GALLEY v. KREUTZIG

Filing 25

ORDER ON DEFENDANTS MOTION TO DISMISS AND PLAINTIFFS MOTION TO STRIKE denying 4 Motion to Dismiss for Lack of Jurisdiction; denying 14 Motion to Strike By JUDGE JON D. LEVY. (nwd)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
JOHN GALLEY,
Plaintiff,
v.
KIRK KREUTZIG,
Defendant.

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ORDER ON DEFENDANT’S MOTION TO DISMISS AND PLAINTIFF’S
MOTION TO STRIKE
This case concerns a business dispute between plaintiff John Galley, a Maine
resident, and defendant Kirk Kreutzig, an Illinois resident. Galley brought suit in
Maine state court for breach of contract, among other causes of action. ECF No. 1-2.
Kreutzig entered a limited appearance, moving to dismiss Galley’s complaint for lack
of personal jurisdiction, ECF No. 4 at 2, and then removed the case to this court, ECF
No. 1. After careful consideration, I conclude that the exercise of personal jurisdiction
over Kreutzig is proper. I also deny Kreutzig’s request for a transfer of venue,1 and
deny Galley’s motion to strike portions of Kreutzig’s reply brief.
I. FACTUAL AND PROCEDURAL BACKGROUND
For purposes of Kreutzig’s motion to dismiss, Galley has the burden of
producing prima facie evidence that demonstrates the court’s personal jurisdiction
over Kreutzig. Daynard v. Ness, Motley, Loadhold, Richardson & Poole, P.A., 290

I treat Kreutzig’s motion to dismiss under the doctrine of forum non conveniens as a motion to
transfer venue. See infra.

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F.3d 42, 50 (1st Cir. 2002). I accept Galley’s properly documented evidentiary proffers
as true, whether or not the evidence is disputed. Id. at 51. I also accept Kreutzig’s
evidence where it does not contradict Galley’s. Id. Through this lens, the parties’
affidavits show the following facts:
Galley and Kreutzig have been friends since meeting as teenagers in Hinsdale,
Illinois, roughly 50 years ago. ECF No. 4 at 40. Kreutzig still resides in Illinois, while
Galley moved to Maine around 15 years ago. Id. at 39-40. Galley is a retired attorney,
while Kreutzig operates Orion4Sight, an Illinois corporation that manufactures
sunglasses. Id. at 40.
In September of 2013, Kreutzig and his wife visited Galley in Maine. ECF No.
10-1 at 5. Kreutzig brought along Orion4Sight marketing materials, and the two
“engaged in extensive discussions” about the business. Id. At some point, the two
agreed that Galley would undertake efforts to make Orion4Sight sunglasses available
for purchase on Amazon.com. Id. at 6. In the spring of 2014, the parties also agreed
that Galley would launch a Kickstarter campaign for Orion4Sight sunglasses. Id. at
3. Galley claims that under this arrangement, he was to incur all of the expenses of
selling sunglasses through Kickstarter, and was to receive all of the profits. Id.
Galley enrolled in several online sales and marketing classes in furtherance of
the Amazon and Kickstarter projects. Id. at 5-6. Kreutzig partially reimbursed
Galley for these courses by mailing checks to him in Maine. Id. Kreutzig also sent
marketing materials and sunglass samples to Galley for Galley’s use at a trade show
in the summer of 2014. Id. In the winter of 2014, Kreutzig contacted a friend of

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Galley’s, Linda Hanson, about product testing the sunglasses in her job as a ski
instructor at Sugarloaf. Id. at 5. Kreutzig mailed Hanson several pairs of sunglasses
to test. Id.
Ultimately, Galley raised more than $300,000 dollars through Kickstarter.
ECF No. 1-2 at 6. The Kickstarter campaign included sales of Orion4Sight sunglasses
to forty-seven people in Maine. ECF No. 10-1 at 6-7. Kreutzig shipped these orders
from Illinois in November of 2014. Id. at 6. Galley also obtained “vendor status” on
Amazon, which enabled him to sell Orion4Sight sunglasses through Amazon’s
website. ECF No. 1-2 at 6.
The parties’ relationship soured for reasons not relevant here. Galley claims
that he and Kreutzig entered into a binding partnership agreement.

