The Honorable Frederick J. Kapala of the United States 

District Court for the Northern District of Illinois, sitting by

designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-3229

GCIU-EMPLOYER RETIREMENT FUND,

Plaintiff-Appellant,

v.

THE GOLDFARB CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court

for the Central District of Illinois.

No. 07 C 1174—Joe Billy McDade, Judge.

ARGUED APRIL 2, 2009—DECIDED MAY 11, 2009

Before BAUER and FLAUM, Circuit Judges, and KAPALA,

District Judge.

KAPALA, District Judge. On June 29, 2007, plaintiff,

Graphic Communications International Union (GCIU)

Employer Retirement Fund, filed a complaint against
2 No. 08-3229

In reciting the facts, we read the complaint liberally with 1

every inference drawn in favor of plaintiff and resolve all

factual disputes in favor of plaintiff. See Cent. States, Se. & Sw.

Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870,

878 (7th Cir. 2006); Purdue Research Found. v. Sanofi-Synthelabo,

S.A., 338 F.3d 773, 782 (7th Cir. 2003). However, we accept as

true any facts contained in the defendant’s affidavits that

remain unrefuted by the plaintiff. See First Nat’l Bank v.

El Camino Res., Ltd., 447 F. Supp. 2d 902, 905 (N.D. Ill. 2006).

defendant, The Goldfarb Corporation, seeking to collect

withdrawal liability payments under the Employee

Retirement Income Security Act of 1974 (ERISA), 29

U.S.C. § 1001 et seq. The district court granted defendant’s

motion to dismiss plaintiff’s action for lack of personal

jurisdiction. Plaintiff now appeals.

I. Background1

Defendant is a Canadian company with its principal

place of business in Canada. It does not maintain a place

of business, employ individuals, serve customers, or

have a designated agent for service inside the United

States. In April 1995, defendant purchased 60% of the

stock of Fleming Packaging Corporation (Fleming). Fleming was a Delaware corporation with its principal place

of business in Peoria, Illinois. Defendant did not direct or

control the daily affairs of Fleming. Defendant and

Fleming maintained separate payrolls, bank accounts,

and leases and filed separate tax returns.

Fleming, as a consequence of the collective bargaining

agreements of its wholly-owned subsidiaries, was re-
No. 08-3229 3

See 29 U.S.C. §§ 1002(37), 1301(a)(3). 2

“For purposes of determining withdrawal liability, ERISA 3

defines an ‘employer’ as the business that directly participates

in the plan, as well as those entities that constitute the business’s ‘control group.’ All entities constituting the control

group incur withdrawal liability.” Phencorp, 440 F.3d at 873-74

(citation omitted). Plaintiff alleges that defendant was an

“employer” for the purposes of the assessment of withdrawal

liability because defendant owned more than an 80% interest

in Fleming. See 29 U.S.C. § 1301(b)(1); 26 C.F.R. § 1.414(c)-

(2)(b)(2)(i)(A).

quired to contribute to plaintiff, a multi-employer pension

plan. In May 2003, Fleming filed for bankruptcy. There2

after, Fleming’s assets were sold. Plaintiff argues

that when Fleming’s assets, which included its subsidiaries, were sold, Fleming withdrew from the Fund, see

29 U.S.C. § 1383, and thereby incurred withdrawal

liability, see id. § 1381. Plaintiff now seeks to collect from

defendant for Fleming’s withdrawal from the Fund.

Prior to Fleming’s demise, defendant had considerable

involvement with Fleming’s creditors. In 1997, Fleming

entered a loan agreement with Bank One. In the years

that followed, Fleming defaulted on the loan, and

amended the loan agreement several times. As a result

of Fleming’s continuing financial difficulties, in 2001,

defendant increased its ownership in Fleming to 82.2%.3

In March 2001, three members of the Goldfarb family,

Martin, Stanley, and Alonna, were elected as Fleming

officers and also accounted for 3 of the 9 seats on its

Board of Directors. At that time, Martin and Alonna were
4 No. 08-3229

officers, directors, and shareholders of defendant. Although not an officer, Stanley was also a director and

shareholder of defendant. In December 2001, defendant

presented a restructuring plan to Fleming’s lenders, but

the lenders rejected the plan and declared Fleming in

default in February 2002.

