NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 16-3572

_____________

MARK IV TRANSPORTATION & LOGISTICS,

 Appellant

v.

LIGHTNING LOGISTICS, INC.; TRAVELLER LOGISTICS, INC.; 

JOHN GREGORY O'RIORDAN; CROSSTOWN COURIER, INC.;

SCOTT EVATT*

_____________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civ. No. 2-09-cv-06480)

District Judge: Honorable Esther Salas

______________

Submitted Under Third Circuit L.A.R. 34.1(a)

March 27, 2017

______________

Before: AMBRO, VANASKIE, and RESTREPO, Circuit Judges

(Opinion Filed: August 25, 2017)

 

* Mark IV Transportation & Logistics is a New Jersey corporation whose correct 

name is “Mark IV Transportation & Logistics, Inc.” Lightning Logistics was a 

Tennessee limited liability company whose correct name is “Lightning Logistics, LLC.”
2

___________

OPINION**

___________

VANASKIE, Circuit Judge.

This appeal arises out of the failure of the now-defunct Lightning Logistics, LLC 

(“Lightning”) to pay for delivery services rendered by Appellant Mark IV Transportation 

& Logistics, Inc. (“Mark IV”). The issue presented by Mark IV is whether grounds exist 

to pierce Lightning’s corporate veil and impose alter ego liability to establish personal 

jurisdiction over defendants who are residents of Tennessee. Those defendants are 

Appellees: Scott Evatt, former President of Lightning; John Gregory O’Riordan, a former

owner of Lightning; and Crosstown Courier, Inc. (“Crosstown”), Evatt’s current 

company. 

The District Court held that Lightning was not a “sham or dummy” entity such 

that its corporate veil should be pierced and alter ego liability imposed. Mark IV Transp. 

& Logistics, Inc. v. Lightning Logistics, LLC, 2014 WL 7073088, *7 (D. N.J. Dec. 15, 

2014). The District Court then granted Evatt and Crosstown’s motion to dismiss for lack 

of personal jurisdiction. The District Court also, after requesting a supplemental letter 

brief and holding a hearing on the matter, dismissed the claims against O’Riordan for 

lack of personal jurisdiction. For the following reasons, we will affirm the orders of the 

District Court. 

 

** This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 

does not constitute binding precedent.
3

I.

Mark IV is a New Jersey corporation that provides delivery services. Lightning 

was a Tennessee LLC that provided logistical services to commercial shippers, including 

arranging for delivery of packages by companies like Mark IV. Lightning was owned 

and operated by Evatt and O’Riordan, both of whom are Tennessee residents. Evatt 

currently owns and operates Crosstown, another Tennessee corporation that provides 

courier services. In 2008, Mark IV agreed to provide “last mile” delivery services in 

New Jersey for Lightning.

1 Mark IV continued to provide delivery services for Lightning 

until August of 2009. At that time, Mark IV was owed approximately $100,000 under its 

agreement with Lightning. 

In December of 2009, Mark IV commenced this action against only Lightning. In 

April of 2010, Lightning was administratively dissolved by the State of Tennessee. In 

February of 2011, Mark IV filed an amended complaint, adding as defendants Evatt, 

O’Riordan, Crosstown, and Traveller Logistics, Inc. (“Traveller”), the successor 

corporation to Lightning. The District Court entered default judgment against Lightning 

and then default judgment against Traveller as Lightning’s successor-in-interest. 

Traveller itself was later dissolved. Mark IV then sought to impose personal liability on 

Evatt, O’Riordan, and Crosstown as alter egos of Lightning. 

 

1

“Last mile” delivery services consists of delivering packages over the final leg of 

a shipment, such as from an airport or handling facility to the package’s ultimate 

recipient. 
4

After permitting discovery, the District Court determined that Mark IV had failed 

to present evidence sufficient to warrant piercing the corporate veil of Lightning. 

Because personal jurisdiction could be asserted over Evatt, O’Riordan, and Crosstown

only if the liability of Lightning could be imputed to them, the District Court dismissed 

those parties for lack of personal jurisdiction.2 Mark IV filed this timely appeal.

II.

The District Court had jurisdiction pursuant to 28 U.S.C. § 1332, and our 

jurisdiction arises under 28 U.S.C. § 1291. We exercise plenary review over the District 

Court’s dismissal for lack of personal jurisdiction. D’Jamoos ex rel. Estate of Weingeroff 

v. Pilatus Aircraft Ltd., 566 F.3d 94, 101 (3d Cir. 2009). 

III.

Under the New Jersey Limited Liability Company Act, “[t]he law of the state or 

other jurisdiction under which a foreign limited liability company is formed governs . . . 

the liability of a member as member and a manager as manager for the debts, obligations, 

or other liabilities of the company.” N.J.S.A. 42:2C-57(a)(2). Accordingly, as Lightning 

was a Tennessee LLC, Tennessee law governs Mark IV’s alter ego theory of liability. 

