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govinfo:USCOURTS-kywd-5_18-cv-00041-3
1
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT PADUCAH
CIVIL ACTION NO. 5:18-CV-041-TBR
GALE CARTER, et al. P L A I N T I F F S
v.
PASCHALL TRUCK LINES, INC., et al. DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the Court upon Defendants ECN Capital Co rp. (“ECN-Cap”) and
ECN Financial, LLC’s (“ECN-Fin”) Motion to Dismiss for lack of personal jurisdiction pursuant
to Federal Rule of Civil Procedure 12(b)(2). [R. 149.] Plaintiffs Gale Carter and Forbes Hayes
(“Plaintiffs”) responded, [R. 159], and ECN-Cap and ECN-Fin (together “ECN Defendants”)
replied, [R. 160]. Fully briefed, this matter is ripe for adjudication. For the reasons stated herein,
ECN Defendants’ Motion to Dismiss, [R. 149], is GRANTED.
BACKGROUND
This case arises out of Gale Cart er and Forbes Hayes’s previous employment as truck
drivers for Paschall Truck Lines, Inc. (“PTL”). Further detail about this case can be found in this
Court’s previous Memorandum Opinion and Order concerning Element Transportation, LLC’s
Motion for Summary Judgment. [R. 136 at 1-3.] In short, this motion revolves around Paschall
Truck Lines, Inc.’s (“PTL”) relationship with Element Financial Corp. (“EFC”), ECN Financial,
LLC (“ECN-Fin”), ECN Capital (“ECN-Cap”), and Quality Equipment Leasing, LLC
(“Quality”).
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As of March 31, 2014, EFC, a Delawar e corporation, entered into a Servicing Agreement
under which Plaintiffs allege that “EFC authorized Quality Equipment Leasing1 to act as its
agent in procuring individual drivers and fleets to lease its trucks.” [R. 159 at 6 (citing [R. 159-2
(3rd Amended Service Agreement).] Plaintiffs claim that, on or around March 12, 2014,
“Defendant PTL entered into a Vehicle Lease Program Agreement with Quality in order to facilitate
the operation of its lease-operator program.” [Id. at 9.]2 Among other things, Plaintiffs allege that,
under the Vehicle Lease Program Agreement, Quality agreed to provide vehicle leasing and
financing services to drivers in PTL’s lease-operator program. [Id.] Plaintiffs summarize the
details of the agreement as follows:
Quality agreed to assist PTL’s personnel with the negotiation of leases and lease
documentation, and the closing of lease transactions. Id. Under the agreement,
Quality would enter into vehicle lease agreements with drivers while PTL would
simultaneously enter into Independent Contractor Agreements with said drivers.
Id. at 2. PTL was required to, on a weekly basis, directly remit to Quality all lease
payments made by drivers. Id. PTL was specifically required to “promote
[Quality] as a recognized and credible source of lease financing” for the
individual drivers and to give Quality a “right of first refusal” for leasing vehicles
to PTL’s drivers.
[Id. (emphasis in original).]
The working relationship between PTL and Quality is exemplifie d through the
experience of Plaintiffs Gale Carter, Forbes Hays, and Lakendal Harris. All three aver that after
they received training from PTL at PTL’s headquarters in Murray, KY, they were instructed to
travel to Quality’s facility in Indianapolis, Indiana to lease a truck. [See R. 159 at 15 (citing Hays
Depo); R. 159-17 at 65:17-24, 111:15-112:16 (Hays Depo); R. 159-18 at 51:9-11, 84:9-17
(Carter Depo); R.159-19 at 50:21-23, 84:3-6 (Harris Depo).] According to Plaintiffs, Carter,
1 According to the agreement, Quality is also a Delaware corporation.
2 Although Plaintiffs cite to “Vehicle Lease Agreement, attached to Arora Decl. as 1-A,” neither the Court nor the
ECN Defendants were able to locate such an attachment. [See R. 160 at 4 n.2.] However, this document was
previously provided as an exhibit under seal at R. 100-1.
