August v. Manley Toys, Ltd.

68 F.Supp.3d 722

Mitch AUGUST, Plaintiff

v.MANLEY TOYS, LIMITED, d/b/a Toy Teck Limited, a foreign corporation, Defendant.

Case No. 13–13894.

United States District Court, E.D. Michigan, Southern Division.

Signed Nov. 12, 2014.

John J. Cooper, Cooper Law Firm, Troy, MI, for Plaintiff.

Michael S. Hale, Michael S. Hale & Associates, PLC, Northville, MI, for Defendant.

OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (ECF NO. 5)

PAUL D. BORMAN, District Judge.

Before the Court is Defendant Manley Toys, Limited's (“Manley”) Motion to Dismiss Plaintiff's Complaint for Lack of Personal Jurisdiction. (ECF No. 5.) Plaintiff filed a Response (ECF No. 7) and Manley filed a Reply (ECF No. 8). The Court has determined that oral argument will not assist the Court in resolving the motion and decides the matter on the briefs. See E.D. Mich. L.R. 7.1(f)(2). The hearing scheduled for November 13, 2014 at 3:30 p.m. is CANCELED. For the reasons that follow, the Court DENIES the motion.

INTRODUCTION

Defendant Manley Toys, Limited (“Manley”) is a Hong Kong company that seeks to dismiss this action for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Manley claims that it does not maintain a place of business in Michigan, has no registered agent in Michigan and does not conduct business in Michigan. It claims that its only connection with Michigan is that it entered into a contract with the Plaintiff, an independent sales representative, to solicit other companies in Michigan (and throughout the United States) to purchase Manley products direct from Manley in Hong Kong. Plaintiff responds that Manley entered into a contract with a Michigan resident (Mitch August) to sell its products throughout the United States, including in Michigan and by virtue of that contract alone could reasonably have expected to be brought into court in Michigan. Additionally, Plaintiff claims that Manley sells its products nationwide to Meijer, a retail company headquartered in Michigan and also identified its products as emanating from Toy Teck Ltd., a division of Manley, located in Waterford, Michigan. For the reasons that follow, the Court DENIES Manley's Motion to Dismiss.

I. BACKGROUND

Plaintiff Mitch August (“August”) is a United States citizen and citizen of the State of Michigan. (ECF No. 7, Pl.'s Resp. Ex. 1, August 25, 2014 Unsworn Declaration Pursuant to 28 U.S.C. § 1746 of Mitch August ¶ 1.) On September 20, 2007, August entered into a contract with Manley to sell Manley products throughout the United States, including in the State of Michigan.Id. ¶ 5. From 2007 to 2012, Manley wired commissions on those sales into August's account at TCF Bank branches in Waterford, Michigan and Walled Lake, Michigan. Id. ¶ 9. Toy Teck Limited, a Hong Kong entity, (“TT–HongKong”) is a division of Manley. Id. ¶ 13. August and Eric Moorehead were the sole shareholders of a Michigan corporation named Toy Teck Corporation (“TT–Michigan”) and in September, 2007, TT–Hong Kong purchased the assets of TT–Michigan. Id. ¶¶ 14–15. In July, 2008, at the direction of Manley executives in Hong Kong, August filed with the State of Michigan an LLC named “Toy Teck Limited, LLC.” Id. ¶ 17. Within weeks of filing the LLC papers in Michigan, Manley instructed August to dissolve the LLC. The purpose of Toy Teck Ltd., LLC was Administration and Sales, marketing and product development for parent company, Toy Teck Ltd. HK a division of Manley. Id. ¶ 18, Ex. 5.

The contract between Manley and August specifies August will receive 4% commission on all orders under Toy Teck Limited, a Hong Kong corporation, and that “Manley appoints Mitch (August) the President of Toy Teck Ltd.” Pl.'s Resp. Ex. 2, Contract ¶¶ 1.1, 2.8. August received over 10,000 emails from Manley Hong Kong employees and several hundred phone calls were placed by Manley Hong Kong employees to August in Michigan from August, 2007 to January, 2012. Id. ¶ 21.

Manley does not deny any of the averments set forth in August's declaration but responds that the September 20, 2007 contract with August appointing him an independent sales representative for Manley is Manley's only connection with Michigan. (ECF No. 5, Def.'s Mot. to Dismiss Ex. A, July 24, 2014 Affidavit of Samuel Lee ¶ 14–15.) Manley explains that its business model is to contract with independent sales representatives who “convince” companies throughout the United States to travel to Manley's showroom in Hong Kong to view and ultimately purchase Manley products. Id. ¶ 13. Manley avers that its products are normally acquired by purchasers in Hong Kong or China and the products are then shipped by the purchasing company to the purchasing company's destination. Id. ¶ 9.