Id. at 9.

Kreutzig claims that the relationship is nothing more than a sales representation
agreement with Galley working as a commissioned sales representative. ECF No. 4
at 42. Galley filed his complaint in the Knox County Superior Court in Maine on
December 5, alleging breach of contract, fraud, and other counts. ECF No. 1-2 at 15.
On January 16, 2015, Kreutzig filed suit against Galley in federal court in the
Northern District of Illinois, alleging breach of fiduciary duty, tortious interference
with contractual rights, and unjust enrichment. ECF No. 10-4 at 13-17.
II. DISCUSSION
A.

Motion to Dismiss for Lack of Personal Jurisdiction
In a diversity case, the forum state’s long-arm statute governs whether a

district court may properly exercise jurisdiction over a nonresident defendant. See,

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e.g., Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir. 1995). Maine’s long-arm statute
is coextensive with the constitutional requirement of due process. 14 M.R.S.A. § 704A(1) (2014).

Accordingly, the question presented is whether the exercise of personal

jurisdiction over Kreutzig comports with the Due Process Clause of the United States
Constitution. See Henderson v. Laser Spine Inst., 815 F. Supp. 2d 353, 367 (D. Me.
2011).
The Due Process Clause permits the exercise of jurisdiction over an out-of-state
defendant only if the defendant has “certain minimum contacts with [the forum state]
such that the maintenance of the suit does not offend traditional notions of fair play
and substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quotation
omitted).
three

For the exercise of jurisdiction in a specific case2 to meet this standard,

criteria

must

be

present:

relatedness,

purposeful

availment,

and

reasonableness. Bluetarp Fin., Inc. v. Matrix Const. Co., Inc., 709 F.3d 72, 80 (1st
Cir. 2013).

The plaintiff carries the burden of producing prima facie evidence to

satisfy each criterion.3 Id. at 79.

Personal jurisdiction may be either general or specific. General jurisdiction, which exists when a
defendant has continuous and systemic contacts with a forum state, allows a defendant to be brought
into court even in matters unrelated to the nature of the defendant’s contacts. See, e.g., Harlow v.
Children’s Hosp., 432 F.3d 50, 64 (1st Cir. 2005). In contrast, specific jurisdiction conveys jurisdiction
only over a case that relates to the defendant’s contacts with the forum. See, e.g., N. Laminate Sales,
Inc. v. Davis, 403 F.3d 14, 24 (1st Cir. 2005). Because Galley makes no claim that Kreutzig’s contacts
with Maine permit the exercise of general jurisdiction, see ECF No. 10, I limit my analysis to the
specific jurisdiction question.
2

A district court has three separate standards available to it when considering a personal jurisdiction
question – the conventional “prima facie” test, as well as “likelihood” and “preponderance” standards
for when the jurisdictional question implicates more serious evidentiary issues. Foster-Miller, Inc. v.
Babcock & Wilcox Canada, 46 F.3d 138, 145-47 (1st Cir. 1995). Because the parties do not indicate a
need for a more searching evidentiary inquiry, and because I discern none independently, I apply the
prima facie standard.
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1. Relatedness
The relatedness prong is satisfied if the cause of action arises from or relates
to the defendant’s contacts with the forum state. Id. The relatedness standard is
“flexible” and “relaxed.” Adelson v. Hananel, 510 F.3d 43, 49 (1st Cir. 2007) (citing
Pritzker v. Yari, 42 F.3d 53, 61 (1st Cir. 1994)). However, the connection between the
cause of action and the forum state “must be more than just an attenuated” one.
Phillips v. Prairie Eye Ctr., 530 F.3d 22, 27 (1st Cir. 2008).

