August v. Manley Toys LTD

Filing 10

OPINION AND ORDER denying 5 Motion to Dismiss. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MITCH AUGUST,
Plaintiff,

Case No. 13-13894
Paul D. Borman
United States District Judge

v.
MANLEY TOYS, LIMITED,
d/b/a TOY TECK LIMITED,
a foreign corporation,
Defendant.
_______________________________/

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

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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

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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
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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 F. Supp. 2d 806, 810 (E.D. Mich. 2000) (citing Sifers v. Horen, 385 Mich. 195, 198-99
(1971)).

“Michigan's “long-arm” statute extends “limited” jurisdiction over nonresident
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corporations pursuant to Mich. Comp. Laws § 600.715, and “general” jurisdiction pursuant to Mich.
Comp. Laws § 600.711. Limited jurisdiction extends only to claims arising from the defendant's
activities that were either within Michigan or had an in-state effect. General jurisdiction, on the
other hand, enables a court in Michigan to exercise jurisdiction over a corporation regardless of
whether the claim at issue is related to its activities in the state or has an in-state effect.” Neogen,
282 F.3d at 888. Only limited personal jurisdiction is at issue in this Opinion and Order.1
“A federal court's exercise of personal jurisdiction in a diversity of citizenship case must be
both (1) authorized by the law of the state in which it sits, and (2) in accordance with the Due
Process Clause of the Fourteenth Amendment.” Neogen, 282 F.3d at 888. To meet the requirements
of due process, a defendant must “have certain minimum contacts with the forum such that
maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l
Shoe v. Washington, 326 U.S. 310, 316 (1945).
A.

Authorized by the Law of the Forum State – Michigan’s Long Arm Statute

Michigan law describes the circumstances by which a Michigan court can exercise limited
personal jurisdiction over a corporation or its agents:
The existence of any of the following relationships between a corporation or its agent
and the state shall constitute a sufficient basis of jurisdiction to enable the courts of
record of this state to exercise limited personal jurisdiction over such corporation and
to enable such courts to render personal judgments against such corporation arising

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In this case, Plaintiff makes a half-hearted effort to argue that Manley has sufficient contacts with
Michigan through its sales to Meijer and other retail outlets to establish the type of “continuous and
systematic contacts” that would support the Court’s exercise of general jurisdiction. The Court does
not rely on this “evidence” in reaching its conclusion that the Court may exercise limited personal
jurisdiction over Manley in this case given Manley’s contacts with August in this state. The Court
expresses no opinion as to whether Manley would be subject to general personal jurisdiction in
Michigan.
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out of the act or acts which create any of the following relationships:
(1) The transaction of any business within [Michigan].
(2) The doing or causing any act to be done, or consequences to occur, in [Michigan]
resulting in an action for tort.
(3) The ownership, use, possession of any real or tangible personal property situated
within this state.
(4) Contracting to insure any person, property, or risk located within this state at the
time of contracting.
(5) Entering into a contract for services to be performed or for materials to be
furnished in the state by the defendant.
Mich. Comp. Laws Ann. § 600.715.
As this Court noted in Light Source, Inc. v. Display Dynamics, Inc., No. 09-14268, 2010 WL
2351489, at *3 (E.D. Mich. June 8, 2010):2
The Sixth Circuit has recognized that the transaction of “any” business under MCL
§ 600.715(1) is established by the “slightest act of business in Michigan.” Lanier v.
Am. Bd. of Endodontics, 843 F.2d 901, 906 (6th Cir. 1988) (citing Sifers v. Horen,
385 Mich. 195, 188 N.W.2d 623, 624 n. 2 (1971)). “Neither the presence of the
defendant in the state, nor the actual contract formation need take place in the forum
state for the defendant to do business in that state.” Lanier, 843 F.3d at 907. In
Lanier, defendant’s correspondence and telephone calls with the Michigan plaintiff,
and its acceptance of payment from the plaintiff, satisfied the “any business”
standard. The Sixth Circuit has recently reaffirmed the expansive reach of
Michigan’s long arm statute to the “full potential” of personal jurisdiction, with just