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Hays, and Harris entered into lease agreements with EFC, which were all serviced by Quality.
[R. 159 at 9 (citing plaintiffs’ lease agreements R. 159-4, R. 159-5, R.159-6; R. 159-21; R. 159-
22; and R. 159-2).]
In order to explain ECN-Fin and E CN-Cap’s relation to EFC, the Court will quote its
previous explanation of this complicated corporate lineage from its previous Memorandum
Opinion and Order:
On June 30, 2016, EFC became Element Financial, LLC. [R. 110- 11 at 3
(Certificate of Conversion).] Element Financial, LLC continued to operate the
commercial and vendor leasing business it had previously operated as EFC. [R.
110-2 at 4; R. 98-1 at 6.] On September 19, 2016, a transaction occurred between
Element Financial, LLC and Element Transportation, LLC, another subsidiary of
Element Financial, LLC’s parent company—Element Financial Corporation. [R.
110-19 at 67:17-21 (Bradley Rowse Deposition); R. 110-2 at 4; R. 98-1 at 7.] . . .
Element Financial, LLC transferred the trucks and the rights to receive lease
payments on those trucks to Element Transportation . . . [R. 110-2 at 4 (citing R.
110-14).] . . . .
On October 3, 2016, Element Financial Corporation split to form ECN
Capital Corp. and Element Fleet Management Corporation. [R. 110-19 at 49:12-
18; R. 98-1 at 7.] As a part of the split, Element Financial, LLC became ECN
Financial, LLC (ECN). [R. 110-19 at 49:12-18; R. 98-1 at 7; R. 110-2 at 5.]
Plaintiffs states that, with that name change, ECN Financial, LLC was divested
from Element Fleet Management Corporation and became a subsidiary of ECN
Capital Corp. [R. 110-2 at 5.]
[R. 136 at 2-3.]
On October 11, 2017, Plaintiffs file d their original complaint in federal district
court. [R. 1.] On March 1, 2019, Defendants ECN-Cap and ECN-Fin (together “ECN
Defendants”) filed a Motion to Dismiss for lack of personal jurisdiction, which is
currently before the Court. [R. 149.]
LEGAL STANDARD
Under Rule 12(b)(2), the burden is on the Plaintiffs to show that personal jurisdiction
exists as to each defendant. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). “[I]n
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the face of a properly supported motion for dismissal, the plaintiff may not stand on his
pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has
jurisdiction.” Id. When “[p]resented with a properly supported 12(b)(2) motion and opposition,
the court has three procedural alternatives: it may decide the motion upon the affidavits alone; it
may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to
resolve any apparent factual questions.” Id. (citing Serras v. First Tennessee Bank Nat. Ass'n.,
875 F.2d 1212, 1214 (6th Cir. 1989)). When an evidentiary hearing has not been held, as in this
case, a plaintiff’s burden is “relatively slight” and “the plaintiff must make only a prima facie
showing that personal jurisdiction exists in order to defeat dismissal.” AlixPartners, LLP v.
Brewington, 836 F.3d 543, 548–49 (6th Cir. 2016) (quoting Air Prods. & Controls, Inc. v.
Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007)). “[T]he pleadings and affidavits submitted
must be viewed in a light most favorable to the plaintiff, and the district court should not weigh
‘the controverting assertions of the party seeking dismissal.’” Air Prods., 503 F.3d at 549
(quoting Theunissen, 935 F.2d at 1459).
“A federal court sitting in diversity may exercise personal jurisdiction over an out-of-
state defendant only to the extent that a court of the forum state could do so.” Kerry Steel, Inc. v.
Paragon Indus., Inc., 106 F.3d 147, 148 (6th Cir. 1997). Under Kentucky law, the Court first
considers Kentucky’s long-arm statute to determine whether “the cause of action arises from
conduct or activity of the defendant that fits into one of the statute's enumerated categories.”
Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 57 (Ky. 2011). If the statutory
requirements are met, the Court must then apply the constitutional due process test “to determine
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if exercising personal jurisdiction over the non-resident defendant offends [its] federal due
process rights.” Id.3
DISCUSSION
This matter is ripe, and the Court will decide the motion upon the record before it,
including pleadings and affidavits, and require Plaintiffs to make a prima facie showing that
personal jurisdiction exists. In their Motion to Dismiss pursuant to Rule 12(b)(2), ECN
Defendants argue that Plaintiffs have failed to make this prima facie showing both under the
Kentucky long-arm statute and the federal due process analysis. As outlined above, the Court
will first address the Kentucky long-arm statute followed by the federal due process analysis.
A. Kentucky Long-Arm Statute
ECN Defendants have filed a properly supported motion to dismiss pursuant to Rule
12(b)(2). In particular, ECN Defendants contend that Plaintiffs have failed to establish
jurisdiction under both K.R.S. § 454.210(2)(a)(1) and § 454.210(2)(a)(2). [R. 149-1 at 7.] As
Plaintiffs only dispute ECN Defendants’ argument concerning § 454.210(2)(a)(1), [R. 159 at 13],
the Court will only address the matter as it pertains to that section of the Kentucky long-arm
statute. Section 454.210(2)(a)(1) provides:
(2)(a) A court may exercise personal jurisdiction over a person who acts directly
or by an agent, as to a claim arising from the person's:
1. Transacting any business in this Commonwealth . . . .
Ky. Rev. Stat. Ann. § 454.210(2)(a)(1).
To assert personal jurisdicti on over ECN Defendants under the Kentucky long-arm
statute, Plaintiffs must show: (1) ECN Defendants’ conduct falls under § 454.210(2)(a)(1) and
3 Caesars clarified that “Kentucky's long-arm statute is narrower in scope than the federal due process clause.” Cox
v. Koninklijke Philips, N.V., 647 F. App'x 625, 628 (6th Cir. 2016) (citing Caesars, 336 S.W.3d at 55–57).
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(2) Plaintiffs’ claim “arises from” that statutory provision. See Caesars, 336 S.W.3d at 59. “A
claim ‘arises from’ certain conduct when there is a ‘reasonable and direct nexus’ between the
conduct causing injury and the defendant's activities in the state.” Churchill Downs, Inc. v. NLR
Entm't, LLC, No. 3:14-CV-166-H, 2014 WL 2200674, at *5 (W.D. Ky. May 27, 2014) (quoting
Caesars, 336 S.W.3d at 59).
Here, ECN Defendants argue that Plaintiffs fail to make a prima facie showing that ECN
Defendants transacted any business in Kentucky. [R. 149-1 at 7.] In particular, ECN Defendants
focus on the lease agreements between the truck drivers and EFC. [R. 149 -1 at 8.] In response,
Plaintiffs assert that “Quality, acting as an agent for ECN-Fin (then operating under the name of
Element Financial Corp.) entered into a partnership with PTL to lease vehicles to drivers working in
PTL’s owner-operator program.” [R. 159 at 14.]4
In support of their argument, Plaintiffs cite to the Eastern District of Kentucky’s explanation
in Hall v. Rag-O-Rama, LLC of several district courts’ interpretations of § 454.210(2)(a)(1). 359 F.
Supp. 3d 499, 505 (E.D. Ky. 2019). In particular, Plaintiffs focus on one interpretation
mentioned in Hall involving two Kentucky districts’ reliance on the Sixth Circuit’s interpretation
of Michigan’s long-arm statute, which also contains the phrase “transacting any business.” [R.
159 at 13 (citing Hall, 359 F. Supp. 3d at 505).] The Eastern District of Kentucky described that
interpretation as follows: “The Sixth Circuit has held that the ‘use of the word “any” . . .
establishes that even the slightest transaction is sufficient to bring a corporation within [the
forum's] long-arm jurisdiction.’” Hall, 359 F. Supp. 3d at 506 (emphasis in original). However,
the “transactions” described both in the Sixth Circuit case quoted in Hall and the accompanying
4 In its Reply, ECN Defendants dispute whether ECN-Fin is the same entity as EFC. [R. 160 at 4; 5-6.] Being
mindful of the fact that the Court should not weigh the controverting assertions of the party seeking dismissal, the
Court finds that even if it considers EFC to be the predecessor to ECN-Fin, the outcome of its analysis would remain
the same.
