MB Financial Bank, N.A. v. Struthers et al

Filing 12

OPINION AND ORDER denying #6 Defendants' Motion to Dismiss for lack of personal jurisdiction and improper venue. Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

MB FINANCIAL BANK, N.A.,
Plaintiff,
v.

Case No. 16-11052

HOLLY STRUTHERS, et. al.,
Defendants.
/
OPINION AND ORDER DENYING DEFENDANTS’ “MOTION TO DISMISS FOR
LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE”
Pending before the court is a “Motion to Dismiss for Lack of Personal Jurisdiction
and Improper Venue,’” filed by Defendants Holly Struthers, Douglas Bland, Scott
Burchett, and Jennifer Gibbons. (Dkt. # 6.) Having reviewed the briefs, the court
concludes a hearing is unnecessary. See E.D. Mich. LR 7.1(f)(2). For the reasons
stated below, the court will deny the motion.
I. BACKGROUND
Plaintiff MB Financial is an Illinois corporation headquartered in Chicago. (Dkt. #
6, Pg. ID 172.) In 2014, the company acquired Cole Taylor Bank. (Id.) Prior to
commencement of this litigation, each of the Defendants was employed by Plaintiff or its
predecessor as an area sales manager for several years, living and working in separate
states. (Id. at Pg. ID 172-73.) Struthers was located in Texas, Burchett in Georgia, and
Gibbons and Bland both in California. (Id.) Despite their remote locations, during the
course of employment, each Defendant maintained regular, daily contact with Plaintiff’s
Ann Arbor office via email and telephone. (Dkt. # 8-2, Pg. ID 297.) They also attended

annual training meetings held there. (Dkt. # 8-2, Pg. ID 299-300; Dkt. # 8, Pg. ID 282.)
Between January 29, 2016 and February 5, 2016, each of the Defendants
tendered their resignation and subsequently commenced working for one of Plaintiff’s
competitors, Home Point Financial Corporation. (Id. at 172-74.) Plaintiff alleges that
prior to resigning, each Defendant transferred large quantities of confidential business
files from company servers located in Michigan to personal email or cloud accounts.
Accordingly, Plaintiff filed a “Motion for Temporary Restraining Order and Motion
for Preliminary Injunction” seeking a court order “enjoining Defendants from using or
disclosing any trade secrets or confidential business information of MB Financial,
directing Defendants to return to MB Financial all trade secrets and confidential
business information they misappropriated” and take other actions to remedy the
alleged misappropriation of confidential files. (Dkt. # 3, Pg. ID 34.) The court denied
Defendants’ motion for a temporary restraining order and set an initial hearing on the
motion for a preliminary injunction. (Dkt. # 5.) Defendants then filed the instant Motion
seeking dismissal for lack of personal jurisdiction and improper venue. (Dkt. # 6.)
II. STANDARD
A. Personal Jurisdiction
If a district court lacks jurisdiction over the defendants, dismissal is appropriate
under Federal Rule of Civil Procedure 12(b)(2). “The burden of establishing jurisdiction
is on the plaintiff.” Tobin v. Astra Pharm. Prod., Inc., 993 F.2d 528, 543 (6th Cir. 1993).
“A district court, in its discretion ‘may decide the motion upon the affidavits alone; it may
permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing
to resolve any apparent factual questions.’” Carrier Corp. v. Outokumpu Oyj, 673 F.3d
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430, 449 (6th Cir. 2012) (quoting Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th
Cir. 1991)). However, when the court has elected to proceed without discovery or a
hearing, the evidence is considered in the light most favorable to the plaintiff: the
plaintiff must only make a prima facie case, and the court does not consider the
“controverting assertions of the party seeking dismissal.” Dean v. Motel 6 Operating
L.P., 134 F.3d 1269, 1272 (6th Cir. 1998). In addition, the plaintiff must follow the
general guidelines for pleading standards—the plaintiff must allege specific facts to
show the standard has been met for personal jurisdiction. Palnik v. Westlake Entm't,
Inc., 344 F. App’x 249, 251 (6th Cir. 2009) (stating that complaints must follow federal
pleading standards for personal jurisdiction issues as well).
A federal court’s exercise of jurisdiction over litigants 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
Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 888 (6th Cir. 2002). For Michigan, the
courts have determined Michigan’s long-arm statute gives the “maximum scope of
personal jurisdiction permitted by the due process clause of the Fourteenth
Amendment.” Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1236 (6th Cir. 1981).
Due process is satisfied if the defendant has “sufficient minimum contacts” with the
forum state “such that the maintenance of the suit does not offend traditional notions of
fairplay and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(citation omitted). “But the plaintiff cannot be the only link between the defendant and
the forum. Rather, it is the defendant's conduct that must form the necessary