2

Because Plaintiff’s responsive brief has lifted verbatim, and disturbingly without attribution,
enormous portions of this Court’s 2010 Opinion and Order in Light Source, the Court is forced to
quote its own prior Opinion at length to eliminate any suggestion that this Court is wholesale
adopting the Plaintiff’s brief in rendering this Opinion and Order. In fact, in responding to Manley’s
motion, Plaintiff has blatantly copied and pasted enormous portions of this Court’s discussion and
analysis of the applicable law in Light Source, suggesting to any reader of the brief that Plaintiff’s
counsel had woven the arguments himself. Whether Plaintiff’s failure to cite the Light Source
decision was intentional or simply incredibly irresponsible, the Court is not amused. Nonetheless,
because the Court’s discussion and analysis of the law in Light Source is highly relevant to the facts
of this case, that opinion is quoted at length here.
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the “slightest act of business in Michigan” satisfying the statute. Citizens Bank v.
Parnes, No. 09–1306, Slip Op. at 7 (6th Cir. May 4, 2010) (unpublished).
Light Source, 2010 WL 2351489, at *3 (quoting Citizens Bank v. Parnes, 376 F. App’x 496, 501
(6th Cir. 2010)).3 The Sixth Circuit in Parnes also noted that Michigan courts have held that the
Michigan long-arm statute “‘is intended to be liberally construed in favor of recognizing limited
personal jurisdiction especially where an ordinary commercial transaction is involved, absent
violation of due process of law.’” Id. (quoting Lazzaro v. Charlevoix Lakes, 108 Mich. App. 120,
310 N.W.2d 295, 297 (1981)).
Manley does not contest August’s allegation that from 2007 to 2012, Manley wired money
into August’s TCF bank accounts in Waterford and Walled Lake, Michigan. Nor does Manley
contest August’s allegation that he received over 10,000 emails from Manley Hong Kong employees
and several hundred phone calls to August in Michigan over the course of the parties’ five-year
relationship. Nor can Manley contest that under the terms of the contract between Manley and
August, Manley appointed August the President of Toy Teck LTD to market and solicit sales for
Manley products through the Toy Teck LTD entity in Michigan and elsewhere throughout the
United States.
B.

In Accordance with Due Process

As this Court stated in Light Source:

3

Plaintiff’s offending lack of attribution to this Court’s opinion in Light Source is particularly
egregious in the instance of the citation to Parnes which, at the time this Court issued its opinion
in Light Source in 2010, was available in slip opinion format only. Plaintiff in this case simply
reiterated the Court’s slip opinion citation, not even taking note of the fact that the slip opinion
citation has long since been updated to the Federal Appendix citation. Another noteworthy example
of the “lifting” of the Court’s language from Light Source that bears mention appears at page 13 of
Plaintiff’s response, where Plaintiff refers to itself as “this Court.”
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Although authorized by the Michigan long-arm statute, the exercise of personal
jurisdiction over DDI must still be in accord with the due process clause of the
Fourteenth Amendment. “The due process clause protects an individual’s liberty
interest in not being subject to the binding judgments of a forum with which he has
established no meaningful ‘contacts, ties, or relations.’” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 471-472 (1985) (quoting Int’l Shoe Co. v. Washington, 326
U.S. 310, 319 (1945)). “By requiring that individuals have fair warning that a
particular activity may subject [them] to the jurisdiction of a foreign sovereign, the
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.”
Burger King, 471 U.S. at 472 (internal quotation marks and citations omitted).
Where a defendant “purposefully directs” his activities at residents of the forum
state, that state has an interest in protecting its residents by “providing [them] with
a convenient forum for redressing injuries inflicted by out-of-state actors.” Id. at
473. Where such purposeful conduct has occurred, the defendant can be assured that
he will not be haled into a jurisdiction “solely as the result of random, fortuitous, or
attenuated contacts, or of the unilateral activity of another party or a third person.”
Id. at 475 (internal quotation marks and citations omitted). “[T]he constitutional
touchstone remains whether the defendant purposefully established ‘minimum
contacts’ in the forum State.” Id. at 474 (quoting Int’l Shoe, 326 U.S. at 316).
The Sixth Circuit utilizes a three-part test for determining whether the exercise of
specific personal jurisdiction over an out-of-state defendant comports with due
process:
First, the defendant must purposefully avail himself of the privilege
of acting in the forum state or causing a consequence in the forum
state. Second, the cause of action must arise from the defendant's
activities there. Finally, the acts of the defendant or consequences
caused by the defendant must have a substantial enough connection
with the forum state to make the exercise of jurisdiction over the
defendant reasonable.
Light Source, 2010 WL 2351489, at *4 (quoting Southern Machine Co. v. Mohasco Ind., Inc., 401
F.2d 374, 381 (6th Cir. 1968)).
1.

