Friday, September 29, 2017
Federal District Court Addresses Personal Jurisdiction Over Partnership and Surviving Partner
In a decision rendered in July, the US District Court for the Western District of Kentucky (Judge McKinley) addressed whether Kentucky courts had personal jurisdiction over both the partnership organized in Indiana and the surviving partner in that partnership, an Indiana resident. It was concluded that jurisdiction existed over both. Childress Cattle, LLC v. Cain, Civ. Act. No. 3:17-CV-00388-JHM, 2017 WL 3446182 (W.D. Ky. July 10, 2017).
R & C Cain Farms (“Cain Farms”), a partnership between Roger Cain and his spouse Christie Cain, was a multiyear customer of the plaintiff Childress Cattle, LLC (“Childress”). While, for some period of time, everybody fully performed under the arrangement, in the last quarter of 2015, Cain Farms ordered and received cattle having a value of $675,239.63. Cain Farms remitted payment of only $380,607.65, leaving an outstanding balance of $294,631.98. Demands for payment were unavailing, and repossession of the cattle was not possible because Cain had apparently already sold the stock. On a date not specified in the opinion, Roger Cain passed away, leaving Christie Cain as the surviving partner.
After Childress filed this suit, the defendants filed a motion to dismiss based upon an alleged lack of personal jurisdiction as well as other bases including lack of subject matter jurisdiction, improper service of process and improper venue.
Sitting in diversity and, in consequence, applying Kentucky law, the court began by noting that “all allegations in the well-plead complaints [will be taken] as true.” On that basis the court determined that there had been a plausible showing that Cain Farms was a partnership between Roger and Christie Cain, and that Christie was not, as she alleged, simply Roger’s wife without being either a partner. In evidence thereof, it had already been shown that Christie signed checks on behalf of the partnership, fielded phone calls with respect to payment and “corresponded with Childress regarding payment in cattle after Roger’s death.”
With respect to whether the court had personal jurisdiction over the partnership, it began by observing that “a partner’s actions may be imputed to the partnership for the purpose of establishing minimum contacts.” Then applying the Kentucky long arm statute, the inquiry was whether jurisdiction was both authorized and whether that jurisdiction comported with the Due Process clause. Caesar’s Riverboat Casino, LLC v. Beach, 336 S.W.3d 51 (Ky. 2011). It was found that the partnership had purposely availed itself of the privilege of doing business in Kentucky through a multiyear pattern of ordering cattle and making payment thereon, citing Air Prod. & Controls, Inc. v. Safetech International, Inc., 503 F.3d 544, 551 (6th Cir. 2007) for the proposition that “where a defendant ‘has created continuing obligations between himself and the residents of the forum, he manifestly has availed himself of the privilege of conducting business there.’”
Setting aside additional objections based upon Due Process principles, it was held that the burden on the defendants in coming to Kentucky to defend the failure to perform upon the contract entered into in Kentucky would not be burdensome, and that ultimately Indiana has less interest in the action than does Kentucky.
Turning to personal jurisdiction over Christie Cain, jurisdiction was found based upon her having tendered performance on the contracts with Childress and participation in various phone calls:
Childress’ allegations and the undisputed facts illustrate that Christie Cain was involved in the ongoing relationship between Cain Farms prior to and after Roger Cain’s death. Because this relationship was a lengthy, continuous, and consistent business relationship, the Court finds Christie Cain transacted business within the Commonwealth. The Court found as well that due process principles were not violated. The dispute arose out of the failure by Cain Farms to make payment on the contracts, and Christie Cain was in charge of that function.
Though a close question, the Court finds that Christie’s involvement does not offend the notions of fair play and substantial justice. It is fair to say that when one is responsible for and actually does perform and tender payment on several contracts with a supplier, and unseasonably halts payments without proffering an explanation, one would reasonably expect to be hauled into court into the forum where payment is due.
Subject Matter Jurisdiction
Cain argued that principles of res judicata should preclude Childress’ suit because it could have been brought in the probate of Roger Cain’s estate. However, because of limitations imposed in probate proceedings, it was found that probate was not, in effect, a full and fair hearing that would be given preclusive effect.
Improper Service of Process
Christie Cain alleged that the service of process of the complaint was invalid because Cain Farms is a sole proprietorship and she was not its agent. The court rejected this argument in reliance upon its prior determination that, for purposes of this motion, Cain Farms was a partnership. In that Christie Cain was a partner in that partnership, service upon her was sufficient.
Describing the suit as one between citizens of Kentucky and citizens of Indiana, an allegation that the suit should be dismissed on the basis of forum non convenience was rejected.
