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CDM Investment Group Inc. v. Sandoval

United States District Court, D. Nebraska

July 17, 2018

CDM INVESTMENT GROUP, INC., a Nebraska Corporation; and AIRTITE, INC., a Nebraska Corporation; Plaintiffs,


          Laurie Smith Camp Chief United States District Judge.

         Before the Court are the Findings and Recommendation of Magistrate Judge Susan M. Bazis, ECF No. 40, recommending that the Motion to Remand, ECF No. 30, filed by Plaintiffs CDM Investment Group, Inc. (CDM), and Airtite, Inc., doing business as E&K of Chicago (E&K), be denied. The parties filed no objections to the Magistrate Judge's Findings and Recommendation and the Court adopts them in their entirety. Also before the Court is the Motion to Dismiss or, in the Alternative, to Transfer, ECF No. 18, filed by Defendants Dustin Sandoval, Ivan Meiring, and Integrated Specialty Contractors, LLC. For the reasons stated below, the Motion to Dismiss will be granted.


         The following facts are those contained in the parties' briefs supported by citations to the pleadings, affidavits, and exhibits, and any factual disputes are, for purposes of this Motion, resolved in favor of Plaintiffs.

         E&K is a subsidiary of E&K Companies, Inc., which is a subsidiary of CDM. Each is a Nebraska corporation, and CDM and Airtite are in the construction and project management industry. E&K maintains an office in Elmhurst, Illinois.[1] Sandoval began his employment with both E&K and CDM on July 1, 2001, and Meiring began his employment with the companies on April 4, 2012. Throughout their employment with E&K and CDM, Sandoval and Meiring resided and worked in Illinois, but occasionally made work-related trips to Nebraska. Meiring attended several education committee meetings in Nebraska between April 2014 and October 2015. Sandoval traveled to Nebraska for training, participated in management phone calls with Nebraska personnel, and attended education committee meetings in Nebraska. They also “contacted persons in Nebraska for IT and administrative support with CDM.” Pl.'s Br., ECF No. 33, Page ID 312.

         At the beginning of their employment, Sandoval and Meiring were required to enter into Confidentiality and Conflict of Interest Agreements, and when each of them eventually purchased shares of CDM, they entered into Shareholder Buy-Sell Agreements. Sandoval Confidentiality Agr., ECF No. 9-1, Page ID 96; Meiring Confidentiality Agr., ECF No. 9-1, Page ID 81; Sandoval Shareholder Agr., ECF No. 9-1, Page ID 85; Meiring Shareholder Agr., ECF No. 9-1, Page ID 71.

         Sandoval achieved the positions of Chief Procurement Officer for CDM and Vice President of Sales for E&K. Meiring became the Senior Estimator/Sales Manager and managed E&K's employees. They both voluntarily resigned their positions on January 22, 2018, to begin working at a competing construction company they formed in September 2017 called Integrated Specialty Contractors, LLC (Integrated). Integrated is an Illinois limited liability company and has its principal place of business in Illinois.

         After Sandoval and Meiring resigned their positions and began working at Integrated, Plaintiffs initiated this action. They asserted claims for breach of contract against Sandoval and Meiring and breach of fiduciary duty against Sandoval, Meiring, and Integrated. These claims are based on Sandoval's and Meiring's creation of, and current employment with, a competing company-Integrated-while they were still employees of Plaintiffs and shareholders of CDM. In Defendants' pending Motion, they ask the Court to dismiss this action under Federal Rule of Civil Procedure 12(b)(2) because they are not subject to personal jurisdiction in Nebraska. In the alternative, Defendants ask that this case be transferred to the Northern District of Illinois under 28 U.S.C. § 1404(a).


         “When challenged, ‘the plaintiff bears the burden to show that jurisdiction exists.” Aly v. Hanzada for Imp. & Exp. Co., LTD, 864 F.3d 844, 848 (8th Cir. 2017) (quoting Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 819 (8th Cir. 2014)). “To successfully survive a motion to dismiss challenging personal jurisdiction, a plaintiff must make a prima facie showing of personal jurisdiction over the challenging defendant.” Fastpath, 760 F.3d at 820 (citing K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591 (8th Cir. 2011)). “A plaintiff's prima facie showing ‘must be tested, not by the pleadings alone, but by affidavits and exhibits supporting or opposing the motion.” Fastpath, 760 F.3d at 820 (internal quotations omitted). If no hearing is held, the evidence must be viewed “in a light most favorable to the plaintiff” and factual disputes are resolved in the plaintiff's favor. Id. Plaintiffs cannot shift the burden of proof to the party challenging jurisdiction. Id.


         The Court will grant Defendants' Motion to Dismiss because Plaintiffs have failed to make a prima facie showing of personal jurisdiction over Defendants.[3]

         In determining whether personal jurisdiction over a nonresident defendant exists, the Court must determine whether: (1) the requirements of Nebraska's long-arm statute, Neb. Rev. Stat. § 25-536, [4] are satisfied; and (2) the exercise of jurisdiction is permitted by the Due Process Clause of the Fourteenth Amendment. See Coen v. Coen, 509 F.3d 900, 905 (8th Cir. 2007). Because § 25-536 extends jurisdiction over nonresident defendants to the fullest degree allowed by the Due Process Clause, Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003), the Court need only determine whether the assertion of jurisdiction offends constitutional limits.

         The Supreme Court “recognize[s] two types of personal jurisdiction: ‘general' (sometimes called ‘all-purpose') jurisdiction and ‘specific' (sometimes called ‘case-linked') jurisdiction.” Bristol-Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773, 1779-80 (2017) (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)); see also BNSF Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017). “‘Specific' or ‘case-linked' jurisdiction ‘depends on an affiliation[n] between the forum and the underlying controversy . . . .'” Walden v. Fiore, 571 U.S. 277, 283 n.6 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). “This is in contrast to ‘general' or ‘all purpose' jurisdiction, which permits a court to assert jurisdiction over a defendant based on a forum connection unrelated to the underlying suit (e.g., domicile).” Walden, 571 U.S. at 283 n.6. Under either theory, due process requires ...

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