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connection with the forum State that is the basis for its jurisdiction over him.” Walden v.
Fiore, 134 S.Ct. 1115, 1122 (2014) (citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 478 (1985)).
B. Venue
Pursuant to Federal Rule of Civil Procedure 12(b)(3), a defendant may move to
dismiss the plaintiff’s complaint for improper venue. Fed. R. Civ. P. 12(b)(3). On a
12(b)(3) motion to dismiss, the plaintiff bears the burden of proving that venue is proper.
Audi AG & Volkswagen of Am., Inc. v. Izumi, 204 F. Supp. 2d 1014, 1017 (E.D. Mich.
2002). The court may examine facts outside of the complaint but must draw reasonable
inferences and resolve factual conflicts in favor of the plaintiff. Id. If the court finds that
venue is improper, it has the discretion to decide whether the case should be dismissed
or transferred to the district in which it could have been brought. Id.; 28 U.S.C. §
1406(a).
III. DISCUSSION
A. Personal Jurisdiction
Personal jurisdiction issues in Michigan courts are governed by the state’s longarm statute, Mich. Comp. Laws §§ 600.715 (corporations) & 600.705 (individuals). For
purposes of this motion, Defendants are subject to limited personal jurisdiction if they
transacted any business within the state and Plaintiff’s cause of action arose out of that
transaction.
Further, Michigan courts and courts within this circuit have consistently held that
Michigan’s long-arm statute extends as far as the Fourteenth Amendment’s Due

