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Westgate Products, LLC v. Edwards

United States District Court, E.D. Wisconsin

June 7, 2019




         Plaintiffs Westgate Products, LLC, Westgate Cups, Ltd., and Westgate Printing, LLC filed this action alleging a variety of state law claims against Defendant Carey Edwards. The court has jurisdiction under 28 U.S.C. § 1332(a). Presently before the court is Defendant's motion to dismiss Plaintiffs' amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3), asserting that he is not subject to personal jurisdiction in Wisconsin and that the Eastern District of Wisconsin is not a proper venue for this action. For the following reasons, Defendant's motion will be denied.


         Westgate Cups, Ltd., which operates its business as Westgate Products, LLC, is a company that sells packaging, such as cups and food buckets, to various food service customers. Am. Compl. ¶¶ 14-15, Dkt. No. 3. Westgate Printing is a Wisconsin Limited Liability Company owned by Westgate Cups. Id. ¶ 16.

         In May 2013, Defendant, who is domiciled in Missouri, began working for Plaintiffs as an independent contractor in a sales capacity. Id. ¶ 19. At that time, Plaintiffs had operations in Wisconsin and Missouri, with four of its six upper management employees located in Wisconsin. Patrick Carroll Decl. ¶ 3, Dkt. No. 14. Although Defendant was hired in a sales capacity, he also managed a Westgate facility in Grandview, Missouri. Id. ¶ 5. All plant staff at that facility reported to Defendant, and Defendant reported to Patrick Carroll, who is Westgate Cup's Chief Executive Officer and works out of Plaintiffs' Oshkosh, Wisconsin facility. Id. ¶¶ 1, 5. Defendant was to provide services exclusively on behalf of and for Plaintiffs' benefit. Plaintiffs provided Defendant with a car as well as a credit card to be used to further the services he was to provide Plaintiffs. Plaintiffs terminated their agreement with Defendant in May 2018. Am. Compl. ¶ 35.

         Upon termination of the agreement, Plaintiffs learned that Defendant had used the Westgate credit card to pay for a significant amount of personal or other use that was unrelated to the work he provided for Plaintiffs and had not been approved by Plaintiffs. Id. ¶ 36. For instance, Defendant used the Westgate credit card to purchase concert tickets to see Britney Spears, Florida Georgia Line, Journey, Jason Aldean, Def Leppard, Nickelback, and Boston and to attend sporting events such as Dallas Cowboys games, St. Louis Cardinal games, and Kansas City Royals games. Id. ¶¶ 48, 50. Defendant also charged $10, 765.57 to the Westgate credit card for expenses incurred at gentlemen's clubs and casinos. Id. ¶¶ 54, 56. Defendant used the Westgate credit card for luxury party limousines; to repair his wife's BMW car; for personal travel expenses related to vacations to Las Vegas, the Dominican Republic, Florida, Colorado, California, Cancun, and Canada; for first-class travel upgrades; for personal dining; for personal moving expenses; for personal gasoline expenses; and for personal computer software and telephones. In all, Defendant charged $224, 925.01 for personal expenses that were not authorized by Plaintiffs. Id. ¶ 79.

         Plaintiffs also discovered that Defendant had engaged in self-dealing, even though he was required to exclusively perform work for Plaintiffs. Id. ¶ 37. In particular, Defendant used non-Westgate email addresses to conduct business with Plaintiffs' customers and vendors and only used his Westgate email address to communicate internally with other employees. Id. ¶¶ 38-39. Defendant also executed contractual agreements between Plaintiffs and third parties without Plaintiffs' knowledge or authorization. Id. ¶ 42. Plaintiffs sustained damages as a result of Defendant's conduct.

         Although Defendant lived in Missouri while he provided services for Plaintiffs, Defendant was in daily email and telephone contact with those executives and employees that worked in Wisconsin. Carroll Decl. ¶ 10. Defendant spoke with Wisconsin-based executives and employees approximately five to ten times in a normal business week. Id. ¶ 11. He also emailed Wisconsin-based executives and employees approximately 20 to 25 times each week. Id. ¶ 12.


         I. Personal Jurisdiction

         Defendant asserts that the amended complaint should be dismissed for lack of personal jurisdiction. Rule 12(b)(2) of the Federal Rules of Civil Procedure governs motions to dismiss for lack of personal jurisdiction. Although the plaintiff has the burden of proving personal jurisdiction, “the burden is not a heavy one.” Burton v. Am. Cyanamid, 128 F.Supp.3d 1095, 1098 (E.D. Wis. 2015). In deciding whether personal jurisdiction exists, the court must accept all well-pleaded allegations in the complaint as true and may rely on affidavits, deposition testimony, exhibits, or other evidence in the record. See Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012). The court must draw all inferences from the record in favor of the plaintiff. PKWare, Inc. v. Meade, 79 F.Supp.2d 1007, 1011 (E.D. Wis. 2000).

         “A federal district court sitting in diversity must apply the personal jurisdiction rules of the state in which it sits.” Kipp v. Ski Enter. Corp. of Wis., Inc., 783 F.3d 695, 697 (7th Cir. 2015). Under Wisconsin law, a court must engage in a two-step inquiry to determine whether it may exercise personal jurisdiction. First, the court must determine whether the defendant is subject to jurisdiction under Wisconsin's long-arm statute, Wis.Stat. § 801.05. See Kopke v. A. Hartrodt, S.R.L., 2001 WI 99, ¶ 8, 245 Wis.2d 396, 629 N.W.2d 662. If the statutory requirements are satisfied, the court must then decide whether the exercise of jurisdiction comports with the requirements of due process. Id.

         A. Wisconsin Long-Arm Statute

         Plaintiffs assert that the court has jurisdiction in this matter pursuant to ...

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