700 Fed.Appx. 865 (10th Cir. 2017), 16-3007, GCIU-Employer Retirement Fund v. Coleridge Fine Arts

Docket Nº:16-3007
Citation:700 Fed.Appx. 865
Opinion Judge:Michael R. Murphy, Circuit Judge
Party Name:GCIU-EMPLOYER RETIREMENT FUND and Board of Trustees of The GCIU-Employer Retirement Fund, Plaintiffs-Appellants, v. COLERIDGE FINE ARTS; Jelniki Limited, Defendants-Appellees.
Attorney:Michael E. Amash, Carol Ann Krstulic, Blake & Uhlig, Kansas City, KS, for Plaintiffs-Appellants. Jill M. Borgonzi, Robert John Hingula, Kansas City, MO, William E. Quirk, Esq., Polsinelli, St. Louis, MO, for Defendants-Appellees.
Judge Panel:Before KELLY, LUCERO, and MURPHY, Circuit Judges. KELLY, Circuit Judge, concurring in part and dissenting in part.
Case Date:August 16, 2017
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 865

700 Fed.Appx. 865 (10th Cir. 2017)

GCIU-EMPLOYER RETIREMENT FUND and Board of Trustees of The GCIU-Employer Retirement Fund, Plaintiffs-Appellants,

v.

COLERIDGE FINE ARTS; Jelniki Limited, Defendants-Appellees.

No. 16-3007

United States Court of Appeals, Tenth Circuit

August 16, 2017

Editorial Note:

UNPUBLISHED OPINION (See Fed. Rule of Appellate Procedure 32.1. See also U.S.Ct. of App. 10th Cir. Rule 32.1.)

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District of Kansas, (D.C. No. 2:14-CV-02303-EFM-GLR)

Michael E. Amash, Carol Ann Krstulic, Blake & Uhlig, Kansas City, KS, for Plaintiffs-Appellants.

Jill M. Borgonzi, Robert John Hingula, Kansas City, MO, William E. Quirk, Esq., Polsinelli, St. Louis, MO, for Defendants-Appellees.

Page 867

Before KELLY, LUCERO, and MURPHY, Circuit Judges.

ORDER AND JUDGMENT[*]

Michael R. Murphy, Circuit Judge

I. Introduction

Plaintiffs GCIU-Employer Retirement Fund and the Board of Trustees of the GCIU-Employer Retirement Fund (collectively the " Fund" ) appeal from the dismissal of their action against Defendants, Coleridge Fine Arts (" Coleridge" ) and Jelniki Limited (" Jelniki" ). The suit was filed pursuant to the Multiemployer Pension Plan Amendments Act (the " MPPAA" ), 29 U.S.C. § § 1381-1461, and involved the Fund’s attempt to collect withdrawal liability from Coleridge and Jelniki. The dismissal was based on the district court’s conclusion it lacked personal jurisdiction over Coleridge and Jelniki, both of which are corporations domiciled in the Republic of Ireland.

Exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court reverses the dismissal of the Fund’s suit and remands the matter for further proceedings.

II. Background

The Fund is a multiemployer pension plan within the meaning of the MPPAA. Greystone Graphics, Inc. (" Greystone" ), a Kansas corporation wholly owned by Coleridge, made contributions to the Fund pursuant to the terms of a collective bargaining agreement. In February 2011, Greystone ceased doing business, effectuating a complete withdrawal from the Fund. The Fund obtained a default judgment against, inter alia, Greystone and Coleridge based on allegations Greystone’s cessation of business gave rise to withdrawal liability under the MPPAA. See 29 U.S.C. § § 1381, 1383, 1391 (providing that an employer who completely withdraws from a multiemployer plan is liable for an amount sufficient to cover the employer’s share of unfunded vested benefits). The Fund initiated the instant action against Coleridge and Jelniki, arguing they are jointly and severally liable for the withdrawal liability because they are members of Greystone’s control group.1 See 29 U.S.C. § 1301(b)(1).

Coleridge and Jelniki moved to dismiss the Fund’s suit on the basis the federal district court lacked personal jurisdiction over them. The district court granted the motion, rejecting the Fund’s argument that specific jurisdiction existed because Defendants purposefully directed their activities at the United States. The court also denied the Fund’s request for jurisdictional discovery. This appeal followed.

III. Discussion

A. Legal Standards

Where, as here, the district court grants a pre-trial motion to dismiss without conducting an evidentiary hearing, this court reviews the district court’s ruling de novo and accepts as true the uncontroverted factual allegations in the complaint. Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011). A plaintiff can satisfy his burden to establish personal jurisdiction over the defendant by making a prima facie showing that jurisdiction is proper. Id.

