IV. CONCLUSION
For the foregoing reasons, Defendant, Michael Cipicchio’s motion to dismiss Plaintiff, James
Allman’s complaint for lack of personal jurisdiction brought pursuant to Federal Rule of Civil
Procedure 12(b)(2) is granted.
IT IS SO ORDERED.
ENTER:
Cale fC fog

CHARLES RONALD NOGLE, SR. Judge
United States District Court

DATED: fF QZ

13


Cipicchio caused an audit to be performed on the accounts of approximately 50 major account
executives, including Allman. Allman alleges that the Defendants directed WorldCom to
“{ntentionally and purposefully” freeze many of the commission bank accounts that had been the
subject of the internal audit, including Allman’s account. Allman contends that the Defendants knew
of WorldCom’s obligation to pay Allman under the Comp Plan and that the Defendants purposefully
prevented the payment of Allman’s final compensation, resulting in a violation of the IWPCA and
tortious interference with Allman’s employment contract rights.

Cipicchio has responded to Allman’s amended complaint by filing a motion to dismiss for
lack of personal jurisdiction, which the court now addresses.

II. STANDARD OF DECISION

Once a defendant has challenged a court’s exercise of personal jurisdiction, through a motion
to dismiss for lack of personal jurisdiction, the plaintiff has the burden of demonstrating that the
court’s exercise of personal jurisdiction over a defendant is proper. See RAR, Inc. v. Turner Diesel,
Ltd., 107 F.3d 1272, 1276 (7th Cir. 1995). “In deciding a motion to dismiss for lack of personal
jurisdiction, the court may receive and consider affidavits from both parties.” Gl: Kem
Corp., 930 F, Supp. 332, 337 (N.D. Ill. 1996) (citing Turnock v, Cope, 816 F.2d 332, 333 (7th
Cir.1987)). “The court resolves factual disputes in the pleadings and affidavits in favor of the
plaintiff, but takes as true facts contained in the defendant’s affidavit that remain unrefuted by the
plaintiff.” Id, (citing Nelson v. Park Industries, Inc,, 717 F.2d 1120, 1123 (7th Cir.1983)).

Ill. DISCUSSION

“A federal district court exercising diversity jurisdiction has personal jurisdiction, of course,

‘only if a court of the state in which it sits would have such jurisdiction.” RAR, Inc. v. Turner



In fact, Cipicchio has never had any contact with Allman, whether by way of telephone, mail, or
electronic communication. The actions of Cipicchio cannot be said to indicate that he “purposefully
availed” himself to I!linois. Viewed along a “minimum contacts” spectrum, the contact between
Cipicchio and Illinois is virtually non-existent and completely unrelated to Allman’s claims for
relief. This court cannot say that Cipicchio could have reasonably anticipated being haled into court
in Illinois, as a result of performing his duties for WorldCom outside of Illinois.

In short, Allman’s syllogism based on the text of the IWPCA proves too much, and ignores
the lessons of International Shoe and its progeny. Therefore, the court finds that Allman has failed
to meet his burden of demonstrating that the court’s exercise of personal jurisdiction over Cipicchio
is proper as to Counts I and II of the amended complaint.

B. Allman’s Tortious Interference with Contract Claim for Relief

Allman’s alternative argument for subjecting Cipicchio to the personal jurisdiction of a court
in Ilinois is premised on the contention that Cipicchio’s conduct qualifies as a tortious act, thereby
subjecting Cipicchio to Illinois’ long-arm statute, 735 Ill. Comp. Stat. 5/2-209(a)(2) (2003).

As indicated above, since the three inquiries may be collapsed into one, with an analysis of
whether the exercise of personal jurisdiction would violate the United States constitutional law due
process requirements as the pivotal inquiry, the court will analyze whether the contacts of Cipicchio
with Illinois satisfy the requirements of federal due process. See Klump, 71 F.3d at 1371.