“Purposeful Availment”

As this Court noted in Light Source, this Court may not exercise personal jurisdiction over
Manley unless Manley “has purposefully entered into a connection within Michigan ‘such that [it]

9

should reasonably anticipate being haled into court [in Michigan].’” Id. at *4 (quoting World–Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)) (alteration in original). As this Court
noted in Light Source, the Sixth Circuit discussed the purposeful availment prong in Air Products
and Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544 (6th Cir. 2008). The Court’s discussion of
Air Products in its opinion in Light Source, is pertinent here:
Air Products involved an interstate contract between plaintiff Air Products, a
Delaware company headquartered in Michigan, and defendant Safetech, a Kansas
corporation. [503 F.3d] at 548. Safetech opened a credit account with Air Products
and over the course of a number of years, Safetech purchased goods on credit from
Air Products, submitting hundreds of orders by phone, fax, email and regular mail.
Id. The goods were shipped by Air Products either to Safetech in Kansas or directly
to Safetech's customers. Id. After several years, Safetech began failing to make
payments to Air Products and litigation ensued in the United States District Court in
Kansas. Id. The district court entered judgment in favor of Air Products but Air
Products was never able to collect from Safetech, who allegedly was without funds
to satisfy the judgment. Air Products later learned that Safetech had transferred
assets that should have been used to pay the Air Products judgment and Air Products
filed suit against Safetech in state court in Michigan alleging fraudulent transfer. Id.
at 549. Safetech removed to this District and moved to dismiss for lack of personal
jurisdiction.
First finding jurisdiction under Michigan's long-arm statute, the Sixth Circuit next
analyzed the due process implications of exercising jurisdiction over Safetech,
discussing at length the “puposeful availment” prong of the minimum contacts
constitutional analysis:
With respect to interstate contractual obligations, the Supreme Court
has emphasized that parties who “reach out beyond one state and
create continuing relationships and obligations with citizens of
another state” are subject to regulation and sanctions for the
consequences of their activities.... In this case, the parties did not
engage in a one-time transaction, but in a continuing business
relationship that lasted a period of many years. Defendants reached
out beyond Kansas' borders to conduct business with a company
whose principal place of business it knew to be in Michigan. Such
contacts are not “random” or “fortuitous” or “attenuated,” but are the
result of deliberate conduct that amounts to purposeful availment.
503 F.3d at 551 (quoting Burger King, supra at 473, 478–479).
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Acknowledging that the contacts between Air Products and Safetech over the years
were admittedly “numerous,” the court cautioned that a “numerical count of the calls
and letters has no talismanic significance,” and focused instead on the quality of
those contacts. Id. at 551 (quoting LAK Inc. v. Deer Creek Enters., 885 F.2d 1293,
1301 (6th Cir. 1989)). Recognizing that a defendant's contacts “lack quality when
they are initiated by the plaintiff rather than the defendant, in part because the
unilateral activity of those who claim some relationship with a non-resident
defendant cannot satisfy the requirement of contact with the forum,” the court found
the opposite to be the case with Safetch. Id. at 552 (quoting Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 80 L.Ed.2d 404
(1984)). Focusing on Safetech's numerous telephone, email, fax and regular mail
contacts with Air Products over the course of the parties' contractual dealings, most
of which were initiated by Safetech's placement of orders with Air Products, the
court concluded that these contacts were not “simply the result of unilateral activity
on the Air Products” but were initiated by Safetech with a known Michigan-based
company in furtherance of the parties' business relationship. Id. at 551–552.
Light Source, 2010 WL 2351489, at *4-5 (first alteration added).
Similarly here, Manley reached out to August in 2007 by entering into a contract with
August, restricting August from representing competing toy companies, precluding him from selling
products that compete with Manley, requiring him to respond to emails from Manley within 24
hours (and obligating Manley to do the same with regard to emails from August), and appointing
August as the President of Toy Teck LTD, a company incorporated by Manley in Hong Kong.
August was appointed a sales representative for the United States of America (including Michigan)
and was limited by the contract to selling Toy Teck LTD products only. Pl.’s Resp. Ex. 2, Contract.
The parties operated under this agreement for over five years, with Manley sending over 10,000
emails and placing several hundred phone calls to August in Michigan, and sending numerous
electronic deposits to August’s Michigan bank accounts. These are not “random,” “fortuitous,” or
“attenuated” contacts and these contacts were initiated by Manley, not by August. The Court
concludes that this conduct satisfies the purposeful availment prong of the due process inquiry.