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Process Clause allows. See Neogen Corp., 282 F.3d at 888 (“The ‘transaction of any
business’ necessary for limited personal jurisdiction under § 600.715(1) is established
by ‘the slightest act of business in Michigan.’”) (citing Lanier v. Am. Bd. of Endodontics,
843 F.2d 901, 906 (6th Cir. 1998); see also Viches v. MLT, Inc., 127 F. Supp. 2d 828,
830 (E.D. Mich. 2000) (“The standard for deciding whether a party has transacted any
business under § 600.715(1) is extraordinarily easy to meet. ‘[T]he only real limitation
placed on this [long arm] statute is the due process clause.’”) (citation omitted).
Accordingly, if jurisdiction over Defendants in this court is proper under the Fourteenth
Amendment, it is also proper under Michigan’s long-arm statute.
Due process is satisfied if the defendants have “sufficient minimum contacts” with
the forum state “such that the maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’” Burger King Corp. v. Rudzewicz, 471 U.S.
462, 475 (1985). In order to find limited personal jurisdiction, a plaintiff needs to
demonstrate three key factors: (1) the defendant must “purposefully avail himself of the
privilege of doing acting in the forum state;” (2) “the cause of action must arise from the
the defendant’s activities there;” and (3) “the acts of the defendant . . . must have a
substantial enough connection with the forum state to make the exercise of jurisdiction
over the defendant reasonable.” Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d
374, 381 (6th Cir. 1968). All three factors must be present to allow for a finding of
limited personal jurisdiction, and all three factors are indeed present here.
1. Purposeful Availment
The Sixth Circuit has found that “[p]urposeful availment is present where the
defendant’s contacts with the forum state proximately result from actions by the
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defendant himself that create a substantial connection with the forum state . . . .”
Beydoun v. Wataniya Rests. Holding, Q.S.C., 786 F.3d 499, 505-06 (6th Cir. 2014).
This requirement “ensures that a defendant will not be haled into a jurisdiction solely as
a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts,” or the actions of a third-party.
Burger King, 471 U.S. at 475. Nevertheless, “the Court does not have to find that [a
defendant] was physically present in Michigan in order to fulfill the purposeful availment
requirement.” ACS Consultant Co., Inc. v. Williams, No. 06-11301, 2007 WL 674608, at
*7 (E.D. Mich. March 5, 2007) (Zatkoff, J.) (citing Burger King, 471 U.S. at 476;
Compuserve, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996) (finding defendant had
purposefully availed himself of forum state even though he had never physically been
there)). While “isolated phone calls” or other electronic communications alone are
insufficient to satisfy this prong, Alex Pallet Sys., LLC v. Bifworld, Inc., No. 13-13567,
2013 WL 6885175, at *3 (E.D. Mich. Dec. 31, 2013) (Cleland, J.) (emphasis added); see
also Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147 (6th Cir. 1997), regular
business contact with individuals in the forum state “through mail or telephone . . . can
constitute contact sufficient to confer personal jurisdiction,” Superior Consulting Co., Inc.
v. Walling, 851 F. Supp. 839, 844 n.6 (E.D. Mich. 1994) (Cohn, J.).
For example, in another case with a similar fact pattern, another judge in this
district exercised personal jurisdiction over a defendant who had only visited the state of
Michigan once for a couple of days because the defendant had:
(1) Traveled to Michigan for training and to meet Plaintiff personnel and become
familiar with Plaintiff corporate culture;
(2) On a regular basis, utilized Plaintiff’s e-mail system and accessed Plaintiff’s
proprietary software, both of which are maintained on Plaintiff’s servers located in
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Michigan;
(3) Participated regularly in telephone conference calls with Plaintiff’s executives
in Michigan as part of his employment with Plaintiff;
(4) E-mailed reports to Plaintiff in Michigan; and
(5) Accessed the Plaintiff system in Michigan for many purposes, including to
misappropriate Plaintiff’s trade secrets, to raid its valuable skills database, and to
thwart its recuriting.
ACS Consulting, 2007 WL 674608, at *7.
Here, the contacts with the forum state are even stronger than in ACS
Consulting. First, each of the Defendants made repeated trips to Michigan for training
at annual Area Manager Roundtable Meetings and Annual National Summer Sales
Meetings, for a combined total of at least sixty-nine days. (Dkt. # 8-2, Pg. ID 299-300;
Dkt. # 8, Pg. ID 282.) Second, the affidavit of Daniel Ervin demonstrates that “[t]hough
working remotely, each of the Defendants was regularly in daily contact with the Ann
Arbor office [of MB Financial], often dozens of times per day, by telephone and or
electronically through email communications” for business purposes. (Dkt. # 8-2, Pg. ID
297.) This frequent correspondence was necessary because none of the Defendants’
loan transactions “originat[ing] with [Plaintiff’s] business clients [could] occur . . . unless
and until it [was] processed through the Ann Arbor operations team.” (Id. at Pg. ID 298.)
Third, Defendants accessed and allegedly misappropriated documents stored in servers
physically located in Michigan. (Id. at Pg. ID 302.) Contrary to Defendants’ assertions,
the court cannot conclude that all of these contacts were simply “random and
fortuitous.” (Dkt. # 6, Pg. ID 184.) When viewed collectively in the light most favorable
to Plaintiff, these electronic and physical contacts are sufficient to establish purposeful
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availment.
2. Arising From
“To satisfy the ‘arising from’ [test,] the plaintiff must demonstrate a causal nexus
between the defendant’s contacts with the forum state and the plaintiff’s alleged cause
of action.” Beydoun, 768 F.3d at 506-07. Defendants argue that this prong is not met
because their “alleged wrongful acts of forwarding emails do not arise from any of the
alleged, Michigan-related activities.” (Dkt. # 6, Pg. ID 186.) The court disagrees. All of
the actions contributing to the cause of action need not have occured within the forum
state: it is enough if the cause of action arise “at least in part, in Michigan.” ACS
Consulting, 2007 WL 674608, at *7. While Defendants may not have been present in
the forum state at the time of the alleged transfers, the confidential and proprietary
information transferred was. Plaintiff developed, maintained, and stored these records
on Plaintiff’s servers which were physically located in Michigan. (Dkt. # 8-2, Pg. ID 302.)
This, alone, is sufficient to create a causal nexus between Defendants’ contacts with the
state and Plaintiff’s cause of action.
3. Reasonableness
The “reasonableness analysis is a function of three factors: ‘[1] the burden on the
defendant, [2] the interests of the forum State, and [3] the plaintiff’s interest in obtaining
relief.” Beydoun, 768 F.3d at 508. Defendants argue that “all three factors dictate that it
would be unreasonable to hale Defendants into a court in Michigan” because
Defendants “have no presence in Michigan;” all of “the alleged improper activities took
place outside the state;’ and the plaintiff is a non-Michigan resident. (Dkt. # 6, Pg. ID
188.) Each of these arguments falls short.
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First, it would be a stretch to say that Defendants have no presence within the
state. As mentioned above, each of them enjoy extensive work contacts with the forum,
and have for several years. Furthermore, their current employer, Home Point Financial,
is headquartered in Ann Arbor. (Dkt. # 1, Pg ID 4.) Any burden imposed by their
current geography would be relatively slight. Second, while none of the parties are
Michigan residents, much of the evidence and many of the witnesses are from
Michigan, providing the state with an interest in the outcome of the litigation. See, e.g.
World-Wide Volkswagen Corp. V. Woodson, 444 U.S. 286, 583 (1980) (dissenting,
Brennan, J.) (finding that the presence of ‘[e]ssential witnesses and evidence” within the
forum state a factor in determining the interests of the forum state); Bryant v. Salvi, 141
F. App’x 279, 283 (5th Cir. 2005) (finding that the presence of evidence within the forum
state a factor in determining the interests of the state). Third, the Plaintiff’s residence is
not dispositive. Weather Underground, Inc. v. Navigation Catalyst Sys., Inc., 2011 WL
1120106 (E.D. Mich. March 24, 2011). Plaintiff maintains a strong presence within
Michigan, employing over 400 workers in its Ann Arbor office. “[I]t seems self-evident
that, in the absence of specific indications of the unsuitability of the chosen forum, the
plaintiff’s interest in obtaining relief . . . [is] best served by respecting the plaintiff’s
choice of forum.” Strippit, Inc. v. Household Utilities, Inc., No. 88-1173, 1989 EL
103673 (W.D.N.Y Sept. 1, 1989). The court sees no reason to deprive Plaintiff of its
choice. Accordingly, exercising personal jurisdiction over each Defendant is
reasonable.
The court will deny this aspect of Defendants’ Motion.
B. Venue

