Opinion
Civil Action No. 99-5581.
June 26, 2000
MEMORANDUM AND ORDER
Plaintiff DaimlerChrysler Corp. ["DaimlerChrysler"] filed a claim for wrongful use of civil proceedings under 42 Pa. Cons. Stat. 8351 against defendants William Askinazi and Greitzer Locks ["lawyers"], as well as defendant Brian Lipscomb ["class representative"]. DaimlerChrysler's suit stems from a class action in which DaimlerChrysler, Ford Motor Co., General Motors Corp., and Saturn Corp. ["class defendants"] were named as defendants. This class action [" Lipscomb"] was filed by the lawyers on behalf of the class representative and all others similarly situated. When it filed the wrongful use of civil proceedings complaint, DaimlerChrysler and its Associate General Counsel, Lewis Goldfarb, made certain statements to the press. In its answer to DaimlerChrysler's wrongful use of civil proceedings complaint, Greitzer Locks asserts counterclaims against DaimlerChrysler and Goldfarb ["counterclaim defendants"] for defamation and for tortious interference with prospective contractual relations. Pending before the court is Goldfarb's motion to dismiss for lack of personal jurisdiction and/or for improper venue (Doc. No. 24). Because the court concludes both that Goldfarb's contacts with Pennsylvania are sufficient to give the court constitutionally proper specific personal jurisdiction over him and that a substantial part of the events giving rise to Greitzer Locks's claims occurred in this district, the court will deny the motion.
This discussion assumes familiarity with the allegations contained in DaimlerChrysler's wrongful use of civil proceedings complaint (Doc. No. 1).
DaimlerChrysler filed its wrongful use of civil proceedings complaint on November 10, 1999. See Compl. (Doc. No. 1). On the same day, DaimlerChrysler issued a press release titled "DaimlerChrysler Corporation Turns the Tables on Class Action Lawyers," which dealt with its filing of the wrongful use complaint. See Answer Am. Countercls. of Def. Countercl. Pl. Greitzer Locks (Doc. No. 20) ["Countercls."] 41, Ex. A. The press release quoted numerous statements made by Goldfarb, which he reviewed and approved. See id. Ex. A; Lewis H. Goldfarb's Mem. of Law in Supp. of His Mot. to Dismiss for Lack of Personal Jurisdiction (Doc. No. 24) ["Goldfarb Jurisdiction Mem."] Ex. A 9. Several newspapers republished the contents of the press release or used it as a source for articles on DaimlerChrysler's actions. See Countercls. 43, Ex. B. Additionally, Goldfarb participated in interviews with reporters from the Wall Street Journal and the American Lawyer concerning DaimlerChrysler's filing of the wrongful use complaint. See Goldfarb Jurisdiction Mem. Ex. A 12. These interviews resulted in a November 11, 1999, article in the Wall Street Journal and an article in the January 2000 issue of the American Lawyer, both of which contained additional statements by Goldfarb. See Countercls. 44-46, Exs. C, D.
Greitzer Locks alleges in its counterclaims that in publicizing DaimlerChrysler's wrongful use suit, the counterclaim defendants intended to prevent a class representative with standing from agreeing to participate with Greitzer Locks in a future suit against DaimlerChrysler. See id. 45, 48, Ex. C. Greitzer Locks further alleges that the counterclaim defendants succeeded. See id. 56-57, 82-84.
The counterclaims at issue herein resulted.
II. Legal Standard
Goldfarb has filed a motion to dismiss for lack of personal jurisdiction. See Fed.R.Civ.P. 12(b)(2). Once a defendant has raised a jurisdictional defense, the burden shifts to the plaintiff to demonstrate that the relevant jurisdictional requirements are met. See Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992); Gehling v. St. George's Sch. of Med., Ltd., 773 F.2d 539, 542 (3d Cir. 1985). The plaintiff must support this burden through "sworn affidavits or other competent evidence." North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir. 1990) (citations omitted). If the plaintiff relies on the complaint and affidavits to satisfy its burden, then the plaintiff meets its burden by making a prima facie showing that jurisdiction exists. See Farino, 960 F.2d at 1223; Friedman v. Israel Labour Party, 957 F. Supp. 701, 706 (E.D.Pa. 1997).
Goldfarb has also filed a motion to dismiss for improper venue. See Fed.R.Civ.P. 12(b)(3). In a diversity action, proper venue is governed by 28 U.S.C. § 1391(a), which provides:
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.28 U.S.C. § 1391(a). If a claim is brought in a district in which venue is improper, then that claim may be dismissed. See 28 U.S.C. § 1406(a).