Generally, under Tennessee law, members, owners, employees, or other agents of an

LLC have no personal liability for the debts or obligations of the company. See Tenn. 

 

2 O’Riordan appeared pro se before the District Court and filed an answer to Mark 

IV’s Amended Complaint. Although O’Riordan was named as a defendant in the Second 

Amended Complaint, he filed no answer or any other response. Mark IV then moved for 

default judgment against O’Riordan. The District Court denied this motion, however, 

and sua sponte dismissed the claims against O’Riordan. 
5

Code Ann. §§ 48-217-101(a)(l), 48-249-14(a)(l)(B). “To pierce the corporate veil,” and 

impose liability on a member or parent company, “a court must be convinced that the 

separate corporate entity ‘is a sham or a dummy’ or that disregarding the separate 

corporate entity is ‘necessary to accomplish justice.’” CAO Holdings, Inc. v. Trost, 333 

S.W.3d 73, 88 (Tenn. 2010) (quoting Oceanics Sch., Inc. v. Barbour, 112 S.W.3d 135, 

140 (Tenn. Ct. App. 2003)). 

Because “there is a presumption of corporate regularity,” Tennessee courts have 

warned that “[t]he principle of piercing the corporate veil [should] be applied with great 

caution and not precipitately.” Muroll Gesellschaft M.B.H. v. Tenn. Tape, Inc., 908 

S.W.2d 211, 213 (Tenn. Ct. App. 1995). A number of factors are to be assessed in 

determining whether the corporate veil should be pierced, including: 

(1) whether there was a failure to collect paid in capital; (2) whether the 

corporation was grossly undercapitalized; (3) the nonissuance of stock 

certificates; (4) the sole ownership of stock by one individual; (5) the use of 

the same office or business location; (6) the employment of the same 

employees or attorneys; (7) the use of the corporation as an instrumentality 

or business conduit for an individual or another corporation; (8) the diversion 

of corporate assets by or to a stockholder or other entity to the detriment of 

creditors, or the manipulation of assets and liabilities in another; (9) the use 

of the corporation as a subterfuge in illegal transactions; (10) the formation 

and use of the corporation to transfer to it the existing liability of another 

person or entity; and (11) the failure to maintain arms length relationships 

among related entities.

Pamperin v. Streamline Mfg., Inc., 276 S.W.3d 428, 438 (Tenn. Ct. App. 2008) (quoting 

Fed. Deposit Ins. Corp. v. Allen, 584 F. Supp. 386, 397 (E.D. Tenn. 1984)). No one 

factor is conclusive in this analysis, but it is necessary “that the equities substantially
6

favor the party requesting the court to disregard the corporate status.” Trost, 333 S.W.3d 

at 89 (citing Barbour, 112 S.W.3d at 140–41). 

Mark IV argues that the failure of Evatt and O’Riordan to adhere to corporate 

formalities in operating Lightning and Evatt’s alleged misuse of Lightning’s corporate 

funds compel the piercing of its corporate veil. According to Mark IV, Evatt withdrew 

$160,000 from Lightning’s line of credit. This withdrawal left Lightning unable to pay 

Mark IV for the services it rendered pursuant to the contract. Mark IV also notes that 

Lightning leased its office space from Crosstown and, on occasion, shared employees

with the company. We agree with the District Court, however, that, although Lightning 

did operate informally and Evatt did draw on Lightning’s line of credit, the equities do 

not weigh so substantially in Mark IV’s favor that Lightning’s corporate status should be 

disregarded. Trost, 333 S.W.3d at 89.

First, with regard to Lighting’s informal structure, Tennessee does not require 

LLCs to adhere to corporate formalities to maintain their limited liability status. See

Tenn. Code Ann. § 48-217-101(e) (“The failure of an LLC to observe the usual company 

formalities or requirements relating to the exercise of its LLC powers or management of 

its business is not a ground for imposing personal liability on the members, governors, 

managers, employees or other agents of the LLC.”); NVK Spinning Co., LTD. v. Nichols, 

2014 WL 28831, *6 (W.D. Tenn. Jan. 2, 2014) (“Adherence to corporate formalities is 

not required for an LLC to maintain its limited-liability status under the statute.”). Courts 

may consider a failure to adhere to corporate formalities in their veil-piercing analyses, 

but in the absence of other factors, such a failure does not make a business a “sham or 
7

dummy.” Trost, 333 S.W.3d at 88. As President of Lightning, Evatt had broad authority 

to make decisions affecting the business. Misguided decisions typically do not warrant

piercing the corporate veil. 

