Sentry Select Insurance Company v. McCoy Corporation et al

Filing 24

ORDER denying 4 Motion to Dismiss ; denying 4 Motion to Transfer Signed by District Judge William M. Conley on 09/30/2013. (mfh)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

SENTRY SELECT INSURANCE COMPANY,
ORDER
Plaintiff,
12-cv-831-wmc
v.
MCCOY CORPORATION, MCCOY TRAILERS LTD,
and PEERLESS LTD,

Defendants.
This case arises out of a single vehicle accident in Longworth, Texas, where a truck
driver failed to negotiate a corner successfully, allegedly due to a defect in a trailer
manufactured by defendants McCoy Corporation, McCoy Trailers, LTD. and Peerless,
Ltd. Having reimbursed its insured, B&K Trucking, LLC, for the losses arising out of the
accident, plaintiff Sentry Select Insurance Company (“Sentry”) commenced this tort and
breach of warranty action as subrogee of B&K Trucking‟s claim. Pending before the
court is defendants‟ motion to dismiss the case for lack of personal jurisdiction and
improper venue or, in the alternative, to transfer venue to the United States District
Court for the Northern District of Texas under 28 U.S.C. § 1404(a) (dkt. #4), which will
be denied in its entirety. Defendants‟ motion to dismiss for lack of personal jurisdiction
will be denied because plaintiff has made a prima facie showing that defendant is subject
to Wisconsin‟s long-arm statute and has sufficient contacts with this state to satisfy due
process requirements. Venue is proper both because a substantial part of the events or
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omissions giving rise to the claims occurred in Wisconsin and because defendants are
deemed to reside in the Western District of Wisconsin for purposes of 28 U.S.C. § 1391.
Finally, the motion to transfer will be denied because defendants have failed to show that
transfer to Texas will advance the interests of convenience and justice, particularly in
light of the fact that all of the accident‟s eye witnesses live in Wisconsin, the trailer itself
is in Wisconsin, and any documents or affidavits from witnesses who saw the aftermath
of the accident can be easily transmitted to this court.

BACKGROUND
Defendant Peerless Ltd. is based in British Columbia, Canada, and manufactures
specialized transportation trailers.

Peerless is wholly owned by defendant McCoy

Corporation, which is based in Alberta, Canada.

For purposes of this motion, the

defendants would treat these two separate corporations as one entity -- “Peerless.” Such
a collective approach would normally be inappropriate, unless the court were to find facts
supporting piercing the defendants‟ “corporate veil,” but since defendants themselves
have advanced this approach, the court will deem waived any personal jurisdiction
objections defendants might have raised individually and adopt the same nomenclature.1
“Peerless” manufactures specialized trailers for transportation companies like B&K
Trucking to use to haul flatbed and oversized products. At some point in 2009 or 2010,

1

Defendants separately assert that there is no such corporation as McCoy Trailers, Ltd.,
but that is a separate legal question outside the scope of defendants‟ pending motion.
2

a Peerless representative solicited B&K Trucking in Wisconsin to test one of its
prototype trailer‟s Peerless had developed. At Peerless‟s request, B&K Trucking used the
prototype trailer during several jobs, providing feedback concerning the trailer‟s
performance along the way.

As a result of B&K Trucking‟s feedback, Peerless

representatives traveled to B&K Trucking‟s facility in Wisconsin on numerous occasions
to repair, retrofit and modify the prototype trailer. B&K Trucking ultimately purchased
the prototype trailer from Peerless, as well as two other trailers, for a total of
$1,009,220.00. After the last of these sales was completed, Peerless continued to make
sales calls and marketing visits to Wisconsin in an attempt to sell additional trailers to
B&K Trucking.
On April 4, 2012, the prototype trailer allegedly failed while a B&K Trucking
driver negotiated a corner in Longworth, Texas. The accident‟s only eye witnesses are
B&K Trucking employees, all of whom reside in Wisconsin.2 Witnesses to the postaccident events reside in Texas. The subject trailer is currently being housed at one of
B&K Trucking‟s facilities in Wisconsin.