III. Discussion
A. Specific Personal Jurisdiction
The parties agree that the court has either specific personal jurisdiction over Goldfarb or none at all. See Goldfarb Jurisdiction Mem. at 7-15; Mem. of Law of Greitzer Locks in Opp'n to Lewis Goldfarb's Mot. to Dismiss for Lack of Personal Jurisdiction (Doc. No. 26) ["Greitzer Locks Jurisdiction Mem."] at 4-8. Whether personal jurisdiction over an out-of-state defendant is proper requires a two-part inquiry. First, a district court sitting in diversity must determine whether the long-arm statute of the forum state would permit the courts of the forum state to exercise jurisdiction over the defendant. See Fed.R.Civ.P. 4(e)(1); Imo Indus. Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998). Second, a district court must ask whether asserting personal jurisdiction would be consistent with the dictates of the Due Process Clause. See Imo Indus., 155 F.3d at 259. In Pennsylvania, the state long-arm statute is coextensive with the limit of due process, so the two-part inquiry becomes a one-part inquiry concerned only with the requirements of the Due Process Clause. See 42 Pa. Cons. Stat. 5322(B) (extending state court jurisdiction over non-residents to "fullest extent allowed under the Constitution of the United States"); Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996).
The due process inquiry focuses on the relationship between the defendant's conduct, the forum state, and the litigation. See Shaffer v. Heitner, 433 U.S. 186, 204 (1977); Imo Indus., 155 F.3d at 259. To satisfy the dictates of the Due Process Clause, the defendant must have purposefully directed conduct toward the forum state or must have purposefully availed itself of the protection of the laws of the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985); Imo Indus., 155 F.3d at 259. If the conduct of the defendant is such that it reasonably should have foreseen being haled into court in the forum state, the necessary minimum contacts for specific personal jurisdiction have been shown. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). If the necessary minimum contacts exist, then courts inquire whether the exercise of personal jurisdiction would comport with traditional notions of "fair play and substantial justice." See Burger King, 471 U.S. at 485-86; International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Imo Indus., 155 F.3d at 259.
Because the court concludes that Goldfarb had sufficient minimum contacts with Pennsylvania, and because the court concludes that exercising jurisdiction over him would comport with traditional notions of "fair play and substantial justice," the court will deny Goldfarb's motion to dismiss for lack of personal jurisdiction.
1. Minimum Contacts
Whether a defendant has sufficient minimum contacts with a forum state is a fact-based inquiry that will vary from case to case. See Burger King, 471 U.S. at 485. Furthermore, courts need not determine the best or most logical place for personal jurisdiction. See Strick Corp. v. A.J.F. Warehouse. Distribs., Inc., 532 F. Supp. 951, 960 (E.D.Pa. 1982). Rather, courts are to ensure that consistent with the requirements of due process, a defendant is subjected to personal jurisdiction only if the defendant "purposefully directed its activities toward the residents of the forum state" or purposefully "invok[ed] the benefits and protections of [the forum state's] laws." Imo Indus., 155 F.3d at 259 (internal quotation marks omitted); see Burger King, 471 U.S. at 472; Vetrotex Certainteed, 75 F.3d at 150.
Goldfarb argues that it is improper for the court to consider his corporate contacts with Pennsylvania in deciding whether it has personal jurisdiction over him in his individual capacity. See Goldfarb Jurisdiction Mem. at 12-14. As a general rule, corporate officers and directors may be held legally accountable for torts that they commit in their corporate capacity. See Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978); Zubik v. Zubik, 384 F.2d 267 (3d Cir. 1967); Kane Communications, Inc. v. Klombers, No. 87-6594, 1988 WL 26462, at *2 (E.D.Pa. March 10, 1988). The corporate shield doctrine, however, 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. See Marine Midland Bank v. Miller, 664 F.2d 899, 902 (2d Cir. 1981); PSC Prof'l Servs. Group, Inc. v. American Digital Sys., Inc., 555 F. Supp. 788, 793 (E.D.Pa. 1983). The rationale for this doctrine is the concern over forcing officers and directors to choose either to "disassociate themselves from the corporation or defend the propriety of their conduct in a distant forum." PSC Prof'l Servs. Group, 555 F. Supp. at 793.
To support this contention, Goldfarb relies heavily on Simkins Corp. v. Gourmet Resources Int'l, Inc., 601 F. Supp. 1336 (E.D.Pa. 1985). See Goldfarb Jurisdiction Mem. at 12-14. Simkins does not, however, reflect the current state of the law in this district with respect to the corporate shield doctrine. For a discussion of the evolution of the corporate shield doctrine in this district, including Simkins's place in that evolution, see Neyer, Tiseo Hindo, Ltd. v. Russell, No. 92-2983, 1993 WL 52552, at *4 (E.D.Pa. Feb. 25, 1993).