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district court cases cited by the court all involve the defendant reaching out to the plaintiff in
their forum state by travelling to that state or calling, texting, or emailing the plaintiff in that
state. See Beydoun v. Wataniya Restaurants Holding, Q.S.C., 768 F.3d 499, 505 (6th Cir. 2014)
(finding that the agent of the defendant travelling to the forum state to recruit the plaintiff
satisfied the “slightest transaction” test); Eat More Wings, LLC v. Home Mkt. Foods, Inc., 282 F.
Supp. 3d 965, 970 (E.D. Ky. 2017) (finding that the defendant transacted business in Kentucky
when he “sent emails to [plaintiff], knowing that he was in Kentucky, asking him to send
samples and instructions for his products, which [plaintiff] fulfilled from Kentucky”); Power
Investments, LLC v. Becker, No. CV 5:18-466-DCR, 2018 WL 4390722, at *3 (E.D. Ky. Sept.
14, 2018) (finding the defendant satisfied the “slightest transaction” test by calling, texting, and
sending e-mails to a Kentucky resident and asking him to wire money, which he did from
Kentucky).
Even under Plaintiffs’ proffered interpretation of “transacting any business,” Plaintiffs
still failed to make the required prima facie showing. Unlike the cases citing this interpretation of
§ 454.210(2)(a)(1), Plaintiffs have not alleged that Quality or ECN-Fin reached out to the
Plaintiffs in Kentucky in any way, including travelling to Kentucky or calling, texting, or
emailing Plaintiffs in Kentucky.
The Court finds that this district’s holding on a similar matter in Churchill Downs, Inc. v.
NLR Entm't, LLC sheds further light on this issue. Churchill Downs, Inc., No. 3:14-CV-166-H,
2014 WL 2200674, at *5 (W.D. Ky. May 27, 2014) (Heyburn, J.). In Churchill Downs, the court
found that the defendants’ actions did not amount to “transacting business” in Kentucky when
the defendants did not make any contacts with the state of Kentucky beyond entering an
agreement with a Kentucky plaintiff. Churchill Downs, Inc., No. 3:14-CV-166-H, 2014 WL
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2200674, at *6-7. In support, the court quoted a previous holding from the Western District of
Kentucky that stated: “[T]he key inquiry in personal jurisdiction cases concerns the activities of
the defendant, not the plaintiff.” Id. (quoting Spectrum Scan, Inc. v. AGM CA, 3:07 CV 72 H,
2007 WL 2258860, at *3 (W.D. Ky. Aug. 2, 2007) (emphasis in original), adhered to on denial
of reconsideration sub nom. Spectrum Scan, LLC v. AGM California, 519 F. Supp. 2d 655 (W.D.
Ky. 2007). Thus, the Court concluded that the plaintiff could not “predicate personal jurisdiction
on [its] conduct instead of [Defendants'] contacts with Kentucky.” Id. at *7 (quoting Thompson
v. Koko, 2012 WL 374054, at *2 (W.D. Ky. Feb. 3, 2012).
Similar to the plaintiff in Churchill Downs, Plaintiffs do not assert any contacts that
Quality or ECN-Fin may have had with Kentucky beyond the Vehicle Lease Program
Agreement. As stated above, Plaintiffs have not alleged that Quality or ECN-Fin reached out to
the Plaintiffs in Kentucky in any way, including travelling to Kentucky or calling, texting, or
emailing Plaintiffs in Kentucky. Thus, the Court finds that neither Quality nor ECN-Fin’s actions
amount to “transacting business” in Kentucky, and Plaintiffs’ claim under § 454.210(2)(a)(1)
cannot proceed.5 However, even if Plaintiffs’ claim were to succeed, the Court finds that
Plaintiffs’ claim would ultimately fail under the federal due process analysis.
