MAG IAS Holdings v. Rainer Schm�ckle
854 F.3d 894
| 6th Cir. | 2017Background
- MAG Holdings (Delaware) and MAG U.S. Holdings, LLC (plaintiffs) sued former MAG Group CEO Rainer Schmückle (a German citizen) in Michigan state court for breach of fiduciary duty, negligence, waste, unjust enrichment, and tortious interference arising from alleged conduct to engineer a "fire sale" of MAG assets and to favor MAG Germany over MAG’s Michigan operations.
- Schmückle served as MAG Group CEO Nov. 2014–June 2015, reportedly held himself out as global CEO, communicated regularly with Michigan-based executives (Prina and Dudek), and visited Michigan twice (Dec. 2014 and Feb. 2015); plaintiffs allege he diverted work and funds from MAG Automotive (Sterling Heights, MI) to MAG Germany and caused harm to Michigan operations.
- Schmückle removed the action to federal court and moved to dismiss for lack of personal jurisdiction (and also for failure to state a claim and forum non conveniens); the district court dismissed for lack of personal jurisdiction without an evidentiary hearing.
- After removal, Schmückle filed wrongful-termination litigation in Germany; the German Ulm Regional Court issued judgment favoring Schmückle on termination claims, and an appeal was pending at oral argument.
- On appeal, the Sixth Circuit reviewed the dismissal de novo, applying the prima facie standard (plaintiffs’ pleadings and affidavits taken in their favor) and considered purposeful availment, whether claims arose from Michigan contacts, and reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction: purposeful availment | Schmückle acted with authority over MAG’s Michigan operations, communicated routinely with Michigan execs, visited Michigan, directed transfers and fees that harmed Michigan operations, and thus purposefully availed himself of Michigan | Schmückle argues his contacts targeted plaintiffs only (not Michigan), tenure was short, employment agreement had German venue/choice-of-law clauses, and conduct primarily occurred abroad | Prima facie showing of purposeful availment satisfied — trips, regular communications, claimed control and directives to Michigan-based personnel distinguish Walden and support minimum contacts |
| Personal jurisdiction: nexus (claims arise from Michigan contacts) | Alleged harm to MAG US and MAG Automotive in Michigan resulted from directives and transfers effected via communications and visits to Michigan | Schmückle contends core misconduct (refusing minority investment, wasting group assets) occurred outside Michigan and is only tangentially related to Michigan contacts | Lenient standard met: plaintiffs’ claims have a substantial connection to Schmückle’s Michigan contacts (transfers, fees, directives) |
| Personal jurisdiction: reasonableness (fair play and substantial justice) | Burden on defendant is not dispositive; Michigan has an interest in harms to Michigan-based business and employees; plaintiffs have an interest in forum | Schmückle cites burden of foreign litigation, parallel German proceedings, and forum-selection clause to argue unreasonableness | Inference of reasonableness not overcome on current record; defendant’s U.S. travel and Oregon residence reduce burden, and further factual development may inform reasonableness on remand |
| Forum non conveniens / forum-selection clause effect | Plaintiffs did not concede German forum; district court did not reach forum non conveniens — plaintiffs prefer Michigan | Schmückle sought dismissal on forum non conveniens and relied on German clause | Sixth Circuit declines to decide forum non conveniens; remands for further proceedings (district court to address on fuller record) |
Key Cases Cited
- Theunissen v. Matthews, 935 F.2d 1454 (6th Cir. 1991) (standards for district court resolution of jurisdictional facts and evidentiary options)
- Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212 (6th Cir. 1989) (jurisdictional hearing and discovery standards)
- Air Prods. & Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544 (6th Cir. 2007) (prima facie burden and reasonableness inference once first two prongs met)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (out-of-state injury to forum resident, standing alone, is insufficient for jurisdiction)
- Calder v. Jones, 465 U.S. 783 (1984) (effects test where defendant’s tort targeted the forum’s community)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and foreseeability of being haled into forum courts)
- S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374 (6th Cir. 1968) (three-part test: purposeful availment, arising-from nexus, and reasonableness)
- CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996) (quality over quantity of contacts; ongoing business relationships)
- Calphalon Corp. v. Rowlette, 228 F.3d 718 (6th Cir. 2000) (contacts attributable to a plaintiff’s location insufficient absent intent to create continuous consequences)
- Fortis Corporate Ins. v. Viken Ship Mgmt., 450 F.3d 214 (6th Cir. 2006) (presumption of reasonableness where defendant purposefully availed and forum has interest)
- Miller v. AXA Winterthur Ins. Co., 694 F.3d 675 (6th Cir. 2012) (distinguishing cases where defendant had no presence, all events occurred abroad, and translation/foreign-law issues made Michigan forum unreasonable)