Opinion
IP 02-C-0422 M/S
March 19, 2003
ORDER ON NAI DEFENDANTS' MOTION TO DISMISS
This matter is before the Court on defendants', North American Indemnity, N.V. ("NAI"), John Fowler Anderson ("Anderson"), Euan D. McNicoll ("McNicoll") and Marsh Investment Corporation ("Marsh") (collectively, the "NAI Defendants"), motion to dismiss pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure. The NAI Defendants essentially argue that the Court lacks personal jurisdiction and that service of process was insufficient. For the reasons set forth herein, the NAI Defendants' motion is DENIED.
I. BACKGROUND
The facts construed in the light most favorable to Plaintiffs are as follows: Plaintiffs have brought this class action against the NAI Defendants and others under the Employee Retirement Income Security Act of 1974 ("ERISA"), alleging breaches of fiduciary duties and requesting payment of medical benefits and equitable relief. This Court certified two plaintiff classes by order dated January 27, 2003. NAI is the reinsurer of certain ERISA plans (the "Plans"), of which Plaintiffs were participants or beneficiaries, for the provision of welfare benefits. Complaint ¶ 12. NAI is a Belgian corporation, of which Anderson is the president, director, and co-owner, and McNicoll is an officer, director and co-owner. Id. ¶ 4. Anderson and McNicoll were the sole shareholders of Marsh, with Anderson holding 61,999 shares and McNicoll holding one share. Plaintiffs' Response to NAI Defendants' Motion to Dismiss ("Response") at 10. Anderson contributed all of his shares in Marsh to fund NAI, in exchange for 11,192,000 new shares of NAI. Id. at 10-11. Plaintiffs allege that Anderson and McNicoll used Marsh stock to undercapitalize NAI with the intent to impair the ability of Plan participants to collect claims or judgments. Complaint ¶ 13.
NAI was formed for the sole purpose of becoming the reinsurer for the Plans. Response at 6. Anderson and McNicoll had several meetings in the United States to prepare for forming NAI and for NAI to become the reinsurer of the Plans. Id. at 7. American Heartland Health Administrators, Inc. ("AHHA"), the Plan administrator and a defendant in this action, made premium payments to NAI at a bank account located in New York. Id. at 8.
Anderson and McNicoll have traveled to the United States numerous times on NAI business, including trips to solicit business with additional Plans. Id. McNicoll and Anderson also met with attorney John Claro ("Claro") in the United States regarding purchase of an American insurance company and had meetings with that company in Dallas, Texas. Id. NAI has filed a suit against AHHA, Claro and others in the Federal District Court for the Southern District of Texas and NAI, Anderson and McNicoll have filed a disciplinary complaint against Claro with the Oklahoma Bar Association. Id. at 9. The disciplinary complaint alleges that NAI sought out and relied on advice from Claro. Id. When the NAI Defendants were served with summonses and complaints in this action, Anderson and McNicoll were in the United States on NAI business. Id. at 10.
Certificates of service filed with the Court show that on March 19, 2002, Anderson and McNicoll were personally served with summonses and copies of the Complaint, in their individual capacities as well as their capacities as principles of NAI and Marsh, in Sacramento, California. Docket No. 21, Ex. C. The NAI Defendants were served by a licensed California process server, Maricruz Rodriguez ("Rodriguez"). Deposition of Maricruz Rodriguez ("Rodriguez Dep.") at 4. Plaintiffs' counsel advised Rodriguez that Anderson and McNicoll may be difficult to serve and that it was very important that they be served while visiting the United States from Scotland. Id. at 5 and Ex. 1 thereto. Plaintiffs' attorney gave Rodriguez a physical description of the two men. Id.
Rodriguez waited for Anderson and McNicoll at the office of their attorney, Kevin Marchese ("Marchese"), where Rodriguez was advised Anderson and McNicoll had a meeting scheduled. Id. at 6. Rodriguez testified that she identified both men, then approached McNicoll. Id. at 8. After McNicoll confirmed his identity, Rodriguez handed him an envelope with three sets of summonses. Id. Marchese then asked Rodriguez whether he could accept the envelopes on behalf of the two men, and Rodriguez answered that she must serve the men personally. Id. at 7-8. Rodriguez then approached Anderson, who confirmed his identity, and handed Anderson an envelope with three summonses. Id. at 8.
