UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

JOEL S. ARIO, in his official capacity as

Insurance Commissioner of the

Commonwealth of Pennsylvania, as

Liquidator of RELIANCE INSURANCE

COMPANY (IN LIQUIDATION),

Plaintiff,

v.

PLUMB'S, INC.,

Defendant.

 /

Case No. 2:09-cv-10093

HONORABLE STEPHEN J. MURPHY, III

ORDER GRANTING IN PART DEFENDANT’S

 MOTION TO DISMISS OR TRANSFER (Docket No. 8)

This matter comes before the Court on defendant Plumb's, Inc. (“Plumb's”) motion to

dismiss this case for improper venue pursuant to 28 U.S.C. § 1391 or, in the alternative,

to transfer this case to the Western District of Michigan pursuant to 28 U.S.C. § 1404(a).

For the reasons stated below, defendant's motion will be granted in part, and the Court will

order this matter transferred to the United States District Court for the Western District of

Michigan.

FACTS

The plaintiff, Joel S. Ario, Insurance Commissioner of the Commonwealth of

Pennsylvania (the "Liquidator"), is the Liquidator of Reliance Insurance Company

("Reliance"). The Liquidator's official place of business is in Harrisburg, Pennsylvania.

Reliance is a Pennsylvania domiciled insurance company with its principal place of

business in Philadelphia, Pennsylvania. Defendant Plumb's, a grocer, is a Michigan

corporation with its principal place of business in Muskegon, Michigan. 

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From 1997 through 2000, Reliance issued four one-year workers' compensation and

employer's liability insurance policies to Plumb's (the "Reliance policies") covering

employees at various Plumb's locations from January 1, 1997 to September 1, 2000. The

policies have "retrospective premium" provisions that provide for the cost of the insurance

to be rated retrospectively through a retrospective calculation and determination of Plumb's

actual premium payment amount. According to the Liquidator, the retrospective premium

provisions in the policies provide that if the retrospective premiums are more than the

estimated premiums paid by Plumb's during the term of the policies, then Plumb's must pay

the balance due, while if the retrospective premiums are less than the estimated premiums

paid, then the insurer is to refund the difference to Plumb's.

Reliance performed retrospective premium adjustments for each of the policy years

of the Reliance policies and alleges that Plumb's owes $258,966 in retrospective premiums.

Plumb's takes the position that Reliance breached the contracts by failing to promptly

calculate the retrospective premiums.

In support of its motion to dismiss or transfer, Plumb's has submitted the affidavit of

James Nader, Plumb's President and CEO. Nader attests that Plumb's has its principal

place of business and is headquartered in Muskegon, Michigan, and does not have any

business locations within the Eastern District of Michigan. He states that all individuals who

possess information on defendant's behalf concerning plaintiff's allegations in this lawsuit

reside within the Eastern District of Michigan (this appears to be a typographical error,

since it appears clear to the Court that Mr. Nader means the Western District of Michigan)

and that all documents in the possession of the defendant that relate to the allegations in

the complaint are located in the Western District of Michigan. Nader states that any actions

by the defendant in connection with the insurance policies took place in Muskegon,

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Michigan. Finally, Nader states that the insurance in question was offered through Spartan

Stores, Inc. ("Spartan"), that Spartan or its designate may have played a role in

administering the coverage and maintaining the documents, and Spartan and its designate

are both located in the Western District of Michigan.

In opposition to defendant's motion to dismiss or transfer, the Liquidator has submitted

what appears to be a press release from Spartan, which states that Spartan is the nation's

tenth largest grocery distributor and has warehouse facilities in Grand Rapids and

Plymouth, Michigan, and a page from the website of defendant's attorney, showing that

defendant's counsel has an office in Ann Arbor, in the Eastern District of Michigan. The

Liquidator has also submitted a supplemental affidavit of Abraham Singer, counsel for the

Liquidator, in which Singer attests that he heard a Plumb's advertisement on Sports Radio

1130 WDFN during a Detroit Piston's basketball game, and that WDFN is located within

Farmington Hills, Michigan, which is within the Eastern District. 

In response to the Singer affidavit, Plumb's has also submitted a supplemental

affidavit by James Nader which addresses the advertising raised in Singer's affidavit. In

his supplemental affidavit, Nader states that Plumb's did not contract for the advertisement

that Singer testified that he heard and that the advertisement may have been placed by

Spartan Stores as part of a statewide promotion offering individuals who shopped at

affiliates of Spartan Stores located around the State of Michigan a chance to receive tickets

to sporting events. Nader attests that Plumb's did not pay for any such advertisement and

did not take part in determining its content or the media in which it would run. Finally,

Nader testifies that Plumb's has no stores located in the Eastern District of Michigan and

does no advertising directed at that part of the state. 

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The defendant has also moved in the alternative to transfer this case under 28 U.S.C.

§ 1404(a) for the convenience of the parties and witnesses, but the Court will not reach this

issue because, as discussed below, the Court finds that the Eastern District of Michigan

is an improper venue.

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ANALYSIS

Defendant moves to dismiss or transfer pursuant to Rule 12(b)(3) for improper venue.