In March 2002, Fleming and Bank One amended the

loan agreement to require Fleming to sell two of its businesses. On the same day, defendant and Bank One

entered into a subsequent private agreement, containing

a Michigan forum-selection clause, which provided that

when Fleming sold these businesses, defendant would

make a secured, subordinated loan to Fleming for

$1.5 million.

In July 2002, the Goldfarbs met with Bank One representatives in Canada before a scheduled Fleming board

meeting. At that meeting, defendant indicated that it

would not fulfill its promise to infuse $1.5 million into

Fleming upon the sale of its businesses. The Goldfarbs

notified Bank One that they planned to use some of the

profits from the sale of two divisions of Fleming to restructure Fleming and that they planned to consolidate

Fleming’s Peoria operations and close others. At the

Fleming board meeting, Fleming learned of defendant’s

negotiations regarding the $1.5 million loan to Fleming.

The other lenders at the meeting rejected the restructuring plan that Fleming had presented to Bank One

earlier and insisted that Fleming hire an independent

consultant. On August 15, 2002, Alonna Goldfarb

traveled to Peoria, Illinois, on behalf of defendant. The

nature of this trip is unknown.
No. 08-3229 5

In September 2002, Fleming sold part of its Peoria

operations causing Bank One to demand the $1.5 million

originally promised by defendant. Defendant sought to

condition this loan on Bank One providing additional

money for restructuring. After negotiations between

defendant and Bank One, defendant loaned Fleming

$765,000 of the $1.5 million. Defendant also agreed to

advance an additional $1.5 million to Fleming if the

lenders funded Fleming’s operations until July 2003.

However, between December 2002 and January 2003, the

lenders rejected Fleming’s proposals to continue

operating, sought to have Fleming and its assets sold,

gave notice of default, and retained bankruptcy lawyers.

In February 2003, the lenders, Fleming, some of Fleming’s subsidiaries, and defendant negotiated and executed

the Fifth Amendment to the Loan Agreement. In the

agreement, the lenders agreed to delay exercising their

default rights if defendant relinquished control of Fleming

to George Gialenios, who was hired in 2002 to develop

Fleming’s restructuring plan. In exchange, defendant

would receive 3.5% of Fleming’s sale proceeds and the

lenders and Bank One agreed not to enforce defendant’s

remaining obligations as to the $1.5 million promised

under defendant’s March 2002 agreement. One of the

purposes of the Fifth Amendment to the Loan Agreement was for the lenders to temporarily forebear from

exercising their rights and thereby permit Fleming to

develop, implement and complete a program for sale

of Fleming’s operations as a going concern. In early

February 2003, the Goldfarbs resigned from Fleming’s
6 No. 08-3229

The record does not reflect whether the Goldfarbs also 4

resigned as officers.

The Bankruptcy Code provides that a trustee “after notice

5

and a hearing, may . . . sell, . . . other than in the ordinary course

of business, property of the estate.” 11 U.S.C. § 363(b). The

Bankruptcy Rules provide that such a sale may be private or

by public auction. Fed. R. Bankr. P. 6004(f)(1).

Board and defendant executed an irrevocable proxy

permitting Gialenios to vote its shares.4

On April 7, 2003, Martin Goldfarb reported to defendant’s Board of Directors that the banks had taken over

Fleming and he had been informed by the investment banker that the original negotiated sale was not proceeding, but he was not otherwise informed of their

progress. In May 2003, Fleming filed for bankruptcy. In

July 2004, the bankruptcy trustee brought an adversary

proceeding against defendant involving many of the

same transactions and events alleged in this case.

According to Joanna Anderson, an asset manager for

Bank One who was involved in the sale of Fleming,

defendant initially did not intend to cooperate in any

way in the bankruptcy, restructuring or liquidation of

Fleming, but eventually agreed to give up control during

the sale process. In her notes, Anderson remarked that

the lenders’ plan was “to set the path of how the sale

will occur in the sales process before control is transferred.” Anderson noted that no bankruptcy would occur

until the lenders found a buyer. Thereafter, the plan

was to file for bankruptcy and “run a 363 auction.”5
No. 08-3229 7

However, according to Anderson, it was not until after

the Fifth Amendment to the Loan Agreement was signed

that Fleming actively sought out buyers.