For contract claims,

relatedness is satisfied if a defendant’s contacts with the forum state were
instrumental in either the formation of the contract or its breach. Phillips Exeter
Acad. v. Howard Phillips Fund, 196 F.3d 284, 289 (1st Cir. 1999). As for tort claims,
there must be a sufficient “causal nexus” between the defendant’s contacts and the
plaintiff’s cause of action. See id.
Galley’s contractual, quasi-contractual, and equitable claims – for declaratory
relief, a permanent injunction, breach of contract, promissory estoppel, and unjust
enrichment – are sufficiently related to Kreutzig’s contacts with Maine to satisfy due
process. Galley has produced prima facie evidence that he and Kreutzig engaged in
extensive discussions in Maine about the eyewear program involved in this suit. ECF
No. 10-1 at 5. Kreutzig’s visit to Maine was thus instrumental to the formation of
any contract that arose between the parties. In addition, Galley and Kreutzig agreed
that Galley, while based in Maine, would run a Kickstarter campaign for Orion4Sight
sunglasses and endeavor to have the sunglasses sold on Amazon.com. Id. at 3.
Galley’s performance in Maine of services related to the eyewear gives the alleged

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contract a substantial connection to Maine that satisfies relatedness. See Jet Wine &
Spirits, Inc. v. Bacardi & Co., Ltd., 298 F.3d 1, 10 (1st Cir. 2002) (noting that
relatedness is present if claim arises from a contract that has a substantial connection
to the forum state).
Galley’s sole tort claim – for fraud – is also sufficiently related to Kreutzig’s
Maine contacts. Galley alleges he was defrauded when Kreutzig had an opportunity
to clarify Galley’s understanding of the parties’ agreement, but failed to do so,
inducing further reliance on Galley’s part. ECF No. 1-2 at 12-13. By discussing the
Orion4Sight business with Galley in Maine, engaging Galley’s labor in Maine, and
sending money and product into Maine, Kreutzig had contacts with Maine that
contributed to Galley’s reliance on the alleged misrepresentation. There is, therefore,
a sufficient causal nexus between Kreutzig’s Maine contacts and Galley’s fraud claim.
2. Purposeful Availment
“Specific jurisdiction further requires that the defendant’s contacts represent
a purposeful availment of the privilege of conducting activities in the forum state[.]”
Bluetarp Fin., 709 F.3d at 82 (quotations omitted). This requirement ensures that
jurisdiction is not based on random or isolated contacts with a forum state. Hannon
v. Beard, 524 F.3d 275, 284 (1st Cir. 2008). The cornerstones of the inquiry are
whether the defendant’s contacts were voluntary and whether they made it
foreseeable that a defendant could be brought before the state’s courts.

Id.

Underpinning the purposeful availment rule is an understanding that “when a
defendant deliberately targets its behavior toward the . . . economy of a particular

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forum, the forum should have the power to subject the defendant to judgment
regarding that behavior.” Carreras v. PMG Collins, LLC, 660 F.3d 549, 555 (1st Cir.
2011).
Galley suggests that Kreutzig’s conduct satisfied the purposeful availment
requirement because it involved business activities with a Maine resident. ECF No.
10 at 14. In response, Kreutzig argues that the parties’ agreement was Galley’s idea,
and that the bulk of the communications between the two were initiated by Galley.
ECF No. 4 at 15-16.
Kreutzig’s efforts to paint himself as a largely passive actor in the parties’
business relationship belies the fact that a relationship existed. By Kreutzig’s own
admission, he “allowed Galley to assist with Internet marketing and sales for
Orion4Sight” while Galley operated from his base in Maine. ECF No. 4 at 42. While
a business contract, without more, cannot establish purposeful availment, see
Bluetarp Fin., 709 F.3d at 82, Galley offers prima facie evidence of other significant
contacts with Maine in furtherance of this agreement: Kreutzig sent Galley eyeglass
samples to use at trade shows, ECF No. 10-1 at 5, promotional brochures to assist in
marketing, id. at 5-6, and reimbursement checks for business expenses, id. Kreutzig
also reached out to another Maine resident to discuss product testing his sunglasses,
and mailed several pairs of the sunglasses to that person for tests.

