Werhahn argues that even if all of the aforementioned allegations are true, they are still
not sufficient for personal jurisdiction because they demonstrate nothing more than an affiliation
that is inherent in every parent-subsidiary relationship. See Andresen v. Diorio, 349 F.3d 8 (1st
Cir. 2003); Papa v. Katy Indus., Inc., 166 F.3d 937 (7th Cir. 1999); Mylan Labs., Inc. v. Akzo,
N.V., 2 F.3d 56 (4th Cir, 1993); Moore v. The St. Paul Cos., Inc., NO. CIV. A. 94-1329, 1995
WL 11187 (D.N.J. Jan. 3, 1995); Huang v. Sentinel Govt. Sec., 657 F.Supp. 485 (S.D.N.Y.
1987). However, the facts in each of these cases can be distinguished from the factual allegations
here.

In Andresen, the Fourth Circuit held that an out-of-state parent corporation’s alleged
financial and policy control over its Massachusetts subsidiary was not sufficient for personal
jurisdiction, absent a showing that the parent’s control was so pervasive and detailed as to invoke
sham or alter ego labels. 349 F.3d at 12, All that the plaintiff presented in support of personal
jurisdiction was evidence that the subsidiary has employed an interim president who formerly
worked for the parent and that the parent was generally aware of its subsidiary’s business plans.
Id. at 12-13. However, the facts here may demonstrate Werhahn’s intimate involvement with the
day-to-day operations of D.A. Stuart, including having a current Board member and family
member twice serve as interim CEO, repeatedly meeting with D.A. Stuart personnel (including
Britton) regarding the management and operations of the company, and making major decisions
regarding capital investments and operations. Although these facts may not serve as the “basis
for [Britton’s underlying] claim” because of the 300-day statute of limitations for filing an EEOC
charge, see Rauen v. United States Mfg. Ltd. Partnership, 161 F.Supp.2d 899, 907 (N.D. Ill.

2001), they are certainly relevant for purposes of whether to pierce D.A. Stuart’s corporate veil.


Accordingly, I find that Werhahn is subject to personal jurisdiction here. However, should
Werhahn desire to move for reconsideration, I hereby grant it leave to do so, but caution that any
further proceedings on this matter will necessitate a period of discovery, further briefing, and a

likely hearing on the issue.

For the reasons above, Werhahn’s Motion to Dismiss is DENIED.

ENTER:

\ ~ ror
James B. Zagel U
United States Distti ge

DATE: _2% Que 2003


In this case, Britton may establish personal jurisdiction over Werhahn as the parent
company of its subsidiary D.A. Stuart by showing that Werhahn “actually controls the activities
of the subsidiary.” Garshman v. Universal Resources Holding, Inc., 641 F.Supp. 1359, 1364
(D.N.J. 1986), aff'd, 824 F.2d 223 (3rd Cir. 1987). I must then look at the totality of the
circumstances, id., to determine whether D.A. Stuart is the “alter ego” of Werhahn, Clark v.
Matsushita Elec. Indus. Co., Ltd., 811 F.Supp. 1061, 1067 (M.D.Pa. 1993).! Here, Werhahn
argues that Britton has failed to make her required showing.

Britton alleges that at separate times in 1996 and 1998, Michael Werhahn, a member of
the Werhahn Board of Directors, served as chief executive of D.A. Stuart until a replacement was
decided upon. She also alleges that while employed at D.A. Stuart, she had several face-to-face
meetings with Michael Werhahn semi-annually upon his and other Werhahn Board members’
visits to D.A. Stuart’s Chicago manufacturing facility. During the meetings, Michael Werhahn
allegedly informed her of how much additional machinery and equipment was being invested in
D.A. Stuart and inquired of her what new equipment she had purchased, what equipment she
needed, whether she had enough staff working under her supervision, and how the
interrelationship between quality control and production was working out. Britton further alleges
that she conducted inspection tours for Werhahn throughout the laboratory and plant, and that she
met with Michael Werhahn at D.A. Stuart’s Philadelphia plant in 1999. Finally, she claims that
Werhahn made the decision to close D.A. Stuart’s Philadelphia plant (based in part on

information collected from her) and the decision to close D.A. Stuart’s Los Angeles plant.

