Eurochem Trading USA Corporation v. Ganske, Julie et al

Filing 78

OPINION and ORDER denying 43 Third Party Defendant Simon's Motion to Dismiss. Signed by Magistrate Judge Stephen L. Crocker on 3/7/19. (jat)

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

EUROCHEM TRADING USA CORPORATION,
Plaintiff,
v.
W. KENT GANSKE, individually and
d/b/a and sole proprietor of AG CONSULTANTS,
and JULIE L. GANSKE,
Defendants.
OPINION and ORDER
W. KENT GANSKE, individually and d/b/a AG
CONSULTANTS, and JULIE GANSKE,

18-cv-16-slc

Counter-Plaintiffs and Third-Party Plaintiffs,
and
WS AG CENTER, INC.,
Third-Party Plaintiffs,
v.
EUROCHEM TRADING USA CORPORATION,
Plaintiff and Counter-Defendant,
and
EUROCHEM GROUP AG, SCOTT SIMON, IVAN
BOASHERLIEV, BENTREI FERTILIZER, LLC
and BEN-TREI, LTD.,
Third-Party Defendants.

This case presents disputes arising from plaintiff EuroChem Trading USA Corporation’s
(ECTUS’s) sale of agricultural chemicals to one or more agri-businesses owned or controlled by
defendant W. Kent Ganske, a Wisconsin resident. In a third-party complaint related to the
underlying lawsuit, W. Kent and Julie Ganske, AG Consultants, and WS AG Center, Inc.
(“WSAG”) – to whom I will refer collectively as “Ganske”– allege that third-party defendant
Scott Simon, the chief financial officer of ECTUS and the other corporate third-party
defendants, spread false and malicious rumors about the financial stability of Ganske’s
businesses to Ganske’s customers and vendors, in violation of federal and Wisconsin state law

related to tortious interference with contract, misrepresentation and deceptive practices, trade
secrets, and defamation. See dkt. 15, ¶¶ 59-61.
Now before the court is Simon’s motion to dismiss the third-party complaint against him
for lack of personal jurisdiction. Dkt. 43. For the reasons stated below, I am denying the
motion.
From the complaint and the documents submitted by the parties in connection with the
pending motion, I draw the following facts, solely for the purpose of deciding this motion:

JURISDICTIONAL FACTS
Scott Simon has been a resident of Oklahoma since 2000 and is the chief financial officer
of plaintiff EuroChem Trading USA Corporation (“ECTUS”) and third party defendants
Ben-Trei Fertilizer Company, LLC (“BT Fertilizer”) and Ben-Trei, Ltd. (“Ben-Trei”). Simon has
never resided in Wisconsin, he only visited Wisconsin once 10 years ago for 24 hours, and he
does not personally do any business in Wisconsin. Simon’s employers— ECTUS, BT Fertilizer,
and Ben-Trei—sell and ship products to customers located in Wisconsin.
In November and December, 2017, Simon contacted four of Ganske’s creditors (or
suppliers) located in Wisconsin to discuss the possibility of filing an involuntary bankruptcy
proceeding against Ganske. Simon left messages with two of the creditors, but his calls were not
returned and Simon never spoke with anyone at the two companies. With respect to the
remaining two creditors, Simon had a single, brief telephone conversation with a representative
at each company, which consisted of Simon reading a script prepared for the creditor calls
identifying ECTUS as a creditor of AG Consultants and WSAG, explaining the nature of an

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involuntary bankruptcy case and the filing requirements for one, and asking if the creditor would
be interested in joining such a proceeding. Simon avers that he spoke with or left messages for
the chief financial officer, controller, or credit manager of each respective creditor and that he
never attempted to speak to any sales person or employee involved in buying or purchasing.
Simon has not disclosed whom he called or the contents of the script that he used, but
Ganske has submitted the contents of a message that Simon left on December 14, 2017 for
Steve Guetter, the Executive Vice President of Finance at Rosen’s Inc., which has headquarters
in Minnesota and extensive operations in Wisconsin. In his message to Guetter, Simon states:
Hello Steve my name is Scott Simon, I am the CFO for Eurochem
North America, including Eurochem Trading USA, we have a
mutual customer - Creditor in the form of WS Ag/Ag Consultants,
I have a prepared statement from Counsel concerning a petition
against WS Ag/Ag Consultants for an involuntary bankruptcy
proceeding, I would like to have an opportunity to read the
prepared statement from Counsel and then determine if any future
steps are interested or future action between us in that endeavor
would make sense for your organization. So if you could give me
a call at your earliest convenience I would appreciate it . . .
Guetter Aff., dkt. 51, exh. 1 at ¶ 12.

