John Crane Fails to Establish Personal Jurisdiction against Plaintiff’s Firm in Fraud Complaint Filed in Federal Court U.S. District Court for the Northern District of Illinois, Eastern Division, March 23, 2017

John Crane, Inc. (JCI) filed suit against Benjamin Shein and the Shein Law Center (the defendant) for fraud, alleging that the defendant fraudulently obtained settlements with and verdicts against JCI by misrepresenting the exposure of asbestos plaintiffs to JCI’s products and concealing the plaintiffs’ exposure to products of other manufacturers. The complaint focused on four specific asbestos cases filed against JCI in Pennsylvania in which verdicts were rendered against JCI. It alleged specific behavior done by the defendants, such as delaying filing claims with bankruptcy trusts until after verdicts against JCI were returned, in order to mislead JCI and other asbestos defendants into paying larger verdict sums. The defendant filed a motion to dismiss on various grounds, including lack of subject matter and personal jurisdiction. The court granted the motion to dismiss based on lack of personal jurisdiction, and did not address the substantive challenges to the complaint.

First, the court briefly addressed the defendant’s challenge to subject matter jurisdiction. Although the defendant based its’ challenge on the Rooker-Feldman doctrine, which holds that federal district courts lack jurisdiction to review state court judgments, this reliance was misplaced. JCI did not seek to overturn the Pennsylvania state court judgments but to advance a claim against the defendant for fraud. The injury caused by the concealment of relevant information was independent of any judgments defendant obtained in state court. Further, the increased litigation costs and loss of independent indemnification were two additional injuries claimed by JCI that were not caused by the state court judgments.

Second, the court concluded that it lacked personal jurisdiction over the defendants. JCI did not assert general personal jurisdiction over the defendants. The court analyzed whether the defendants had the “minimum contacts” required for specific personal jurisdiction. This inquiry “must distinguish between Shein’s contacts with Illinois and Shein’s contacts with ‘persons who reside there.’ Only the former count.” JCI argued that defendant had sufficient contacts with Illinois because defendant sued JCI and directed false discovery responses at JCI in Illinois, and cashed checks that drew on JCI’s Illinois bank account. However, this failed to establish a direct link between the defendant and Illinois, which did not flow through JCI. The defendant had no contacts with Illinois other than to defraud JCI. The defendant’s allegedly wrongful conduct —the concealment of information —– took place in Pennsylvania, where the firm was located. That defendant sued an Illinois corporation, outside the state of Illinois, did nothing to connect the defendant to the state where JCI was headquartered. The court also analyzed other points made by JCI to find no personal jurisdiction. As case law showed, “…directing pleadings, discovery, and other litigation communications to an Illinois citizen facing suit in some other state – even in furtherance of a tortious scheme – is simply not the same as targeting that citizen in Illinois.”

Read the full decision here.


1 Comments

  • Ward, 28th Tuesday 2017 at 9:21 pm

    Reply

    Sounds like the personal jurisdiction reasoning is correct – reminds me of a Civ Pro law exam essay response that probably got an A.

    I wonder why JCI wanted to sue in Illinois courts? I’m sure there’s more to it than simple home field advantage; perhaps some forum shopping going on?


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