Opinion ID: 2998902
Heading Depth: 2
Heading Rank: 4

Heading: General Personal Jurisdiction and Discovery

Text: Next, we must consider whether Central States has met its burden of demonstrating the existence of general personal jurisdiction, Jennings v. AC Hydraulic A/S, 383 F.3d 546, 548 (7th Cir. 2004), or, alternatively, has established a prima facie case for personal jurisdiction, such that it should have been allowed to conduct discovery. Purdue No. 05-2058 9 Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (“[W]hen the district court rules on a defendant’s motion to dismiss based on the submission of written materials, without the benefit of an evidentiary hearing, as the district court did here, the plaintiff ‘need only make out a prima facie case of personal jurisdiction.’ ” (quoting Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002))). According to Central States, it has met its burden of establishing personal jurisdiction. It emphasizes that Phencorp was identified as a domestic corporation on 2000, 2001, and 2002 U.S. tax forms and issued at least five insurance policies to U.S. companies between 1995 and 2004. Additionally, Central States suggests that Phencorp may have kept in communication with those five policyholders, and questions whether Phencorp has issued insurance policies to any additional U.S. customers. Furthermore, Central States argues that even if these five policies themselves are not sufficient to demonstrate the existence of personal jurisdiction, it should have been granted discovery to determine if additional contacts exist that would establish general personal jurisdiction. In the district court, Central States requested discovery “with respect to the negotiation of the [five policies issued to U.S. companies], the terms of the policies themselves, the monitoring of the policies, the claims filed, if any, under the policies, the premiums collected, the underwriting of the policies, . . . the attempts, if any, to secure other business in the United States,” and the total percentage of Phencorp’s business the policies represent. Phencorp admits that it has provided insurance policies to U.S. customers, but maintains that any contacts it once had with the United States ended in 2004, when the last of the five policies expired. Phencorp submitted a declaration of Phillip Young (“Young”), a director of Phencorp, in support 10 No. 05-2058 of this assertion. Young stated that: Phencorp is a Barbados Corporation, with its principal place of business in St. Michael, Barbados; Phencorp has no employees in Illinois or elsewhere in the United States and, to the best of his knowledge, never has; Phencorp owns no real estate in Illinois or elsewhere in the United States and, to the best of his knowledge, never has; Phencorp operates no place of business in Illinois or elsewhere in the United States and, to the best of his knowledge, never has; Phencorp maintains no website and is not referenced on PSC’s website; Phencorp “does not currently do any business in the United States”; to the best of his knowledge, the only business dealings Phencorp has ever had with parties operating in the United States are issuing reinsurance policies to four U.S. companies, from 1995 to 2002, and providing insurance under an excess directors and officers’ liability policy for a U.S. company, from 2003 to May 2004. We agree with the district court that Central States has not met its burden of demonstrating personal jurisdiction over Phencorp. Four of the five policies that Phencorp issued to U.S. companies expired by 2002, and the fifth expired in May 2004. Central States did not file suit until the fall of 2004. See Wild v. Subscription Plus, Inc., 292 F.3d 526, 528 (7th Cir. 2002) (“jurisdiction is normally determined as of the date of the filing of the suit”). Additionally, the tax forms that Central States submitted as evidence, for the years 2000, 2001, and 2002, are insufficient to demonstrate that Phencorp has continuing and systematic contacts with the United States. See 26 U.S.C. § 953(d) (statute allowing a foreign insurance company to elect to be treated as a domestic corporation for tax purposes). As explained above, however, the district court erred by denying Central States’s request for discovery without analyzing that request in light of the requirements for establishing general personal jurisdiction. We therefore No. 05-2058 11 must determine if Central States made out a prima facie case for personal jurisdiction, which is required before it is allowed to conduct discovery. See Purdue Research Found., 338 F.3d at 782. In this analysis, Central States “is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record.” Id. (quoting Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983)) (internal quotation marks omitted). We will “read the complaint liberally, in its entirety, and with every inference drawn in favor” of Central States. Textor v. Bd. of Regents of Northern Ill. Univ., 711 F.2d 1387, 1393 (7th Cir. 1983). The fact that Phencorp may have had a sufficient connection with the United States in the past (through issuance of the five policies discussed above) does not demonstrate a “continuing” connection. However, Central States suggested in the proceedings below that Phencorp may have continuing relationships with its five U.S. policyholders and/or may be soliciting additional business in the United States. Although in his declaration for Phencorp Young states that Phencorp is not currently “doing any business” in the United States, he does not say specifically that it is not attempting to do so or does not send agents to the United States. Since Central States was denied the opportunity to engage in discovery, it is not surprising that it can do little more than suggest that Phencorp currently has minimum contacts with the United States. Additionally, while the 2000, 2001, and 2002 tax forms are not sufficient to establish personal jurisdiction over Phencorp, they do help make out the prima facie case necessary for Central States to be permitted discovery. Phencorp disagrees. It argues that the tax returns were created by its parent company, PSC, and submitted to the Internal Revenue Service as an attachment to PSC’s consolidated tax return. According to Phencorp, the tax forms do not “represent any ‘election’ by Phencorp.” 12 No. 05-2058 There are several problems with Phencorp’s arguments. First, it is possible that Phencorp informed PSC that it wished to be treated as a U.S. domestic corporation for tax purposes. Young stated in a supplemental declaration that the forms were prepared and submitted by PSC, but did not state that PSC submitted the forms without any consultation with Phencorp. It is reasonable to infer that Phencorp had some choice in the matter, as the statute that allows a foreign insurance company to be treated as a domestic corporation for tax purposes, 26 U.S.C. § 953(d), states that such a company may elect to be treated as a domestic corporation, id. (emphasis added). In doing so, it “waives all benefits to such corporation granted by the United States under any treaty,” id. § 953(d)(1)(D), and is “treated as transferring . . . all of its assets to a domestic corporation” for purposes of certain taxes, id. § 953(d)(4)(A). Additionally, if Phencorp made an election, it is possible that it should still be considered a domestic corporation for tax purposes, as the election “shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary [of the Treasury].” Id. § 953(d)(2)(a). Although this is a close case, when we consider the record in its entirety and draw all inferences in favor of Central States, we find that Central States has established a prima facie case for general personal jurisdiction. Therefore, we must reverse the district court’s opinion and order and remand to allow Central States to conduct discovery regarding general personal jurisdiction over Phencorp.