Courts in this district, however, have held that the protections of the corporate shield doctrine are not absolute. See Fyk v. Roth, No. 94-3826, 1995 WL 57487, at *2 (E.D.Pa. Feb. 10, 1995) (Rendell, J.). 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. See Elbeco Inc. v. Estrella de Plato, Corp., 989 F. Supp. 669, 676 (E.D.Pa. 1997); Rittenhouse Lee v. Dollars Sense, Inc., No. 8305996, 1987 WL 9665, at *4 n. 6 (E.D.Pa. April 15, 1987) (Scirica, J.) (holding that one of the factors a court should consider in the jurisdictional inquiry is the "extent and nature of [the] corporate officer's personal participation in the tortious conduct"). The courts look to the following three factors to determine whether it is proper to consider the defendant's corporate contacts in the jurisdictional inquiry: (1) the defendant's "role in the corporate structure"; (2) "the nature and quality of the [defendant's] forum contacts"; and (3) "the extent and nature of [the defendant's] personal participation in the [allegedly wrongful] conduct." Rittenhouse Lee, 1987 WL 9665, at *4 n. 6; see also Elbeco, 989 F. Supp. 669, 676 (E.D.Pa. 1997) (applying the three factors); Royal Gist-Brocades N.V. v. Sierra Prods. Ltd., No. 97-1147, 1997 WL 792905, at *6 (E.D.Pa. Dec. 22, 1997) (same); Fyk, 1995 WL 57487, at *2 (same).
Courts have also recognized an exception to the corporate shield doctrine if an officer is accused of a statutory violation that may result in personal and corporate liability. See Huth v. Hillsboro Ins. Mgmt., 72 F. Supp.2d 506, 511 (E.D.Pa. 1999); Rototherm Corp. v. Penn Linen Uniform Serv., Inc., No. 96-6544, 1997 WL 419627, at *8 n. 10 (E.D.Pa. July 3, 1997).
The first Rittenhouse Lee factor requires an examination of Goldfarb's role in DaimlerChrysler's corporate structure. Goldfarb is DaimlerChrysler's Associate General Counsel. See Goldfarb Jurisdiction Mem. Ex. B 2. As such, he had no control over DaimlerChrysler's preparation or issuance of the press release containing his comments. See id. Ex. A 6-8. It is unclear, however, whether anyone other than Goldfarb played a role in determining what exactly he would say in his statements to either the DaimlerChrysler public relations employee who prepared the press release or the reporters who conducted the interviews. Consequently, the court considers this factor to weigh against considering Goldfarb's corporate contacts with Pennsylvania, but only slightly.
The second Rittenhouse Lee factor requires an examination of Goldfarb's contacts with Pennsylvania. Considering his participation in interviews with reporters representing Reuters, the Wall Street Journal, and the American Lawyer, it should have been abundantly clear to Goldfarb that his remarks would be distributed nationwide, including Pennsylvania. See id. Ex. B 23. Moreover, Goldfarb's statements appear to have been made in part to "discourage prospective litigants from signing on" with Greitzer Locks to replace the Lipscomb class representative, whose claims were dismissed due to a lack of standing. See Countercls. Ex. C (reporting that Goldfarb hoped the suit would discourage prospective class representatives, the implication being that publicizing the suit was an effort to further that end); see also id. 48 (alleging that the purpose of the publicity was to injure Greitzer Locks). Because the principal office of Greitzer Locks is located in Philadelphia, Pennsylvania, where Lipscomb was brought, any discouragement would necessarily be directed toward Pennsylvania. See Greitzer Locks Jurisdiction Mem. Ex. B 2. Indeed, Greitzer Locks has presented evidence that the effects of the discouragement were, in fact, felt in Pennsylvania. See id. Ex. B 6. Goldfarb should have been aware that the effects of his actions would be felt in Pennsylvania, and there is evidence suggesting that this was his intent. Therefore, the court concludes that the nature and quality of Goldfarb's forum contacts are such that the second Rittenhouse Lee factor weighs in favor of considering his corporate contacts with Pennsylvania. See Neyer, Tiseo Hindo, 1993 WL 52552, at *5 (reaching a similar conclusion).