II. Procedural History

In June 2007, plaintiff filed this suit seeking to collect

withdrawal liability payments from defendant, and the

matter was referred to Magistrate Judge Byron Cudmore.

In response to defendant’s motion to dismiss for lack

of personal jurisdiction, the Magistrate Judge entered a

Report and Recommendation recommending dismissal.

The Magistrate Judge reasoned that although defendant

had sufficient minimum contacts with the United States,

plaintiff was unable to show that its claim arose from

or was related to defendant’s contacts. The Magistrate

Judge also recommended that plaintiff’s request for

further discovery be denied because further information about matters such as Alonna Goldfarb’s trip to

Peoria and defendant’s negotiations with Fleming’s

lenders was unrelated to plaintiff’s claim.

The district court accepted the Magistrate Judge’s

recommendation and reasoning, finding that plaintiff’s

claims did not arise out of defendant’s minimum

contacts with the United States. The court found that

defendant’s contacts with the United States arose from

its involvement with Fleming’s lenders. However, the

court noted that these contacts did not involve

Fleming’s withdrawal from the Fund, which serves as the

basis for plaintiff’s claim. Specifically, the court found

that defendant had relinquished its control over
8 No. 08-3229

Fleming well before Fleming withdrew from the Fund,

and pointed out that Fleming’s lenders were the ones that

originally sought to have Fleming sold in January 2003. In

addition, the district court found that defendant’s interactions with the lenders had no impact on the collective

bargaining agreements entered into by Fleming’s subsidiaries. The district court also denied defendant’s

request for further discovery, agreeing that the limited

discovery sought would not relate to plaintiff’s claim.

III. Discussion

A. Personal Jurisdiction

This court reviews dismissals for lack of personal jurisdiction de novo. Cent. States, Se. & Sw. Areas Pension Fund

v. Reimer Express World Corp., 230 F.3d 934, 939 (7th Cir.

2000). Plaintiff has the burden of demonstrating the

existence of personal jurisdiction. RAR, Inc. v. Turner Diesel,

Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). When a defendant’s motion to dismiss is based on the submission of

written materials, without the benefit of an evidentiary

hearing, the plaintiff need only make out a prima facie

case of personal jurisdiction. Purdue, 338 F.3d at 782.

“Any district court in which a plaintiff brings an action

under Title I of ERISA will have personal jurisdiction

over the defendant, if the defendant is properly served

and has sufficient minimum contacts with the United

States.” Phencorp, 440 F.3d at 875 (alteration and quotation

marks omitted). These contacts may be related or

unrelated to the facts forming the basis for the lawsuit de-
No. 08-3229 9

pending on whether defendants are subject to specific or

general jurisdiction. Id.; RAR, 107 F.3d at 1277. General

jurisdiction is for suits neither arising out of nor related

to the defendant’s contacts with the State, and is permitted

only where the defendant conducts continuous

and systematic general business within the forum state.

RAR, 107 F.3d at 1277. Specific jurisdiction, meanwhile,

“refers to jurisdiction over a defendant in a suit arising

out of or related to the defendant’s contacts with the

forum.” Id. (quotation marks omitted). In either case, the

defendant’s conduct and connection with the forum

must be such that it should reasonably anticipate being

haled into court there. Reimer, 230 F.3d at 943. In this

case, plaintiff does not challenge the district court’s

finding that defendant does not have sufficient contacts

with the United States to merit general jurisdiction. Thus,

we proceed to explore whether the court has specific

jurisdiction.

To decide whether specific personal jurisdiction may

be exercised, a court must engage in three distinct steps:

(1) identify the contacts the defendant has with the

forum; (2) analyze whether these contacts meet constitutional minimums and whether exercising jurisdiction on the basis of these minimum contacts sufficiently comports with fairness and justice; (3) determine whether the sufficient minimum contacts, if any,

arise out of or are related to the causes of action involved in the suit. 

