Gciu-Employer Ret. Fund & Bd. of Trs. of the Gciu-Employer Ret. Fund v. Coleridge Fine Arts
| Decision Date | 16 August 2017 |
| Docket Number | No. 16-3007,16-3007 |
| Parties | GCIU-EMPLOYER RETIREMENT FUND AND BOARD OF TRUSTEES OF THE GCIU-EMPLOYER RETIREMENT FUND, Plaintiffs - Appellants, v. COLERIDGE FINE ARTS; JELNIKI LIMITED, Defendants - Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
D. Kansas
ORDER AND JUDGMENT*Before KELLY, LUCERO, and MURPHY, Circuit Judges.
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.
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 (). The Fund initiated the instant action against Coleridge and Jelniki, arguing theyare 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.
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, Rule 4(k)(2) of the Federal Rules of Civil Procedure provides for federal long-arm jurisdictionif the plaintiff can show that the exercise of jurisdiction comports with due process.2 Holland Am. Line Inc. v. Wärtsilä 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. (). 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 thedefendant 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).
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 otherpension-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 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 acquiring company and no reasoned argument to support the notion that such a rule would comport with due process. See Shaffer v. Heitner, 433 U.S. 186, 213-16 (1977) (). To the contrary, the Seventh Circuit and several other circuit courts of appeals have held "that stock ownership in or affiliation with a corporation, without more, is not a sufficient minimum contact."Reimer Express World Corp., 230 F.3d at 943 (collecting cases). The Seventh Circuit's analysis in this regard is convincing, particularly its reliance on Supreme Court precedent to support the proposition that "[t]he unilateral activity of an entity cannot subject a nonresident defendant to personal jurisdiction in the entity's forum" because "'[e]ach defendant's contacts with the forum State must be assessed individually.'" Id. at 944 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984)). Equally convincing is the Seventh Circuit's analysis of why the "MPPAA's control group provision regarding withdrawal liability does not alter the rule that corporate affiliation or ownership is not a sufficient minimum contact for the exercise of personal jurisdiction." Id. at 944-45. We agree that the fact "a defendant would be liable under a statute if personal jurisdiction over it could be obtained is irrelevant to the question of whether such jurisdiction can be exercised." Id. at 944.
Although jurisdiction cannot be premised on corporate affiliation alone even when the claims...
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