Smith, Webster v. Windy Hill Foliage, Inc. et al
OPINION AND ORDER denying as moot 13 Motion to Dismiss; denying as moot 17 Motion to Dismiss for Lack of Jurisdiction; granting 21 Motion to Transfer to Middle District of Florida. Case will be transferred in 7 days unless a party files a motion to reconsider. Signed by District Judge William M. Conley on 4/11/18. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
OPINION AND ORDER
WINDY HILL FOLIAGE, INC., SUNCO
CARRIERS, INC., HIRERIGHT, LLC,
Plaintiff Webster Smith alleges that defendants Windy Hill Foliage, Inc., Sunco
Carriers, Inc., and HireRight, LLC, violated the Fair Credit Reporting Act (“FCRA”), 15
U.S.C. § 1681 et. seq. (2012), causing Sunco to terminate his employment. HireRight
and Sunco have moved to dismiss Smith’s claims against them under Federal Rule of
Civil Procedure 12(b)(2), arguing that the court lacks personal jurisdiction. (Dkt. ##13,
17.) Instead of responding to the defendants’ motions to dismiss, Smith filed a motion
to transfer under 28 U.S.C. § 1406(a) to the Middle District of Florida. (Dkt. #21.)
Defendant Windy Hill opposes transfer, preferring to remain in Wisconsin where it is
headquartered. As explained below, the record shows that the Middle District of Florida
has personal jurisdiction over all parties, and the transfer is in the interest of justice.
Accordingly, plaintiff’s motion to transfer is granted.
ALLEGATIONS OF FACT 1
Defendant Windy Hill, a Florida corporation with its principal place of business in
The following facts are taken from the allegations in the complaint, the undisputed
representations of the parties by affidavits, and the public record, as confirmed during today’s
hearing on the motion to transfer.
Marshfield, Wisconsin, employed Smith as a tractor-trailer driver through October 2015.
That month, Smith took his tractor-trailer to a service center for repairs. Shortly after,
Smith alleges that he voluntarily left his position.
Sometime after Smith left its employ, Windy Hill advised defendant HireRight, a
consumer credit reporting agency, that: (1) Smith had been involved in a preventable
accident before the October repairs; and (2) he was a “no show” for work.
contends this information is false. HireRight is a Delaware limited liability company
with its principal place of business in Irvine, California.
One month after his departure from Windy Hill, defendant Sunco, a Florida
corporation with its principal place of business in Lakeland, Florida, hired Smith as a
company driver. Just a month later, Sunco terminated Smith. After the termination,
Smith learned HireRight provided a report to Sunco detailing his employment history,
including the false information from his Wisconsin employer.
I. Defendants HireRight’s and Sunco’s Motions to Dismiss
As reflected by plaintiff’s decision to move to transfer, rather than oppose
defendants’ motions to dismiss, this court lacks personal jurisdiction over either
HireRight or Sunco. Nevertheless, the court will set forth the reasons for this in light of
the remaining defendant Windy Hills’ opposition to transfer plaintiff’s claim against it.
The Due Process Clause of the Fourteenth Amendment requires a finding of “minimum
contacts” between the defendant and the forum state for a court to exercise personal
jurisdiction, “such that the maintenance of the suit does not offend traditional notions of
fair play and substantial justice.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir. 2017)
(quoting Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)) (internal quotation marks
omitted). A court may establish jurisdiction over a defendant either through general or
A. General Personal Jurisdiction
General jurisdiction requires a defendant to have “continuous and systematic”
contacts with the forum state, such that it is essentially “at home.” BNSF Ry. v. Tyrrell,
137 S. Ct. 1539, 1558 (2017). A corporate defendant is typically “at home” only in its
place of incorporation and its principal place of business. Id. In the “exceptional case,”
general jurisdiction may be found where the defendant’s contacts “may be so substantial
and of such a nature to render the corporation at home in that State.” Id. (quoting
Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014)). Moreover, in determining whether
it can exercise general jurisdiction over a corporate defendant, a court must consider the
corporation’s activities in their entirety -- “nationwide and worldwide” -- because “[a]
corporation that operates in many places can scarcely be deemed at home in all of them.”
Daimler, 134 S. Ct. at 762 n.20.
Neither HireRight nor Sunco even arguably fall under this court’s general personal
Not only is HireRight a Delaware limited liability company with its
principal place of business in Irvine, California, it has no physical presence in Wisconsin
and its customers in Wisconsin account for less than 1.5% of its revenue. (Aldrich Decl.
(dkt. #15) ¶¶ 3-4; Compl. (dkt. #1) ¶9.) As for Sunco, it is incorporated in Florida, and
maintains its principal place of business in Lakeland, Florida. 2
(Templin Decl. (dkt.