Id. at 7.

Additionally, Kreutzig’s company fulfilled at least 47 orders of sunglasses for Mainers
as a result of the Kickstarter campaign that is a focus of the dispute. Id. at 6-7. This
is all behavior targeted toward Maine.

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In short, Kreutzig deliberately entered into a business relationship with
Galley, a Maine resident, with the understanding that Galley would engage in
marketing and promotional activities from his base in Maine. See Harlow, 432 F.3d
at 63 (noting that, in case involving provision of personal services, jurisdictional
analysis should focus on where the services were rendered). Kreutzig mailed both
money and products to Maine in furtherance of that relationship, in addition to
shipping sunglasses to Maine customers after Galley launched the Kickstarter
campaign that is a subject of this litigation. Kreutzig’s actions made it foreseeable
that he might be brought before Maine courts if litigation arose from his arrangement
with Galley.
3. Reasonableness
Finally, the exercise of specific jurisdiction over an out-of-state defendant must
be reasonable.

See, e.g., N. Laminate Sales, 403 F.3d at 26.

The test of

reasonableness weighs several factors designed to give definition to the higher
concepts of “fair play and substantial justice” which are the touchstones of the
inquiry. See Pritzker v. Yari, 42 F.3d 53, 63 (1st Cir. 1994). These factors include:
[T]he defendant’s burden of appearing; the forum State’s interest in
adjudicating the dispute; the plaintiff’s interest in obtaining convenient
and effective relief; the interstate judicial system’s interest in obtaining
the most efficient resolution of the controversy; and the shared interest
of the several States in furthering fundamental substantive social
policies.
N. Laminate Sales, 403 F.3d at 26 (citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 477 (1985)). Kreutzig protests that his burden to appear in Maine would be high;
that Maine has little interest in this dispute because it involves an Illinois corporation
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and implicates Illinois professional responsibility rules; and that Galley’s interest in
obtaining relief does not depend on litigating this case in Maine. ECF No. 4 at 17-18.
In response, Galley asserts that Maine has an interest in regulating its own
commerce, in providing its citizens with access to courts where they reside, and in
protecting its citizens from the torts of nonresident defendants transacting business
in the state. ECF No. 10 at 12-13. Weighing these factors, the balance tips in favor
of jurisdiction.
First, the burden Kreutzig will bear by litigating this case in Maine does not
weigh against jurisdiction. Because “mounting an out-of-state defense most always
means added trouble and cost,” this factor is only meaningful if a party can
demonstrate a “special or unusual burden.” Bluetarp Fin., 709 F.3d at 83 (quoting
Hannon, 524 F.3d at 285). Here, Kreutzig has not alleged more than the typical
inconveniences of having to hire Maine counsel and incur travel costs. ECF No. 4 at
17-18. Kreutzig’s burden, then, is a neutral factor. So too is the shared interest of
the two states involved: Maine and Illinois. Neither party provides any reason, nor
do I discern one, to conclude that a finding of jurisdiction “would speak one way or
another” to the common interests of all sovereigns in advancing particular policies.
See Adelson v. Hananel, 652 F.3d 75, 84 (1st Cir. 2011).
Judicial efficiency is also a neutral factor. While as Kreutzig asserts, Illinois’
professional responsibility rules may ultimately be relevant to the merits of this
dispute because Galley is an Illinois-licensed attorney who previously provided legal
representation to Kreutzig, see ECF No. 4 at 12-13, it remains to be determined

