Knight Capital Partners Corporation v. Henkel AG & Company, KGaA
OPINION AND ORDER denying 24 Motion to Dismiss. Signed by District Judge David M. Lawson. (DTof)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
KNIGHT CAPITAL PARTNERS CORP.,
Case Number 16-12022
Honorable David M. Lawson
HENKEL AG & COMPANY, KGAA,
OPINION AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
The question presented by the defendant’s motion to dismiss is whether the conduct of Cedric
Berthold, the defendant’s European Senior Vice President and General Manager, was connected
enough to this District to establish specific personal jurisdiction over the defendant for the plaintiff’s
claims of tortious interference with its business expectancy and a breach of a non-disclosure
agreement. According to the facts pleaded in the complaint, it was. Plaintiff Knight Capital Partners
Corporation (KCP) was brokering a three-way deal with the defendant’s American subsidiary
(Henkel Corporation [Henkel US]), and another company that held a patent on technology useful to
Henkel US. KCP alleges that Berthold, acting on behalf of defendant Henkel AG & Company,
KGaA (Henkel US’s parent), torpedoed the deal so that Henkel US could deal directly with the
technology holder, thereby cutting KCP out of the deal. Berthold did that, says KCP, by directing
his communications to Henkel US in Michigan, so that the tortious conduct and its effects were
intimately entwined in this District. Because the allegations in the complaint support that theory,
the Court will deny Henkel AG & Company, KGaA’s (Henkel Germany) motion to dismiss, which
challenges personal jurisdiction.
The scuttled negotiations concerned a proposed three-way agreement between KCP, as a
broker and technology license holder, AI Sealing, LLC (AIS), a Texas company and the holder of
the patent rights for a “revolutionary” series of citrus-based compounds developed for cleaning dirty
equipment at oil rigs and refineries (which had licensed its technology to KCP), and Henkel US,
which under the contemplated partnership would have been responsible for marketing and
distributing the products under the Henkel brand. KCP is located in Farmington Hills, Michigan.
AIS has its facility in Harris County, Texas. Henkel US maintains a technical research and
development center in Madison Heights, Michigan and a manufacturing plant in Warren, Michigan,
both in the Eastern District of Michigan.
KCP alleges that Henkel US’s German parent corporation, defendant Henkel Germany,
undermined the negotiations between KCP and Henkel US, after Henkel Germany’s principals who
were involved in the negotiations concluded that Henkel US could secure a more lucrative deal by
cutting out the middleman (KCP) and striking a deal directly with AIS instead. KCP contends that
the end-run constituted tortious interference with its business expectancy and a breach of a nondisclosure agreement executed by KCP and Henkel US at the outset of the negotiations.
According to the complaint, defendant Henkel Germany used its influence over its U.S.
affiliate, Henkel US, “to hijack hundreds of millions of dollars in potential profits from an
extraordinarily lucrative business venture brought to [the] U.S. affiliate” by plaintiff KCP. KCP
alleges that Henkel Germany tortiously interfered with its prospective deal with Henkel US, and
breached a non-disclosure agreement that was executed by Henkel US and KCP. The non-disclosure
agreement covered information disclosed during the negotiations, and prohibited the use of any
confidential information disclosed by KCP for any purpose beyond evaluating the viability of the
proposed joint venture.
A. Non-disclosure Agreement
In February 2014, KCP held a global license granted to it by AIS, covering a “unique
cleaning technology” that was designed to be incorporated into cleaning products for use in oil and
gas extraction and refinery maintenance operations. KCP approached Henkel US to explore the
possibility of a deal for marketing and distribution of products based on the new technology. In an
attempt to reach a deal, the parties engaged in lengthy negotiations, which persisted over several
months. Beforehand, however, Henkel US and KCP entered into a non-disclosure agreement. That
agreement governed the parties’ handling of confidential information.