#19) ¶ 2.) Moreover, Sunco has no physical presence in Wisconsin. (Id. at ¶¶ 6–7.)
Finally, while Sunco occasionally delivers goods to Wisconsin, these deliveries comprise
less than one percent of its business. (Id. at ¶ 8.)
B. Specific Jurisdiction
This leaves only the possibility of specific personal jurisdiction over either
HireRight or Sunco.
Specific jurisdiction requires:
(1) the defendant’s purposeful
direction of activities at the forum state or purposeful availing of the privilege of
conducting business in the forum state; (2) the alleged injury arises out of the
defendant’s forum-directed activities; and (3) the exercise of specific jurisdiction
comports with traditional notions of fair play and substantial justice. See Tamburo v.
Dworkin, 601 F.3d 693, 702 (7th Cir. 2010) (citing Burger King Corp. v. Rudzewicz, 471
U.S. 462, 472 (1985)).
“The action must directly arise out of the specific contacts
between the defendant and the forum state” for the court to exercise specific jurisdiction.
GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1024 (7th Cir. 2009).
Here, HireRight’s attenuated contacts with Wisconsin did not give rise to
plaintiff’s FCRA claims. Specifically, Smith alleges HireRight violated the FCRA by: (1)
failing to follow reasonable procedures to assure the maximum possible accuracy of
information on Smith in its report to Sunco under 15 U.S.C. § 1681e(b); and (2) failing
Sunco amended its name to “Old SC, Inc.,” following its sale to Sunco Trucking, LLC in
October 2016, well after plaintiff’s termination from Sunco.
Sunco Trucking, LLC is
incorporated in Delaware and maintains a principal place of business in Lakeland, Florida. Old
SC, Inc. remains a Florida corporation.
to reasonably reinvestigate the accuracy of Smith’s report under 15 U.S.C. § 1681i.
While HireRight arguably received information about plaintiff from a Wisconsin
company, HireRight’s resulting report was neither generated in Wisconsin, nor was it
sent to a Wisconsin business. (Aldrich Decl. (dkt. #15) ¶¶ 5–6.) In addition, Smith’s
termination, the injury he alleges was caused by the report, occurred in Florida.
(Templin Decl. (dkt. #19) ¶ 18.) Finally, HireRight handled Smith’s dispute in their
Tulsa, Oklahoma office. (Aldrich Decl. (dkt. #15) ¶ 8.) Smith does not dispute any of
these facts, nor does he offer even a tenuous connection between HireRight and
Wisconsin, as it relates to his claims.
Accordingly, this court also lacks specific
jurisdiction over HireRight.
The court’s lack of specific jurisdiction over Sunco is even more obvious because
Smith’s claims do not arise out of any contact between Sunco and Wisconsin. Smith
alleges Sunco violated the FCRA by: (1) failing to disclose that a consumer report was
procured for employment purposes under 15 U.S.C. § 1681b(b)(2); and (2) taking an
adverse employment action before providing him a copy of HireRight’s report and a
description of his rights under the FCRA.
Importantly, Sunco accepted Smith’s
application for employment, employed and terminated Smith in Florida. (Templin Decl.
(dkt #19) ¶ 15; Compl. (dkt. #1) ¶¶ 18, 21.)
Smith fails to allege any connection
between Sunco and Wisconsin giving rise to his claims, and again he fails to dispute
Sunco’s factual allegations. Therefore, the court lacks specific jurisdiction over Sunco as
II. Plaintiff’s Motion to Transfer
Standing alone, then, the court would grant defendant HireRight’s or Sunco’s
motions to dismiss because the court cannot exercise personal jurisdiction over either.
Obviously anticipating this result, Smith instead moves to transfer this case to the
Middle District of Florida in hopes of curing this court’s lack of personal jurisdiction.
(Dkt. #21.) This court may, “if it be in the interest of justice, transfer such case to any
district or division in which it could have been brought” if venue in the transferor court is
“wrong.” 28 U.S.C. § 1406(a). The statute affords courts broad discretion in choosing
to grant or deny a motion to transfer. Cote v. Wadel, 796 F.2d 981, 985 (7th Cir. 1986).
A court’s lack of personal jurisdiction over the defendants can make venue
“wrong” for the purposes of a motion to transfer. “The language of § 1406(a) is amply
broad enough to authorize the transfer of cases, however wrong the plaintiff may have
been in filing his case as to venue, whether the court in which it was filed had personal
jurisdiction over the defendants or not.” Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466
(1962). Taking this cue, the Seventh Circuit has held that either 28 U.S.C. § 1404(a) or
§ 1406(a) can be used to transfer a case in which personal jurisdiction over the
defendants is lacking.