In his reply brief, Goldfarb argues that he "took no actions, whatsoever, that were 'expressly aimed at Pennsylvania'" and cites for support his own affidavit and that of Jay Cooney, a DaimlerChrysler employee in the public relations department. Lewis Goldfarb's Reply Mem. of Law in Supp. of His Mot. to Dismiss for Lack of Personal Jurisdiction (Doc. No. 31) at 4. Although these affidavits reveal that neither the press release nor any other statement was released directly to any Pennsylvania media source, such release is only one way of directing the publicity toward the forum state. See Goldfarb Jurisdiction Mem. Ex. A 13-14, Ex. B 25-26. The affidavits reveal nothing about whether Goldfarb and DaimlerChrysler were using nationally circulated periodicals and a press release to publicize the wrongful use suit in an effort to impact Pennsylvania residents, such as Greitzer Locks and the pool of potential replacement class representatives.
The third Rittenhouse Lee factor requires an examination of Goldfarb's personal participation in the allegedly tortious conduct. Goldfarb did not issue the press release himself. See Goldfarb Jurisdiction Mem. Ex. B 21-22. Statements made by Goldfarb personally are, however, the basis for Greitzer Locks's defamation and tortious interference claims. See Countercls. 53, 64, 76, 88. The court concludes that the Goldfarb's personal involvement in the allegedly tortious conduct weighs in favor of considering his corporate contacts with Pennsylvania. After considering the three Rittenhouse Lee factors, the court concludes that it is proper to consider Goldfarb's corporate contacts with Pennsylvania in deciding whether it may exercise personal jurisdiction over him.
In performing the inquiry suggested by Rittenhouse Lee, the court recognized that Goldfarb should have known that his statements would both be reported in Pennsylvania and damage Greitzer Locks's reputation there. The court also found that there is evidence to suggest that Goldfarb directed his remarks to Pennsylvania. Therefore, the court concludes that it was reasonably foreseeable that Goldfarb would be haled into court in Pennsylvania as a result of his conduct. Thus, Goldfarb had sufficient minimum contacts with Pennsylvania to allow the court to exercise specific personal jurisdiction over him. See Imo Indus., 155 F.3d at 259 (recognizing that specific jurisdiction is proper if the defendant "purposefully directed its activities toward the residents of the forum state").
The reasonable foreseeability of Goldfarb being haled into court in Pennsylvania and Goldfarb's apparent direction of conduct toward Pennsylvania distinguish this situation from that described in Westhead v. Fagel, 611 A.2d 758 (Pa.Super.Ct. 1992), a case on which Goldfarb relies. See Goldfarb Jurisdiction Mem. at 8-10.
2. Fair Play and Substantial Justice
The court must now determine whether personal jurisdiction over defendant would offend traditional notions of "fair play and substantial justice." See Burger King, 471 U.S. at 477; Farino, 960 F.2d at 1226. A defendant bears the burden of persuasion on this matter, and must "show that the assertion of jurisdiction is unconstitutional." Farino, 960 F.2d at 1226. A "compelling case" must be presented that jurisdiction would not be reasonable. See Burger King, 471 U.S. at 477; World-Wide Volkswagen, 444 U.S. at 292. In determining whether jurisdiction is reasonable, a court should consider the following factors:
"[T]he burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies."Farino, 960 F.2d at 1222 (quoting World-Wide Volkswagen Corp., 444 U.S. at 292).
Goldfarb addresses the fairness and justice of exercising personal jurisdiction over him in Pennsylvania, but he does not present the compelling evidence necessary to demonstrate that such jurisdiction would be unreasonable. He makes the legitimate argument that defending himself in this forum would be burdensome. See Goldfarb Jurisdiction Mem. at 14. Goldfarb ignores, however, that if the court declines to exercise jurisdiction over Goldfarb, then Greitzer Locks will be faced with the burden of either litigating the same claims twice — once in Pennsylvania against DaimlerChrysler and once in Michigan against Goldfarb — or dropping the Pennsylvania counterclaims and proceeding against both DaimlerChrysler and Goldfarb in Michigan. Either prospect would be at least as inconvenient to Greitzer Locks as being subject to jurisdiction in Pennsylvania would be burdensome for Goldfarb. Because Goldfarb does not present the court with the compelling evidence necessary to demonstrate that exercising specific jurisdiction over him would be unreasonable, the court concludes that exercising jurisdiction over him would not offend the traditional notions of "fair play and substantial justice." See Burger King, 471 U.S. at 477; World-Wide Volkswagen, 444 U.S. at 292.