At bottom, Allman’s alternative argument for personal jurisdiction reduces itself to an
argument that personal jurisdiction is proper because Allman was injured in Illinois as a result of a

decision made outside of Illinois that involved Cipicchio. To support this argument, Allman relies

on the well-known case of Gray v. American Radiator and Standard Sanitary Corp., for the


To establish that such “minimum contacts” have been established, “[i]t is essential in each case that
there be some act by which the defendant purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v.
Denckla, 357 U.S. 235, 253 (1958). In determining whether sufficient “minimum contacts” exist,
courts consider whether a defendant could “reasonably anticipate being haled into court” in Illinois.
See World-Wide Volkswagen Corp, v. Woodsen, 444 U.S. 286, 297 (1980). This requirement is
satisfied when the defendant intentionally directs his activities at forum state residents and the
litigation arises from injuries allegedly caused by those activities. See Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474 (1985).
A, Allman’s WPCA Claim for Relief

One of Allman’s arguments for subjecting Cipicchio to the personal jurisdiction of a court
in Illinois is premised on the Illinois Wage Payment and Collection Act, which provides, inter alia:
“Any officers of a corporation or agents of an employer who knowingly permit such employer to
violate the provisions of this Act shall be deemed to be the employers of the employees of the
corporation.” 820 Ill. Comp. Stat. 115/13 (2003). Allman argues that because Cipicchio knowingly
permitted WorldCom to withhold Allman’s final compensation, Cipicchio is deemed to be Allman’s
employer under the IWPCA, and therefore subject to personal jurisdiction in Illinois because
WorldCom would be subject to personal jurisdiction in Illinois. However, the court cannot accept
Allman’s personal jurisdiction syllogism in light of existing federal due process jurisprudence.

The present case is virtually indistinguishable from other cases decided in this district dealing
with the IWPCA and the issue of personal jurisdiction over non-resident officers and directors of

corporations, In McMurray v. Improvenet, Inc., No. 00 C 7137, 2001 WL 561376 *1 (N.D. Ill. May


Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997) (citing Klump v. Duffus, 71 F.3d 1368, 1371 (7th

Cir. 1995). This federal district court, sitting in diversity, will have personal jurisdiction over a non-
resident defendant only where: 1) Illinois statutory law properly grants jurisdiction; 2) the exercise
of personal jurisdiction would not violate Illinois constitutional law due process requirements; and
3) the exercise of personal jurisdiction would not violate the United States constitutional law due
process requirements. See Central States, Southeast and Southwest Areas Pension Fund v. Reimer
Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000).

In this case, the three inquiries may be collapsed into one, with an analysis of whether the
exercise of personal jurisdiction would violate the United States constitutional law due process
requirements as the pivotal inquiry. See Klump, 71 F.3d at 1371 (indicating “if the contacts between
the defendant and I!linois are sufficient to satisfy the requirements of due process, then the
requirements of both the Illinois long-arm statute and the United States Constitution have been met,
and no other inquiry is necessary”); see also Rollins v. Ellwood, 565 N.E.2d 1302, 1315 (ll. 1990)
(indicating “Tllinois’ long-arm statute . . . may well restrict the power that the courts of this State
have to bring nonresidents before them to a greater extent than do the Federal due process clause and
the ‘minimum contacts’ standard developed over the years by the [United States] Supreme Court”);
see also RAR, 107 F.2d at 1276 (indicating that “Illinois courts have given little guidance as to how
state due process protection differs from federal protection in the context of personal jurisdiction”).

