Central States v. Reimer Express World Corp.

• Decision Date: 18 October 2000
• Docket Number: No. 00-1502,00-1502
• Citation: 230 F.3d 934
• Parties: (7th Cir. 2000) Central States, Southeast and Southwest Areas Pension Fund, and Howard McDougall, trustee, Plaintiffs-Appellants, v. Reimer Express World Corporation, a Canadian corporation, and Reimer Express Enterprises Limited, a Canadian corporation, Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 934

230 F.3d 934 (7th Cir. 2000)

Central States, Southeast and Southwest Areas Pension Fund, and Howard McDougall, trustee, Plaintiffs-Appellants, v. Reimer Express World Corporation, a Canadian corporation, and Reimer Express Enterprises Limited, a Canadian corporation, Defendants-Appellees.

No. 00-1502

In the United States Court of Appeals For the Seventh Circuit

Argued September 13, 2000

Decided October 18, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 2524--James B. Moran, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Flaum, Chief Judge, and Bauer and Kanne, Circuit Judges.

Flaum, Chief Judge.

Central States, Southeast and Southwest Areas Pension Fund, and its trustee Howard McDougall (collectively, the "Fund") appeal the dismissal of their suit and the denial of their motion to conduct discovery against Reimer Express Enterprises, Limited ("REE"), and Reimer Express World Corporation ("REWCOR"). The Fund challenges the district court's determinations that personal jurisdiction over the defendants, two Canadian companies, was lacking and that discovery on this issue was unnecessary. For the reasons stated herein, we affirm.

I. Background

REE is a Canadian holding company corporation with its principal place of business in Winnipeg, Manitoba, Canada. In January 1986, REE owned all the stock of a Canadian corporation named 141622 Canada, Inc., when this corporation purchased all the common stock of another Canadian company, 140593 Canada, Inc. The record does not reveal where this acquisition took place, but the district court concluded that the transaction occurred in Canada. 140593 Canada, Inc. owned all the stock of Inter-City Truck Lines, Inc. ("ICTL"). Thus, from January 1986 until February 1994 when REE sold 141622 Canada, Inc., REE was the corporate "great-grandparent" of ICTL. REWCOR, which was formed as a Canadian corporation on November 29, 1993, is a wholly owned subsidiary of REE.

ICTL was a Canadian corporation with its principal place of business in Canada that also operated a United States trucking enterprise out of Detroit, Michigan. ICTL engaged in extensive business in the United States and participated in the Fund. Under collective bargaining agreements between ICTL and Local 299 of the International Brotherhood of Teamsters, ICTL was obligated to contribute to the Fund on behalf of ICTL's employees. The Fund is a multiemployer pension plan within the meaning of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. sec.sec. 1002(37), 1301(a)(3), and is administered from Rosemont, Illinois.

ICTL contributed to the Fund under a collective bargaining agreement covering April 1, 1988 through March 31, 1991. From the beginning of this period until March 1990, the Fund sent bills to ICTL's address in Detroit. In March 1990, ICTL requested that its billing address be changed to a street address in Winnipeg, Manitoba, which was not the address of the registered office of REE. In January 1991, ICTL asked that the Fund change its address to a post office box, which also was located in Winnipeg.

On November 13, 1991, the Fund received via fax a document titled "Fringe Benefit Agreement" whose cover page was on REE's letterhead. This agreement extended ICTL's obligation to contribute to the Fund on the terms provided by a national collective bargaining agreement. It was signed by J.D. Cockburn, whose title was described on the document as Manager of Human Resources and Industrial Relations of REE and whose address was that of REE. The fax legend named the sender of the document as "REE/ICTL."

In November 1992, the Fund received a fax from Linda Messel, whose position was listed as "ICTL (Payroll)." The letterhead of the fax cover page read "Reimer Express Enterprises Ltd., Administration Centre, Winnipeg." The attachments to this fax related to ICTL's obligation to remit contributions to the Fund. Prior to this fax, the Fund had received a fax from the same person with a cover page reading "Reimer Express Lines," which was a subsidiary of REE at the time.

In May 1993, ICTL went out of business and ceased to have an obligation to contribute to the Fund. This constituted a withdrawal under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") to ERISA. 29 U.S.C. sec. 1383. Under MPPAA, an employer that withdraws from a pension plan incurs withdrawal liability. 29 U.S.C. sec. 1381. Businesses under common control are jointly and severally liable for the withdrawal liability of any affiliate.¹ 29 U.S.C. sec. 1301(b)(1).