Marchese has testified that Rodriguez came to his office asking for Anderson and McNicoll, but Marchese told her they were unavailable. Deposition of Kevin R. Marchese ("Marchese Dep.") at 18. Marchese testified that Rodriguez did not identify herself as a process server, and that she handed the two packages to Marchese. Id. Marchese also has stated that his office receptionist reported that Rodriguez did not ask for Anderson or McNicoll, and that Rodriguez left the papers at Marchese's office as, Marchese assumed, courtesy copies. Response at 13-14 and Ex. 1.
Attorney Vincent Busschaert, purporting to act on behalf of the NAI Defendants, sent the Court a letter dated May 7, 2002, claiming that this Court lacks jurisdiction over the NAI Defendants and that the NAI Defendants were not properly served. Plfs' Ex. 1. Mr. Busschaert explained that jurisdiction is absent because NAI is a Belgian corporation, has never done business in Indiana, and does not have an office in Indiana. Id. Mr. Busschaert also stated that the reinsurance contracts at issue were executed in Belgium, and that the reinsurance contracts exclude jurisdiction in this district. Id. The Court ordered on May 28, 2002, that Mr. Busschaert's letter would be treated as a motion to dismiss. Plaintiffs' response followed. The NAI Defendants have not filed a brief or any additional documents in support of their position.
II. STANDARDS
When a defendant challenges personal jurisdiction, the plaintiff bears the burden of demonstrating jurisdiction exists. Health Mgmt. Prof'ls, Inc. v. Diversified Bus. Enters., Inc., 882 F. Supp. 795, 797 (S.D.Ind. 1995). A court may receive and consider affidavits and other documentary evidence when making a ruling regarding jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997); Nelson v. Park Indus., Inc., 717 F.2d 1120, 1124 (7th Cir.) cert. denied 465 U.S. 1024 (1983). However, the Court must accept as true all of Plaintiffs' undenied factual assertions and resolve in their favor any disputes regarding relevant facts. See RAR, Inc., 107 F.3d at 1275; Neiman v. Rudolf Wolff Co., 619 F.2d 1189, 1191 (7th Cir.) cert. denied, 449 U.S. 920 (1980).
Motions to dismiss pursuant to Rule 12(b)(2) and Rule 12(b)(5) are interrelated; thus the standards are the same for both motions. See Robinson v. Turner, 886 F. Supp. 1460, 1462 (S.D.Ind. 1995). Courts grant motions to dismiss sparingly, so as not to deny the parties an opportunity to be heard on the merits. Id.
III. DISCUSSION
Litigation under ERISA may occur "in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found." 29 U.S.C. § 1132(e)(2). ERISA also permits nationwide service of process. "[P]rocess may be served in any district where a defendant resides or may be found." Id. § 1132(e)(2). Thus, if a defendant is personally served in any district in the United States, the district court in which the suit has been filed has personal jurisdiction over the defendant, regardless of the defendant's contacts with forum district. See Board of Trustees, Sheetmetal Workers Nat'l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031. The questions in this case thus become (1) whether the NAI Defendants were served properly, and (2) whether the NAI Defendants had sufficient contacts with the United States.
Though not challenged by the NAI Defendants, it is appropriate to note that venue is proper in this district, pursuant to 29 U.S.C. § 1132(e)(2) because Plaintiffs allege the named plaintiffs "worked and/or were to have received welfare benefit payments in this district." Complaint ¶ 9.
A. SERVICE OF PROCESS
Service of process is a prerequisite to the Court's exercise of personal jurisdiction. See Omni Capital Int'l Ltd. v. Rudolf Wolff Co., Ltd., 484 U.S. 97, 104 (1987). "It is the mechanism 'by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served." Waeltz v. Delta Pilots Ret. Plan, 301 F.3d 804, 808 n. 3 (7th Cir. 2002) (quoting Omni Capital Int'l Ltd., 848 U.S. at 104). ERISA provides for service to be made nationwide. 29 U.S.C. § 1132(e)(2). Rule 4 of the Federal Rules of Civil Procedure provides for service "by delivering a copy of the summons and complaint to the individual personally." Fed.R.Civ.P. 4(e). Service can be made upon a foreign or domestic corporation "by delivering a copy of the summons and of the complaint to an officer" of the corporation. Fed.R.Civ.P. 4(h).