Aselucidated by Intemational Shoe Co. v. Washington, 326 U.S. 310 (1945) and its progeny,
to satisfy the requirements of federal due process, a non-resident defendant must have established
sufficient “minimum contacts” with the forum state such that the exercise of jurisdiction does not

offend traditional notions of fair play and substantial justice. See generally RAR, 107 F.2d at 1277.



and directors of the corporation filed motions to dismiss for lack of personal jurisdiction. Id, at *2.
Two of the defendants, H. Kaufman and A. Kaufman, had only visited Illinois a few times a year to
transact unrelated business, and the court dismissed them from the complaint. Id. at *3. The two
remaining defendants, Price and Horton, visited Illinois for the purpose of meeting with the plaintiff,
and subsequently terminated his employment at that meeting. Id, at *4. The court indicated that by
traveling to Illinois to terminate the plaintiff's employment, Price and Horton performed an act
which caused an injury in Illinois, thus subjecting them to the personal jurisdiction of the court to
answer the plaintiff's claim of tortious interference with contract. Id, As to the plaintiff's claim of
violations of IWPCA, the court indicated: “[The IWPCA count] arises out of a wage payment
dispute, not a wrongful termination action. Thus, under 5/2-209(a)(1), this court should not exercise
personal jurisdiction if [the IWPCA count] were standing alone.” Id, However, the court subjected
Price and Horton to personal jurisdiction in Illinois on the rationale that since they were subject to
personal jurisdiction as to the tortious interference with contract claim, their “burden does not
substantially increase by this court asserting jurisdiction over them as to [the [WPCA count].” Id,
The court also rejected the arguments of Price and Horton that the fiduciary shield doctrine should
prevent the court from exercising personal jurisdiction over them, based on the finding that Price and
Horton were acting to serve their personal interests. Id,

In the present case, as compared with McMurray and Krok, there are even fewer contacts
between Cipicchio, Allman and Illinois. It is undisputed that Cipicchio has never lived in Illinois,
never owned property in Illinois, never paid taxes in Illinois, and never been involved in any
litigation in Illinois. Cipicchio’s only contacts with Illinois occurred in June of 2000 when he

attended a conference in Illinois, and Cipicchio did not have any contact with Allman at that time.


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Jud; Sitting Judge If Oth
or Magistrate Judge Charles R. Norgle, Sr. than Assigned Judge
CASE NUMBER 02 C 7442 DATE 4/3/2003
CASE Allman vs. McGann, et al.
TITLE
[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]

Defendant Michael Cipicchio’s motion to dismiss for lack of personal jurisdiction

DOCKET ENTRY:
ql) a Filed motion of [ use listing in “Motion” box above.]
(2) o Brief in support of motion due
(3) oO Answer brief to motion due. . Reply to answer briefdue____.
(4) im Ruling/Hearingon______ssetfor_—_at
(5) oO Status hearing[held/continued to] {set for/re-set for]on__—=sset for at
(6) oO Pretrial conference[held/continued to] [set for/re-set for]on__ssetfor_——sat_-
(1) o Trialfset for/re-set for]on ss at_—
(8) Oo [Bench/Jury trial] [Hearing] held/continuedto__at
(9) gq This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) OlLocal Rule 41.1 CIFRCP41(a)(1) CIFRCP41(a)(2).
ao [Other docket entry] Defendant Michael Cipicchio’s motion to dismiss for lack of personal
jurisdiction [10-1] is granted. See attached.
Leal RAghidk
dlp [For further detail see order attached to the original minute order.}

NO notices required, advised in open court

No notices required.

Notices mailed by judge's staff.

APR

Notified counsel by telephone,
x Docketing to mail notices.
Mail AO 450 form,

1ynoa sonisia sin

Copy to judge/magistrate judge.
ony) CaM
courtroom 10:8 Fa =k
deputy’s :
initials — < ‘ —
Dateltimie recéived in
central Clerk's Office smallng deputy ‘tile