B. Constitutional Due Process Test
ECN Defendants argue that the Due Process Clause does not permit the exercise of
jurisdiction over the ECN Defendants. [R. 149-1 at 5.] Plaintiffs respond that the interactions
between ECN-Fin and PTL are sufficient to satisfy due process considerations. [R. 159 at 17.]
The Court's exercise of jurisdiction comports with due process when the defendant has
sufficient minimal contacts such that “traditional notions of fair play and substantial justice are
5 The Court need not consider whether Plaintiffs’ claims “arise from” ECN Defendants’ contacts. Churchill Downs,
Inc., No. 3:14-CV-166-H, 2014 WL 2200674, at *7.
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not offended.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The frequency of
contacts is not determinative; the defendant's conduct must be such that he or she “should
reasonably anticipate being hauled into court there.” World–Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980).
“The minimum contacts requirement may be satisfied by a showing of either general
jurisdiction or specific jurisdiction.” Fortis Corporate Ins. v. Viken Ship Mgmt., 450 F.3d 214,
218 (6th Cir .2006); Fairbrother v. American Monument Found., LLC, 340 F. Supp. 2d 1147,
1153 (D. Colo. 2004). General jurisdiction over a nonresident requires a showing of continuous
and systematic contacts with the forum state. Aristech Chemical Intern. Ltd. v. Acrylic
Fabricators Ltd., 138 F.3d 624 (6th Cir. 1998); see Helicopteros Nacionales de Colombia, S.A.
v. Hall, 466 U.S. 408, 415 (1984). In order for a nonresident to be subject to the jurisdiction of
the court under specific jurisdiction, i.e., for specific claims asserted, those claims must arise out
of or be related to activities that were significant and purposely directed by the defendant at a
resident of the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472–73 (1985). The
following criteria have historically been employed to determine if specific personal jurisdiction
is appropriate:
First, the defendant must purposefully avail himself of the privilege of acting in
the forum state or causing consequence in the forum state. Second, the cause of
action must arise from the defendant's activities there. Finally, the acts of the
defendant or consequences must have a substantial enough connection with the
forum state to make the exercise of jurisdiction over the defendant reasonable.
Tobin v. Astra Pharmaceutical Products, Inc., 993 F.2d 528, 542–43 (6th Cir. 1993) (quoting
Theunissen, 935 F.2d at 1460). “[E]ach criterion represents an independent requirement, and
failure to meet any one of the three means that personal jurisdiction may not be invoked.” LAK,
Inc. v. Deer Creek Enterprises, 885 F.2d 1293, 1303 (6th Cir. 1989).
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Although ECN Defendants contend t hat the Court has neither general jurisdiction nor
specific jurisdiction, Plaintiffs only dispute whether the Court has specific jurisdiction over ECN
Defendants. [R. 159 at 16.] Thus, the Court will focus its analysis on whether the exercise of
specific jurisdiction over ECN Defendants is proper.
Under the first specific juris diction criterion, ECN Defendants contend that they did not
purposefully avail themselves of the privilege of acting in or causing consequence in Kentucky
because they are not parties to any agreements with Plaintiffs. [R. 149-1 at 10.] Rather, Plaintiffs
contracted with EFC, a Pennsylvania resident, through Individual Program Lease Agreements.
[Id.] Moreover, ECN Defendants contend that Plaintiffs do not allege in the Complaint that ECN
Defendants derived any benefits or enforced any obligations pursuant to these agreements by
availing themselves of the privileges of Kentucky law. [Id. at 11.]6
In Plaintiffs’ brief res ponse to this argument,7 they first assert that “ECN-Fin, while
acting as Element Financial Corp. worked in partnership with PTL in Kentucky, to create a long-
term leasing partnership agreement,” which constitutes purposeful availment in Kentucky. [R.
159 at 13.] The Court assumes that Plaintiffs are referring to the Vehicle Lease Program
6 Also, ECN Defendants mention that Plaintiffs alleged in their complaint that “on information and belief” ECN
Defendants entered into “joint agreements with PTL to administer the ‘Lease-Purchase Program’ in which Plaintiffs
participated and were purportedly harmed by.” [Id.] ECN Defendants contend that, assuming such agreements exist,
there is still “no allegation that the performance of such agreements connects the ECN defendants to Kentucky.”
