d Cir. 1996) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).
Plaintiff contends that if we find personal jurisdiction over any of its claims against Moore, we can, and should, exercise jurisdiction over all of its claims pursuant to our "pendent personal jurisdiction." (Def's Mot. at 33.) The concept of pendent personal jurisdiction is recognized in this circuit under some circumstances. See Robinson v. Penn Cent. Co., 484 F.2d 553, 556 (3d Cir. 1979); Donner v. Tams-Witmark Music Library, Inc., 480 F. Supp. 1229, 1234 n. 5 (E.D. Pa. 1979). Because we find jurisdiction lacking over all of Plaintiff s claims against Moore, there is no need to discuss the limits of our pendent personal jurisdiction.
A. The Corporate Shield Doctrine
"The corporate shield doctrine . . . provides a degree of protection for officers and directors by limiting the extent to which actions they performed in a corporate capacity may be used to exercise jurisdiction over them individually." DaimlerChrysler Corp. v. Askinazi, No. 99-5581, 2000 WL 822449, at *3 (E.D. Pa. June 26, 2000). Here, Plaintiff does not allege that Moore was acting in his individual capacity during the events giving rise to its claims. Rather, Plaintiff specifically alleges that "[a]t all times relevant hereto, Moore was employed [by SBC]. . . and acting within the scope and course of his employment and/or agency." (Am. Compl. ¶ 9). Thus, we must consider whether Moore's actions performed in his corporate capacity may be used to exercise jurisdiction over him individually.
The protections of the corporate shield doctrine are not absolute. DaimlerChrysler, 2000 WL 822449, at *3 (citing Fykv. Roth, No. 94-3826, 1995 WL 57487, at *4 (E.D. Pa. Feb. 10, 1995)). "Accordingly, courts have sometimes refused to permit a corporate officer to invoke the shield when the officer was involved in tortious conduct for which he could be held personally liable." Id. (citing Elbeco Inc. v. Estrella de Plato, Corp., 989 F. Supp. 669, 676 (E.D. Pa. 1997)). Some courts weigh various factors to determine whether a defendant's corporate contacts are relevant to the jurisdictional inquiry. See Rittenhouse Lee v. Dollars Sense, Inc., No. 83-5996, 1987 WL 9665, at *4 n. 6 (E.D. Pa. Apr. 15, 1987) (setting forth three relevant factors: "[1] the extent and nature of a corporate officer's personal participation in the tortious conduct; [2] the nature and quality of the officer's forum contacts; and [3] the officer's role in the corporate structure."); Daimler Chrysler, 2000 WL 822449, at *4-5 (weighing Rittenhouse factors). Other decisions have rejected the corporate shield doctrine in the context of corporate officers accused of tortious conduct. See Donner v. Tams-Witmark Music Library, Inc., 480 F. Supp. 1229, 1234 (E.D. Pa. 1979); General Elec. Capital Corp. v. Alleco, Inc., No. 00-5226, 2001 WL 253850, at *3 (E.D. Pa. Mar. 13, 2001) (noting that it appears that the corporate shield doctrine "was soundly rejected by the Supreme Court of the United States in Calder v. Jones, 465 U.S. 783 (1984) when it observed that defendants' 'status as employees does not somehow insulate them from jurisdiction.'").
We need not resolve the conflicting decisions regarding the scope of the corporate shield doctrine. With respect to Plaintiff's contract claim, it is clear that the corporate shield doctrine prevents us from exercising jurisdiction over Moore. See National Precast Crypt Co. v. Dy-Core of Pennsylvania, Inc., 785 F. Supp. 1186, 1191-92 (W.D. Pa. 1992) (where allegations sound solely in contract, none of the exceptions to the corporate shield doctrine apply). With respect to Plaintiff's tort claims, as explained below, we conclude that Moore has insufficient minimum contacts with Pennsylvania to support personal jurisdiction over him, even if we consider those contacts that arise solely because of his position as an employee of SBC. In other words, whether or not the corporate shield doctrine applies, Moore is not subject to personal jurisdiction in this Court with respect to Plaintiff's tort claims.