' In ruling on a motion to dismiss for lack of personal jurisdiction, I may consider matters
outside the pleadings, such as affidavits and other materials submitted by the parties. Mcllwee v.
ADM Indus., Inc., 17 F.3d 222, 223 (7th Cir. 1994).

3


In Papa, the Seventh Circuit held that conditions were not present for “piercing the
corporate veil” when a parent and its subsidiary had not neglected their respective corporate
forms, 166 F.3d at 943. Unfortunately, Papa is scarce on factual details, and so a comparison
with the present case is not possible, Nonetheless, it may be possible to conclude here that
Werhahn neglected its and D.A. Stuart’s respective corporate forms through its alleged intimate
involvement with the day-to-day operations of D.A. Stuart. Therefore, this case is also
distinguishable.

In Mylan Labs., Inc., a Maryland court held that it did not have personal jurisdiction over
a foreign parent corporation, even though the parent’s third-tier subsidiary conducted business in
Maryland, where there were no common officers or directors, corporate functions were rigidly
separated, the parent did not exert control over management or operating policies of the
subsidiary, and the parent was not authorized to conduct any business in the United States,
though it indirectly owned 100 percent of the subsidiary’s stock and the alleged criminal acts of
the subsidiary’s employees were allegedly done for the benefit of the parent, where there was no
evidence of an intent to benefit the parent or of the parent’s knowledge. Jd. at 63. In affirming
the dismissal of the company, the Fourth Circuit noted that it could “[not] say that the district
court erred in holding that the parent-subsidiary relationship between [the companies was]
insufficient to justify the exercise of personal jurisdiction over (the parent] by the Maryland
courts.” Jd, at 63. Unlike in Mylan Labs., Inc., however, the factual allegations here may
demonstrate that Werhahn and D.A. Stuart shared at least one common officer, that corporate
functions were not rigidly separated, and that Werhahn exerted significant control over the

management or operations of D.A. Stuart.


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Notified counsel by telephone.
ov | Docketing to mail notices,

sro Megitrate Judge James B. Zagel “than Assigned Judge
CASE NUMBER 03 C 6493 DATE 12/23/2003
CASE BRITTON vs. WERHAHN KG
TITLE
{In the following box (e) 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.)
DOCKET ENTRY:
qQ) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) Oo Answer brief to motion due____. Reply to answer brief due__.
(4) a Ruling/Hearing on setfor___at
(5) Oo Status hearing[held/continued to] [set for/re-set for]on__——ssetfor Saat
(6) Qo Pretrial conferencefheld/continued to] [set for/re-set for]on__—ssetfor__———sat__.
(7) Oo Trial{set for/re-set for] on___—_—sat
(8) Oo [Bench/Jury trial] [Hearing] held/continuedto___—_aat
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OlLocal Rule 41.1 OFRCP41(a)(1) CFRCP41(a)(2).
(0) [Other docket entry] Defendant Werhahn KG’s motion to dismiss is denied.
(41) [For further detail see order attached to the original minute order]
No notices required, advised in open court. Document’
‘No notices required. vmper of aisea = Number,
Notices mailed by judge's staff. DEC 24 2003

Mail AO 450 form.
Copy to judge/magistrate judge. yunod Loustsia
pw | Serge nak Ha 62338

initials

ae cee



In Moore, a New Jersey court held that an out-of-state parent corporation's Chief
Administrative Officer’s multiple visits to the subsidiary’s New Jersey office, where the
subsidiary was headquartered, and membership on the subsidiary’s board of directors along with
the fact that six of the sixteen members of the subsidiary’s board of directors were officers of the
parent corporation and that the parent and subsidiary were in constant contact on matters of
operation, policy, and reporting profits to the corporate parent were not sufficient to establish the
personal jurisdiction of either the parent corporation or the CAO personally because the court
found that it “must presume that both [the CAO’s] directorship and his visits were connected to
his duties as an executive of the parent corporation in the normal course of overseeing its
subsidiary.” 1995 WL 11187, at *6-7. Unlike in Moore, however, I cannot presume based on
the factual allegations here that Michael Werhahn’s and the company’s involvement with D.A.
Stuart were connected with their “duties . . . in the normal course of overseeing [a] subsidiary.”
To the contrary, the facts may demonstrate significant control over the management or operations
of D.A. Stuart or at least much more than mere oversight.

