United States District Court, N.D. Illinois, Eastern Division
June 16, 2004.
CHARLES F. BENDA, JR., Plaintiff,
PER-SE TECHNOLOGIES, INC., a Delaware Corporation, DOUGLAS MARCOTTE and FRANK MURPHY, Defendants.
The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff filed a two-count suit against Per-Se Technologies,
Inc., Douglas Marcotte, and Frank Murphy, alleging fraudulent
misrepresentation and wrongful termination. Marcotte and Murphy
moved to dismiss the complaint pursuant to Federal Rule of Civil
Procedure 12(b)(2) for lack of personal jurisdiction. For the
reasons set forth below, the motion is granted.
Per-Se Technologies, Inc. ("Per-Se") is a Delaware corporation
with its principal place of business outside of Illinois. (R.
1-1, Def.'s Notice of Removal ¶ 5.) Douglas Marcotte, the
Plaintiff's former supervisor, is Senior Vice President of Sales
and Marketing of the Physician Services Division at Per-Se. (R.
1-3, Compl. ¶ 3.) Frank Murphy is President of Per-Se's Physician
Services Division. (Id. ¶ 4.) Marcotte and Murphy both reside
and work in Georgia. (R. 8-1, Marcotte Decl. ¶ 2; R. 8-2, Murphy
Decl. ¶ 2.) Prior to February 2003, Plaintiff worked for one of Per-Se's
competitors. (R. 1-3, Compl. ¶ 5.) In February 2003, Marcotte and
Murphy recruited Plaintiff to join Per-Se. (Id.) During the
recruiting and interviewing process, Marcotte represented that a
certain amount of near-term sales opportunities were in the
"sales pipeline." (Id. ¶ 7.) They would base Plaintiff's
compensation, in part, upon these potential sales. (Id.)
Marcotte also represented that the software that Plaintiff would
be responsible for selling functioned suitably for the customers
to whom he would sell it. (Id.)
Plaintiff joined Per-Se in exchange for a base salary, sales
commissions, and 30,000 shares of Per-Se stock options, which
would incrementally vest over a three-year period. (Id. ¶ 8.)
Plaintiff claims that he relied upon Marcotte's representations
when he left his former employer and joined Per-Se. (Id. ¶ 12.)
After less than a year, Per-Se terminated Plaintiff. (Id. ¶
Plaintiff alleges that Marcotte fraudulently misrepresented the
amount of sales in the pipeline and the functionality of the
software in an effort to induce him to leave his former employer
and join Per-Se. (Id. ¶ 13.) Plaintiff further claims that
Per-Se wrongfully terminated him because Per-Se wanted to deprive
him of the sales commissions he expected to earn, and to keep
Plaintiff's 10,000 shares of Per-Se stock options from vesting
after one-year of employment. (Id. ¶¶ 24-26.)
Plaintiff brought suit against Per-Se, Marcotte, and Murphy in
an Illinois state court for fraudulent misrepresentation and
wrongful termination. The three defendants removed the action to
a federal district court. Marcotte and Murphy now seek to dismiss
the case for lack of personal jurisdiction. LEGAL STANDARD
When a defendant files a motion to dismiss because of a lack of
personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff
bears the burden of proving that personal jurisdiction exists.
RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th
Cir. 1997). The plaintiff must prove that a prima facie case for
personal jurisdiction over the defendant exists. Hyatt Int'l
Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). In
determining whether a plaintiff has met the burden, a court may
consider affidavits from both parties. Turnock v. Cope,
816 F.2d 332, 333 (7th Cir. 1987). The Court must accept the
plaintiff's uncontroverted allegations as true and resolve any
conflicts in the affidavits in the plaintiff's favor. Id. The
plaintiff must prove that personal jurisdiction exists for each
separate claim alleged in the complaint. Beveridge v. Mid-west
Mgmt., Inc., 78 F. Supp.2d 739, 744 (N.D. Ill. 1999).