Plaintiff's claim against Moore for bad faith sounds in contract. See Gorski v. Smith, 812 A.2d 683, 710 (Pa.Super. 2002) ("Where a duty of good faith arises, it arises under the law of contracts, not under the law of torts.") (quoting Creeger Brick v. Mid-State Bank, 560 A.2d 151, 153 (Pa.Super. 1989)).
B. Plaintiff's Intentional Tort Claims
Seven of the eight claims Plaintiff asserts against Moore are claims for intentional torts. To determine whether we may assert jurisdiction over an out-of-state defendant accused of an intentional tort, we must apply the effects test announced in Colder v. Jones, 465 U.S. 783 (1984). See Remick, 238 F.3d at 260 (citing Imo Indus., 155 F.3d at 266-68). In/mo Indus., the Third Circuit, applying Colder, set forth a three-prong test to determine when a federal court can assert personal jurisdiction over an out-of-state defendant accused of an intentional tort:
First, the defendant must have committed an intentional tort. Second, the plaintiff must have felt the brunt of the harm caused by that tort in the forum, such that the forum can be said to be the focal point of the harm suffered by the plaintiff as a result of the tort. Third, the defendant must have expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity.Imo Indus., 155 F.3d at 256 (emphasis added).
Applying this test to the present facts, Plaintiff has easily satisfied the first two prongs. As noted, several of Plaintiff s claims are for intentional torts. The brunt of the harm of these torts must necessarily have been felt by Plaintiff in Pennsylvania, where its business is based. See Remick, 238 F.3d at 260 ("[T]he brunt of the harm caused by the alleged intentional tort must necessarily have been felt by Remick in Pennsylvania, as his business practice is based in Philadelphia."). Therefore, to establish personal jurisdiction over Moore with respect to its tort claims, Plaintiff must show that the defendant "expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity." Imo Indus., 155 F.3d at 256.
In arguing that it has satisfied the third prong of the Imo Indus, test, Plaintiff relies principally on Remick. In Remick, the defendant, Manfredy, was an out-of-state resident boxer who entered into a contract with the plaintiff, Remick, an attorney based in Pennsylvania. Under the contract, Remick agreed to act as Manfredy's special counsel in the procurement and negotiation of high profile and lucrative fights, promotions, and endorsements. Eventually, Manfredy terminated the contract, asserting that Remick had failed to adequately represent Manfredy's interests. Remick sued Manfredy for defamation, misappropriation of image and likeness, and tortious interference with contract. Manfredy moved to dismiss these claims for lack of personal jurisdiction.
The Third Circuit affirmed the district court's determination that it had no jurisdiction over Remick's claims for defamation and misappropriation, but reversed its dismissal of Remick's tortious interference with contract claim. With respect to the defamation claim, the court noted that the "allegedly defamatory letters and the charges therein were published [by the defendants] throughout the boxing community, not just in Philadelphia." Remick, 238 F.3d at 259. The court also noted that persons in the boxing community were "located throughout the country." Id. Therefore, the court could not say "that the defendants here expressly aimed their conduct at Pennsylvania so that Pennsylvania was the focal point of the tortious activity." Id. Under these circumstances, the court found that it lacked jurisdiction over Remick's defamation claim.
With respect to the tortious interference with contract claim, however, the Remick court came to the opposite conclusion. Remick alleged that Manfredy intentionally set him up to fail in his performance of the contract so that Manfredy could replace Remick with another entity. The court noted that this claim was "necessarily related to the contract which [Remick] had entered into with Manfredy and which is subject of the alleged tortious interference." Id. at 260. The majority of Remick's negotiation, consultation, and advice services for Manfredy were performed out of Remick's Philadelphia offices. The court then concluded that "it follows that the effects of any intentional conduct by the defendants designed to interfere with Remick's contractual relations with Manfredy necessarily would have been felt in Pennsylvania." Id. Accordingly, the court found the third prong of Imo Indus, satisfied.