The non-disclosure agreement purportedly bound Henkel US and all of its affiliates, which
are defined as follows:
As used in this Agreement, “Affiliate” shall mean, with respect to a Party, any
individual, corporation or other business entity which, either directly or indirectly,
controls a Party, is controlled by a Party, or is under common control with a Party.
As used herein, “control” means possession of the power to direct, or cause the
direction of the management and policies of a corporation, or other entity, whether
through the ownership of voting securities, by contract or otherwise.
NDA ¶ A.1. (Pg ID 50). The agreement defined “Receiving Party” as “Henkel [US] or its Affiliates
receiving Confidential Information hereunder.” NDA ¶ A.5. The Receiving Party was prohibited
from “us[ing] the Confidential Information of the Disclosing Party except” for the purpose of
investigating the feasibility of a future business relationship between the parties. The agreement was
effective for a one-year term starting on April 23, 2014. It controlled all disclosures made during
that term, with a “period of protection” extending for three years after the expiration or termination
of the agreement, during which the restrictions continued on use or disclosure of any confidential
materials disclosed during the one-year term. The agreement allowed for early termination by either
party at any time upon 30 days written notice to the other.
As the negotiations progressed, executives from Henkel US’s German parent corporation,
Henkel Germany, became involved. A main player was Cedric Berthold, Henkel Germany’s Senior
Vice President and General Manager in Europe.
KCP now believes that, as the negotiations proceeded, Berthold “developed a different
agenda — i.e., to eliminate KCP from the business equation altogether and assume exclusive control
over the Technology and the profits generated from its sales.” Compl. ¶6. KCP asserts that “Henkel
[Germany] and Henkel US are separate economic units and separate legal entities with independent
business operations,” Compl. ¶ 98-99, but it contends, nevertheless, that Berthold used his influence
over the US affiliate to pursue his goal of sabotaging the deal by stalling and complicating the
negotiations, and eventually by simply disregarding the NDA and inducing Henkel US to strike a
deal directly with AIS.
On August 2, 2014, after some progress in the negotiations, Henkel US informed KCP that
the proposed “Technology Distribution Deal” was approved for a pilot project in North America.
Around that same time, another senior executive at Henkel Germany, Grant Kupko, became involved
in the negotiations. From August through October 2014, KCP’s principals consulted at least weekly
meetings by phone with Kupko as they worked out details of the deal, identified departments and
personnel within Henkel US that would be involved, and addressed “action items” identified by
Henkel that needed to be addressed to ensure further progress. KCP and Henkel US also began
framing the details of pricing and marketing plans, including setting proposed price schedules and
identifying potential customers.
On November 5, 2014, KCP executed a “Technology License Agreement” with AIS that
granted to KCP a global exclusive license to use and commercialize the subject technology.
However, that license was conditioned on KCP’s success in closing the proposed distribution deal
with Henkel US. The term of the AIS license was for five years, unless terminated according to its
terms, but it would terminate if the deal between Henkel US and KCP did not close within 60 days,
that is, by February 5, 2015.
On November 14, 2014, Henkel US presented the first draft of the proposed distribution
agreement to KCP, and within days representatives from KCP, Henkel US, and Henkel Germany
discussed and reviewed the draft agreement.
On November 21, 2014, KCP and Henkel US had a meeting in Bridgewater, Connecticut to
discuss the deal and present it to senior executives of Henkel Germany, including Berthold, who
attended the Connecticut meeting in person. Berthold told KCP’s principals at the meeting that the
deal was “attractive” to Henkel and fit with its strategy, and that Henkel agreed “to pursue the
development of a formal agreement.” Berthold also enumerated several issues with the agreement
that needed to be addressed before the deal could move ahead.
Over the course of the several months following the late November meeting in Connecticut,
the parties circulated more than 20 versions of the proposed distribution agreement. Revisions often
were proposed, made, reviewed, and approved on the same day by representatives of KCP, Henkel
US, and Henkel Germany. Representatives of all three entities had joint conference calls, sometimes
daily, to discuss the deal.