B. Venue
The parties agree that venue must be proper in the Eastern District of Pennsylvania under 28 U.S.C. § 1391(a)(2) or not at all. See Lewis H. Goldfarb's Mem. of Law in Supp. of his Mot. to Dismiss for Improper Venue (Doc. No. 24) ["Goldfarb Venue Mem."] at 3; Mem. of Law of Greitzer Locks in Opp'n to Lewis H. Goldfarb's Mot. to Dismiss for Improper Venue (Doc. No. 27) ["Greitzer Locks Venue Mem."] at 3. Section 1391(a) states in relevant part that "[a] civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in . . . (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(a). As the Third Circuit has explained, "[t]he test for determining venue [under 1391(a)(2)] is not the defendant's 'contacts' with a particular district, but rather the location of those 'events or omissions giving rise to the claim.'" Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994). Even if some events that gave rise to a claim occurred in a district, "[e]vents or omissions that might only have some tangential connection with the dispute in litigation are not enough." Id.
Goldfarb argues that venue in the Eastern District is improper because the only non-tangential event occurring here that gave rise to the defamation and tortious interference claims was the damage Greitzer Locks allegedly suffered. See Goldfarb Venue Mem. at 3-5. Goldfarb is correct in his assertion that venue is not proper in a district if injury is the only event occurring in that district. See Henshell Corp. v. Childerston, No. 99-2972, 1999 WL 549027, at *4 (E.D.Pa. July 28, 1999) (rejecting argument that venue is proper in a district simply because harm from malpractice is suffered there); Pennsylvania Gear Corp. v. Fulton, No. 98-1538, 1999 WL 80260, at *2-*3 (E.D.Pa. Jan. 26, 1999) (deciding that suffering damages from tortious interference in a district does not make that district a proper venue if the interference occurred in a different district); Triple Crown America, Inc. v. Biosynth AG, No. 96-7476, 1997 WL 611621, at *4 (E.D.Pa. Sept. 17, 1997) ("An act committed outside this district resulting in a loss of revenue to a party in the district is not itself an event in the district giving rise to a claim.").
Injury in conjunction with another event, however, may make a district a proper venue. In defamation cases, for example, courts have repeatedly held that venue is proper in a district in which the allegedly defamatory statement was published, particularly if injury was suffered in the same district. See, e.g., Miracle v. N YP. Holdings, Inc., 87 F. Supp.2d 1060, 1072-73 (D.Haw. 2000); Wachtel v. Storm, 796 F. Supp. 114, 116 (S.D.N.Y. 1992); Comaford v. Wired USA, LTD., No. 94-2615, 1995 WL 324564, at *3 (N.D.Ill. May 26, 1995). Indeed, even a case from this district on which Goldman relies heavily, Manion v. Lima Mem'l Hosp., No. 92-5452, 1992 WL 368158 (E.D.Pa. Dec. 3, 1992), recognized that "other courts facing venue disputes in defamation cases have found that the claim arose where the statements were published." Id. at *2.
There is no dispute that although Goldfarb's statements were actually made in Michigan, they were published in this district in the form of articles based on the press release, the Wall Street Journal article, and the American Lawyer article. See Goldfarb Venue Mem. at 5; Greitzer Locks Venue Mem. at 6. Goldfarb argues that this publication is tangential in nature because he did not issue the press release himself and because he participated in the interviews that formed the basis of the Wall Street Journal and American Lawyer articles only because DaimlerChrysler asked him to do so. See Goldfarb Venue Mem. at 5. The court finds Goldfarb's reasoning unpersuasive. Moreover, there is evidence that Goldfarb directed his statements to the Eastern District — the district in which Greitzer Locks's main office is located and in which Lipscomb was filed. See supra Part III.A.1.
Goldfarb's statements were published in the Eastern District, and that publication allegedly caused injury to Greitzer Locks's reputation there and allegedly interfered with their prospective contractual relationships there. Consequently, the court concludes that a substantial portion of the events giving rise to the counterclaims of Greitzer Locks occurred in the Eastern District. Thus, venue is proper here. Therefore, the court will deny Goldfarb's motion to dismiss due to improper venue.
IV. Conclusion
Because the court concludes that it may constitutionally exercise jurisdiction over Goldfarb, the court will deny his motion to dismiss for lack of personal jurisdiction. Because the court concludes that venue for the counterclaims against Goldfarb is proper in the Eastern District of Pennsylvania, the court will deny his motion to dismiss for improper venue. An appropriate order follows.
ORDER
AND NOW, this day of June, 2000, upon consideration of counterclaim defendant Goldfarb's motion to dismiss for lack of personal jurisdiction and/or improper venue (Doc. No. 24), the counterclaim plaintiff's responses thereto (Doc. Nos. 26, 27), and counterclaim defendant Goldfarb's replies thereto (Doc. Nos. 31, 32), IT IS HEREBY ORDERED that the motion to dismiss for lack of personal jurisdiction and/or improper venue is DENIED.