Finally, in Huang, a New York court held that no personal jurisdiction existed over a
British parent corporation where the parent corporation’s CFO visited the subsidiary’s facility in
New York, during which he approved the subsidiary’s entry into a new business. Id. at 490.
Once again, however, the facts here may demonstrate much more significant involvement than
simple visits and mere approval of new business endeavors.

In sum, treating Britton’s factual allegations as true, she has demonstrated enough facts
showing that Werhahn may have controlled D.A. Stuart over the last several years, certainly

enough facts (if ultimately true) to possibly justify piercing D.A. Stuart’s corporate veil.


UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS DOCKEr,
EASTERN DIVISION D ED
1 EC 24 a
003
ALVINA BRITTON,
Plaintiff, |
v. No. 03 C6493

Judge James B. Zagel
D.A. STUART COMPANY, a Delaware
Corporation; and WILH. WERHAHN KG, a
Federal Republic of Germany corporation,

Defendants,
MEMO. DU ON AND ORDER

Plaintiff Alvina Britton is a former employee of Defendant D.A. Stuart Company, a
Delaware corporation, whose headquarters are located in Warrenville, Ilinois. Britton alleges,
among other things, that D.A. Stuart discriminated against her because of her race by offering her
a promotion which would have required her to relocate from Chicago to Detroit. D.A. Stuart is a
wholly-owned subsidiary of Safeway GMBH, a German corporation that is owned by Defendant
Wilhelm Werhahn KG, also a German corporation. Werhahn does not have officers anywhere in
Illinois or elsewhere in the United States, nor is it licensed to conduct business in Ilinois or
anywhere else in the United States. Werhahn also has no agent for service of process, owns no
property, and maintains no bank accounts or telephone listing in Illinois or the United States.
Britton has never been employed by, or provided services to, Werhahn.

Pursuant to Federal Rule of Civil Procedure 12(b)(2), Werhahn moves to dismiss itself
from this lawsuit for lack of personal jurisdiction. For purposes of a 12(b)(2) motion, all well-
pleaded allegations in the complaint are treated as true, Tobin for Governor v. Illinois State Bd.

of Elections, 268 F.3d 517, 521 (7th Cir. 2001), and Britton has the burden of proving the


existence of personal jurisdiction, RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.
1997). However, if any material facts are in dispute, I must hold an evidentiary hearing to
resolve them, at which point Britton must prove what is alleged. Until such a hearing takes
place, Britton need only make out a prima facie case of personal jurisdiction, Hyatt Int'l Corp. v.
Coco, 302 F.3d 707 (7th Cir. 2002).

To be subject to personal jurisdiction, a nonresident defendant must have “minimum
contacts” with the forum state and must have “purposefully availed itself” of the privilege of
conducting activities within the forum state. International Shoe Co. v. Washington, 326 U.S.
310, 315 (1945). “Crucial to the minimum contacts analysis is showing that the defendant
should reasonably anticipate being haled into court [in the forum state] because the defendant has
purposefully avail[ed] itself of the privilege of conducting activities there.” RAR, Inc., 107 F.3d
at 1277 (quotations omitted). The “purposeful availment” requirement ensures that a nonresident
defendant will not be forced to litigate in a jurisdiction as a result of random contacts with the
forum or the unilateral activity of another party. Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474-75 (1985). Exercise of personal jurisdiction over a nonresident defendant must be
reasonable and must not violate traditional notions of fair play and substantial justice. Id. at 476.
Factors which I may consider in determining the reasonableness of exercising personal
jurisdiction over a nonresident defendant include the state’s interest in providing a forum to the
plaintiff, the burden of defense on the defendant, the burden of prosecution elsewhere on the
plaintiff, the extent to which the claim is related to the defendant’s local activities, and avoidance
of a multiplicity of suits. Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S.

102, 115 (1987).