Id. at 944. Neither party disputes the district court’s

identification of defendant’s contacts as those defendant
10 No. 08-3229

had with Fleming’s lenders, or its decision that those

contacts would fairly and justly merit specific jurisdiction in suits arising out of those contacts. Rather, the sole

issue on appeal is whether plaintiff’s claim meets the

third criterion as one arising out of or related to the

minimum contacts defendant had with the United States

Initially, we note, and neither party contests, that defendant’s ownership of a majority of Fleming stock is insufficient to establish specific personal jurisdiction. See id. at

943-44. In Reimer, this court noted that “jurisdiction and

liability are two separate inquiries.” Id. at 944. As such,

we recognized that in actions seeking withdrawal

liability, ERISA’s broad “definition of corporate affiliation as an element of withdrawal liability does not confer

personal jurisdiction on the basis of such affiliation.” Id.

Goldfarb’s contacts with the forum must be assessed

separate from Fleming’s. Id. at 944 (citing Keeton v. Hustler

Magazine, Inc., 465 U.S. 770, 781 n.13 (1984)). Although

in this case, at times defendant’s actions may have evidenced more than a normal parent-subsidiary relationship, we agree with the district court that the proper

focus of the analysis is on defendant’s conduct and

whether plaintiff’s claim arises out of that conduct. See

Keeton, 465 U.S. at 781 n.13.

In order to determine whether a claim relates to or

arises out of a party’s contacts, the court “cannot simply

aggregate all of a defendant’s contacts with a state- no

matter how dissimilar in terms of geography, time, or

substance- as evidence of the constitutionally-required

minimum contacts.” RAR, 107 F.3d at 1277. As such,

this court has held that, to be relevant for personal juris-
No. 08-3229 11

diction, past contacts should either bear on the substantive legal dispute between the parties or relate to the

operative facts of the case. Id. at 1278. Thus, “the action

must directly arise out of the specific contacts between

the defendant and the forum state.” Id. (quotation

marks omitted).

The parties agree that because the only contact defendant

had with the United States was its interaction with Fleming’s lenders, the crux of this case is whether defendant’s

involvement with Fleming’s lenders is sufficiently

related to plaintiff’s cause of action. In order to answer

that question, we look first to the elements of plaintiff’s

cause of action for withdrawal liability. An employer is

liable to the multi-employer plan in the amount determined to be withdrawal liability when the employer

engages in a complete or partial withdrawal. See 29

U.S.C. § 1381(a). Plaintiff alleges that Fleming completely

withdrew from the Fund. “Complete withdrawal” occurs

when an employer “(1) permanently ceases to have

an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan.” Id.

§ 1383(a).

That being said, plaintiff acknowledges that only

certain types of sales of Fleming would have caused a

“complete withdrawal” as defined by § 1383(a). For

example, plaintiff points out that a stock sale of

Fleming would not necessarily have caused a complete

withdrawal. See Santa Fe Pac. Corp. v. Cent. States, Se. & Sw.

Areas Pension Fund, 22 F.3d 725, 727 (7th Cir. 1994). In

addition, neither filing for bankruptcy protection nor

insolvency is necessarily a repudiation of obligations or a
12 No. 08-3229

That provision exempts sales of assets from withdrawal 6

liability if the buyers and sellers structure the sale appropriately and comply with certain reporting and bonding requirements. Cent. States, Se. & Sw. Areas Pension Fund v.

Nitehawk Express, Inc., 223 F.3d 483, 488 (7th Cir. 2000).

It is also undisputed that defendant had no role in either 7

negotiating or entering the collective bargaining agreements

that provided for Fleming’s subsidiaries’ contributions to the

Fund.

cessation of operations. Cent. States, Se. & Sw. Areas Pension

Fund v. Basic Am. Indus., Inc., 252 F.3d 911, 916-17 (7th Cir.

2001). In contrast, a sale of Fleming’s assets without

complying with ERISA’s “safe harbor” provision, as

plaintiff argues occurred here, would trigger complete

withdrawal. See 29 U.S.C. § 1384. As such, the cause 6

of action here does not arise out of the general decision

to sell Fleming or financial demise of Fleming, but

rather the actual sale of Fleming’s assets without complying with the “safe harbor” provisions.