We fail to see how Remick supports Plaintiff's claim of jurisdiction. In Remick, the court upheld the exercise of jurisdiction over the tortious interference claim because the defendant allegedly targeted a single contract he knew would mainly be performed in Pennsylvania. In contrast, Plaintiff alleges that Moore targeted Plaintiff's entire business: "The Defendants intended to interfere, and cause harm, to the contract and future economic relationships that Directory Dividends had with customers and other publishers by, among other things, destroying its relationships and by publishing and disseminating false and defamatory information about Directory Dividends' skill and ability." (Am. Compl. ¶ 91.) Plaintiff admittedly conducted business nationwide: "By way of example, Moore set Directory Dividends up to appear untrustworthy to some of Directory Dividends most significant national accounts." (Am. Compl. ¶ 35.) Plaintiff does not contend that any of contracts targeted by Moore involved strictly Pennsylvania accounts. Nor does Plaintiff allege that any false statement was made in Pennsylvania. Under these circumstances we fail to see how Moore "expressly aimed his tortious conduct" at Pennsylvania. Imo Indus., 155 F.3d at 256.
A case more on point with the facts presented here is Santana Prod., Inc. v. Bobrick Washroom Equip., 14 F. Supp.2d 710 (M.D. Pa. 1998). In Santana, the plaintiff, Santana Products, Inc. ("Santana"), sued several defendants alleging that they conspired to interfere with Santana's business through the use of false advertising materials. Santana was a Virginia corporation headquartered in Pennsylvania that manufactured toilet accessories and distributed them nationwide. Santana alleged that the one of the defendants, Sylvester Associates, Ltd. ("Sylvester"), used a video containing false statements about Santanta in connection with business transactions in New York and New Jersey. Santana did not allege that the defendants disseminated any false information about Santana in Pennsylvania. Under these circumstances, the district court concluded that Sylvester's alleged tortious conduct was not directed at Pennsylvania and dismissed the complaint against it for lack of personal jurisdiction:
It may have been foreseeable that any tortious conduct that interfered with Santana's ability to enter into contractual relations would have its final economic manifestation in Pennsylvania. This economic result does not require a finding of specific personal jurisdiction. The Sylvesters' conduct simply was not directed at Pennsylvania; instead, it was directed at competing with Santana for sales in New York and New Jersey. Any financial injury to Santana within Pennsylvania was fortuitous in that it simply depended upon the location of Santana's principal place of business.Santana, 14 F. Supp.2d at 716 (emphasis added). See also Remick, 238 F.3d at 259 (holding federal court lacked jurisdiction over defamation claim when allegedly defamatory statements published nationwide and not directed at forum). Based upon Santana and Remick, we conclude that the alleged tortious conduct by Moore was focused on the Plaintiff and its business and not expressly on Pennsylvania. Therefore, we have no personal jurisdiction over Plaintiff's intentional tort claims against Moore.
Another court posed the following hypothetical, which further illustrates why Plaintiff's intentional tort claims must fail for lack of personal jurisdiction:
For example, if defendant, a New Jersey resident who has never been to Pennsylvania, punches plaintiff, a Pennsylvania resident, in New Jersey, it is foreseeable that harm will be realized in Pennsylvania — plaintiff may miss work, go on welfare to support his family, and become generally unpleasant — but absent some conduct by defendant directed at Pennsylvania rather than simply directed at plaintiff, Pennsylvania is not a reasonably foreseeable forum.Surgical Laser Techs., Inc. v. C.R. Brand, Inc., 921 F. Supp. 281, 285 n. 6 (E.D. Pa. 1996).
Conclusion
Viewing the evidence in the light most favorable to the Plaintiff we find that we do not have jurisdiction over Plaintiff's claims against Moore.
In light of our decision to dismiss Plaintiff's claims against Moore for lack of personal jurisdiction, we need not discuss Moore's motion to dismiss pursuant to Rule 12(b)(6).
An appropriate Order follows.