On December 10, 2014, at Henkel US’s request, KCP and AIS staged a product technology
demonstration at a Henkel US product laboratory in Madison Heights, Michigan. Berthold
personally attended the technology demonstration, and he was pleased with the results, stating that
the demo was “very productive and informational.” On December 17, 2014, the parties held a
conference call to discuss details of the deal. Berthold participated in that call and “directed” the
discussion from Henkel’s side. On December 19, 2014, KCP’s CEO, Fadi Nona, sent an email to
Berthold outlining issues that KCP needed to address, and Nona and Berthold discussed those issues
by phone later the same day. As a result of those discussions, Nona believed that the deal would be
closed soon after the holidays.
In January 2015, Henkel Germany asked KCP, as a condition of finalizing the deal, to allow
Henkel representatives to meet with a third-party company in Texas, known as Magnablend, that
would be tasked with “blending” products under the arrangement, to ensure that Magnablend could
handle the large volume of product that Henkel US believed it could sell to its customers. The
meeting took place on January 28, 2015, and, after the meeting, Magnablend began the process of
registering as a Henkel US supplier. Also in January, Berthold asked KCP to provide a customer
list, including contact information, for customers that it planned to bring in as part of the deal, which
KCP did. At the end of January, Berthold circulated to KCP and Henkel US “yet another version
of the proposed distribution agreement, incorporating terms related to the expansion of the Project
from just North America to Global.”
In February 2015, Berthold asked that representatives of KCP travel to Germany for a
meeting to finalize the agreement, and he represented that, of the work needed to conclude the deal,
“only 5% is left.” On February 18, 2015, Nona and Berthold conferred by phone about the
incorporation of new terms regarding global distribution, and, on February 20, 2015, Henkel US’s
counsel stated that he was awaiting final approval of the deal “from Germany.” On March 3 and 4,
2015, representatives of KCP, Henkel US, and Henkel Germany met in Germany to finalize the deal.
During the two-days of meeting, the parties discussed the terms of the expanded deal, and a “go to
market” plan. But KCP was puzzled when the distribution agreement was not executed at the
conclusion of the meetings. Nevertheless, after the meetings in Germany, Berthold urged KCP to
begin contacting customers immediately, and Berthold even suggested marketing prospects in
Europe and India.
In March 2015, at Berthold’s request, KCP’s Craig Bell attended a project implementation
meeting in Mumbai, India as part of a global Henkel business unit meeting, to discuss the plan for
implementing the distribution deal in different regions. However, despite the apparent imminent
conclusion of the deal, Berthold then began to make “what seemed like endless requests of KCP
involving such things as approving various modifications to the contract, marketing actions,
customer contacts — all of which KCP provided — except one.” The sticking point was Berthold’s
demand for “direct access” to KCP’s technology partner AIS. KCP was concerned at that point that
Berthold was trying to make an end run around the distribution deal and cut KCP out, in order to deal
directly with AIS, so Nona responded that KCP would provide direct access only once the deal was
concluded. The negotiations then took on a decidedly cooler tone, and KCP had very little contact
with Henkel representatives for the rest of March and April. Some representatives of Henkel US told
Nona they had been instructed to avoid contact with KCP, and Nona’s requests to Henkel’s US
counsel for Henkel to renew the NDA, which was soon to expire, were ignored. Nona then
concluded that Berthold was simply running out the clock on the NDA so that Henkel could proceed
with the deal without KCP.
On April 17, 2015. AIS terminated its licensing agreement with KCP, based on the failure
to close the distribution deal. On April 20, 2015, KCP notified Henkel of the termination letter, but,
to its surprise, “Henkel [Germany] agreed to move forward with the contract between Henkel US
and KCP whether or not AIS was involved — indeed, Berthold directly expressed that he believed
that AIS was only ‘causing issues’ and it was better that AIS was not involved.” KCP then “began
formulating ‘Plan B’ for the Project, which KCP presented to Henkel [Germany] on or around April
30, 2015.” However, despite the ongoing negotiations and KCP’s repeated requests, Henkel
Germany still refused to extend the NDA.