OPINION
I. Legal Standard
On a motion to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2),
the burden of proof rests on the party asserting jurisdiction–here, Ganske–to make a prima facie
showing of personal jurisdiction over the moving party. Hyatt International Corp. v. Coco, 302
F.3d 707, 713 (7th Cir. 2002).

In deciding the motion, the court must take as true all

well-pleaded facts alleged in the complaint and resolve “all disputes concerning relevant facts

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presented in the record” in Ganske’s favor. Purdue Research Foundation v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 782 (7th Cir. 2003) (quoting Nelson v. Park Industries, Inc., 717 F.2d 1120, 1123
(7th Cir. 1983)); see also Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010) (quoting same).
A federal court has personal jurisdiction over a non-consenting, nonresident defendant
to the extent authorized by the law of the state in which that court sits, Giotis v. Apollo of the
Ozarks, Inc., 800 F.2d 660, 664 (7th Cir. 1986), unless the federal statute at issue permits
nationwide service or the defendant is not subject to personal jurisdiction in any state in the
United States, see Fed. R. Civ. P. 4(k)(1) and Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201-02 (7th
Cir. 1997). Because the parties do not assert that either of these exceptions applies, the question
is whether Wisconsin law allows this court to exercise personal jurisdiction over Simon in this
lawsuit.
Wisconsin breaks this question into two parts. First, the court is to determine whether
Simon is within the reach of Wisconsin’s long-arm statute, Wis. Stat. § 801.05. Logan Prods.,
Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996); Kopke v. A. Hartrodt S.R.L., 245 Wis. 2d
396, 408-09, 629 N.W.2d 662, 667-68 (Wis. 2001). This statute enumerates several different
grounds for personal jurisdiction, and it is to be construed liberally in favor of exercising
jurisdiction. Federated Rural Elec. Ins. Corp. v. Inland Power and Light Co., 18 F.3d 389, 391 (7th
Cir. 1994); Lincoln v. Seawright, 104 Wis. 2d 4, 9, 310 N.W.2d 596, 599 (Wis. 1981). Ganske
contends that personal jurisdiction over Simon is warranted under two different provisions of
the long-arm statute:

local act or omission, § 801.05(3) and local injury, foreign act, §

801.05(4)(a).

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If the statutory requirements of the long-arm statute are met, then the court must
determine whether the exercise of jurisdiction over Simon in this lawsuit comports with due
process requirements of the Fourteenth Amendment of the United States Constitution. Id.
Wisconsin’s long-arm statute has been interpreted to confer jurisdiction “to the fullest extent
allowed under the due process clause.” Daniel J. Hartwig Associates, Inc. v. Kanner, 913 F.2d 1213,
1217 (7th Cir. 1990); see also Felland v. Clifton, 682 F.3d 665, 678 (7th Cir. 2012)
(“[C]onstitutional and statutory questions tend to merge; compliance with the Wisconsin
long-arm statute creates a presumption that constitutional due process is satisfied.”); Kopke, 629
N.W.2d at 671 (“Compliance with the [long-arm] statute presumes that due process is met,
subject to the objecting defendant’s opportunity to rebut.”). The crucial inquiry for specific
jurisdiction under the due process clause is whether a defendant’s contacts with the state are
such that it should reasonably anticipate being haled into that state’s courts. International
Medical Group, Inc. v. American Arbitration Association, Inc., 312 F.3d 833, 846 (7th Cir. 2002)
(citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)).
After considering all of the parties’ arguments, I am persuaded that this court has specific
jurisdiction over Simon under both the due process clause and § 801.05(3) of the long-arm
statute. Although I discuss both the state and federal requirements below, I start with the due
process inquiry because it is the more complicated of the two. See Felland, 682 F.3d at 672
(doing same). In addition, the Seventh Circuit has held that “[o]nce the requirements of due
process are satisfied, then there is little need to conduct an independent analysis under the
specific terms of the Wisconsin long-arm statute itself because the statute has been interpreted
to go to the lengths of due process.” Id. at 678.