2

The Court notes that one of the witnesses is no longer a B&K Trucking employee who
nevertheless still lives in Wisconsin.
3

OPINION
I. Personal Jurisdiction
Defendants claim that this court lacks personal jurisdiction over them because
they do not do substantial business in Wisconsin and because the accident occurred in
Texas. A federal court sitting in diversity must rely on the law of personal jurisdiction of
the state in which it sits. Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992).
Determining whether personal jurisdiction is present under Wisconsin law is a two-step
inquiry. Stayart v. Hance, 2007 WI App 204, ¶12, 305 Wis. 2d 380, 740 N.W.2d 168.
First, the court must determine whether the nonresident defendant is subject to
jurisdiction under Wisconsin‟s long-arm statute, Wis. Stat. § 801.05. Id. If that statute
applies, the court decides whether jurisdiction would be consistent with due process
standards. Id. Plaintiffs bear the burden of proving the existence of personal jurisdiction
once it is challenged by making out a prima facie factual case and, if facts are disputed, by
prevailing at an evidentiary hearing. See Purdue Research Found. v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 782 (7th Cir. 2003).
Wisconsin‟s long-arm statute extends personal jurisdiction to nonresidents who
are “engaged in substantial and not isolated activities within this state.” Wis. Stat. §
801.05. Similarly, due process is satisfied if the defendant has established minimum
contacts in Wisconsin such that “the defendant should reasonably anticipate being haled
into court in the forum state, because the defendant has purposefully availed itself of the

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privilege of conducting activities there.” Kinslow v. Pullara, 538 F.3d 687, 691 (7th Cir.
2008).

Naturally, there is much overlap in the evidence needed to meet both the

statutory and due process standards, as is true here.
To illustrate defendants‟ activity within Wisconsin, plaintiff points to their
continuous marketing efforts aimed directly at B&K Trucking in Wisconsin.3
Defendants initially solicited B&K Trucking‟s business in Wisconsin and requested B&K
Trucking to test their prototype trailer, eventually making frequent trips to Wisconsin to
ensure that the trailer met B&K Trucking‟s requirements.

This ultimately led to a

$1,009,220.00 sale. Thereafter, defendants continued to make sales calls and marketing
visits to Wisconsin in an attempt to sell B&K Trucking even more trailers.

Finally,

defendants delivered the trailers to Wisconsin and warranted the trailers to be free from
defects in Wisconsin. These undisputed facts by themselves make out a prima facie case
of personal jurisdiction.
Defendants argue that there is no “substantial connection” to Wisconsin because
the sale to B&K Trucking accounted for less than 2% of its sales for the years 2010 and
2011. (Reply Br., dkt. #19 at 4.) This is not compelling. Nowhere in the Wisconsin