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Manley urges the Court to conclude otherwise based upon the Sixth Circuit’s opinion in
Calphalon Corp. v. Rowlette, 228 F.3d 718 (6th Cir. 2000). But, as this Court discussed at length
in its opinion in Light Source, Calphalon has often been criticized as irreconcilable with controlling
Supreme Court precedent:
Light Source correctly observes that several courts, along with the dissent in
Calphalon, have had difficulty reconciling Calphalon with controlling Supreme
Court precedent. Cf. Frankenmuth Mutual Ins. Co. v. Appalachian Underwriters,
Inc., No. 03–10193, 2004 WL 1406121 at *9 (E.D. Mich. June 21, 2004)
(unpublished) (“This Court finds it difficult to reconcile the holding in Calphalon
with the Supreme Court's pronouncements in Burger King.”). Calphalon, an Ohio
corporation, engaged defendant Rowlette, a Minnesota resident, as its exclusive
manufacturer's representative for its products in five states, none of which was Ohio.
228 F.3d at 720. During the course of the relationship, Rowlette corresponded with
Calphalon in Ohio via email, fax and telephone. When Calphalon announced that it
was not going to renew Rowlette's agreement, Rowlette expressed its intent to seek
damages for breach of contract and unpaid commissions. Id. at 720–721. Calphalon
filed suit in the United States District Court in Ohio seeking a declaratory judgment
that it owed Rowlette nothing under the terms of the agreement. Id. at 721. Rowlette
moved to dismiss the Ohio action, alleging lack of personal jurisdiction. The court
granted the motion to dismiss, finding that Rowlette's contacts with Ohio were too
random, fortuitous and attenuated. Id. at 723.
In Frankenmuth, supra, Judge Lawson questioned the Calphalon holding, ultimately
distinguishing the case on grounds that this Court finds also applicable here:
If there is a distinction to be made between the critical facts in
Calphalon and Burger King, it perhaps can be derived from the
absence of any activity by Rowlette himself directed into the forum
state. For all that can be determined from the opinion in that case, it
appears that Rowlette simply arranged sales in other states and
reported on market conditions there. He never remitted payment for
any goods to Calphalon's headquarters, nor did he “reach out beyond”
Minnesota for the purpose of deriving the benefit of affiliating with
a “nationwide organization,” as did John Rudzewicz in the Burger
King case. Moreover, the lawsuit in that case was a declaratory
judgment action in which Calphalon sought a ruling that it owed
nothing to Rowlette, not that Rowlette had damaged Calphalon.
[Frankenmuth Mutual Ins. Co. v. Appalachian Underwriters, Inc.,
No. 03–10193,] 2004 WL 1406121 at *9 [E.D. Mich. June 21,
2004)].
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Light Source, 2010 WL 2351489, at *5-6. See also Functional Pathways of Tenn., LLC v. Wilson
Senior Care, Inc., 866 F. Supp. 2d 918, 925 (E.D. Tenn. 2012) (citing this Court’s opinion in Light
Source and noting that “[s]everal courts have distinguished Calphalon from the majority of breach
of interstate contract claims, because in Calphalon, the plaintiff company sought declaratory
judgment that it owed nothing to a former sales representative [whereas] [i]n this case, like most
others for breach of contract, Plaintiff seeks economic damage for an alleged breach of contract that
threate[ne]d or otherwise adversely affected Plaintiff's ability to conduct business”).
As in Light Source and Functional Pathways, this Court finds that Manley’s conduct in
contracting with August and performing under that contract for an extended period of time, wiring
payments under the contract to August here in Michigan and communicating with August
extensively here in Michigan via email and telephone created a “substantial connection” with
Michigan. In allegedly refusing to remit payments for work August alleges he performed under the
contract, Manley could reasonably expect to be haled into court in here. “Surely, based upon these
contacts, [Manley] had “fair warning” that these activities, specifically directed toward [August] in
Michigan, if injurious to [August], might require [Manley] to come to Michigan to answer for its
conduct. Certainly, in such an instance, Michigan has an interest in providing [Manley] with a
forum to attempt to redress these wrongs. This is all that traditional notions of justice and fair play
require.” Light Source, 2010 WL 2351489, at *6 (alterations added).
2.

