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1 McKearney Inc. claims that the Medzilla resume database is located in Washington, but (as SciStaff

points out) provides no proof of that claim.

ORD ON MTN

TO DISMISS - 1 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

MEDZILLA, INC.,

Plaintiff,

v.

SCISTAFF SERVICES LLC, a New Jersey

limited liability company;

LEADINGSCIENCE.COM, a Massachusetts

sole proprietorship corporation; S.J.

McKEARNEY, INC., a Massachusetts

corporation; and SCOTT McKEARNEY, an

individual,

Defendants.

No. C06-506-MJP

ORDER DENYING SCISTAFF

SERVICES, LLC’S MOTION TO

DISMISS CROSS-CLAIM OR

SEVER AND TRANSFER CROSSCLAIM

Third-Party Defendant SciStaff Services LLC (“SciStaff”) seeks dismissal of the claim

filed against it by Defendant/Third-Party Plaintiff S.J. McKearney, Inc. (“McKearney Inc.”) or, in

the alternative, that the claim be severed and either transferred or stayed. For the reasons stated

below, the Court finds SciStaff’s grounds for dismissal and severance to be unpersuasive, and

therefore DENIES the motion.

Background

SciStaff is a one-man operation licensed as a limited liability corporation in New Jersey. 

Their business is placing biotech and pharmaceutical professionals in jobs. They have no office,

employees, property or presence in the State of Washington, and do not solicit business here. 

Medzilla is a Washington corporation dedicated to warehousing electronic resumes.1

 SciStaff

contracted with Medzilla for monthly access to their database. Among the contract provisions

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ORD ON MTN

TO DISMISS - 2 

were agreements that Washington law would govern, that disputes would be litigated in King

County, and that only SciStaff would use the database access code which Medzilla provided.

McKearney Inc. was an independent sub-contractor intermittently hired by SciStaff and

paid on a contingency basis. They had no written agreement. In April, 2006, Medzilla sued

SciStaff, McKearney Inc. and others for violations of federal and state statutes related to allegedly

improper access of Medzilla’s database. Medzilla and SciStaff settled their portion of the case

and SciStaff was dismissed as a defendant in July, 2006. In November 2006, an answer was filed

on behalf of the remaining defendants, at which time McKearney Inc. asserted a “cross-claim” for

indemnification against SciStaff, claiming that it had acted as SciStaff’s agent. It is that claim

which SciStaff seeks to dismiss by this motion.

SciStaff seeks dismissal on several grounds:

1. Under FRCP 12(b)(2), for lack of personal jurisdiction

2. Under FRCP 12(b)(3), for improper venue

3. Under FRCP 13(g), because they are improperly named as a “co-party”

4. Under 28 U.S.C. § 1367(c)(1), because the cross-claim raises a “novel and

complex issue” of New Jersey law.

5. Alternatively, severance and transfer to the U.S. District Court for the District of

New Jersey is sought under 28 U.S.C. § 1404 or 28 U.S.C. § 1406.

The analysis will address each ground separately.

Analysis

Personal Jurisdiction

Both sides are in agreement that no general personal jurisdiction exists – SciStaff does not

have “substantial and continuous activities” within Washington. Pac Atlantic Trading Co. v.

M/V Main Express, 758 F.2d 1325, 1327 (9th Cir. 1985).

SciStaff argues further there are no grounds upon which to exercise specific personal

jurisdiction and the Court must disagree. The elements of specific personal jurisdiction are:

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ORD ON MTN

TO DISMISS - 3 

1. Purposeful availment of the privilege of conducting business within the forum

2. Claims arising out of forum-related activities

3. Reasonableness in the exercise of jurisdiction

Doe v. Unocal Corp., 248 F.3d 915, 923 (9th Cir. 2001). 

SciStaff did purposefully avail itself of the privilege of conducting business here when it

contracted with Medzilla, a Washington corporation, to access its database of resumes. 

Furthermore, it agreed to be governed by Washington law and to try any claims arising out of the

contract in King County, Washington. McKearney Inc.’s claims against SciStaff arise out of

activities related to that agreement: although SciStaff correctly points out that there is no

evidence that the actual database is housed here, Medzilla’s presence in this forum – creating,

updating and maintaining the database, wherever it is – is sufficient forum-related activity. And it

is reasonable that, having contracted with a Washington business (and having agreed to

Washington law and forum provisions), SciStaff should be subject to this forum’s jurisdiction

when contract-related claims arise.

Venue

SciStaff presents its venue argument as though it were a first-party defendant answering a

suit by a first-party plaintiff, pointing out that the company has no business presence in

Washington and none of the events related to McKearney Inc’s indemnification claim occurred

here. McKearney, Inc. responds as though it were a first-party plaintiff trying to defend its choice

of forum.

Neither party appears to have grasped the fact that, as a third-party defendant, SciStaff

cannot avail itself of traditional venue analysis. A number of federal jurisdictions hold that “the

reasons which give the court jurisdiction over an ancillary proceeding by virtue of its jurisdiction

over the principal action, likewise support the conclusion that venue in the ancillary proceeding

may depend or rest upon the venue in the main proceeding.” U.S. v. Acord, 209 F.2d 709, 714

(10th Cir. 1954)

Since the Court has subject matter jurisdiction over Medzilla’s and McKearney Inc’s

claims (either independently or on an ancillary basis) and has personal jurisdiction over SciStaff,

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ORD ON MTN

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“statutory venue limitations have no application to [FRCP] 14 claims even if they would require

the third-party action to be heard in another district had it been brought as an independent

action.” Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 1445. See Gundle

Lining Const. Corp. v. Adams County Asphalt, Inc,. 85 F.3d 201, 209-210 (5th Cir. 1996)

(disallowing a motion to transfer venue by a third-party defendant over whom the court had

personal jurisdiction).