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II. Due Process Considerations
There are three essential requirements related to specific jurisdiction under the due
process clause: (1) Simon must have purposefully availed himself of the privilege of conducting
business in the forum state or purposefully directed his activities at the state, Burger King, 471
U.S. at 472; (2) the alleged injury must have arisen from or relate to Simon’s forum-related
activities, id.; and (3) the exercise of jurisdiction must comport with traditional notions of fair
play and substantial justice, International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945);
Felland, 682 F.3d at 673. All three elements are satisfied in this case.

A. Conduct purposefully directed at forum state
This inquiry depends in large part on the type of claim at issue. Felland, 682 F.3d at 674.
When a plaintiff alleges intentional tortious conduct, personal jurisdiction generally turns on
“whether the conduct underlying the claim[ ] was purposely directed at the forum state.”
Tamburo, 601 F.3d at 702. Interpreting the Supreme Court’s decision in Calder v. Jones, 465 U.S.
783 (1984), the court of appeals has identified three requirements for a plaintiff to show that
the conduct was purposefully directed at the forum state:

“(1) intentional conduct (or

‘intentional and allegedly tortious’ conduct); (2) expressly aimed at the forum state; (3) with the
defendant’s knowledge that the effects would be felt—that is, the plaintiff would be injured—in
the forum state.” Tamburo, 601 F.3d at 703; see also Felland, 682 F.3d at 674-75 (citing same).
Simon argues that his two brief telephone conversations and two messages do not
demonstrate a “real relationship” with the state, “significant activities” in Wisconsin, or a
“substantial connection” with Wisconsin. However, Ganske alleges that Simon intentionally

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made false statements about the financial viability of Ganske, AG Consultants, and WSAG to
people and businesses with whom Ganske had business relationships in Wisconsin, which
resulted in damage to Ganske’s reputation and business relationships in the state. If Ganske’s
allegations are true, then these misrepresentations constituted part of the wrongful conduct that
forms the basis of his claims for unfair competition, intentional interference with contract,
various types of misrepresentation and deceptive practices, defamation, and misappropriation,
disclosure, and theft of trade secrets. See, e.g., Felland, 682 F.3d at 679 (Defendant’s “Wisconsindirected [mail and electronic] communications were intentional misrepresentations designed to
deceive the Fellands” and “amount[ed] to a ‘local act’ causing ‘injury to person or property
within . . . this state.’”).
In Felland, while the Wisconsin-based plaintiff and his wife were vacationing in Arizona,
they visited an under-construction condominium project in Mexico. They ended up purchasing
a condominium from a developer–defendant Clifton–based in part on Clifton’s alleged
misrepresentations made during the sales pitch in Mexico. The court held that although the
initial fraud occurred in Mexico, Clifton’s subsequent communications to the Fellands in
Wisconsin assuring them that the project was adequately financed and on schedule were part
of a comprehensive and ongoing scheme to perpetuate the initial fraud. Felland, 682 F.3d at
675. These communications sufficed to establish personal jurisdiction in Wisconsin over
Clifton.
As with Clifton, so with Simon: even though Simon had only four brief contacts targeted
at Wisconsin, they were part of the alleged overall plan to harm Ganske’s reputation and
business relationships both within and outside of Wisconsin.