II. STANDARD OF REVIEW

Plaintiffs bear the burden of establishing that personal jurisdiction exists. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir.2002). The Court has three options when faced with a motion to dismiss for lack of personal jurisdiction. The court may: (1) decide the motion on affidavits alone; (2) permit discovery to help rule on the motion; or (3) conduct an evidentiary hearing to decide any remaining factual questions. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir.1991) (citing Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir.1989) ). Although the plaintiff always bears the burden of establishing that jurisdiction exists, the method selected by the court to resolve the issue will affect the weight of the burden. Id. The Sixth Circuit recently reiterated these options and the effect that the manner of resolution has on the plaintiff's burden in establishing that jurisdictions exists:

The plaintiff bears the burden of establishing through “specific facts” that personal jurisdiction exists over the non-resident defendant, and the plaintiff must make this demonstration by a preponderance of the evidence. See Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 & n. 3 (6th Cir.2006) ; Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir.1991). But where, as here, the defendant has moved to dismiss the case under Rule 12(b)(2) for lack of personal jurisdiction and the district court rules on the motion without an evidentiary hearing, the plaintiff need only make a “prima facie” case that the court has personal jurisdiction. Kroger, 437 F.3d at 510. In this procedural posture, we do not weigh the facts disputed by the parties but instead consider the pleadings in the light most favorable to the plaintiff, although we may consider the defendant's undisputed factual assertions. See Kerry Steel [Inc. v. Paragon Indus.], 106 F.3d [147 (6th Cir.1997) ] at 153; CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261–62 (6th Cir.1996). But also where, as here, “the plaintiff has received all of the discovery it sought with respect to personal jurisdiction and there does not appear to be any real dispute over the facts relating to jurisdiction,” the prima facie “proposition loses some of its significance.” [ Int'l Technologies Consultants, Inc. v.] Euroglas S.A., 107 F.3d [386 (6th Cir.1986) ] at 391.

Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir.2012).

Thus, when the court relies solely on affidavits, the plaintiff need only make a prima facie showing that personal jurisdiction exists to defeat a motion to dismiss. Theunissen, 935 F.2d at 1458. In such a scenario, the pleadings and affidavits are read in the light most favorable to the plaintiff. Id. at 1459. A moving defendant's contrary assertions can, however, present factual disputes that merit further investigation before an ultimate decision can be made whether jurisdiction exists. Id. at 1465 (remanding for an evidentiary hearing because of the “directly contradictory nature of the parties' assertions”). If an evidentiary hearing is held, generally the plaintiff must demonstrate that jurisdiction is proper by a preponderance of the evidence. Id. But see Conley v. MLT, Inc., No. 11–11205, 2012 WL 1893509, at *2 n. 3 (E.D.Mich. May 23, 2012) (concluding that simply permitting the parties to engage in discovery on the issue of personal jurisdiction, without holding an evidentiary hearing, and ultimately deciding the issue based on written submissions after discovery, does not necessarily increase plaintiff's burden to demonstrate jurisdiction by a preponderance of the evidence).

III. ANALYSIS

Jurisdiction over a non-resident defendant is permitted in Michigan if suit can be brought against the defendant under Michigan's long-arm statute without violating the due process requirements of the Constitution:

“A federal court sitting in diversity may not exercise jurisdiction over a defendant unless courts of the forum state would be authorized to do so by state law—and any such exercise of jurisdiction must be compatible with the due process requirements of the United States Constitution.” Int'l Techs. Consultants v. Euroglas S.A., 107 F.3d 386, 391 (6th Cir.1997) (citation omitted). Deciding whether jurisdiction exists is not an idle or perfunctory inquiry; due process demands that parties have sufficient contacts with the forum state so that it is fair to subject them to jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (“[T]he Due Process Clause gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.” (internal quotation marks and citations omitted)). The court's jurisdiction accordingly extends only to those parties who have in some fashion placed themselves in the hands of the tribunal.

Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir.2012).

The Michigan Supreme Court has interpreted Michigan's long-arm statute as providing for the broadest grant of jurisdiction consistent with due process. Sports Auth. Mich., Inc. v. Justballs, Inc., 97...