On May 8, 2015, Berthold communicated to Nona that he was discussing the situation with
other Henkel executives and that a “final go no go decision” would be made by the Henkel Germany
Executive Committee by May 14, 2015. However, on May 22, 2015, Berthold told Nona that the
Executive Committee was “interested,” but needed further assurances that KCP reliably could
deliver the product technology without AIS as a partner, and that a deal without AIS involved would
not expose Henkel US to legal consequences. After the May 22, 2015 discussion, Nona heard
nothing more from Berthold until June 5, 2015, when Berthold called Nona to tell him that Henkel
US had been approached by AIS, and that although “no decision” had been made, the deal with KCP
had been put “on hold” while Henkel US explored the prospect of dealing with AIS directly. KCP
later learned, “[b]ased upon critical Henkel [Germany] internal documents that KCP has in its
possession, . . . that after June 5, 2015[,] Henkel [Germany] fully pursued the Project without KCP
and with AIS.”
C. Procedural History
The plaintiff filed its complaint in this Court on June 3, 2016, asserting claims for tortious
interference with a business expectancy and breach of the NDA by Henkel KGaA, which KCP
contends were the consequences of Berthold’s determination to sabotage the deal with Henkel US,
and its eventual conclusion of a separate deal with AIS, after Henkel had leveraged KCP’s eagerness
during the negotiations to gain direct access to KCP’s technology partner. The defendant initially
filed a motion to quash the summons based on insufficient service of process, but that motion was
withdrawn. It later filed this motion to dismiss for want of personal jurisdiction, and the Court heard
oral argument on April 24, 2017.
Citing Federal Rule of Civil Procedure 12(b)(2), defendant Henkel Germany argues that this
Court cannot exercise personal jurisdiction over it. When personal jurisdiction is challenged in a
motion filed under Rule 12(b)(2), the plaintiff bears the burden of establishing the Court’s authority
to proceed against the defendant. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)
(citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Am. Greetings Corp.
v. Cohn, 839 F.2d 1164, 1168 (6th Cir. 1988); Weller v. Cromwell Oil Co., 504 F.2d 927, 929 (6th
Cir. 1974)). Henkel Germany offers no affidavits or other factual statements in support of its
motion, but instead argues that the allegations in the complaint simply do not support personal
jurisdiction over it in this District. The plaintiff, therefore, need only present a prima facie case for
personal jurisdiction, and the Court views the submissions in the light most favorable to the plaintiff.
Id. at 1458-59.
The parties agree on the basic law. In a case where subject matter jurisdiction is based on
diversity of citizenship, as here, federal courts look to state law to determine personal jurisdiction.
See Fed. R. Civ. P. 4(k)(1); Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012).
If a Michigan court would have jurisdiction over a defendant, so would a federal district court sitting
in this state. Daimler AG v. Bauman, --- U.S. ---, 134 S. Ct. 746, 753 (2014) (explaining that
“[f]ederal courts ordinarily follow state law in determining the bounds of their jurisdiction over
persons”). Michigan law recognizes two bases for personal jurisdiction over corporations: general,
Mich. Comp. Laws § 600.711, and specific (called “limited personal jurisdiction” in state law
parlance), Mich. Comp. Laws § 600.715.
The plaintiff does not rely on general personal jurisdiction over Henkel Germany.
Michigan’s so-called Long Arm Statute defines the scope of its limited personal jurisdiction. But
“[t]he Due Process Clause of the Fourteenth Amendment constrains a State’s authority to bind a
nonresident defendant to a judgment of its courts.” Walden v. Fiore, --- U.S. ---, 134 S. Ct. 1115,
1121 (2014). Michigan interprets its Long Arm Statute to allow personal jurisdiction to extend to
the limits imposed by the federal constitution. Michigan Coalition of Radioactive Material Users,
Inc. v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992).
