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John T. ("Tom") Minemyer v. R-Boc Representatives

May 11, 2012

JOHN T. ("TOM") MINEMYER, PLAINTIFFS,
v.
R-BOC REPRESENTATIVES, INC., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Jeffrey Cole

MEMORANDUM OPINION AND ORDER

A.

Following five years of litigation, a two-week trial, and a jury decision against him, one of the defendants, Timothy Grimsley, has brought a motion challenging the court's personal jurisdiction over him. He raised the personal jurisdiction issue in June of 2007 -- less than three months after the complaint was filed -- before Judge Coar, to whom the case was originally assigned. Judge Coar denied the motion to dismiss under Illinois' fiduciary shield doctrine and the due process clause. The "fiduciary shield doctrine" as enunciated by the Illinois courts, precludes a court (federal or state) from exercising personal jurisdiction over a non-resident tortfeasor where the conduct which gave rise to the tort was "solely on behalf of [their] employer." Minemyer v. R-Boc Representatives, Inc., 2007 WL 2461666, 3 (N.D.Ill. 2007); [Dkt. # 66, at 12].

A number of courts have concluded, Judge Coar found, that the doctrine should not apply where the employee has the power to decide what is to be done and chooses to commit the acts that subject him to long-arm jurisdiction. But the level of discretion is not, itself, determinative and must instead be viewed within the context of all the circumstances. Judge Coar found significant, inter alia, the claim that Grimsley was motivated in part by his friendship with R-BOC's Robert Lundeen, Minemyer, 2007 WL 2461666, 5.*fn1 Cf., Rice v. Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1994)(Posner, J.)("The shield is withdrawn if the agent was acting also or instead on his own behalf-to 'serve his personal interests,' [which] we may assume, need not be pecuniary.").

The fiduciary shield doctrine is usually said to be discretionary or "equitable," rather than an absolute entitlement. Minemyer, 2007 WL 2461666, 5. In terms of the fairness of the case as a whole, Judge Coar held that, taking the allegations of Plaintiff's complaint as true, it did not make sense to preclude jurisdiction over Grimsley since he conspired with Mr. Lundeen of R-Boc to replace plaintiff's couplers with R-Boc's and lied and facilitated lies about the switch to plaintiff. The plaintiff was thus wronged not only by the actions of R-BOC and Dura-Line in materially infringing on his patent, but also by the assurances of Grimsley, himself, that induced Plaintiff's continued reliance on his mistaken belief that his patented product was being submitted to Verizon in response to its request for bids.*fn2 Judge Coar concluded that: "To excuse Grimsley at the outset from a case in which -- according to Plaintiff's portrayal of events -- he was intimately involved as an individual does not equate with principles of fairness." Minemyer, 2007 WL 2461666, 7.

Although he said that it was a close question whether Illinois's fiduciary shield doctrine applied, Judge Coar ended with this invitation: "[i]f after further discovery it should prove appropriate, [Mr. Grimsley] will have the opportunity to move for dismissal once again and this Court retains the right to consider the motion on a more complete record." Minemyer, 2007 WL 2461666, 7. However, Judge Coar had no reservations about the issue of specific jurisdiction under the Due Process clause, and he denied that portion of Mr. Grimsley's motion without any suggestion that the issue might be reintroduced at a later date. Id. at 7-8. [Dkt. # 66, at 13-16].

This case was reassigned to me in December of 2008 by consent of the parties. [Dkt.# 124]. Discovery closed on May 30, 2009. [Dkt. # 167, 168]. There was, to use Judge Coar's qualifier, no "further discovery" after that. Between the date of the reassignment in 2008 and the date the trial began in February 2012, the parties were in court on an almost constant basis.*fn3 Those innumerable and highly adversarial conferences and hearings on motions were conducted on the record, routinely lasted for several hours at a time, and covered every imaginable aspect of the case.