Allman’s claims for relief were sufficiently related to Cipicchio’s contacts with Illinois, this court
would decline to exercise personal jurisdiction over Cipicchio based on the fiduciary shield doctrine.
“The fiduciary shield doctrine is a judicially created principle that precludes the exercise of

personal jurisdiction over non-resident corporate agents or employees who are acting in the forum

state in their role as corporate agents or employees.” Sonja Larsen, Validity, Construction, and
Application of “Fiduciary Shield” Doctrine - Modern Cases, 79 A.L.R.S5th 587 (2000), The fiduciary

shield doctrine is premised on the rationale that it is unfair to force non-resident corporate agents or
employees to defend suits brought in a forum where their only relevant contacts are acts performed
not for personal benefit but for the benefit of their employer. Id, The Illinois Supreme Court
recognized the fiduciary shield doctrine in Rollins v. Ellwood, 565 N.E.2d 1302, 1317-18 (Ill. 1990).
In explaining the fiduciary shield doctrine, and its legal underpinnings, the Illinois Supreme Court
indicated:

Thus, we find it to be unfair and unreasonable, under Illinois’ due process clause and

the tenets of our concept of the jurisdictional power of the Illinois courts, to assert

personal jurisdiction over an individual who seeks the protection and benefits of

Illinois law, not to serve his personal interests, but to serve those of his employer or

principal.
Id, at 1318. As interpreted by the federal courts in the Northern District of Illinois, “[t]here are three
basic limitations on the fiduciary shield doctrine: where the defendant was motivated in part or solely
by personal interest, as opposed to the interests of the corporation; where ‘the defendant is the alter
ego of the entity for which he is.a fiduciary;’ and, possibly, where the defendant was a director or
officer who had discretion regarding whether the contacts occurred.” Robinson v. Sabis Education
Systems, Inc., No. 98 C 4251, 1999 WL 412642 (N.D. Ill. May 28, 1999) (citations omitted).

Allman has proffered nothing to refute Cipicchio’s affidavit, which indicated that Cipicchio ,

11


proposition that “the place of a wrong is where the last event takes place which is necessary to render
the actor liable.” 176 N.E.2d 761, 763 (Ill. 1961). However, this argument misses later development
in personal jurisdiction in the Illinois courts. The Illinois Supreme Court has explicitly rejected the
contention that the Illinois long-arm statute applies to non-resident defendants whose only contact
with Illinois is allegedly causing economic harm within the state. See R.W. Sawant & Co. v, Allied
Programs Corp., 489 N.E.2d 1360, 1364 (Ill. 1986) (indicating “an economic loss which is felt in
Illinois is not sufficient to confer jurisdiction in our courts when the acts occurred outside of
Illinois”); see also Green v. Advance Ross Electronics Corp., 408 N.E.2d 1007, 1010 (Ill. App. 1980)
(“While there may ultimately have been an indirect economic impact in Illinois, we do not believe
that this type of tortious consequence, without more, constitutes sufficient contact with this state.”).

Furthermore, whether Illinois statutory law properly grants jurisdiction is only one part of the
inquiry, which at bottom must meet the requirements of federal due process. As indicated above,
the actions of Cipicchio cannot be said to indicate that he “purposefully availed” himself to Illinois.
When viewed along a “minimum contacts” spectrum, the contact between Cipicchio and Illinois is
virtually non-existent and completely unrelated to Allman’s claims for relief. This court cannot say
that Cipicchio could have reasonably anticipated being haled into court in Illinois as a result of
performing his duties for WorldCom outside of Illinois.

Therefore, the court finds that Allman has failed to meet his burden of demonstrating that the
court’s exercise of personal jurisdiction over Cipicchio is proper as to Count III of the amended
complaint.

C. Fiduciary Shield Doctrine

Even accepting Allman’s syllogism and alternative argument, and assuming arguendo, that