“‘Specific’ or ‘case-linked’ jurisdiction depends on an affiliation between the forum and the
underlying controversy.” Walden, 134 S. Ct. at 1122 n.6 (quoting Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). To satisfy the Due Process Clause, the Court
must find that “the defendant’s suit-related conduct . . . create[s] a substantial connection with the
forum State.” Id. at 1121. “In other words, there must be ‘an affiliation between the forum and the
underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State
and is therefore subject to the State’s regulation.’” Bristol-Myers Squibb Co. v. Superior Court of
California, San Francisco Cty., 582 U.S. ---, No. 16-466, 2017 WL 2621322, at *6 (June 19, 2017)
(quoting Goodyear, 564 U.S. at 919).
The defendant’s physical presence within the jurisdiction is not a necessary condition for
personal jurisdiction, but “the nonresident generally must have ‘certain minimum contacts such that
the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”
Walden, 134 S. Ct. at 1121 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945)) (alterations omitted). The Sixth Circuit historically has applied three criteria to guide the
minimum contacts analysis, which it enunciated in Southern Machine Company, Inc. v. Mohasco
Industries, Inc., 401 F.2d 374 (6th Cir. 1968):
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
Southern Machine, 401 F.3d at 381.
The defendant argues that transitory contacts in the course of contract negotiations that
ultimately never came to fruition are insufficient to show that the defendant “purposely availed”
itself of the privilege of doing business in the state. That is particularly so, it says, where those
contacts were directed into Michigan in response to a solicitation to engage in a business enterprise
that was initiated by the plaintiff, which is located here.
“Purposeful availment is present where the defendant’s contacts with the forum state
proximately result from actions by the defendant himself that create a substantial connection with
the forum state.” Means v. United States Conference of Catholic Bishops, 836 F.3d 643, 649 (6th
Cir. 2016) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); Neogen Corp. v. Neo
Gen Screening, Inc., 282 F.3d 883, 889 (6th Cir. 2002)). “The defendant’s conduct and connection
with the forum must be such that he should reasonably anticipate being haled into court there.” Ibid.
“‘Due process requires that a defendant be haled into court in a forum State based on his own
affiliation with the State, not based on the random, fortuitous, or attenuated contacts he makes by
interacting with other persons affiliated with the State.’” Ibid. (quoting Walden, 134 S. Ct. at 1123).
The plaintiff contends that the exercise of personal jurisdiction is warranted in this case based
on (1) the execution of a non-disclosure agreement by Henkel US, which the plaintiff asserts also
was binding on Henkel Germany and which allegedly was breached by the German parent
company’s actions when it made an “end run” around the plaintiff and entered into a deal directly
with the plaintiff’s technology partner instead; (2) the personal visit to Michigan by one of the
defendant’s senior executives for a product technology demonstration, during the months-long
negotiations in anticipation of a product distribution deal; and (3) numerous email and telephone
contacts between principals of the plaintiff and defendant concerning the details of that deal, which
were directed by the defendant to the plaintiff in Michigan.
The facts surrounding the negotiation and execution of the non-disclosure agreement do not
help the plaintiff’s cause. Even if Henkel Germany can be considered a party to that agreement, the
existence of that contract is not sufficient in itself to establish sufficient minimum contacts with this
District. Burger King, 471 U.S. at 478 (“If the question is whether an individual’s contract with an
out-of-state party alone can automatically establish sufficient minimum contacts in the other party’s
home forum, we believe the answer clearly is that it cannot.”). Likewise, mere negotiation of a
contract that involved communications and in-person execution by the defendant within the forum
state does not establish sufficient minimum contacts, where no ongoing relationship involving any
substantial performance within the forum state was contemplated. Capital Dredge & Dock Corp.
v. Midwest Dredging Co., 573 F.2d 377, 380 (6th Cir. 1978). Nor would merely signing the contract
in the forum suffice. LAK, Inc. v. Deer Creek Enterprises, 885 F.2d 1293, 1301-02 (6th Cir. 1989).