[Id.]
7 It is possible that Plaintiffs’ argument was brief due to what appears to be Plaintiffs’ outdate understanding of the
Kentucky long-arm statute’s alignment with due process requirements. [R. 159 at 17 (“[A]ny exercise of jurisdiction
in accordance with the Kentucky long-arm statute would comport with the requirements of the due process clause as
a matter of simple logic.”). Indeed, some long-arm statutes run co-extensive with due process. E.g., Southern Mach.
Co. v. Mohasco Indust., Inc., 401 F.2d 374, 377 (6th Cir. 1968). That used to be the case in the Commonwealth.
However, the Kentucky Supreme Court reversed course in Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51
(Ky. 2011). Looking to the plain language of KRS 454.210, the court recognized that “the long-arm statute discloses
no language indicating that its provisions should, per se, be construed as coextensive with the limits of federal due
process.” Id. at 56. Following Caesars and its progeny, then, courts applying Kentucky law must engage in a two-
part inquiry. First, the Court must “determine if the cause of action arises from conduct or activity of the defendant
that fits into one of the [long-arm] statute's enumerated categories.” Id. at 57. Second, the Court must “determine if
exercising personal jurisdiction over the non-resident defendant offends his federal due process rights.” Id.
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Agreement between Quality and PTL as they specifically cite to that agreement earlier in their
motion when listing “key events” that exemplify their alleged business activities within
Kentucky. [See R. 159 at 6.] Furthermore, Plaintiffs mention that this transaction “lasted from
early 2014 through EFC’s sale of assets to Element Transportation,” and that ECN-Fin
“maintained and currently maintains a registered agent in Kentucky.” [Id.] After considering
Plaintiffs’ assertions, the Court finds that they have failed to meet the purposeful availment
criterion required to establish personal jurisdiction.
The purposeful availment requir ement “ensures that a defendant will not be haled into a
jurisdiction solely as a result of ‘random,’ ‘fortuitous' or ‘attenuated’ contacts or of the
‘unilateral activity of another party or third person.’” Burger King, 471 U.S. at 475 (internal
citations omitted). “Jurisdiction is proper, however, where the contacts proximately result from
actions by the defendant himself that create a ‘substantial connection’ with the forum State.” Id.
(citation omitted and emphasis in original). When a defendant “has created ‘continuing
obligations' between himself and the residents of the forum, he manifestly has availed himself of
the privilege of conducting business there.” Id. at 476 (internal citation omitted). “In addition,
physical presence in a forum state is not required, and the Supreme Court has ‘consistently
rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.’”
Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 551 (6th Cir. 2007) (citing
Burger King., 471 U.S. at 476).
Regarding contracts that cross st ate lines, the Supreme Court has stated that parties who
“‘reach out beyond one state and create continuing relationships and obligations with citizens of
another state’ are subject to regulation and sanctions for the consequences of their activities.”
Burger King, 471 U.S. at 473 (quoting Travelers Health Ass'n v. Virginia, 339 U.S. 643, 647,
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(1950)). “Although entering into a contract with an out-of-state party alone does not
automatically establish sufficient minimum contacts, the presence of certain factors in addition to
the contract will be found to constitute purposeful availment. Factors to consider are ‘prior
negotiations and contemplated future consequences, along with the terms of the contract and the
parties' actual course of dealing.’” Air Prods., 503 F.3d at 551 (citing Burger King, 471 U.S. at
478-79) (internal citation omitted).