Evatt’s withdrawal of funds does not require a different result. Courts may pierce 

the corporate veil “when the corporation is liable for a debt but is without funds to pay 

the debt, and the lack of funds is due to some misconduct on the part of the officers and 

directors.” In re Steffner, 479 B.R. 746, 755–56 (Bankr. E.D. Tenn. 2012) (quoting VP 

Bldgs., Inc. v. Polygon Grp., No. M2001–00613–COA–R3–CV, 2002 WL 15634, *4 

(Tenn. App. Jan. 8, 2002). Evatt used Lighting’s line of credit to secure a loan for 

Crosstown, but, as the District Court noted, nothing in the record suggests that the line of 

credit was designated exclusively for paying creditors. In Steffner, the owner of a single 

member LLC transferred funds from the company to another entity he owned just one 

day before a garnishment was served on the LLC. Steffner, 479 B.R. at 753. The 

Bankruptcy Court declined to pierce the LLC’s corporate veil as there was “no evidence . 

. . that the transfer resulted in a permanent inability for [the LLC] to meet its financial 

obligations.” Id. at 757. Here, as in Steffner, the withdrawal did not rise to the level of 

misconduct necessary for disregarding corporate status. Id. at 757. 

The same is true of the sharing of resources and personnel. In Steffner, the 

Bankruptcy Court declined to pierce the LLC’s corporate veil despite the fact that the two 

companies “operated out of the same building . . . and used the same bank, attorneys, and 

accounts.” Id. As was the case in Steffner, Lightning and Crosstown were “formed at 

different times and for different purposes” such that Lightning could not be considered a 
8

“sham or dummy” even if it did rent office space from Crosstown.3 Id. at 757, 756. 

Because the facts do not support piercing Lightning’s corporate veil or the imposition of 

alter ego liability, the District Court properly dismissed the claims against Evatt and 

Crosstown for lack of personal jurisdiction. 

Mark IV also argues that the District Court erred in sua sponte dismissing the 

claims against O’Riordan. Mark IV correctly notes that O’Riordan did not raise the 

issue of personal jurisdiction and that he filed an answer to Mark IV’s Amended 

Complaint. O’Riordan, who was not represented by counsel during the District Court 

proceedings,4also filed a “Preliminary Statement” regarding Mark IV’s motion for 

default judgment, but never submitted an answer or any other response to the Second 

Amended Complaint. After a hearing on the issue, the District Court dismissed the 

claims for lack of personal jurisdiction, noting that O’Riordan “never answered the 

Second Amended Complaint, or sought an extension of time to do so, or filed any other 

application or pleading in [the] matter.” (App. 8.) 

“[W]hen a court is considering whether to enter a default judgment, it may dismiss 

an action sua sponte for lack of personal jurisdiction.” In re Tuli, 172 F.3d 707, 712 (9th 

Cir. 1999); accord Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 

767, 771 (10th Cir. 1997); D'Onofrio v. Il Mattino, 430 F. Supp. 2d 431, 436 (E.D. Pa. 

2006); see also Prudential Ins. Co. of Am. v. Bramlett, 2010 WL 2696459, *1 (D. N.J. 

 

3 Crosstown was formed approximately 10 years before Lightning was established. 

Moreover, unlike Lightning, Crosstown’s principal business was in “last mile” delivery 

services. 

4 O’Riordan has not participated in this appeal, either through counsel or pro se. 
9

July 6, 2010) (“Before entering default judgment, the Court must address the threshold 

issue of whether it has personal jurisdiction and subject matter jurisdiction over the 

parties.”). As explained in Allaham v. Naddaf, 2015 WL 3421464, *3 (E.D. Pa. May 28, 

2015):

[I]n contrast to the general rule that personal jurisdiction is waivable, a court 

considering a motion for a default judgment must sua sponte ensure that an 

exercise of personal jurisdiction over each defaulting defendant is proper. 

Compare Jasper v. Bexar Cnty. Adult Det. Ctr., 332 F. App'x 718, 719 (3d 

Cir. 2009) (noting the general rule that “because personal jurisdiction may 

be conferred by consent of the parties . . . a court may not sua sponte dismiss 

for want of personal jurisdiction”) (internal quotation marks and citation 

omitted), with AnnexTelecom Co. v. Brown, 2014 WL 5149101, *1 (E.D.Pa. 

Oct. 14, 2014) (asserting that “the [c]ourt may only grant a motion for default 

judgment if it has ... personal jurisdiction over the parties against whom a 

judgment for affirmative relief is sought”) (citation omitted), and Pars 

Tekstil Sanayi Tic, A.S. v. Dynasty Designs, Inc., 2008 WL 3559607, *1

(E.D. Pa. Aug. 13, 2008) (confirming that “[a] district court may not enter a 

default judgment unless it is satisfied that it has personal jurisdiction over the 

defendant”) (citation omitted). “In reviewing its personal jurisdiction, the 

court does not assert a personal defense of the parties; rather, the court 

exercises its responsibility to determine that it has the power to enter the 

default judgment.” Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th 

Cir. 1986).

Because the District Court sua sponte addressed the lack of personal jurisdiction in the 

context of a motion for default judgment, dismissal of O’Riordan was proper. 

IV.

For the foregoing reasons, we will affirm the December 15, 2014 and August 10, 

2016 Orders of the District Court.