Next we determine whether defendant’s contacts

were sufficiently related to the cause of action. It is undisputed that defendant surrendered all of its controlling

interest in Fleming in February 2003, months before

Fleming was sold and withdrew from the Fund. Despite 7

this fact, plaintiff contends that defendant’s contacts

directly relate to plaintiff’s claim. Plaintiff argues that

defendant’s failure to honor its March 11, 2002 agreement with Bank One may have caused the lenders to be

more aggressive in recovering their loans and, thus,

increased the likelihood Fleming would withdraw from
No. 08-3229 13

the Fund. Plaintiff also argues that defendant’s imprudent

negotiation with Fleming’s lenders and eventual agreement

to “abandon its investment,” were contributing factors

in the sale of Fleming’s assets, which caused Fleming’s

withdrawal from the Fund. In addition, plaintiff argues

that by negotiating and executing the final amendment

to the loan agreement, in which the Goldfarbs resigned

from Fleming’s Board and defendant executed an irrevocable proxy, defendant allowed the resulting asset sale.

However, we find these contacts too attenuated to

support specific personal jurisdiction. First, the fact that

defendant’s poor financial decisions in relation to

Fleming may have caused Fleming to garner a more

contentious relationship with its lenders does not necessarily mean that Fleming would or had to withdraw

from the Fund. See RAR, 107 F.3d at 1278 (holding that

the fact that defendant would not have been performing

the task that subjected him to liability but for his

previous contacts with plaintiff in Illinois was a loose

causal connection that did not provide the basis for

personal jurisdiction).

Second, even assuming that defendant’s poor negotiating tactics contributed to Fleming’s withdrawal, these

tactics do not “directly” relate to Fleming’s withdrawal

from the Fund. Although, arguably, the withdrawal

would not have occurred but for the failure of

defendant’s negotiations, defendant’s negotiations were

temporally far from the actual withdrawal, and several

independent decisions were made by the lenders between

the failed negotiations and the withdrawal. See O’Connor

v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 322 (3d Cir.
14 No. 08-3229

In response to this final point, plaintiff argues that an em- 8

ployer’s pure intent should not insulate them from withdrawal liability. However, as discussed above, liability should

not be confused with jurisdiction. See Reimer, 230 F.3d at 944.

Moreover, it is not defendant’s intentions that are determinative, but rather its conduct related to withdrawal. Because

defendant was not involved in structuring the sale, its contacts did not relate to the actions that directly caused Fleming’s

withdrawal from the Fund.

Although Anderson indicates that the lenders may have 9

decided how the sale would occur before defendant surrendered control, there is no indication defendant was aware

of this plan or participated in it.

2007) (“But-for causation cannot be the sole measure of

relatedness because it is vastly overinclusive in its calculation of a defendant’s reciprocal obligations. The problem

is that it ‘has . . . no limiting principle; it literally

embraces every event that hindsight can logically

identify in the causative chain.’ ”).

Finally, it is important to realize that even if defendant’s

contacts included an acquiescence that Fleming would

be sold, there is no evidence that defendant’s contacts

involved the decision to sell assets without considering the

Fund obligations. As plaintiff acknowledges there were

many ways Fleming could have been sold to avoid withdrawal. Plaintiff points to no evidence that defendant’s

contacts with the United States included any contribution or input on how Fleming would ultimately be sold.8

In fact, Anderson’s notes reflect that the lenders decided

on what was the best plan for sale.9
No. 08-3229 15

At oral argument, plaintiff asserted that defendant knew

of the asset sale because it agreed to the sale of Fleming “as

a going concern.” A going concern is “[a] commercial

enterprise actively engaging in business with the expectation of indefinite continuance.” Black’s Law Dictionary

712 (8th ed. 2004). In its brief, defendant contends that

this meant that Fleming’s lenders were going to sell

Fleming through a stock sale as opposed to an asset

sale. However, a sale of assets as a group also can be

referred to as a sale of assets as a “going concern.” See Fla.

Dept. of Revenue v. Piccadilly Cafeterias, Inc., ___ U.S. ___,

128 S. Ct. 2326, 2330 (2008); Phason v. Meridian Rail Corp.,

479 F.3d 527, 529 (7th Cir. 2007); EEOC v. G-K-G, Inc., 39

F.3d 740, 747 (1994). Moreover, the complaint alleges

that defendant agreed to “permit a sale of [Fleming’s]

operations as a going concern,” suggesting the assets were

to be sold as a going concern. (Emphasis added). Accordingly, when construing the evidence and the complaint

in the light most favorable to plaintiff, one could conclude defendant was aware that an asset sale was possible.