The Court finds the Sixth Circuit’s holding in Air Products & Controls, Inc. v. Safetech
International, Inc.to be particularly informative in this matter. In Air Products, the Sixth Circuit
held that a Kansas corporation, Safetech, and its president, Davenport, purposefully availed
themselves of the privilege of acting in the forum state of Michigan when they opened a credit
account with Air Products and purchased goods from Air Products’s headquarters in Michigan
over a span of nine years. Id. Amongst several reasons for finding purposeful availment, the
Court first explained that the parties had engaged in a “continuous business relationship” in
which the defendants “sent purchase orders to Michigan, some or all of which presumably
formed the basis of contracts on which the parties ultimately based their breach of contract
claims in the initial Kansas litigation.” Id. The Court found that this was not a “one-time
transaction” but an instance where the defendants “reached out beyond Kansas' borders to
conduct business with a company whose principal place of business it knew to be in Michigan.”
Id.
Additionally, the Court in Air Products explained that the fact that Davenport “contacted
Air Products in Michigan on approximately several hundred occasions through telephone, email,
facsimile, and ordinary mail correspondence for purposes of discussing and placing orders for
goods” demonstrated purposeful availment as these contacts “were initiated by the defendants
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themselves and, therefore, are not simply the result of unilateral activity on the part of Air
Products.” Id. at 552. Furthermore, these contacts furthered the business relationship as they
were made for the purpose of placing purchase orders. Id.
In contrast to Air Products, the only factors Plaintiffs mention beyond the Vehicle Lease
Program Agreement are that the “transaction” lasted from 2014 until 2016 and that ECF-Fin has
a registered agent in Kentucky. [R. 159 at 16-17.] What is missing from Plaintiffs Complaint and
motions is any allegation that ECN-Fin, or Quality, “‘reach[ed] out beyond one state and
create[d] continuing relationships and obligations with citizens of another state’ . . . .” Burger
King, 471 U.S. at 473, (quoting Travelers Health Ass'n v. Virginia, 339 U.S. at 647). Although
the agreement between PTL and Quality was not necessarily a “one-time transaction,” Plaintiffs
do not allege Element reached out beyond the Indiana state border to conduct business with PTL
or that there were any communications via telephone, email, facsimile, or ordinary mail
correspondence for purposes of discussing truck leases. Moreover, Plaintiffs have not provided
any information regarding prior negotiations and contemplated future consequences of the
agreement or any details concerning the parties' actual course of dealing. Put simply, Plaintiffs
have not shown that a “substantial connection” with Kentucky was created from actions “by the
defendant[s] [themselves].” Burger King, 471 U.S. at 475.
As for Plaintiffs assertion r egarding the length of the transaction, the Sixth Circuit has
stated that “the parties' actions ‘in the negotiation and performance of the . . . agreement’ are
more important factors to consider than the duration of the contract in determining whether this
case ‘should be subject to suit in [the state at issue].’” Calphalon Corp. v. Rowlette, 228 F.3d
718, 722 (6th Cir. 2000) (quoting Nationwide Mut. Ins. Co. v. Tryg Intern. Ins. Co. Ltd., 91 F.3d
790, 796 (6th Cir. 1996)). Once again, besides the fact that PTL sent drivers to Quality
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Indianapolis to lease trucks, Plaintiffs provide no detail concerning the negotiation of the
agreement or actions taken by either party in furtherance of the performance of the agreement.
Regarding ECN-Fin’s registered agent in Kentucky, this district previously held that a
corporation having a registered agent in Kentucky did not establish a prima facie showing of
jurisdiction. Stuart v. Lowe’s Home Centers, LLC, No. 4:17-cv-077-JHM, 2017 WL 4875281, at
*2 (W.D. Ky Oct. 27, 2017) aff'd, 737 F. App'x 278 (6th Cir. 2018) (McKinley, J.). In Stuart, the
plaintiff alleged in his complaint that the defendant was subject to personal jurisdiction due to
the fact that the defendant was registered to do business in Kentucky with a registered agent.
Stuart, No. 4:17-CV-00077-JHM, 2017 WL 4875281, at *2.8 The court held that “this does not
make a prima facie showing of jurisdiction as it neither invokes any of the enumerated activities
from the Kentucky long-arm statute nor proves that the claim arose from Lowe's Home
Improvements, LLC's actions.” Stuart, No. 4:17-CV-00077-JHM, 2017 WL 4875281, at *2.