3

Although barely worth mentioning, the court does not find compelling defendants‟
argument that Wis. Stat. § 801.05(5)(e) cannot apply because B&K Trucking received
the goods and not plaintiff Sentry. “One who rests on subrogation stands in the place of
one whose claim he has paid, as if the payment giving rise to the subrogation had not
been made.” United States v. Munsey Trust Co. of Washington, D.C., 332 U.S. 234, 242
(1947). As B&K Trucking‟s subrogee, Sentry may bring any right or claim that B&K
Trucking could have brought against Peerless. If B&K Trucking has a claim against
Peerless, then so does Sentry.
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law or due process does personal jurisdiction hinge upon an analysis of the percentage of
defendant‟s own sales in the forum state. Courts must consider the entirety of defendant‟s
relationship to that state. Indeed, many companies that actively market their products
throughout the United States, yet make only a small fraction of their sales in any given
state, would be subject to personal jurisdiction in most states, unless the sales in a state
are truly de minimus. See, e.g., Richler v. INSTAR Enters. Int’l, 594 F. Supp. 2d 1000, 1007
(N.D. Ill. 2009) (holding sales de minimus where they represented one tenth of one
percent of overall sales). Absent such tenuous contacts, they would not be exempt from
personal jurisdiction in any state. See, e.g., Keeton v. Hustler Magazine, 465 U.S. 770, 781
(1984) (“Respondent produces a national publication aimed at a nationwide audience.
There is no unfairness in calling it to answer for the contents of that publication
wherever a substantial number of copies are regularly sold and distributed.”); Nelson by
Carson v. Park Indus., Inc., 717 F.2d 1120, 1125-26 (7th Cir. 1983) (noting that
manufacturers and distributors who “purposely conduct their activities to make their
product available for purchase in as many forums as possible … may be subject to a
particular forum‟s jurisdiction … because [they] have intended to serve a broad market
and they derive direct benefits from serving that market.”).
Two percent of gross sales is certainly not de minimus on the facts here given all the
related sales efforts by Peerless in Wisconsin to accomplish those sales. Even if it were,
the lawsuit here arises directly from those sales. See Burger King Corp v. Rudzewicz, 471
U.S. 462, 475 n.18 (1985) (“So long as it creates a „substantial connection‟ with the
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forum, even a single act can support jurisdiction.”) (citing McGee v. Int’l Life Ins. Co., 355
U.S. 220, 223 (1957)).

II. Venue
The general federal venue statute allows a civil action to 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; [or] (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.” 28 U.S.C. § 1391(b)(1), (2). The Western
District of Wisconsin is the proper venue under either of these two subsections.
As corporations, defendants are deemed residents of “any judicial district in which
[they are] subject to the court‟s personal jurisdiction with respect to the civil action in
question.” 28 U.S.C. § 1391(c)(2). In light of the court‟s ruling above, both defendants
are, therefore, residents of the Western District of Wisconsin for venue purposes, which
means that venue is proper here under § 1391(b)(1).
Defendants‟ brief in support of its motion dismiss focuses solely on § 1391(b)(2),
arguing that the case should be dismissed because all of the important events occurred in
Texas. (Def‟ Br. in Support, dkt. #5 at 1-2.) This argument ignores that this court is
obligated to “look to the entire sequence of events underlying the claim, rather than a
single action which may have triggered the claim.” Estate of Moore v. Dixon, 460 F. Supp.
2d 931, 936 (E.D. Wis. 2006). In this case, there are several important events that
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occurred in Wisconsin: defendants solicited B&K Trucking‟s business, sold the trailer,
and developed and retrofitted the trailer in Wisconsin.
The fact that the accident occurred in Texas is not lost on this court. Texas would
also be a proper venue, but venue may be proper in multiple locations. Estate of Moore,
460 F. Supp. 2d 931, 935 (E.D. Wis. 2006). Considering the specialized business of
transporting oversized flatbeds and products, defendants were obviously well aware that
B&K Trucking would use its trailers to transport products across state lines. Indeed,
Peerless was monitoring the performance of its prototype trailer during such long hauls.
Therefore, it should be no surprise that an accident with one of its trailers occurred
outside the state where the trailer was purchased.

III.

Transfer
In the alternative to dismissal, defendants have moved to transfer this case to the

United States District Court for the Northern District of Texas pursuant to 28 U.S.C. §
1404(a). A federal court may “for the convenience of the parties and witnesses, in the
interest of justice . . . transfer any civil action to any other district where it might have
been brought.”