10


22, 2001) an Illinois employee filed suit against his former employer and the president of that
corporation, both non-residents of Illinois, alleging violations of the IWPCA and tortious
interference with contract. The president of the corporation filed a motion to dismiss for lack of
personal jurisdiction, which the court granted. Jd, at *2, The president of the corporation had visited
Illinois approximately four times on behalf of the corporation, once meeting with the plaintiff. Id.
at*3. In addition, the president of the corporation had communicated with the plaintiff via telephone
on numerous occasions. Jd, The court stated that the single meeting with the plaintiff was “too
tenuous to justify asserting personal jurisdiction over [the president of the corporation].” Id, In -
addition, the numerous telephone contacts would not support the exercise of personal jurisdiction
because the substance of those communications revealed nothing about the plaintiff s specific claims
for relief. Id, In sum, the court indicated: “We cannot say that, through these limited contacts, [the
president of the corporation] could reasonably anticipate being required to defend himself here.” Id,
Additionally, the court indicated that assuming that minimum contacts could be established, “we
would lack jurisdiction over [the president of the corporation] because he is protected by the
‘fiduciary shield’ doctrine.” Id,

In Krok v. Burns & Wilcox, Ltd., No. 98 C 5902, 1999 WL 262125 *1 (N.D. Ill. April 16,

1999) an Illinois employee filed suit against his former employer and four officers and directors of
that corporation, all non-residents of Illinois, alleging violations of the IWPCA, tortious interference
with contract, and unjust enrichment. The four non-resident officers and directors of the corporation
included: H. Kaufman, former owner of the corporation; A. Kaufman, Executive Vice President,

Director, and current owner of the corporation; Price, Senior Vice President of the corporation; and

Horton, Executive Vice President and Director of the corporation. Id, The four non-resident officers



This court initially dismissed the present case for failure to properly plead subject matter
jurisdiction, Thereafter, Allman filed an amended complaint, properly pleading subject matter
jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). In Count I of the amended complaint, Allman
contends that the Defendants’ failure to pay his final commission resulted in a violation of the
Illinois Wage Payment and Collection Act, 820 Ill. Comp. Stat. 115/1 ef seg. (“IWPCA”). Count
TI of the amended complaint seeks attorney fees under the IWPCA. Lastly, in Count III of the
amended complaint, Allman contends that the Defendants tortiously interfered with his employment
contract rights.

Returning to the facts underlying Allman’s claims for relief, in regard to commissions,
WorldCom maintained a commissions bank account for Allman in WorldCom’s Commissions
Accounting department. WorldCom regularly provided Allman with commissions reports detailing
the amounts held in Allman’s commissions account. Under the Comp Plan, Allman would receive
a maximum of $25,000 per month from commissions, with any amount of commission in excess of ,
$25,000 to be held in Allman’s commissions bank account. In the event that Allman’s commissions
for a given month were less than $25,000, funds would be taken out of Allman’s commissions
account and applied to assure a monthly commission of $25,000. Furthermore, in the event of
termination, Allman would continue to receive a maximum of $25,000 per month from commissions
until his commissions account was exhausted.

Cipicchio, a citizen of the State of Mississippi, was, and is, employed by MCI as Vice
President of Corporate Processing Services. Cipicchio performs his duties on behalf of WorldCom
from an office located in Mississippi. In that position Cipicchio has responsibility for administering

WorldCom’s compensation plans and commission accounting. Prior to Allman’s resignation,


Comp Plan”), Allman resigned his employment with WorldCom effective November 2, 2001.
Allman alleges that at the time of his resignation, his commissions report indicated that he was owed
$700,339.49, in addition to unreported commissions for October and November of 2001, an amount
which WorldCom has not paid.

Initially, in order to seek redress for his grievance, Allman filed suit against WorldCom. This
case was filed in the United States District Court for the Northern District of Illinois, Eastern
Division, and was assigned to the Honorable Matthew F. Kennelly. See Allman v. WorldCom, Inc.,
docket number 01 C 9741. In that case, WorldCom filed a motion to dismiss and compel arbitration.
WorldCom’s motion to dismiss and compel arbitration was rendered moot as a result of Allman’s
motion to voluntarily dismiss the case pursuant to Federal Rule of Civil Procedure 41(a). Thereafter,
Allman proceeded to arbitrate his claim; however, as a result of WorldCom’ petition for bankruptcy
pursuant to Chapter 11 of the Bankruptcy Code, the arbitration proceedings were stayed. Impatient
with the progress of his arbitration as a result of the bankruptcy stay, Allman filed the present case
against various individual officers of WorldCom, including Kevin D. McGann, Michael Cipicchio,

and Scott D. Sullivan (collectively “the Defendants”).?