The plaintiff points to numerous instances of telephone and email communications directed
to it by the defendant, along with Cedric Berthold’s visit to Michigan for the technology
demonstration, to show that Henkel Germany “did business” within the State. However, the plaintiff
overlooks the well-established rule that it is not the quantity of contacts that matters but the quality.
Here, the quality of the contacts — their topic, substance, and impact — indicate that they bear no
substantial relationship to the forum state. They offer little support for a finding of sufficient
minimum contacts. As the Supreme Court recently explained in Walden v. Fiore, --- U.S. ---, 134
S. Ct. 1115 (2014), the fact that the contacts were with a plaintiff that was itself an entity
incorporated in and operating within the forum is immaterial, absent some indication that the
contacts involved attempts by the defendant to establish its own ties to the state. The analysis must
“look to the defendant’s contacts with the forum State itself, not the defendant’s contacts with
persons who reside there.” Id. at 1122. Although the Court has sustained personal jurisdiction “over
defendants who have purposefully ‘reached out beyond’ their State and into another by, for example,
entering a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ in the
forum State,” “the plaintiff cannot be the only link between the defendant and the forum.” Id. at
In this case, it is unclear what, if any, impact on the defendant’s dealings in this state the
distribution deal itself ultimately could have had. From the facts alleged, it evidently concerned
products that would be developed and made in Texas and distributed on a national or global scale.
Notwithstanding vague allusions to an intent by the parties to make Michigan “the seat of the
project,” the plaintiff has not pointed to any specific terms of the deal that would involve any
performance to be undertaken in Michigan, or any specific efforts of the parties that would be
devoted to exploiting the state as a potential market for the venture. The negotiations between the
parties, and the defendant’s participation in them with the plaintiff, were not directed specifically
to this forum. Instead, they were the sort of “random, fortuitous, or attenuated” interactions that the
Sixth Circuit and the Supreme Court have found insufficient to establish sufficient minimum
contacts. See Reynolds v. Int’l Amateur Athletic Fed’n, 23 F.3d 1110, 1118 (6th Cir. 1994) (holding
that, despite evidence of some communications and business dealings, none of the circumstances of
the parties’ interactions were enough to establish sufficient minimum contacts by the defendant).
The parties’ affairs had no underlying connection to the forum state itself, but only were directed into
the forum because the plaintiff happened to be situated therein. Id. at 1118-19 (reiterating that
“minimum contacts can only be formed by ‘an action of the defendant purposefully directed toward
the forum State’”) (citation omitted); see also International Technologies Consultants, Inc. v.
Euroglas S.A., 107 F.3d 386, 395 (6th Cir. 1997) (“[Our] conclusion [is not] altered by the fact that
the defendants communicated with International Technologies in Michigan by letter, telephone, and
facsimile. Such communications have no talismanic qualities, and the only reason the
communications in question here were directed to Michigan was that International Technologies
found it convenient to be present there.”).
Moreover, the plaintiff does not assert anywhere in the complaint or its briefing that the
defendant would have been a direct party to any iteration of the contemplated agreement. Worthy
of note here is that the plaintiff explicitly has alleged that Henkel US and Henkel Germany are
entirely separate entities, neither of which controls the other. The plaintiff has not alleged that
Henkel Germany has any operations, facilities, or personnel located in Michigan, nor does it conduct
any business itself within the state. Any connection between Michigan and any parties to the
distribution deal, or any anticipated performance by them, so far as the facts alleged indicate, would
have involved Henkel US, which is not a party to this case, not Henkel Germany, which is the
defendant. And it is well established that mere corporate affiliation or beneficial ownership of a
possibly involved entity by a distinct corporate entity defendant is insufficient to establish minimum
contacts. Dean v. Motel 6 Operating L.P., 134 F.3d 1269, 1273-74 (6th Cir. 1998) (citing Keeton
v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984); Shaffer v. Heitner, 433 U.S. 186, 216
(1977); American Greetings Corp. v. Cohn, 839 F.2d 1164, 1170 (6th Cir. 1988)).