The Fund assessed ICTL's withdrawal liability to be $310,922.12. The Fund prevailed in a suit against ICTL for this amount plus interest, but this judgment has not been satisfied. After determining that REE and REWCOR were affiliated with ICTL, on June 23, 1994, the Fund sent a notice demanding payment of ICTL's withdrawal liability plus interest. The defendants asked for a review of the Fund's determination, which was denied by the Fund on November 1, 1994. The Canadian companies have refused to pay the withdrawal liability.

The Fund filed the current action in federal district court in Illinois and served process on REE and REWCOR in Canada. The defendants filed a motion seeking to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). As part of that motion, the defendants submitted the affidavit of W.A. Redekopp, the general counsel of REWCOR. Redekopp said that REE, REWCOR and its subsidiaries such as ICTL have observed all corporate formalities, and that neither defendant exercised day-to-day management control of ICTL, 141622 Canada, Inc., or 140593 Canada, Inc. Redekopp also stated that REE or REWCOR have not done any business, have not had an office or telephone number, or owned or leased any property in Illinois or anywhere in the United States.

Accompanying the defendants' reply brief was an affidavit from James D. Cockburn and a second affidavit from Redekopp. Cockburn stated that in 1991 he was employed by REE and served as a consultant to REE's operating subsidiaries on labor matters. REE charged its subsidiaries a fee for the use of Cockburn's services. Cockburn further averred that prior to executing the aforementioned fringe benefit agreement, he discussed the matter with Hugh Richardson, then president of ICTL, who orally authorized Cockburn to sign the document on behalf of ICTL. Thus, Cockburn claims that he was serving as an agent of ICTL and not REE when he signed the agreement. Redekopp stated that REE provided administrative services to its subsidiaries in return for fees. Redekopp explained that Messel was employed by REE and, at the request and direction of ICTL management, provided payroll services to ICTL, which was charged by REE for these services. He also claimed that none of these REE employees were involved in the day-to-day management of the subsidiaries.

The trial judge granted the defendants' motion to dismiss because personal jurisdiction was absent, without ruling on the other grounds for dismissal.² The court stated that corporate ownership generally is not a sufficient basis for personal jurisdiction. Likewise, the provision of administrative services by a parent for a subsidiary does not trigger personal jurisdiction over the parent. The Fund had not alleged that REE and REWCOR were the alter egos of ICTL, controlled ICTL to the degree necessary to pierce the corporate veil, or exerted substantial control over ICTL's day-to-day activities. The court also denied the Fund's request for discovery, finding that the activities plaintiffs wished to investigate were attributable only to ICTL and were not related to the ERISA cause of action. The Fund timely appealed.

II. Discussion

A. Personal Jurisdiction

The Fund argues that the district court had specific personal jurisdiction³ over the defendants based on their contacts either with Illinois or with the United States as a whole. It claims that the standard rule that corporate ownership cannot confer jurisdiction over the parent does not apply in the context of a statutory scheme that premises liability on such affiliation. The Fund also asserts that REE and REWCOR had enough other contacts with either Illinois or the United States to be subject to jurisdiction by the district court.

Dismissals for lack of personal jurisdiction are reviewed de novo. See Logan Productions, Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996). The plaintiff bears the burden of demonstrating personal jurisdiction. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). We first determine whether there are federal or state statutory grounds for personal jurisdiction, then see whether the state constitution bars such jurisdiction if it is based on a state statute, and finally determine if the exercise of jurisdiction over the defendant would be consistent with the federal Constitution.

1. Statutory basis.

The Fund served process on REE and REWCOR in Canada. Service is sufficient to establish personal jurisdiction if the defendant could be subject to jurisdiction in courts of the state where the district court is located. Fed.R.Civ.P. 4(k)(1)(A). If no state could exercise jurisdiction, then service will establish personal jurisdiction for claims arising under federal law if the exercise of jurisdiction is consistent with the Constitution and laws of the United States. Fed.R.Civ.P. 4(k)(2). The Fund argues that the district court has personal jurisdiction over REE and REWCOR under either the Illinois long-arm statute or, if Illinois cannot assert jurisdiction, Federal Rule of Civil Procedure 4(k)(2) since the MPPAA is a federal statute and no other state could exercise jurisdiction.

a) Illinois long-arm.

The Illinois long-arm statute permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United...