New Kentucky Law Rejects Treatment of Franchisor as Employer of Franchisee’s Employees
In recent years, both the National Labor Relations Board and private parties have brought suits as asserting that, at least upon particular fact situations, a franchisor should be treated as the joint-employer of employees of a franchisee. See e,g,. Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015) (The Board found that direct control over the essential terms of employment included “matters related to the employment relationship such as hiring, firing, discipline, supervision, and direction”). Kentucky’s courts have to date not been open to these arguments. See, e.g., Uninsured Employers’ Fund v. Crowder, 2016 WL 2605624 (Ky. May 5, 2016); Doctor’s Associates, Inc. v. Uninsured Employers’ Fund, 364 S.W.3d 88 (Ky. 2011). Still, in an effort to preclude the argument, the 2017 General Assembly adopted a series of parallel statutes providing, inter alia, that the franchisor is not the joint-employer of the employees of the franchisee. See Ky. Rev. Stat. Ann. § 337.010 as amended by 2017 Ky. Acts, ch. 24, § 1; id. § 338.021 as amended by 2017 Ky. Acts, ch. 24, § 2; id. § 341.070 as amended by 2017 Ky. Acts, ch. 24, § 3; id. § 342.690 as amended by 2017 Ky. Acts, ch. 24, § 4; id. § 344.030 as amended by 2017 Ky. Acts, ch. 24, § 5. Each statute was amended to provide:
(a) Notwithstanding any voluntary agreement entered into between the United States Department of Labor and a franchisee, neither a franchisee nor a franchisee’s employee shall be deemed to be an employee of the franchisor for any purpose under this chapter.
(b) Notwithstanding any voluntary agreement entered into between the United States Department of Labor and a franchisor, neither a franchisor nor a franchisor’s employee shall be deemed to be an employee of the franchisee for any purpose under this chapter.
(c) For purposes of this subsection, “franchisee” and “franchisor” have the same meanings as in 16 C.F.R. sec. 436.1.
Still, these amendment extend only to the existence of an employer-employee relationship, and does not reach other allegations of franchisor control over, and consequent responsibility for, franchisee conduct. See, e.g., Johnson v. Seagle Pizza, Inc., No. 2015-CA-000085-MR, 2016 WL 4410705 (Ky. App. Aug. 19, 2016) (rejecting claim that franchisor should be liable for murder that occurred off-site following a robbery).
Tuesday, September 12, 2017
Athenian Forces Defeat Invading Persians at Marathon
Today might be the anniversary of the great battle, fought in 490 at Marathon, at which the forces of Athens defeated the Persian invasion sent by Darius the Great. The exact date of the battle is subject to controversy, although there is something of an alternative consensus on the 21st.
At the time of the battle, the Persian Empire extended from the western boundaries of what is today India across the Middle East, Turkey and to Southwest Europe. Darius had decided that the land we refer to today as Greece, inhabited by a variety of city-states, would be next incorporated into his empire. An invasion fleet landed its troops some 26 miles northeast of Athens at the Bay of Marathon. Working with collaborators in Athens, it was thought that the army could be drawn away and destroyed even as the collaborators led an internal revolt, taking control of the city and making it available to Darius. It would not turn out that way.
At news of the landing, Athens sent word to Sparta seeking its assistance, the Spartan hoplite troops being the strongest force in the region. Famously, the Spartans were unwilling to send their forces in light of an upcoming religious festival. In consequence, Athens would stand alone. The Athenian army, well smaller than the Persian forces, camped facing their enemy for over a week. On the 8th day, seeing that the Persians were re-embarking some troops onto ships and fearing that they intended to launch a direct assault on Athens, the Greek forces attacked. Although outnumbered, by skillful flanking maneuvers the Greeks were able to envelop the Persian forces. While the historical records recite what must be grossly inflated figures, certainly the Persians lost in excess of 6,000 men while the Greeks lost fewer than 200.
Although not recounted in the contemporary historic record, a runner took off to announce the victory to Athens. Just over 26 miles later, he entered the city, announced “nickomen” (“victory”) and dropped dead from exhaustion. Meanwhile, the balance of the Persian army embarked on their ships and set out from the Bay of Marathon with the intent of directly attacking Athens. The Athenian army force-marched itself back to the city, manning its walls as the Persian fleet approached. The Persians decided that another attack was not in their best interest and they withdrew.
A decade later, the Persian forces under Xerces, son of Darius, would again invade Greece. They would ultimately fall victim to the Spartan and allied forces at Thermopylae, the Greek naval forces at Salamis and again the allied forces at Plataea.