Arising From

As this Court noted in Light Source, “[t]he arising from prong of the Southern Machine test
is satisfied if ‘a defendant’s contacts with the forum state are related to the operative facts of the
controversy.’” 2010 WL 2351489, at *6 (quoting CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267
13

(6th Cir. 1996)). August’s Complaint in this case directly relates to the alleged failure to pay sales
commissions due under the 2007 contract between Manley and August, a contract that Manley
entered into with August who was at that time a citizen and resident of the State of Michigan.
Manley’s contacts with Michigan thus relate directly to the operative facts of this controversy.
Manley argues that its business model of having its United States sales representatives like August
solicit purchasers for Manley products who ultimately travel to Hong Kong or China to make those
purchases allows it to evade this Court’s jurisdiction because the actual sales of products on which
August claims commissions are consummated in Hong Kong. But this case is about the business
deal that Manley made with August in September, 2007, when it hired August to solicit business for
Manley products throughout the United States and Canada, and when it promised to pay August
commissions for soliciting that business, which Manley did pay to August by wiring funds directly
to August’s bank accounts in Michigan. Manley insists, however, that “had Plaintiff not worked to
consummate sales which all occurred in Hong Kong, Plaintiff would not have received
commissions.” ECF No. 8, Def.’s Reply 4. But the “work” that Manley contracted with August to
perform, i.e. to represent and market exclusively Manley products and to provide new and
innovative products to Manley,” was to be done here in Michigan, not in Hong Kong. The fact that
the calculation of August’s commissions was based on sales actually consummated in Hong Kong
by the Michigan and other United States-based entities whom August had solicited for Manley does
not diminish Manley’s extensive contacts and affirmative acts in reaching out to August in Michigan
to solicit orders for Manley products.
In support of its argument, Manley relies on Int’l Technologies Consultants, Inc. v. Euroglas
S.A., 107 F.3d 386 (6th Cir. 1997). Euroglas is distinguishable. To begin with, the contract in that