See Cote, 796 F.2d at 985; see 17 Moore’s Federal Practice
§ 111.02(1)(b)(ii)(B) (3d ed. 2018) (summarizing circuit split on correct statute for
transfer when court lacks personal jurisdiction). Thus, it must be determined whether
the interests of justice require transfer.
The Middle District of Florida is undoubtedly a better place for Smith’s case to be
heard. From the outset, the Western District of Wisconsin, Smith’s original choice of
forum, defies reason, as personal jurisdiction over HireRight and Sunco was at best
highly dubious. In fairness, plaintiff’s counsel may have chosen this district because the
source of the allegedly erroneous information was Windy Hill, who does business here,
but ironically it appears Florida courts would have personal jurisdiction over that
defendant as well.
First, defendant Sunco is a Florida corporation with a principal place of business
there. (Templin Decl. (dkt. #19) ¶ 2.) Second, albeit not important for the personal
jurisdiction question, plaintiff is domiciled in Daytona Beach, Florida. (Compl. (dkt. #1)
¶ 6.) Third, while defendant HireRight argues a Florida court would not have personal
jurisdiction over it, the record shows that it provided a report to its customer, Sunco,
located there, and Smith’s alleged injury resulted from that report also occurred in
Florida. While this does not foreclose HireRight from arguing that the Middle District of
Florida lacks personal jurisdiction over it, Smith has made a prima facie showing that a
Florida court would have personal jurisdiction for the purposes of his motion to transfer.
Fourth and finally, while defendant Windy Hill has its principal place of business in
Wisconsin (giving this court general personal jurisdiction over it), Windy Hill is
incorporated in Florida.
Accordingly, a Florida court would have general personal
jurisdiction over it.
Even so, Windy Hill opposes plaintiff’s motion to transfer the claims against it,
seeking instead to sever the litigation under Federal Rule of Civil Procedure 21.
However, one of the factors that must be considered in determining the “interest of
justice” is the preference for trying related litigation together. See Heller Financial Inc. v.
Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989).
Not only would it be
inefficient to try part of this Florida-based litigation in Wisconsin when a Florida court
could exercise personal jurisdiction over Windy Hill, and indeed all parties, but even
more important keeping the case together in one venue would avoid the very real
possibility and resulting in justice of inconsistent results. See Coffey v. Van Dorn Iron
Works, 796 F.2d 217, 221 (7th Cir. 1986) (“The interest of justice analysis relates, then,
to the efficient functioning of the courts. . . . [R]elated litigation should be transferred to
a forum where consolidation is feasible.”); see also Van Dusen v. Barrack, 376 U.S. 612,
644 (1964) (transfer favorable where it brings “the full benefits of consolidation and
uniformity of result.”) Accordingly, the court will grant the motion to transfer despite
Smith’s erroneous forum choice.
Finally, Smith avers that a dismissal by this court, rather than a transfer order,
would effectively be with prejudice because his claims are by now otherwise barred by the
applicable statute of limitations. In cases where a plaintiff makes an elementary error in
filing suit in a forum where the court clearly lacks personal jurisdiction over a party,
dismissal is not an abuse of discretion, even when that dismissal is effectively with
prejudice due to the statute of limitations. See Saylor v. Dyniewski, 836 F.2d 341, 345
(7th Cir. 1988); Hapaniewski v. City of Chicago Heights, 883 F.2d 576, 581 (7th Cir. 1989).
Unlike in those cases where the plaintiff made a jurisdictional error about a single
defendant, however, Smith had to determine the best forum in a case with three
defendants located throughout the country. While ordinary prudence would suggest that
the Middle District of Florida was the best choice of forum to satisfy jurisdictional
requirements, Smith’s error in hindsight is not so egregious as to warrant dismissal of his
claim with prejudice, particularly when coupled with defendant Windy Hill’s failure to
own up to its incorporation in Florida on a more timely basis.
IT IS ORDERED that:
1) Plaintiff Webster Smith’s motion to transfer to the Middle District of Florida
under 28 U.S.C. § 1406(a) (dkt. #21) is GRANTED;
2) Defendants HireRight, LLC and Sunco Carriers, Inc.’s motions to dismiss for
lack of personal jurisdiction (dkt. ##13, 17) are DENIED as moot; and
3) The clerk of court is directed to transfer this case to the United States District
Court for the Middle District of Florida in seven (7) days unless a party files a
motion to reconsider before that time.
Entered this 11th day of April, 2018.
BY THE COURT:
WILLIAM M. CONLEY
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