When a plaintiff’s claims arise under federal law and the defendant is not subject to the jurisdiction of any state’s court of general jurisdiction,

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Rule 4(k)(2) of the Federal Rules of Civil Procedure provides for federal long-arm jurisdiction if the plaintiff can show that the exercise of jurisdiction comports with due process.2 Holland Am. Line Inc. v. W ä rtsilä N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007). Here, Defendants concede the Fund’s claims arise under federal law and no state court in the United States has jurisdiction over them. See id. (joining three other circuit courts of appeals in holding " a defendant who wants to preclude use of Rule 4(k)(2) has only to name some other state in which the suit could proceed" (quotation and alteration omitted)). Thus, the only question at issue is whether the exercise of federal jurisdiction satisfies Fifth Amendment due process standards. Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1211-12 (10th Cir. 2000). To resolve this issue, we must determine whether Defendants have had minimum contacts with the United States. See Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008); Cent. States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 942-43 (7th Cir. 2000). Consistent with the minimum contacts standard, a federal court may exercise specific jurisdiction3 over a foreign defendant if the defendant purposefully directed its activities at the forum and the plaintiff’s injuries arose from the defendant’s forum-related activities. Dudnikov, 514 F.3d at 1071 (quotations omitted).

B. Analysis

Relying on a case from the United States District Court for the District of Columbia, the Fund argues Defendants purposefully directed their activities toward the United States by acquiring Greystone with knowledge of the possibility of withdrawal liability. See Pension Ben. Guar. Corp. v. Asahi Tec Corp., 839 F.Supp.2d 118, 124 (D. D.C. 2012). In Asahi Tec, the D.C. district court concluded it could exercise personal jurisdiction over the defendant, a Japanese corporation, because the defendant acquired a United States subsidiary " with its eyes wide open" to the " possibility of control [ ] group liability" under ERISA. Id. Documentation showed the defendant hired a consultant to evaluate the scope of the subsidiary’s employee benefit plan and develop strategies to mitigate any obligations arising from the subsidiary’s participation in the plan. Id. It took these actions after learning the plan " had unfunded benefit and other pension-related liabilities" but before the acquisition. Id. The district court noted the negotiated purchase price was based, in part, on the potential control group liability for the underfunded plan. Id.

The Fund asserts the facts it has alleged in its complaint are nearly identical

Page 869

to those alleged by the plaintiff in Asahi Tec . Specifically, it claims Coleridge knew of the future potential risk of withdrawal liability stemming from Greystone’s participation in the Pension Fund when it acquired Greystone and, thus, it purposefully directed its activities at the forum. Even if this court was inclined to give any weight to the district court decision in Asahi Tec, the facts alleged by the Fund are not comparable. In Asahi Tec, it was alleged the defendant knew the subsidiary actually had pension-related liabilities at the time of the acquisition. There is no similar claim made by the Fund in its amended complaint. True, the complaint alleges Coleridge knew Greystone was a long-time contributor to the Fund and had knowledge of the risk of future control group liability in 2002 at the time it acquired the remaining 50% interest in Greystone. The Fund, however, did not allege that any withdrawal liability actually or even potentially existed at that time. There was no allegation that Greystone employees were entitled to receive unfunded vested benefits or any assertion regarding the inapplicability of the MPPAA’s safe harbor provisions. In contrast, the plaintiff in Asahi Tec alleged the defendant learned the pension plan in which the subsidiary participated " had unfunded benefit and other pension-related liabilities" at the time of the acquisition. Id. Here, the Fund admits Greystone continued to contribute to the Fund until February 2011, when it ceased doing business. Consequently, the withdrawal liability that forms the basis of the Fund’s claims against Defendants did not arise until thirteen years after Coleridge acquired a fifty percent ownership in Greystone and nine years after it acquired the remaining fifty percent interest. Because any potential future risk of withdrawal liability was wholly speculative at the time Coleridge acquired Greystone, Defendants did not assume a known risk of control group liability at that time. The Fund’s argument, thus, becomes nothing more than an assertion of personal jurisdiction based solely on corporate affiliation or stock ownership. That assertion is not sufficient to show minimum contacts even under the ruling in Asahi Tec .

This leaves the Fund with no legal authority for the proposition that the acquisition of a company that participates in a multiemployer pension plan is, by itself, sufficient to establish personal jurisdiction over the...

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