Fleischli v. N. Pole U.S., LLC
| Decision Date | 10 May 2013 |
| Docket Number | Case No. 4:12CV1618 CDP |
| Parties | STEVEN D. FLEISCHLI, Plaintiff, v. NORTH POLE US, LLC, a Missouri limited liability company, NORTH POLE LIMITED, a Hong Kong corporation, WARBURG PINCUS, LLC, a New York limited liability company, Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Steven Fleischli is the former CEO of outdoor equipment manufacturer North Pole Limited. He brings this suit for breach of contract and six related claims against his former employer and two other entities. Fleischli filed suit in Missouri state court on June 5, 2012. North Pole Limited removed to this court three months later, with the consent of its co-defendants, North Pole US, LLC, and Warburg Pincus, LLC.
Now pending before me are Fleischli's motion to remand and the defendants' motions to dismiss or, alternatively, to compel arbitration. Because I agree with the defendants that I have subject matter jurisdiction over this case under the Convention for the Recognition and Enforcement of Foreign Arbitral Awards, implemented by 9 U.S.C. §§ 201 et seq., I will deny Fleischli's motion to remand. However, I agreewith Fleischli that this court has personal jurisdiction over each of the defendants, so I will deny the defendants' motions to dismiss for lack thereof. Finally, for the reasons set forth below, I will compel arbitration and stay the proceedings.
Plaintiff Fleischli is a resident of Missouri. Defendant North Pole Limited is a Hong Kong corporation with its principal place of business in Kowloon, Hong Kong. Defendant North Pole US, LLC is a Delaware limited liability company with its principal place of business in Missouri. Defendant Warburg Pincus is a New York limited liability company with its principal place of business in New York. Fleischli alleges that Warburg controls both North Pole entities through its ownership of a majority of shares, voting stock, corporate officers' positions, and directors' seats.
At the time the events in this case took place, North Pole Limited was a corporation that manufactured tents and other outdoor equipment. On March 1, 2010, Fleischli entered into an employment agreement with North Pole Limited and thereby became the company's CEO. Fleischli also alleges that, at some point, he became a minority shareholder in North Pole Limited.
The employment agreement stated:
[Fleischli's] primary base of operations and office will be located at [North Pole Limited's] Washington, Missouri office.
In addition to describing the parties' duties, the agreement gave Fleischli certain rights if he was terminated without cause. Namely, it entitled him to 90 days' notice of the termination, as well as nine months' severance pay and various benefits. (Id. ¶ 12.)
The employment agreement also contained a mandatory arbitration clause that provided, in relevant part:
(Id. ¶ 26.)
The agreement further provides that a demand to arbitrate made by Fleischli "shall be deemed to have been duly given if . . . mailed within the continental United States by first class, registered mail . . . and addressed" to Chang Q. Sun on behalf of North Pole Limited. (Id. ¶ 20.) Sun is the individual who signed the employment agreement as representative of North Pole Limited in his capacity as "Chairman." (Id., p. 11.)
For two years, Fleischli traveled to and worked in China, Bangladesh, and Canada as North Pole Limited's CEO. He alleges that sometime during that period, the defendants designated him to the Chinese government as the party responsible for North Pole Limited's financial obligations.2 He contends that this was done without his knowledge or consent.
Fleischli alleges that, on May 12, 2012, while he was in China, Warburg falsely accused Fleischli of gross misconduct and terminated his employment with North Pole Limited. Nonetheless, according to Fleischli, neither Warburg nor the other defendants have informed the Chinese government that Fleischli is no longer financially responsible for North Pole Limited, and the defendants have not replaced him with a new designee.
In the meantime, the defendants allegedly defaulted on various financial obligations in China. Fleischli alleges that as a result, the Chinese government currently is holding his passport because he is still designated as the party responsible for North Pole Limited's financial affairs. The Chinese government has issued a Departure Prohibition Order against Fleischli and will not permit him to leave the country.
On May 29, 2012, counsel for Fleischli sent, by registered mail and e-mail, an arbitration demand to Chang Sun. Sun apparently works for Warburg and, at the time of the demand, also served as chairman of the board for North Pole Limited. The demand stated that it was "made to arbitrate the termination of Mr. Fleischli's employment for cause." (Pl.'s Ex. 1 to Resp. to Mot. to Dismiss, p. 3.)
The following day, May 30, 2012, counsel for Warburg responded to the demand, stating that Warburg was not party to the employment agreement and that he had forwarded the demand to North Pole Limited's counsel.
Less than a week later, Fleischli filed the instant action in state court, before hearing further response from any of the defendants. He served the defendants on June 26, 2012. He claims that North Pole Limited did not timely respond to his arbitration demand so that an arbitrator could be selected within the ten-day period called for by the agreement. He also claims that North Pole Limited has still not responded to his demand to arbitrate.
Fleischli has brought seven claims arising out of the events described above, all under Missouri common law. Four of the counts seek damages against all three defendants: breach of contract, outrageous conduct, intentional infliction of emotional distress, and civil conspiracy (Counts 1, 5, 6, and 7). Underlying these claims are Fleischli's allegations that the defendants falsely accused him of misconduct so as to avoid paying his severance pay and benefits; breached the employment agreement by not actually providing severance pay and benefits; and have since failed to inform the Chinese government that he no longer represents North Pole Limited.
In Count 2, brought solely against Warburg, Fleischli alleges that Warburg's "complete dominion and control" over the North Pole entities makes Warburg liable for the North Pole entities' liabilities and warrants piercing the corporate veil.
In Count 3, Fleischli alleges Warburg has breached its duty to him as a minority shareholder of North Pole Limited.
In Count 4, tortious interference with contract, Fleischli alleges that Warburg and North Pole US, LLC, intentionally interfered with his contractual relationship with North Pole Limited and caused it to terminate his employment agreement without just cause or excuse.
As Fleischli's motion to remand implicates a question of subject matter jurisdiction, I will address it first. See Larsen v. Pioneer Hi-Bred Int'l, Inc., 4:06CV77, 2007 WL 3341698, at *1 (S.D. Iowa Nov. 9, 2007). I will then turn to the defendants' motions to dismiss for lack of personal jurisdiction. Finally, I will discuss the motions to compel arbitration. Because I conclude that the issue of arbitration is dispositive, I will deny as moot defendants' motions for dismissal for forum non conveniens and - for certain claims - under Rule 12(b)(6).
Federal courts are courts of limited jurisdiction. Myers v. Richland Cnty., 429 F.3d 740, 745 (8th Cir. 2005). As such, federal courts are authorized to hear cases only as provided by the Constitution and by statute. A defendant may remove an action from state court to federal district court if the action is within the federal court's original jurisdiction. 28 U.S.C. § 1441(a). The removing party has the burden of establishing federal subject matter jurisdiction. See Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009). Any doubt about the existence of federal jurisdiction must be resolved in favor of remand. In re Bus. Men's Assur. Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993).
In 1970, Congress ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention) to ensure that United States citizens wouldhave predictable enforcement of their arbitration agreements and awards in the courts of the United States and other signatory nations. Convention, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38. Congress has implemented the Convention by federal statute,...
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