14

case under which the plaintiff claimed relief specified that jurisdiction for that contract was in Berne,
Switzerland and that the contract was to be interpreted under Swiss law. 107 F.3d at 387.
Moreover, the alleged misuse of the intellectual property at the heart of the dispute in that case
occurred in Europe and it was plaintiff who solicited business with the defendants in Europe,
promising among other things to build a manufacturing facility in Europe. Id. at 392. In this case,
according to August’s uncontested allegations, it was Manley that solicited the contract later claimed
to have been breached, giving rise to August’s claims. At bottom, Euroglas involved much more
passive conduct on the part of the defendants than Manley is accused of here but even more
distinguishing is the court’s reliance on the contractual language that specified Switzerland as the
jurisdictional base for the contract: “These provisions are not without relevance to the jurisdictional
question presented here.” Id. The contractual provision specifying Switzerland as the jurisdiction
for the contract “strongly suggest[ed]” that the defendant should not have anticipated being haled
into court here in Michigan.” Id. There is no such contractual language here. Finally, the court in
Euroglas dismissed the significance of the defendants’ email, fax and telephone correspondence
directed to the plaintiff in the state of Michigan because: “Glas Trösch was not attempting to exploit
any market for its products in Michigan, and the company presumably would have been pleased to
communicate with International Technologies wherever the latter wished.” Id. at 395. Not so here
where Manley specifically sought to exploit the Michigan market for the sale of its products. The
Court finds Euroglas distinguishable and concludes that the due process “arising under” prong is
satisfied here.4

4

Manley also submits an opinion and order from the United States District Court in the Southern
District of Iowa, Rennenger v. Manley Toy Direct, et al., No. 10-00400 (S.D. Iowa 2010), in which
Manley was dismissed for lack of personal jurisdiction. (Def.’s Reply Ex. 1.) Rennenger is
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3.

“Reasonableness”

As this Court noted in Light Source: “[W]here, as here, the first two criterion [of Southern
Machine] are met, ‘an inference of reasonableness arises’ and ‘only the unusual case will not meet
this third criteria.’” 2010 WL 2351489, at *7 (quoting Air Products, 503 F.3d at 554 (quoting
Theunissen, 935 F.2d at 1461). “In determining reasonableness, the court should consider: 1) the
burden on the defendant; 2) the interest of the forum state; 3) the plaintiff's interest in obtaining the
relief sought; 4) another state's interest in securing resolution of the matter.” Id. (quoting Air
Products, 503 F.3d at 554–55).
Whatever the burden on Manley, Michigan has a strong interest in protecting its citizens
from breaches of contract such as are alleged by August against Manley in this case. It would be
an enormous burden for August to attempt to litigate this claim in Hong Kong. Moreover, August’s
claims relate to sales made to United States companies. Nothing about this case makes Hong Kong
a reasonable venue for vindication of August’s rights. An inference of reasonableness is appropriate
here given the Court’s resolution of the “purposeful availment” and “arising under” prongs. That
inference is not defeated here by considerations of reasonableness.
IV.

CONCLUSION
Manley concedes that it entered into a contract with August, does not deny that it initiated

that contractual relationship and admits that the purpose of that contract was to market Manley

completely inapposite. Plaintiff in Rennenger filed a Title VII sexual harassment lawsuit against
an Iowa corporation that plaintiff alleged was owned by Manley. The court in Rennenger expressly
noted that Manley did not conduct business in Iowa, had no employees, corporate offices or
contracts in Iowa and had no actual control over the individuals alleged to have sexually harassed
the plaintiff in that case. Nothing like the facts in this case which establish that Manley reached out
to a Michigan citizen and entered into a contract with that individual for the solicitation for sale of
Manley products in Michigan and throughout the United States.
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products to companies in the State of Michigan and throughout the United States. It does not deny
that it wired money on multiple occasions into August’s bank accounts in Michigan and that it sent
over 10,000 emails to August in Michigan, and placed hundreds of phone calls to August here in
Michigan, over the course of their contractual relationship.
For the foregoing reasons, the Court concludes that the minimum requirements of Due
Process have been met here and that this Court may properly exercise personal jurisdiction over
Manley. Manley’s motion is DENIED.
IT IS SO ORDERED.

s/Paul D. Borman
PAUL D. BORMAN
UNITED STATES DISTRICT JUDGE
Dated: November 12, 2014
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon each attorney or party of record
herein by electronic means or first class U.S. mail on November 12, 2014.

s/Deborah Tofil
Case Manager

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