The pretrial order was originally due on December 29, 2008. [Dkt. No. 79]. Over the next three years, there followed repeated requests to extend the date for filing the final pretrial order and to extend the trial date. See, e.g., Dkt. Nos. 117, 118, 147, 161, 192, 224, 265, 267, 269, 270, 271, 272, 281, 375, 376. At one point, the trial was continued for over a year until early 2011. [Dkt. No. 281]. The case did not, however, ultimately proceed to trial until February 2012. In the interim, there were numerous meetings with counsel in court regarding the preparation of the pretrial order. See Dkt. Nos. 385-388, 390-393, 402, 405, 407-409, 412, 426, 429. In addition, at my instruction, the parties were having continual meetings and telephone discussions regarding the final pretrial order, which was completed and signed on February 6, 2012 -- four and a half years after Judge Coar had denied Mr. Grimsley's motion to dismiss on jurisdictional grounds and almost three years after discovery had closed. Yet, in all that time, and notwithstanding the constant activity on the part of all the defendants throughout the entirety of that period, not once did Mr. Grimsley ever mention Judge Coar's ruling or even hint that there was a jurisdictional question to be decided or revisited.

It was not until February 14, 2012, when the trial was half over, that Mr. Grimsley's lawyer, on his cross-examination, began to question him about his contacts with Illinois and matters that might be implicated by the fiduciary shield doctrine. [Dkt. # 492, at 1397].*fn4 There was nothing in the pretrial order or in anything that occurred in the several years the case was before me that would have alerted anyone that the issue was coming. On March 16, 2012, after the jury had entered a verdict adverse to Mr. Grimsley, he again challenged the court's personal jurisdiction over him. [Dkt. 479]. Not surprisingly, the plaintiff has objected, contending that Mr. Grimsley has waived his challenge to personal jurisdiction.

B.

Even a valid defense of lack of personal jurisdiction can be deemed waived if it is not raised in a timely fashion. Blockowicz v. Williams, 630 F.3d 563, 566 (7th Cir. 2010). It is Mr. Grimsley's contention that having raised the issue at the start of the case in mid-2007, he could wait until the trial was underway four-and-a-half years later to pursue the issue. The theory advanced is that since the plaintiff has the burden at trial to prove jurisdiction, the issue was of necessity in the case. While it is true, as Mr. Grimsley submits, that there are cases that say it is up to the plaintiff to prove by the end of trail that the court has personal jurisdiction over the defendant, there are dangers, as the Seventh Circuit repeatedly reminds both bench and bar, in reading statements in judicial opinions too literally. See, e.g., Miller v. Dobier, 2011 WL 477046, 2 (7th Cir. 2011); McCready v. Jesse White, 417 F.3d 700, 703-04 (7th Cir. 2005); Acevedo v. Canterbury, 457 F.3d 721, 724 (7th Cir. 2006); All-Tech Telecom v. Amway Corp., 174 F.3d 862, 866 (7th Cir. 1999); Rapier v. Harris, 172 F.3d 999, 1005-06 (7th Cir. 1999).*fn5 That caution applies with singular force here, as Judge Posner's panel opinion in Rice v. Nova Biomedical Corp., supra, teaches.

Rice acknowledged that some cases say, "perhaps too casually," 38 F.3d at 914, that by the end of the trial the plaintiff must have proved that the court has personal jurisdiction over the defendant. But, said Judge Posner:

[T]hese statements . . . should not be taken literally. To begin with, they are in tension with the rule that the defendant must challenge personal jurisdiction at the earliest opportunity, on pain of forfeiture if he fails to do so. Fed.R.Civ.P. 12(h)(1). Such challenges should be resolved before rather than after trial in order to head off situations in which a defendant, if he thinks the trial is going against him, will plead lack of jurisdiction in order to force the plaintiff to start over in another court, but if he thinks the trial is going well will waive his objection to personal jurisdiction and await the entry of a final judgment that he can use as res judicata to prevent the plaintiff from suing him again.

It would defeat the purpose of requiring prompt assertion of the defense of lack of personal jurisdiction if the defendant, having raised an objection to personal jurisdiction at the outset as required, could without any penalty fail or refuse to press it, creating the impression that he had abandoned it, and not seek to correct that impression until he appealed from an adverse final judgment on the merits. We do not understand the cases that we have cited to condone such a tactic; and we condemned it in Continental Bank, N.A. v. Meyer, 10 F.3d 1293, 1297 (7th Cir.1993), though we did so not under Rule ...


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