However, though we reach this conclusion, such knowledge in itself is not enough to show that defendant’s

conduct related to withdrawal because withdrawal involves not only a sale of assets, but a sale of assets without complying with the safe harbor provisions. See 29

U.S.C. § 1384. Anderson’s notes indicate that at the time

defendant surrendered control of Fleming there was no

buyer, and no sale was set to occur. Thus, defendant’s

contacts regarding the Fifth Amendment to the Loan

Agreement could not have involved decisions related to

withdrawal because there had been no determination
16 No. 08-3229

of whether a yet unknown potential buyer was amenable

to complying with ERISA’s safe harbor provisions. Moreover, three months passed between defendant’s surrender of control and the sale. As noted by Martin

Goldfarb, during that time the plans for sale changed

and in any event defendant was not informed of the

progress of the sale. As such, this court cannot find that

defendant’s contacts with the United States were sufficiently related to decisions regarding the sale of Fleming

that triggered withdrawal liability.

As a result, plaintiff has not met its burden to make

out a prima facie case that its cause of action is one

“arising out of” or “related to” defendant’s minimum

contacts with the United States. See RAR, 107 F.3d at 1277.

Accordingly, we affirm the district court’s order

granting defendant’s motion to dismiss.

B. Discovery

Plaintiff next argues that the district court erred in

denying its motion for further discovery. Plaintiff argues

it should have been allowed limited discovery

regarding Alonna Goldfarb’s travel to Peoria as well as

information about the extent of defendant’s negotiations

with Fleming. “We review the district court’s decision

on discovery matters for an abuse of discretion.” Phencorp,

440 F.3d at 875. In order to garner discovery, “[a]t a

minimum, the plaintiff must establish a colorable or

prima facie showing of personal jurisdiction . . . .” Reimer,

230 F.3d at 946. “Foreign nationals usually should not
No. 08-3229 17

be subjected to extensive discovery in order to determine whether personal jurisdiction over them exists.” Id.

The district court did not abuse its discretion in

denying plaintiff’s request for discovery. In investigating

its claim, plaintiff admits it already had reviewed over

6,000 documents as well as the depositions of the

Goldfarbs and Anderson in the bankruptcy proceedings.

Despite this search, plaintiff points to nothing indicating

that defendant was involved in deciding to implement

an asset sale of Fleming that did not comply with ERISA’s

safe harbor provisions. Plaintiff asserts that it is crucial

to find out information about defendant’s final agreement to surrender control of Fleming because defendant

could possibly have suggested structuring its divestiture

of Fleming as an asset sale. However, there is nothing

plaintiff points to that indicates this was a possibility. In

fact, Anderson’s deposition suggests otherwise. In addition, Alonna’s trip occurred long before the sale, and

there is no indication that defendant had yet contemplated allowing the lenders to control any sale of Fleming.

Moreover, the agreement makes it clear that defendant

surrendered its control in February 2003 so that Gialenios,

not defendant, could structure the sale of Fleming. Additional evidence presented by plaintiff also indicates

that defendant’s input was not considered in the sale.

For example, Anderson stated in her deposition in the

bankruptcy case that during the negotiation in which

defendant surrendered control, “the bank group wanted

a quick and clear path to a sale and felt that a third party

would be able to better implement a sale.” In addition,
18 No. 08-3229

Anderson specifically acknowledged that the Goldfarbs

were difficult to deal with during this time period in

terms of getting things accomplished and that it took

a lot more time to make decisions dealing with them.

Accordingly, the district court did not abuse its discretion in finding that further information about Alonna’s trip

or the negotiations surrounding defendant’s surrender

of control was unlikely to yield evidence of any contacts

arising out of or relating to Fleming’s withdrawal from

the Fund. Compare id. at 947. As such, we affirm the

district court’s denial of plaintiff’s motion for further

discovery.

IV. Conclusion

For the foregoing reasons, we AFFIRM the district

court’s judgment in favor of defendant.

5-11-09