Thus, the Court finds that without any further evidence regarding ECN-Fin’s actions within
Kentucky, the fact that ECN-Fin has a registered agent in Kentucky does not tip the scales in
favor of purposeful availment.
Furthermore, the Court notes that the choice of law provision of the Vehicle Lease
Program Agreement states that the agreement is to be interpreted under the laws of Indiana, not
Kentucky. [R. 100-1 at 7.] The Supreme Court “stated that a choice of law provision, though
alone insufficient to establish jurisdiction, can ‘reinforce [a] deliberate affiliation with the forum
State and the reasonable foreseeability of possible litigation there.’” Calphalon Corp., 228 F.3d
at 723 (quoting Burger King, 471 U.S. at 482). Logically, it would seem that a choice of law
8 In fact, it appears as though it might be the same agent as the one listed for ECN-Fin. [See R. 159-13.] Both are
named Corporation Service Company and reside at 421 West Main Street, Frankfort, Kentucky. [Id.]
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provision favoring Indiana would weigh against “the reasonable foreseeability of possible
litigation” in Kentucky.
Finally, the Court notes that ot her courts within the Sixth Circuit have come to a similar
conclusion as this Court in the matter at hand. See Shehan v. Turner Construction Company, No.
CV 18-14-DLB-CJS, 2019 WL 1320046, at *9 (E.D. Ky. Mar. 22, 2019); McDermott v.
Johnston Law Office, P.C., No. 1:15-CV-00095-GNS, 2016 WL 1090624, at *3 (W.D. Ky. Mar.
18, 2016) (Stivers, J.) (holding that the court did not have personal jurisdiction in Kentucky over
the defendants when a contract existed between the parties but plaintiff failed to claim that
defendants’ communications to plaintiff “were made to further their business and to create
continuous and substantial consequences in Kentucky”). For example, in Shehan v. Turner
Construction Company, the Eastern District of Kentucky held that the plaintiff, Shehan, failed to
provide specific facts regarding communications between himself and the defendant, the
Museum of Natural History (“Museum”), that would allow the Museum to reasonably anticipate
being haled into court in Kentucky. Shehan, No. CV 18-14-DLB-CJS, 2019 WL 1320046, at *9.
In that case, Shehan claimed he satisfied the purposeful availment requirement by making a
substantial contract with the Museum, a resident of New York. Id. However, the court held that
Shehan failed to “describe any communications which may have been initiated by the Museum.”
Id. Furthermore, despite Shehan’s claim that he met with representatives of the Museum to
discuss the project at issue, the court found that Shehan failed to provide specific facts
concerning this contact that would demonstrate purposeful availment. Id. Like Shehan, Plaintiffs
have failed to provide specific facts regarding communications between PTL and Quality that
would demonstrate contacts between the parties and, therefore, allow ECN-Fin to reasonably
anticipate being haled into court in Kentucky.
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In sum, after viewing the pleadings and affidavits in a light most favorable to Plaintiffs,
the Court finds that ECN-Fin did not purposefully avail itself of the privilege of acting in or
causing consequence in Kentucky. Because Plaintiffs failed to make a prima facie showing that
ECN-Fin purposefully availed itself of this forum, the Court “need not dwell on” the final two
prongs of the due process analysis. LAK, Inc. v. Deer Creek Enter., 885 F.2d 1293, 1303 (6th
Cir. 1989).
C. ECN Capital Corp.
Plaintiffs argue that “ECN-Fin is a mere alter-ego to ECN-Cap, and accordingly, the
transactions which warrant the exercise of jurisdiction over ECN-Fin apply with equal force to
the exercise of jurisdiction over ECN-Cap.” [R. 159 at 2.] As the Court has found that Plaintiffs
failed to make a prima facie showing of personal jurisdiction over ECN-Fin, the Court holds that
personal jurisdiction cannot be exercised over ECN-Cap either.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED: ECN Defendants Motion to
Dismiss, [R. 149-1], is GRANTED without prejudice.
IT IS SO ORDERED.
cc: Counsel of Record
May 29, 2019
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