Brasure's Pest Control, Inc. v. Air Cleaning Equipment, Inc., 1:17-cv-00323

Background

Plaintiff Brasure's Pest Control, Inc. sued Air Cleaning Equipment, Inc. (ACE) and individual defendants Robert Clemens and Kevin Yow alleging misrepresentations and omissions that induced purchases of dehumidifiers.
Clemens and Yow moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The matter was referred to a Magistrate Judge.
The Magistrate Judge issued a Report and Recommendation recommending dismissal for lack of personal jurisdiction. Plaintiff filed a specific objection only to the Magistrate Judge’s reliance on the fiduciary (corporate) shield doctrine.
The District Court reviewed de novo, addressing Delaware’s long-arm statute (10 Del. C. § 3104(c)(1)–(4)) and the federal due process minimum-contacts inquiry.
The Court found the amended complaint lacked allegations that any defendant’s act occurred in Delaware or that the defendants had sufficient forum contacts to support specific or general jurisdiction.
The Court denied Plaintiff’s request for jurisdictional discovery for failure to show reasonable particularity that jurisdictional facts existed and for lacking good cause to delay the request until after the Report and Recommendation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Delaware has specific jurisdiction under § 3104(c)(1) based on alleged representations/omissions	Clemens and Yow made oral/written misrepresentations to Brasure's; those acts induced purchases and support jurisdiction	Contacts were made on behalf of ACE and did not occur in Delaware; therefore no transaction of business by individuals in Delaware	Dismissal upheld: Plaintiff alleged no act occurring in Delaware; § 3104(c)(1) not satisfied
Whether fiduciary/corporate shield bars consideration of defendants’ forum contacts	Plaintiff: fiduciary shield misapplied because defendants weren’t acting in ordinary employment when they made misrepresentations	Defendants: contacts tied to corporate role; shield limits using corporate contacts to establish individual jurisdiction	Court: need not resolve shield question; even crediting fiduciary-capacity contacts, plaintiff’s allegations insufficient to establish jurisdiction
Whether general jurisdiction exists under § 3104(c)(4) (persistent course of conduct or substantial revenue)	Plaintiff argued broadly that defendants’ contacts allow jurisdiction under (c)(4)	Defendants lacked the necessary continuous and systematic contacts with Delaware	Held: (c)(4) not satisfied; no general jurisdiction shown
Whether jurisdictional discovery should be allowed	Plaintiff sought discovery to depose Clemens and Yow to uncover contacts with Delaware	Defendants opposed; discovery was not previously requested and would be a fishing expedition	Denied: Plaintiff waived timely request and failed to show reasonable particularity or good cause to warrant jurisdictional discovery

Key Cases Cited

Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003) (plaintiff must establish jurisdictional contacts with reasonable particularity; governs jurisdictional discovery standard)
Provident Nat‘l Bank v. Cal. Fed. Sav. & Loan Ass’n, 819 F.2d 434 (3d Cir. 1987) (plaintiff bears burden to show minimum contacts once jurisdictional defense raised)
Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 (3d Cir. 1984) (Rule 12(b)(2) requires competent evidence, e.g., affidavits, to resolve jurisdictional facts)
International Shoe Co. v. Washington, 326 U.S. 310 (1945) (due process requires minimum contacts so suit does not offend fair play and substantial justice)
Eurofins Pharma US Holdings v. BioAlliance Pharma SA, 623 F.3d 147 (3d Cir. 2010) (jurisdictional discovery not permitted as a fishing expedition; must show factual predicate)
Jeffreys v. Exten, 784 F. Supp. 146 (D. Del. 1992) (Delaware courts interpret long-arm provisions liberally but subject to due process limits)
Thorn EMI N. Am., Inc. v. Micron Tech., Inc., 821 F. Supp. 272 (D. Del. 1993) (to transact business under § 3104(c)(1), an act must be directed at Delaware residents and some act must occur in Delaware)
TriStrata Tech., Inc. v. Neoteric Cosmetics, Inc., 961 F. Supp. (D. Del.) (an act must actually occur in Delaware to satisfy § 3104(c)(1))