2

At a status hearing on April 1, 2003, counsel for Allman advised the court that Defendant,
Scott D. Sullivan was served with a summons and a complaint on March 17, 2003. Counsel for
Allman also advised the court that Defendant, Kevin D, McGann had not been served.

The court is deciding the matter before it, as to Defendant, Michael Cipicchio, solely on
jurisdictional grounds. As such, the court is not addressing the appropriateness of the complaint in
light of the bankruptcy court’s stay of Allman’s arbitration proceedings or in light of Local Rule
40.4, dealing with reassignment of related cases. In light of this opinion, Allman should be diligent
in pursuing this matter as to the remaining Defendants. See Fed. R. Civ. P. 11; see also Berwick

Grain Co., Inc, v. Illinois Dept, of Agriculture, 217 F.3d 502, 504 (7th Cir.2000) (per curiam)
(discussing Rule 11 and collecting cases).



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
James Allman, )
) No. 02 C 7442
Plaintiff, )
)
)
Vv. ) Judge Charles R. Norgle, Sr.
)
Kevin D. McGann, Michael Cipicchio, )
and Scott D. Sullivan, )
) Oe is
Defendants, ) y*
Na
OPINION AND ORDER

Before the court is Defendant, Michael Cipicchio’s (“Cipicchio”) motion to dismiss Plaintiff,
James Allman’s (“Allman”) complaint for lack of personal jurisdiction brought pursuant to Federal
Rule of Civil Procedure 12(b)(2). For the following reasons, Cipicchio’s motion is granted.
I. BACKGROUND’

Allman is seeking to recover commissions allegedly owed for work performed as an employee
of a subsidiary of MCI WorldCom Network Services, Inc. (“WorldCom”). Allman, a citizen of the
State of Illinois, began working for a subsidiary of WorldCom in March of 1991. Allman was
employed as a major account executive and was compensated for his services by way of salary,

commissions and bonuses, as set forth in MCI’s Major Account Executive Compensation Plan (“the

The court takes the facts from Allman’s amended complaint and the parties’ briefs and supporting
affidavits on the present motion to dismiss for lack of personal jurisdiction. Disputed facts are noted
in the text.

oe,

/6



did not benefit or serve his personal interests by causing an audit to be performed on Allman’s
commissions account and freezing Allman’s commission bank account. Allman’s allegations against
Cipicchio, and the Defendants generally, are devoid of specific facts. Allman simply indicated that
Cipicchio “knowingly” violated the IWPCA, and “purposefully” and “maliciously” interfered with
Allman’s employment contract rights. As was aptly stated by the district court in McMurray: “The
adverbs ‘willfully’ and ‘maliciously’ are too general to describe a personal interest.” 2001 WL
561376 at *4. Further, as a vice president in a national corporation, it cannot be argued that
Cipicchio is the alter ego of WorldCom. In addition, Allman does not allege that Cipicchio had
discretion whether the contacts occurred. In fact, Cipicchio had no relevant contacts with Illinois.
Also, Cipicchio’s actions were authorized by the Comp Plan, which Allman entered into with
WorldCom, and cannot be said to be anything other than Cipicchio performing his duties as an
employee of WorldCom in Mississippi.

Furthermore, judicial acceptance of Allman’s personal jurisdiction arguments would result
in a myriad of officers and directors of corporations being forced to defend themselves in litigation
from Seattle to Key West, and every point in between where their corporations transact business,
irrespective of their individual contacts with each forum state. Despite the technological advances
made that enable the business world to span many borders, such a result would not be consistent with

current conceptions of due process guaranteed by the Fourteenth Amendment.

12