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whether Maine or Illinois law governs the imposition of liability in this case.
Moreover, while a case related to the same underlying events as this one has been
filed by Kreutzig in the Northern District of Illinois, ECF No. 10-4 at 3, the First
Circuit has noted that the pendency of related cases in other jurisdictions is
insufficient, standing alone, to “tip the constitutional balance,” Bluetarp Fin., 709
F.3d at 83.
The remaining factors tip the scale in Galley’s favor. Contrary to Kreutzig’s
assertion that Maine has no interest in this dispute beyond Galley’s Maine
citizenship, the First Circuit has recognized that “Maine has an interest in redressing
harms committed . . . by out of state [defendants]” and that Maine “has a stake in
being able to provide a convenient forum for its slighted residents.” Id. Finally,
Galley’s interest in convenient and effective relief is best served by litigation in
Maine. See Sawtelle, 70 F.3d at 1395 (“[A] plaintiff’s choice of forum must be accorded
a degree of deference with respect to the issues of its own convenience.”).
Accordingly, I conclude that the exercise of personal jurisdiction over Kreutzig
is reasonable. No substantial injustice or fundamental unfairness is worked by
having Kreutzig travel from Illinois to Maine to defend and assert claims that arise
from his business relationship with a Maine resident and relate to business activities
that occurred in Maine as well as money and products he sent into the state.
Kreutzig’s motion to dismiss for lack of personal jurisdiction is denied.
B.

Motion to Dismiss Under Forum Non Conveniens
Kreutzig next contends that even if personal jurisdiction is present, this case

should be dismissed under the doctrine of forum non conveniens. ECF No. 4 at 19.
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Kreutzig notes that he has not specifically moved to transfer venue pursuant to 28
U.S.C. § 1404 because he filed his forum non conveniens motion in state court before
this action was removed. ECF No. 12 at 7 n.6. However, he also acknowledges that
he would seek a transfer in the event he is denied forum non conveniens relief. Id.
Because the doctrine of forum non conveniens is not applicable in federal court when
the alternative forum is another federal court, see Sinochem Int’l Co. Ltd. v. Malaysia
Int’l Shipping Corp., 549 U.S. 422, 430 (2007), and because the parties’ briefs have
addressed the applicable criteria and the alternative venue, I treat Kreutzig’s forum
non conveniens motion as a motion to transfer to the Northern District of Illinois.
“For the convenience of parties and witnesses, in the interest of justice, a
district court may transfer any civil action to any other district . . . where it might
have been brought[.]” 28 U.S.C. § 1404(a) (2014). In addition to convenience, this
analysis considers the availability of documents, the possibility of consolidation, and
the order in which the district courts obtained jurisdiction. Coady v. Ashcraft & Gerel,
223 F.3d 1, 11 (1st Cir. 2000). The moving party bears a “substantial burden” of
demonstrating why a change of venue is appropriate. Demont & Assocs. v. Berry, 77
F. Supp. 2d 171, 173 (D. Me. 1999). Additionally, “[w]here identical actions are
proceeding concurrently in two federal courts . . . the first filed action is generally
preferred in a choice of venue decision.” Coady, 223 F.3d at 11 (citing Cianbro Corp.
v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir. 1987)).
In favor of transfer, Kreutzig argues that Illinois would be a more convenient
location for the parties and witnesses, and stresses that Illinois’ professional

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responsibility rules could bear on liability issues because of Galley’s membership in
the Illinois bar and professional duties he may have owed to Kreutzig. ECF No. 4 at
20. Galley responds that the District of Maine is a proper venue because a substantial
part of the events giving rise to the lawsuit occurred here. ECF No. 10 at 17-18.
Although this is a close question, for reasons I will explain, the “first-filed rule”
decides this matter.
The first-filed rule exists to further sound judicial administration and avoid
duplicative efforts by courts and parties litigating identical actions by favoring the
action filed first. See Dinan v. Alpha Networks, Inc., 803 F. Supp. 2d 71, 75-76 (D.
Me. 2011). Here, Galley filed his complaint on December 5, 2014, ECF No. 1-2 at 15,
and Kreutzig was served on January 6, 2015, ECF No. 1 at 1. Kreutzig then filed his
suit in the Northern District of Illinois on January 16, 2015. ECF No. 10-4 at 17.
Because Galley filed in December alleging a breach of contract that occurred in
October, see ECF No. 1-2 at 7, his complaint does not reveal a “race to the courthouse”
that would justify abrogation of the first-filed rule. See Cianbro, 814 F.2d at 11. In
contrast, Kreutzig’s filing of a complaint in Illinois just 10 days after learning of
Galley’s suit in Maine suggests a “quick response . . . designed to get home-court
advantage,” see id., which the first-filed rule seeks to discourage.
If the first-filed rule were not implicated, the analysis, while close, would still
favor Galley. The relevant factors here do not strongly favor either venue. Much of
the evidence regarding the existence and terms of the parties’ agreements is
contained in e-mails and testimony about the content of conversations, meaning that

