Walker, et al v. Arthur Andersen LLP, et al

Filing 226

OPINION AND ORDER denying #216 Deft Causey's Motion to Dismiss state law claimsfor lack of personal jurisdiction.(Signed by Judge Melinda Harmon) Parties notified.(htippen, )

Walker, et al v. Arthur Andersen LLP, et al

Doc. 226

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In Re Enron Corporation Securities, Derivative & "ERISA Litigation MARK NEWBY, ET AL., Plaintiffs VS. ENRON CORPORATION, ET AL., Defendants JOE H. WALKER, et al., Plaintiff, VS. ARTHUR ANDERSEN, LLP, et al., Defendants. § § § § § § § § § § § § § § § § § § § § § § MDL-1446

CIVIL ACTION NO. H-01-3624 CONSOLIDATED CASES

CIVIL ACTION NO. H-03-2345

OPINION AND ORDER Pending before the Court is Defendant Richard A.

Causey's motion to dismiss state law claims1 (instrument #216) for lack of personal jurisdiction in Tennessee under Federal Rule of Civil Procedure 12(b)(2). Plaintiffs Joe H. Walker, Andre H. Walker, and Deborah C. Walker have been granted four extensions of time to respond to Causey's motion, which was filed on November 17, 2009. #219, 221, 223, and 224. The last order gave Plaintiffs until July 1, 2010

The complaint asserts common-law claims for fraud, conspiracy, intentional infliction of emotional distress, and negligent misrepresentation under Tennessee law against former officers and members of the board of directors of Enron Corp. and Enron's auditor.
1

Dockets.Justia.com

to file a response; they have failed to do so.

#224.

Accordingly

the Court looks at the motion on the merits as a matter of law. This action was originally filed in the Circuit Court for Davidson County, Tennessee, was removed to the United States District Court for the Middle District of Tennessee by Enron's former Outside Directors on diversity and "related to" bankruptcy jurisdiction, 28 U.S.C. § 1332(a)(1), 1334(b) and 1452, and was subsequently transferred here by the Judicial Panel on

Multidistrict Litigation for pretrial proceedings coordinated with MDL 1446. Causey argues that therefore personal jurisdiction must exist over Causey in Tennessee. His motion, supported by an

affidavit, asserts that he has no and has never had minimum contacts with Tennessee to support personal jurisdiction in

Tennessee. This Court disagrees. It has previously concluded that

it has "related to" bankruptcy jurisdiction under 28 U.S.C. § 1334(b) over this action, and it has not changed its mind. See generally In re Enron Corp. Sec., Derivative, and "ERISA" Litig., Nos. MDL 1446, et al., 2002 WL 32107216, *7-8 (S.D. Tex. Aug. 12, 2002); In re Enron Corp. Sec., Derivative, and "ERISA" Litig., 314 BR 354, 357 (S.D. Tex. 2004). When a suit is in federal court on

"related to" bankruptcy jurisdiction, as it was after removal in Tennessee and here, the sovereign exercising authority is the United States, not the particular state where it was originally filed. Diamond Mortgage Corp. of Illinois v. Sugar, 913 F.2d

1233, 1244 (7th Cir. 1990) cert. denied, 498 U.S. 1089 (1991). -2-

Therefore the appropriate inquiry to determine whether a court may exercise personal jurisdiction over a defendant is whether that party has minimum contacts with the United States such that subjecting it to personal jurisdiction does not offend the Due Process Clause of the Fifth Amendment to the United States Constitution," so as to "comport with `traditional notions of fair plan and substantial justice.'" Id., citing International Shoe Causey clearly has

Co. v. Washington, 326 U.S. 310, 316 (1990).2

more than minimum contacts with the United States. Accordingly, the Court ORDERS that Causey's motion to dismiss pursuant to

As this Court held in In re Enron Corp. Sec., Derivative, and "ERISA" Litig., 511 F. Supp. 2d 742, 790 (S.D. Tex. 2005),
2

[W]here there is "related to" bankruptcy jurisdiction, as here, the personal jurisdiction challenge based on minimum contacts is irrelevant. 17 Charles A. Wright, Arthur R. Miller, and Edward H. Cooper, Fed. Prac.& Proc., § 4106 (2004 Supp.)("Bankruptcy Rule 7004 provides for nationwide service of process in adversary proceedings arising in the bankruptcy courts. Therefore in determining whether the bankruptcy court has personal jurisdiction over the adversary defendants, the relevant question to be asked is not whether defendants have minimum contacts with the forum state, but whether the defendants have sufficient contacts with the United States for the exercise of personal jurisdiction to comport with traditional notions fo fair play and substantial justice."). . . . -3-

Federal Rule of Civil Procedure 12(b)(2) (instrument #216) is DENIED. SIGNED at Houston, Texas, this 17th day of August , 2010.

___________________ MELINDA HARMON UNITED STATES DISTRICT JUDGE

-4-