Once a defendant raises the question of proper venue, the plaintiff has the burden of

establishing that venue is proper. Audi AG v. Volkswagen of America, Inc., 204 F. Supp.

2d 1014, 1017 (E.D. Mich. 2002). "The Court may examine facts outside the complaint but

must draw all reasonable inferences and resolve factual conflicts in favor of the plaintiff."

Id. (citations omitted).1

In federal diversity cases, venue is controlled by 28 U.S.C. §1391(a) which provides

that proper venue lies (1) in the judicial district where any defendant resides, (2) where a

substantial part of the events or omission giving rise to the claim occurred, or (3) where the

defendant is subject to personal jurisdiction at the time the action is commenced. A

defendant that is a corporation is deemed to reside in any judicial district in which it is

subject to personal jurisdiction at the time the action is commenced. 28 U.S.C. § 1391(c).

If the state has more than one judicial district, as Michigan does, the corporate defendant

is deemed to reside in any district within which its contacts would be sufficient to subject

it to personal jurisdiction if that district were a separate State. Id. Under Michigan law, a

corporation is subject to general personal jurisdiction if it carries on “a continuous and

systematic part of its general business within the state.” M.C.L. § 600.711(3). 

Here, there is no indication that Plumb’s Inc., a grocery store with its principal place of

business and headquarters in Muskegon, Michigan, carries on any continuous or systematic

business within the Eastern District of Michigan. In fact, the record indicates the exact

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opposite. In his affidavit, Mr. James A. Nader, President and CEO of Plumb’s Inc., states

that Plumb’s has no business locations within the Eastern District of Michigan. Although

Plaintiff is quick to note that Plumb’s receives shipments from Spartan Stores, a company

with distribution centers in both Grand Rapids and Plymouth, Michigan, Mr. Nader’s

supplemental affidavit makes clear that Defendant only deals with Spartan Stores through

that company’s main office in Grand Rapids, Michigan. Unlike in Foley and Lewis Racing,

Inc. v. Torco Racing Fuels, Inc., No. 08-CV-13416, 2009 WL 22860, at *3 (E.D. Mich. Jan.

5, 2009), to which Plaintiff points this Court, these are not Defendant’s own licensed dealers

(as they were in Foley) but distribution centers of a third-party. Defendant has no control

over which distribution center Spartan Stores chooses to ship its goods from and should not,

and cannot, be subjected to personal jurisdiction on the business practices of a third-party.

Asahi Metal Industry Co., Ltd. v. Superior Court, 480 U.S. 102, 109 (1987). 

The Liquidator has offered an affidavit tending to show that Plumb's advertises in this

district and argues that this advertising is sufficient to warrant the assertion of general

personal jurisdiction. If Plumb's did, in fact, regularly advertise in the Eastern District there

might be grounds for a finding of general personal jurisdiction. Plumb's, however, has

offered a supplemental affidavit by Nader, its CEO, in which Nader states that the single

radio advertisement in question was produced and funded by Spartan Stores, and that

Plumb's was not consulted about either the content or the geographical distribution of the

advertisement. Again, personal jurisdiction cannot be premised on the unilateral acts of

third parties. Asahi, 480 U.S. at 109. 

The burden rests on the Plaintiff to establish that the Defendant is subject to personal

jurisdiction in the Eastern District and that, therefore, venue in this District is proper. Kepler

v. ITT Sheraton Corp., 860 F. Supp. 393, 396 (E.D. Mich. 1994), citing Welsh v. Gibbs, 631

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F.2d 436, 438 (6th Cir. 1980), cert. denied, 450 U.S. 981 (1981). Plaintiff has failed to

establish that Plumb’s carries on “continuous and systematic” business within the Eastern

District. Furthermore, none of the events giving rise to this claim occurred in the Eastern

District of Michigan. Mr. Nader, again, states that actions associated with the insurance

polices at issue in this claim all occurred in Muskegon, Michigan. This Court is, therefore,

forced to conclude that venue in this District is not proper.

Where a court determines that venue is improper, the court must order that the case

be dismissed or, if the court finds it to be in the interest of justice, the court may order the

matter to be transferred to a district in which the case might have originally been brought.

The matter could have been brought in the Western District of Michigan, where the

defendant is clearly subject to the jurisdiction of that court. The submissions in this matter

also suggest that at many of the events giving rise to the plaintiff's claims occurred in the

Western District and, because the defendant is a Michigan corporation, the state of

Michigan has an interest in adjudicating this matter. The court finds that a transfer, rather

than a dismissal, would serve the interest of justice and therefore will order this matter

transferred to the Western District of Michigan. 

For the foregoing reasons, it is hereby ORDERED that defendant's motion to dismiss

or transfer for improper venue (docket no. 8) is GRANTED IN PART. The Court ORDERS

the Clerk of the Court to TRANSFER this matter to the UNITED STATES DISTRICT

COURT OF THE WESTERN DISTRICT OF MICHIGAN.

s/Stephen J. Murphy, III 

STEPHEN J. MURPHY, III

United States District Judge

Dated: June 26, 2009

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I hereby certify that a copy of the foregoing document was served upon the parties and/or

counsel of record on June 26, 2009, by electronic and/or ordinary mail.

Alissa Greer 

Case Manager

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