It is clear that Anderson and McNicoll were personally served with summonses and copies of the complaint while they were in Sacramento, California. The Court has been provided with returns of service demonstrating that Anderson and McNicoll were personally served in their individual capacities as well as their capacities as principles of NAI and Marsh. Docket No. 21, Ex. C. The certified process server has sworn that she handed the summonses and complaints directly to Anderson and McNicoll. Marchese testified that Anderson and McNicoll were not personally served. However, Marchese has given two conflicting versions of the facts and, further, the Court must construe factual conflicts in favor of the plaintiff. See RAR, Inc., 107 F.3d at 1275. The Court is satisfied that the NAI Defendants were served properly.
B. PERSONAL JURISDICTION
ERISA's nationwide service of process statute alters the usual personal jurisdiction analysis, established by International Shoe Co. v. Washington, 326 U.S. 310 (1945), which requires sufficient minimum contacts with the forum state in order for the exercise of jurisdiction to comport with notions of substantial justice and fair play. See Medical Mutual of Ohio v. deSoto, 234 F.3d 298, 303 (6th Cir. 2000). Having determined that the NAI Defendants were served properly, this Court has personal jurisdiction over the NAI Defendants if they have had sufficient contacts with the United States as a whole. See id.; Waeltz, 301 F.3d at 808 n. 3; Elite Erectors, Inc., 212 F.3d at 1035.
The Seventh Circuit has looked favorably upon the view that if a defendant is personally served in the United States, personal jurisdiction also is established. Waeltz, 301 F.3d at 808 n. 3. ("Of course, it may be that sufficient contacts will exist whenever a defendant is served within the United States.") (citing Lorelie Corp. v. County of Guadalupe, 940 F.2d 717, 719 (1st Cir. 1991)). Sufficient contact is established because a defendant must be in the United States to be properly served under 29 U.S.C. § 1132(e)(2). Id. (citing Central States, Southeast Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 941 (7th Cir. 2000)); see also, Bourassa v. Desrochers, 938 F.2d 1056, 1058 (9th Cir. 1991) (finding court had jurisdiction over foreign defendant who was served within the United States while present on unrelated business). According to this view, this Court's exercise of personal jurisdiction over the NAI Defendants would be proper here, because the NAI Defendants were properly served in the United States.
However, because the Seventh Circuit has not specifically adopted the rule that service within the United States will always establish jurisdiction over a foreign defendant, it is appropriate for the Court to note that Anderson, McNicoll and NAI conducted a sufficient amount of business in the United States to establish minimum contacts. NAI was formed for the purpose of doing business with ERISA plans in the United States. Anderson and McNicoll traveled to the United States several times to conduct business. NAI apparently collected premium payments in a United States bank account for some time. Anderson, McNicoll and NAI have initiated other legal action in the United States. This Court's jurisdiction over them does not offend the notions of substantial justice and fair play.
The Court further finds that its exercise of jurisdiction over Marsh also is appropriate. Plaintiffs have alleged that Marsh is the alter ego of NAI, making Marsh essentially the same entity as NAI. See Elite Erectors, 212 F.3d at 1038. NAI's contacts within the United States are thus imputed to Marsh. See United Elec., Radio Mach. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1091 (1st cir. 1992) (noting that where the acts of one defendants may be attributed to another, "the jurisdictional hurdle can be vaulted"). Both NAI and Marsh are owned and controlled almost exclusively by Anderson. Anderson contributed all of his shares of Marsh to fund NAI. The NAI Defendants have not contested these facts and the Court is obliged to accept all undenied factual assertions as true for the purposes of Plaintiffs' motion. See RAR, Inc., 107 F.3d at 1275; Neiman, 619 F.2d at 1191. Even if Plaintiffs cannot later prove that Marsh is liable, their allegations are not "too feeble to invoke federal jurisdiction." See Elite Erectors, Inc., 212 F.3d at 1038. Thus, Marsh's role as alter ego of NAI is sufficient to establish this Court's jurisdiction.
IV. CONCLUSION
For all the foregoing reasons, the NAI Defendants' motion to dismiss for insufficient service of process and lack of personal jurisdiction is DENIED.