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the availability of documents in either forum is not a decisive factor. Likewise, the
convenience factor is in equipoise – in either district, one litigant will be burdened
substantially more than the other, and I do not find that Galley’s having lived in
Illinois 15 years ago makes it significantly more convenient for him to travel there
now, as Kreutzig claims. It is also not apparent that witnesses will be centered in
one district or the other. See ECF No. 10 at 16; ECF No. 4 at 20. Neither party
identifies with any specificity a critical or necessary witness whose availability could
hinge on the choice of venue. Id.
A court’s familiarity with the applicable law has also been recognized in this
circuit as an appropriate factor in deciding a motion to transfer. See World Energy
Alternatives, LLC v. Settlemyre Indus., Inc., 671 F. Supp. 2d 215, 218-19 (D. Mass.
2009). Kreutzig contends that Illinois professional responsibility rules are implicated
in this case, making the Northern District of Illinois a more appropriate forum. ECF
No. 4 at 12-13. Accordingly, Galley’s alleged role as Kreutzig’s attorney may prove
relevant to this dispute, and Illinois’s rules of professional conduct may control one
or more of the questions of law that are presented. However, the same may be true
with respect to Maine law. Because Maine’s choice of law analysis for contract actions
that do not include choice-of-law provisions is highly fact intensive, see State Farm
Mut. Auto. Ins. Co. v. Koshy, 2010 ME 44, ¶¶ 46-47, 995 A.2d 551, I decline to engage
in that inquiry without a more fully developed record. See Levin v. Dalva Bros., Inc.,
459 F.3d 68, 73 (1st Cir. 2006) (noting that the forum state’s choice-of-law rules apply
in a diversity case). Nevertheless, the record establishes a real possibility the Maine

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law will govern the question of contract formation. Without clarity as to which state’s
laws will ultimately govern this case, I consider this factor neutral.
Finally, because Galley did not object to the exercise of personal jurisdiction in
Illinois, that court obtained jurisdiction first. However, in view of my analysis of the
preceding factors, this sole reason to favor venue in the Northern District of Illinois
does not overcome the “strong presumption in favor of the plaintiff’s choice of forum.”
See Coady, 223 F.3d at 11. Accordingly, I conclude venue properly rests in Maine.
C.

Motion to Strike
Galley has moved to strike Kreutzig’s reply brief on the jurisdictional question.

ECF No. 14. Galley alleges that the brief raised “totally new material” regarding
Galley’s status as an Illinois attorney in violation of Local Rule 7, which provides that
a reply memoranda “shall be strictly confined to replying to new matter raised in the
objection or opposing memorandum.” Id. at 1-2 (citing Loc. R. 7(c)).
Galley’s response to Kreutzig’s motion to dismiss argues that litigating in
Maine would comport with traditional notions of fairness. ECF No. 10 at 15-16. In
his reply, Kreutzig uses Galley’s status as an Illinois attorney to argue that Illinois
would be the fairer venue for litigation. See ECF No. 12 at 6-7. Broadly speaking,
this is responsive to an argument – the fairness of litigating in Maine – that Galley
raised in his response brief. Galley’s reply, therefore, does not violate Local Rule 7.

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III. CONCLUSION
For the foregoing reasons, Kreutzig’s motion to dismiss (ECF No. 4) is
DENIED. Galley’s motion to strike (ECF No. 14) is also DENIED.
SO ORDERED.
Dated: May 15, 2015

/s/ Jon D. Levy_____________
U.S. District Judge

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