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UNITED PRODUCTS CORP. v. ADMIRAL TOOL & MFG. CO.

November 28, 2000

UNITED PRODUCTS CORPORATION, ET AL., PLAINTIFFS,
V.
ADMIRAL TOOL & MANUFACTURING CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Joyner, District Judge.

MEMORANDUM

This is a commercial contract case brought by Plaintiffs United Products Corporation ("UPC") and Joseph Egan ("Egan") against Defendants Admiral Tool & Manufacturing Company ("Admiral"), Ernie Levine ("Levine"), and William Dugan ("Dugan"). In their Amended Complaint, Plaintiffs allege five counts, including: violation of the Pennsylvania Commissioned Sales Representatives Act ("CSRA"), 43 P.S. § 1471, et seq. (Count I); violation of the Pennsylvania Wage Payment and Collection Law ("WPCL"), 43 P.S. § 260.1, et seq. (Count II); request for an accounting and punitive damages (Count III); fraud (Count IV); and breach of contract (Count V). Presently before the Court is Defendants' Motion to Dismiss Counts I, II, and IV or Alternatively to Transfer. For the reasons below, we will grant Defendants' Motion in part and deny it in part.

BACKGROUND

Taken in the light most favorable to Plaintiffs, the relevant facts are as follows. Admiral is an Illinois corporation that manufactures, among other things, seating for the mass transit industry. Levine and Dugan are the President and Vice-President of Admiral respectively. UPC is a Pennsylvania corporation and is principally owned by Egan. In January 1993, UPC and Admiral entered into an Agreement of Representation ("the Agreement") through which UPC and Egan became the exclusive sales representatives for Admiral's products. The Agreement was for one year and was to be automatically renewed for one year unless canceled by either party with thirty-days written notice. Under the Agreement, Admiral agreed to pay UPC a 5-percent commission on each product order UPC obtained.

In May or June 1999, Dugan informed UPC that Admiral was having financial difficulties. In view of Admiral's problems, UPC agreed to reduce the rate of its commissions. Nonetheless, in November 1999, Admiral notified UPC that it was terminating the Agreement effective January 6, 2000. Following Admiral's termination notice, UPC contacted Admiral on several occasions regarding past commissions and other information that were still owed to UPC under the terms of the Agreement. After their repeated letters and telephone calls went unanswered for several months, UPC and Egan filed a complaint with this Court in March 2000. They subsequently amended that complaint in June 2000.

DISCUSSION

I. Claim Against Levine and Dugan

In Count II, Plaintiffs allege a violation of the WPCL. Significantly, this is the only count that names Levine and Dugan as individual Defendants. Defendants argue that the "fiduciary shield" doctrine precludes this Court's exercise of personal jurisdiction over Levine and Dugan. Further, Defendants assert that if we dismiss the claim against Levine and Dugan, we should then transfer the entire case to the Northern District of Illinois. While we agree that the fiduciary shield precludes jurisdiction over the individually named Defendants, we believe that transfer of this entire action is premature at this time.

A. Personal Jurisdiction and the Fiduciary Shield

In general, a court does not have personal jurisdiction over an individual defendant whose only contacts with the forum state were taken in his or her corporate capacity. TJS Brokerage & Co. v. Mahoney, 940 F. Supp. 784, 789 (E.D.Pa. 1996); National Precast Crypt Co. v. DyCore, 785 F. Supp. 1186, 1191 (W.D.Pa. 1992); see also Andrews v. CompUSA, Inc., Civ. A. No. 99-3240, 2000 WL 623234, at *2 (E.D.Pa. May 15, 2000). This general rule, however, does not apply when the corporate officer is charged with (1) committing a tort in his corporate capacity or (2) violating a statutory scheme that provides for personal, as well as corporate, liability for corporate actions. See National Precast Crypt, 785 F. Supp. at 1191. Likewise, a court may disregard the fiduciary shield if the defendant "had a major role in the corporate structure, the quality of his contacts with the state were significant, and his participation in the tortious conduct was extensive." TJS Brokerage, 940 F. Supp. at 789 (citation omitted).

In this case, the number and extent of Levine and Dugan's contacts with Pennsylvania are undisputed.*fn1 In addition, it is undisputed that all of the contacts by Levine and Dugan were taken within their corporate capacities at Admiral. Plaintiffs do not allege that Levine or Dugan committed a tortious act while acting in their corporate capacities. Moreover, regardless of whether Levine and Dugan may be liable under the WPCL, their potential liability is not sufficient to subject them to personal jurisdiction in Pennsylvania. E.g., Andrews, 2000 WL 623234, at *2; Sneberger v. BTI Americas, Inc., No. Civ. A. 98-932, 1998 WL 826992, at *4 (E.D.Pa. Nov. 30, 1998); Schommer v. Eldridge, Civ. A. No. 92-3372, 1992 WL 357557, at *2 (E.D.Pa. Nov. 30, 1992). Finally, while Levine and Dugan certainly have a major role in Admiral's corporate structure, there is no indication that the quality of their contacts was significant or that their role in any tortious activity was extensive.

We find that all of Levine or Dugan's contacts with Pennsylvania were made within their corporate capacities and that, as a result, they are protected by the fiduciary shield doctrine. As none of the exceptions to that doctrine apply in this case, Levine and Dugan are not subject to the personal jurisdiction of this Court. Accordingly, we will dismiss Count II without prejudice as to Levine and Dugan.

B. Appropriateness of Transfer

Having dismissed Count II with respect to Levine and Dugan for lack of personal jurisdiction, the Court must next determine the most just and efficient manner to proceed with the remainder of the case. In this circumstance, we are left with two options: (1) to transfer the entire case to another district where jurisdiction may be exercised over all Defendants or (2) to sever the claims, retaining jurisdiction over UPC and transferring the case as to Levine and Dugan to a proper forum. See Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 296 (3d Cir. 1994) (describing court's options when venue is proper for one defendant but not for another). Guiding our choice of alternatives is the United States Court of Appeals for the Third Circuit's position "that [the court] should not sever if the defendant over whom jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would require the same issues to be litigated in two places." Id. (quoting Sunbelt Corp. v. Noble, Denton & Assocs., Inc., 5 F.3d 28, 33-34 (3d Cir. 1993).) The Third Circuit further explained that "[w]hen the conduct of a co-defendant as to whom venue is proper is central to the issues raised by the plaintiff against those subject to transfer, the grant of a severance would not ordinarily be consistent with the sound ...


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