However, the complaint does include facts that support an inference suggesting that Henkel
Germany committed the alleged tortious act in Michigan when it directed its communications to its
U.S. affiliate located here for the purpose of scuttling the three-way deal. KCP has alleged that the
defendant’s intentional conduct directed Henkel US to slow walk the negotiations with plaintiff and
run out the clock on the term of the NDA, which ought to be viewed as a setup for the eventual
tortious breach of the NDA and improper end run around the plaintiff to secure a direct deal with its
technology partner. That scenario, amply supported by the facts alleged, fits neatly into the template
of Calder v. Jones, 465 U.S. 783 (1984). In that case, plaintiff Shirley Jones filed a lawsuit in a
California state court alleging that she had been libeled in an article written and edited by the
defendants in Florida. “The article was published in a national magazine with a large circulation in
California.” Id. at 784. The Court held that it was proper for the California court to exercise
jurisdiction over the Florida residents because their intentional conduct allegedly was calculated to
cause injuries to the plaintiff in California. The Court reasoned:
The allegedly libelous story concerned the California activities of a California
resident. It impugned the professionalism of an entertainer whose television career
was centered in California. The article was drawn from California sources, and the
brunt of the harm, in terms both of respondent’s emotional distress and the injury to
her professional reputation, was suffered in California. In sum, California is the
focal point both of the story and of the harm suffered. Jurisdiction over petitioners
is therefore proper in California based on the “effects” of their Florida conduct in
Id. at 788-89 (emphasis added).
The plaintiff here alleges that the defendant thwarted the potential deal with Henkel US by
obstructing and delaying the negotiations between the plaintiff and Henkel US. The plaintiff alleged
that Henkel US has both a technology center and a manufacturing facility located in this District, and
that at least some of the negotiations with Henkel US were centered there. It is fair to infer from the
pleadings that Henkel US has either its main project agents or significant operations in Michigan that
were involved in the negotiations or would have been involved in Henkel’s contemplated
performance under the distribution deal. It also fair to infer that Henkel Germany and its operatives
(including Cedric Berthold) had communications with or influence over decision makers within the
U.S. affiliate’s Michigan-based business units, and that some of those communications may have
comprised tortious efforts by the German defendant to induce its U.S. affiliate to scuttle the deal.
KCP alleged that representatives of Henkel US told its CEO, Fadi Nona, that they had been
instructed to avoid contact with KCP, during a critical phase of the negotiations.
If those inferences prove true (and borrowing liberally from Calder’s operative language),
the allegedly tortious interference concerned the Michigan activities of a Michigan corporation. It
obstructed the business dealings of an entity whose operations were centered in Michigan. The
obstructive communications were directed to the plaintiff’s potential partner in a Michigan-based
joint venture, and the brunt of the harm, in terms of the lost opportunity, was suffered in Michigan.
In sum, Michigan is “the focal point” both of the obstructive communications “and of the harm
suffered.” Jurisdiction over the defendant therefore is proper in Michigan based on the “effects” of
the defendant’s conduct initiated in Germany and directed at Michigan. See Calder, 465 U.S. at 791.
Notably, the Court in Calder expressly disclaimed reliance on a single alleged visit by one
of the reporter defendants to California, and on various alleged investigative activities carried out
within the state, instead focusing solely on its conclusion that the exercise of jurisdiction sufficiently
was justified by the intentional writing by the defendants of the allegedly defamatory story for
publication within the forum. Calder, 465 U.S. at 785 n.4, 787 n.6.
The Calder Court found that the defendants’ tortious conduct alone, intentionally directed
into the forum state, and producing harmful effects felt there, was enough to establish that the
defendants had the required minimum contacts to make the exercise of jurisdiction proper. It
therefore is clear, based on Calder, that there need not be any other or further contacts beyond a
single instance of intentional tortious interference by the defendant with the plaintiff’s affairs within
the forum, as long as the unlawful conduct was sufficiently directed and related to the forum to itself
qualify as the relevant contact. Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014) (“International
Shoe recognized . . . that ‘the commission of some single or occasional acts of the corporate agent
in a state’ may sometimes be enough to subject the corporation to jurisdiction in that State’s tribunals
with respect to suits relating to that in-state activity.” (quoting 326 U.S. at 318)).