“Co-party” or third-party defendant

SciStaff points out that, since they were not a party to the case at the time when

McKearney Inc’s cross-claims were filed (they had already settled Medzilla’s claims against

them), they are not properly named as “co-parties” as required by FRCP 13(g). On this basis,

SciStaff claims a right to be dismissed. McKearney Inc. concedes that it was an error to designate

their claim against SciStaff as a cross-claim and asks the Court to exercise its discretion to redesignate their pleading as a third party claim under FRCP 14. 

There is precedent for this. In Raytheon Aircraft Credit Corp. v. Pal Air Intern, Inc., 923

F.Supp. 1408 (D. Kan. 1996), the court opted to remedy an improper filing of a cross-claim by

treating it as a third-party pleading under FRCP 14 and re-designating the parties in the caption. 

Such a result here would not offend principles of equity or due process. But for SciStaff settling

its claims prior to McKearney Inc. filing its answer, it would have been properly named as a coparty. SciStaff has adequate notice of the existence of the lawsuit and the issues and claims. 

McKearney Inc. will be permitted to amend their pleading to re-designate SciStaff as a third-party

defendant.

Supplemental jurisdiction

SciStaff argues that because McKearney Inc.’s indemnification claim pertains to limited

liability companies, it involves a “novel or complex issue of State law” and on that basis

supplemental jurisdiction may and should be declined under 28 U.S.C. § 1367(c)(1). There is

general agreement between the parties that New Jersey law applies to this question; what this

motion puts at issue is whether the Court should retain jurisdiction or either dismiss the claim or

transfer it to New Jersey federal court.

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2 N.J.S.A. 42:2B-10

3 New Jersey corporation law states that a corporation “shall indemnify a corporate agent.” N.J.S.A.

12A:3-5(4).

ORD ON MTN

TO DISMISS - 5 

The Court recognizes that retention of supplemental jurisdiction is a matter of discretion,

not of right. In re Latex Glove Products Liability Litigation, 373 F.Supp.2d 1205, 1207

(W.D.Wash. 2005). Jurisdiction may be declined on a statutory basis (such as SciStaff seeks

here) and may also be refused in consideration of issues of economy, convenience, fairness, and

comity. United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966); Executive Software North

Am., Inc. v. U.S. District Court, 24 F.3d 1545, 1555-57 (9th Cir. 1994).

SciStaff bases its argument that McKearney Inc.’s third-party claim raises a “novel and

complex” issue of New Jersey law on two grounds. First, the language of New Jersey limited

liability company law regarding indemnification is permissive (“may, and shall have the power to,

indemnify”)2

 rather than mandatory.3 Second, the issue of a limited liability company’s

indemnification obligations appears to be one of first impression in New Jersey.

But New Jersey has long recognized that common law principles of indemnification

govern in the absence of express provisions to the contrary. Mettinger v. Globe Slicing Mach.

Co., Inc., 153 N.J. 371, 380 (1998) (citing Promaulayko v. Johns Manville Sales Corp., 116 N.J.

505, 510-11 (1989)). And it is also the law of that jurisdiction that in order for a statute to

supercede or nullify the common law, it must express or specifically do so. Matter of Tierney,

175 N.J. Super. 614, 623 (1980). SciStaff has cited to no provision of New Jersey’s limited

liability company statutory scheme overruling the common law indemnification principles

governing that state’s jurisprudence.

As both parties have pointed out, New Jersey law recognizes that an independent

contractor can be a principal’s agent. Sodexho Operations, LLC v. Director, Division of

Taxation, 21 N.J. Tax 24, 38-39 (Tax Ct. 2003). At this juncture, the resolution of the issue is

simply a matter of applying the facts of this case to the common law factors enumerated in the

Restatement of Agency § 220(2), as the Supreme Court of New Jersey did in Mavrikidis v.

Petullo, 153 N.J. 117, 132 (1998). This Court adjudges itself as competent to accomplish that

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ORD ON MTN

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analysis as a court in SciStaff’s home state, and therefore sees no need to either dismiss

McKearney Inc.’s claim or transfer it to the federal courts in New Jersey.

The Court also finds no merit in SciStaff’s suggestion that their portion of the case be

severed and stayed pursuant to FRCP 42 pending resolution of the primary claims between

Medzilla and the remaining defendants. FRCP 42(b) contemplates the furtherance of

convenience, the avoidance of prejudice and the attainment of economy in ordering a separate

trial. To do so in this instance would accomplish none of those goals and would instead

necessitate the re-litigation of common issues should McKearney prevail in the principal litigation

and then have separately prove its right to indemnification.

Conclusion

SciStaff is subject to the personal jurisdiction of this Court and, as a third-party defendant,

is bound by the propriety of venue as determined by the underlying lawsuit. The company is not

entitled to dismissal based on McKearney Inc.’s failure to properly implead them and McKearney

Inc. will be permitted to re-designate SciStaff as a third-party defendant. Finding that this claim

represents neither a novel nor complex issue of state law, the Court chooses to exercise

supplemental jurisdiction over the claims and to consider it simultaneously with the primary

causes of action.

SciStaff’s motion to dismiss or sever the claims against it is therefore DENIED.

Dated: June _20__, 2007

AMarsha J. Pechman

U.S. District Judge

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