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B. The injury arises out of Simon’s contacts
In the absence of Supreme Court guidance on this requirement, federal circuit courts
disagree whether a defendant’s contacts must be the factual cause of plaintiff’s injury, the factual
and proximate cause, or something in between. Tamburo, 601 F.3d at 708–09 (citing cases);
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1078 (10th Cir. 2008) (outlining
the conflict). The Court of Appeals for the Seventh Circuit has suggested that a mere “but for”
causal relationship is insufficient, GCIU–Employer Retirement Fund v. Goldfarb Corp., 565 F.3d
1018, 1025 (7th Cir. 2009) (citing O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 322 (3d Cir.
2007)), but it has declined to resolve the question definitively, Felland, 682 F.3d at 676-77;
Tamburo, 601 F.3d at 709. Simon has not made any specific arguments with respect to this
factor. In any event, I find that Ganske’s allegations are sufficient to satisfy even the strictest
application of the standard because at least some of Ganske’s alleged injuries arise from and are
related to Simon’s contacts with Wisconsin for the reasons discussed above.

C. Fair play and substantial justice
“The final inquiry in the specific-jurisdiction analysis is whether the exercise of personal
jurisdiction over an out-of-state defendant would offend traditional notions of fair play and
substantial justice.” Felland, 682 F.3d at 677 (citing International Shoe, 326 U.S. at 316). Factors
relevant to this determination include the burden on defendant, Wisconsin’s interest in
adjudicating the dispute, plaintiff’s interest in obtaining convenient and effective relief, the
interstate judicial system’s interest in obtaining the most efficient resolution of controversies and

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the shared state interest in “furthering fundamental substantive social policies.” Id. (quoting
Burger King, 471 U.S. at 477).
“[W]here a defendant who purposefully has directed his activities at forum residents
seeks to defeat jurisdiction, he must present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable.” Felland, 682 F.3d at 677. Simon
contends that having to defend an action in Wisconsin rather than his home state of Oklahoma
is unduly burdensome and that the third-party plaintiffs include multi-million dollar
corporations that are in a much better position to participate in an out-of-state litigation.
Although Simon faces some burden in being forced to defend an action in another state,
out-of-state defendants always face such a burden. There is no suggestion that Simon’s hardship
would be any greater than that routinely tolerated by courts exercising specific jurisdiction
against nonresidents. Id.
Accordingly, I do not find Simon’s reasons to be compelling enough to render jurisdiction
unreasonable in Wisconsin. Wisconsin has a strong interest in providing a forum for its
residents to seek redress for wrongs inflicted by out-of-state actors and resulting injuries suffered
within the state. Id. Further, the third-party complaint is only one part of an overarching
litigation involving several other claims and counterclaims between many of the same parties,
and Simon shares counsel with other plaintiffs, counter-defendants and third-party defendants.
Therefore, judicial economy considerations weigh strongly in favor of keeping the claims against
Simon in this court.

III. Long-Arm Statute

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Wis. Stat. § 801.05(3) allows a court to exercise personal jurisdiction over a defendant
in “any action claiming injury to person or property within or without this state arising out of
an act or omission within this state by the defendant.” As with the due process inquiry, the
analysis of this provision relies in large part on the type of claim at issue.
As with the due process inquiry, Simon argues that his four minimal contacts with
Wisconsin are not significant enough to constitute an act or omission in Wisconsin for purposes
of personal jurisdiction. This argument fails for the reasons previously stated. Ganske alleged
that Simon’s Wisconsin-directed communications were intentional misrepresentations designed
to harm Ganske’s reputation and business within the state. Accepting Ganske’s allegations as
true and drawing all inferences in favor of Ganske, I find that Simon’s actions in Wisconsin
constituted a key component of Ganske’s claims, regardless how minimal they may seem. As a
result, Simon’s actions amount to a “local act” causing “injury to person or property within . .
. this state.” § 801.05(3).
Because Simon’s actions in Wisconsin are sufficient to support personal jurisdiction
under § 801.05(3), it is unnecessary to address Ganske’s arguments that the third-party plaintiffs
also have satisfied the requirements of § 801.05(4)(a). Accordingly, this court finds that it has
jurisdiction over defendant Simon in this lawsuit.

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ORDER
IT IS ORDERED that third party defendant Simon’s motion to dismiss the claims
against him for lack of personal jurisdiction, dkt. 43, is DENIED.
Entered this 7th day of March, 2019.
BY THE COURT:
/s/
_______________________
STEPHEN L. CROCKER
Magistrate Judge

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