28 U.S.C. § 1404(a).

In adopting this broad standard, Congress

intended to “place discretion in the district court to adjudicate motions to transfer
according to an individualized, case-by-case consideration of convenience and fairness.”
Stewart Org., Inc. v. Ricoh, 487 U.S. 22, 29 (1988). Exercising that discretion, the court
finds that none of the factors listed in § 1404(a) favor defendants.
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To prevail, defendants carry the burden of proving that “the transferee forum is
clearly more convenient.” Coffey v. Van Dorn Iron Works, 796 F.2d 219, 219-20 (7th Cir.
1986) (emphasis added). A “convenience” analysis typically considers the accessibility of
the forum to the parties, the witnesses, and the evidence, as well as the fact that transfer
would disturb a plaintiff‟s choice of forum. Id.
Because plaintiff (as B&K Trucking‟s subrogee) has chosen its home forum in
which to litigate, its choice is particularly deserving of deference. See In re Nat’l Presto
Indus., Inc., 347 F.3d 662, 663-64 (7th Cir. 2003) (“[U]nless the balance is strongly in
favor of the defendant, the plaintiff‟s choice of forum should rarely be disturbed.”).
Indeed, when a plaintiff chooses its home forum, that choice is entitled to even greater
deference than when the plaintiff is foreign. See Piper Aircraft Co. v. Reyno, 454 U.S. 235,
255-56 (1081); compare Gen. Portland Cement Co. v. Perry, 204 F.2d 316, 319 (7 Cir.
1958) (declining to set aside plaintiff‟s home forum even where defendant said
controversy and choice of witnesses resided in Texas), with Kamel v. Hill-Rom Co., 108
F.3d 799, 803 (7th Cir. 1997) (“[A] foreign plaintiff‟s choice of forum deserves less
deference.”).
As for the convenience of the parties, keeping the case here is obviously
convenient for plaintiff, which is based in the Western District of Wisconsin.
Defendants have no offices in Wisconsin, but Peerless must be familiar with Wisconsin‟s
roads and airports as a result of frequent repair trips between their home bases in Canada
and B&K Trucking‟s facility in Wisconsin. Defendants fail to give any reasoning to find
9

that litigating this dispute nearer the scene of the accident in a relatively obscure
community in the middle of Texas, a location obviously much farther from their
headquarters, would be any easier than Madison, Wisconsin for either party.4 Indeed,
none of the parties seems to have any substantial connection to Texas. Even if Texas
were more convenient than Wisconsin for defendants, a motion to transfer should be
denied if the effect “would be merely to shift the inconvenience from one party to the
other.” Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil §
3848 at 164 (3d ed. 2004) (citing Van Dusen v. Barrack, 376 U.S. 612, 646 (1964)).
As to convenience of witnesses, plaintiff maintains that the only eye witnesses to
the accident, current and former employees of B&K Trucking, reside in Wisconsin; the
trailer remains in B&K Trucking‟s facility; and all of the pertinent documents and
personnel concerning the trailer at issue are in Wisconsin. Defendants, on the other
hand, point out that certain law enforcement personnel and others who witnessed the
aftermath of the accident reside in Texas. Defendants fail, however, to describe why
these individuals are more important than the witnesses who actually saw the accident
occur. Moreover, defendants disclose neither why these non-parties could not testify by

4

Although neither party advises the court, it appears Longworth, Texas, is a town of less
than 100 people located some 226 miles west of the Dallas / Fort Worth International
Airport, over a three hour drive. See Texas State Historical Association, “Longworth
Texas,”
available
at
http://www.tshaonline.org/handbook/online/articles/hn145;
https://maps.google.com/maps?hl=en&authuser=0&q=Longworth+tx&ie=UTF8&ei=yaJJUrWGMMuO2QX1qIGoBQ&ved=0CAoQ_AUoAg (last visited September
30, 2013).
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video deposition or live video feed, nor why law enforcement records and documents
cannot be mailed or electronically transferred here. At most, defendants have shown that
both districts are inconvenient for some of the witnesses and a tie goes to plaintiff.
Finally, defendants do not address in any detail why the interest of justice requires
this court to transfer the case to Texas, and needless to say, the interests of convenience
do not favor transfer. Therefore, defendants‟ motion will be denied.

ORDER
IT IS ORDERED that defendants McCoy Corporation, McCoy Trailers, Ltd. and
Peerless, Ltd.‟s motion to dismiss or transfer (dkt. #4) is DENIED.
Entered this 30th day of September, 2013.
BY THE COURT:
/s/
___________________________________________
WILLIAM M. CONLEY
District Judge

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