The plaintiff has pleaded facts establishing purposeful availment.
The Sixth Circuit has “‘articulated the standard for [the ‘arising from’] prong in a number
of different ways, such as whether the causes of action were made possible by or lie in the wake of
the defendant’s contacts, or whether the causes of action are related to or connected with the
defendant’s contacts with the forum state.’” AlixPartners, LLP v. Brewington, 836 F.3d 543, 552
(6th Cir. 2016) (quoting Air Products & Controls, Inc. v. Safetech International, Inc., 503 F.3d 544,
553 (6th Cir. 2007)). “It is clear, however, that this is a lenient standard and the cause of action need
not formally arise from defendant’s contacts.” Ibid. (quotations omitted). This element of the test
is easily satisfied.
KCP maintains that agents of Henkel Germany instructed its U.S. affiliate to curtail contacts
during end-game stage of the negotiation. That would have caused the NDA to expire, along with
KCP’s licensing agreement with AIS. The defendant’s instructions to its affiliate in Michigan would
have been a key component to the illegal interference alleged by KCP. “At a minimum, this factor
is satisfied if the cause of action, of whatever type, has a substantial connection with the defendant’s
in-state activities.” Ibid. (citing Bird v. Parsons, 289 F.3d 865, 875 (6th Cir. 2002); Third National
Bank in Nashville v. WEDGE Group Inc., 882 F.2d 1087, 1091 (6th Cir. 1989)). The allegations
satisfy the requirement that “[t]he defendant’s contacts with the forum state must relate to the
operative facts and nature of the controversy.” Community Trust Bancorp, Inc. v. Community Trust
Financial Corp., 692 F.3d 469, 472-73 (6th Cir. 2012).
“The final requirement is ‘whether exercising personal jurisdiction over [the defendant]
would be reasonable, i.e., whether it would comport with traditional notions of fair play and
substantial justice.’” AlixPartners, 836 F.3d at 552 (quoting CompuServe, Inc. v. Patterson, 89 F.3d
1257, 1267-68 (6th Cir. 1996)).
The Court has found that the conduct of Henkel Germany’s agents amounts to purposeful
availment, and the alleged tortious conduct arose from the defendant’s contacts with this forum.
Where “‘the first two criteria are met . . . only the unusual case will not meet this third criterion.’”
Ibid. (quoting Theunissen, 935 F.2d at 1461).
“In analyzing this requirement, [the Court must] consider a number of factors, including: ‘(1)
the burden on the defendant; (2) the interest of the forum state; (3) the plaintiff’s interest in obtaining
relief; and (4) other states’ interest in securing the most efficient resolution of the policy.’” Ibid.
(quoting Air Products, 503 F.3d at 554-55)). “‘Because there is an inference of reasonableness when
the first two Southern Machine prongs are satisfied, [where] there are no considerations put forward
by [the defendant] to overcome or contradict that inference, the exercise of jurisdiction is reasonable
under the circumstances.’” Id. at 552-53 (quoting Air Products, 503 F.3d at 555).
The defendant is a German company. But it has an affiliate with a substantial presence in
Michigan. And it participated along with its affiliate in the contract negotiations. It is likely that
many of the relevant witnesses are located here, although many, no doubt, will be found in other
jurisdictions. Nonetheless, it is plain that this state has an interest in vindicating its corporate
citizens who allege that foreign entities have reached into this jurisdiction to commit torts that result
in loss and damage. The third element of the Southern Machine test is satisfied.
The plaintiff has pleaded sufficient facts in its complaint to establish a prima facie case for
personal jurisdiction over the defendant.
Accordingly, it is ORDERED that the defendant’s motion to dismiss for want of personal
jurisdiction [dkt. #24] is DENIED.
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: June 23, 2017
PROOF 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 June 23, 2017.
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