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A civil case may be brought in:
(1) a judicial district in which any defendant resides, if all defendants are
residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions
giving rise to the claim occurred, or a substantial part of property that is the
subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as
provided in this section, any judicial district in which any defendant is subject
to the court’s personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b). Plaintiff argues that venue is proper in the Eastern District of
Michgian under § 1391(2) because “a susbtantial part of the events occur in this venue
because it has a substantial connection to MB Financial’s claims.” (Dkt. # 8, Pg. ID 291
(internal quotations omitted).) The court agrees. As mentioned above, the confidential
and proprietary information allegedly transferred by Defendants to their personal email
and cloud accounts were developed, maintained, and stored within the district. This,
alone, is sufficient to establish venue. See First of Mich. Corp. V. Bramlet, 141 F.3d
260, 263 (6th Cir. 1998) (“[I]n diversity of citizenship cases the plaintiff may file his
complaint in any forum where a substantial part of the events or omissions giving rise to
the claim arose; this includes any forum with a substantial connection to the plaintiff’s
claims.”) (emphasis added). The court will deny this aspect of Defendants’ Motion.

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IV. CONCLUSION
IT IS ORDERED that Defendants’ “Motion to Dismiss for Lack of Personal
Jurisdiction and Improper Venue” (Dkt. # 6) is DENIED.
S/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: May 2, 2016
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, May 2, 2016, by electronic and/or ordinary mail.
S/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

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