I. The Fiduciary Shield Doctrine
Defendants Marcotte and Murphy argue that the Court should
dismiss them for lack of personal jurisdiction under the
fiduciary shield doctrine because their contacts with Illinois
were made solely in a corporate capacity and the Plaintiff
identifies no possible exceptions to the doctrine. The Court
In a diversity action, the Court has jurisdiction over the
parties "only if [an Illinois state court] would have such
jurisdiction." Klump v. Duffus, 71 F.3d 1368, 1371 (7th
Cir. 1995). Illinois recognizes a fiduciary shield doctrine that
"denies personal jurisdiction over an individual whose presence
and activity in the state in which the suit is brought were
solely on behalf of his employer or other principal." Rice v.
Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1994). The
Illinois Supreme Court has noted that where an individual
defendant's conduct "was a product of, and was motivated by, his
employment situation and not his personal interests . . . it
would be unfair to use this conduct to assert personal
jurisdiction over him as an individual." United Financial
Mortgage v. Bayshores Funding Corp., 245 F. Supp.2d 884, 894
(citing Rollins v. Ellwood, 141 Ill.2d 244, 565 N.E.2d 1302,
1318, 152 Ill. Dec. 384 (Ill. 1990)). The doctrine is a
discretionary, rather than absolute entitlement. Consumer
Benefit Services, Inc. v. Encore Marketing Int'l, Inc., No. 01 C
6985, 2002 WL 31427021, at 3 (N.D.Ill. Oct. 30, 2002).
Courts recognize two exceptions to the fiduciary shield
doctrine: "(1) the shield is removed if the individual's personal
interests motivated his actions, and (2) the shield generally
does not apply when the individual's actions are discretionary."
Id. Courts have held that the shield does not apply to
high-ranking company officers or shareholders with a direct
financial stake in company health. United Financial,
245 F. Supp.2d at 895. Further, "the determinative factor is the
individual's status as a shareholder, not merely as an officer or
director." Id., (quoting Plastic Film Corp. of Am., Inc. v.
Unipac, Inc., 128 F. Supp.2d 1143, 1147 (N.D. Ill. 2001)). A
plaintiff wishing to avoid application of the fiduciary shield
doctrine "needs only to allege in good faith that the actions
complained of advanced personal rather than employer interests."
Cargo Pacific Logistics, Inc., v. Concord Express, Inc., 1997
U.S. Dist. LEXIS 1493, No. 96 C 2558, 1997 WL 106241 at 4
(N.D.Ill. Feb. 6, 1997)).
Plaintiff does not dispute that the fiduciary shield doctrine
applies to Marcotte and Murphy. In fact, he failed to respond to
this argument. Defendants' contacts with Illinois were business-related. Marcotte's contacts with Illinois
in the past decade amount to no more than ten trips, all solely
for business purposes. (R. 8-1, Marcotte Decl. ¶ 5.) Murphy's
Illinois contacts are fewer in number and similarly limited to
business trips. (R. 8-2, Murphy Decl. ¶¶ 4-6.)
Further, Plaintiff does not satisfy either exception to the
fiduciary shield doctrine. Plaintiff does not allege that either
Defendant acted to further his personal interests. In fact,
Plaintiff asserts that Defendants "at all relevant times . . .
acted within the scope of their authority and employment for
Per-Se and with the express authority to act as alleged. . . ."
(R. 1-3, Compl. ¶ 5.) Plaintiff does not allege that either
Marcotte or Murphy was a shareholder or had a direct financial
stake in the company. He also does not contend that either
Marcotte or Murphy's actions were discretionary.
Marcotte and Murphy are entitled to the protection of the
fiduciary shield doctrine. Accordingly, the motion to dismiss is
II. Removal does not Constitute Waiver of a Personal
Plaintiff has suggested that Defendants waived the right to
assert a personal jurisdiction defense under Federal Rules of
Civil Procedure 12(h)(1) by removing this case to federal court.
This suggestion fails as a matter of law. See Allen v.
Ferguson, 791 F.2d 611, 614 (7th Cir. 1986) (noting that a
defendant does not waive any objection to personal jurisdiction
by removing a state-court action to a federal district court.) CONCLUSION
The fiduciary shield doctrine shields Marcotte and Murphy from
the jurisdiction of this Court. Marcotte's and Murphy's contacts
with Illinois came solely in a corporate capacity and Plaintiff
has failed to identify any applicable exception to the fiduciary
shield doctrine. Accordingly, Marcotte and Murphy's motion to
dismiss is granted.