496 F.Supp.3d 872
E.D. Pa.2020Background
- In July 2019 O’Shaughnessy loaned $1,000,000 to SSPT as part of a purported "Bond Deal"; SSPT executed a promissory note promising return of the funds and containing an exclusive forum selection clause for the Eastern District of Pennsylvania.
- Plaintiff alleges the deal was fraudulent, the funds were disbursed and not returned, and he filed an amended complaint asserting breach of contract, securities and tort claims against multiple individuals and entities.
- SSPT conceded the forum clause precluded dismissal of the breach-of-note claim but moved to dismiss the remaining claims for lack of personal jurisdiction; Palazzo and Robison moved to dismiss for lack of personal jurisdiction as to all claims.
- Court interpreted the note’s clause broadly (covers disputes "arising out of or relating to" the note) and held it binds SSPT for all claims that have a logical or causal connection to the note.
- Court held Palazzo (SSPT president) is bound as a non‑signatory closely related to the contract (he signed the note, negotiated documents, received payments and had awareness of the clause).
- Court held Robison is not bound by the forum clause but exercised personal jurisdiction over him under the co‑conspirator jurisdiction theory, finding substantial acts in furtherance of the alleged conspiracy occurred in Pennsylvania (notably disbursement instructions sent from Bethlehem) and Robison was or should have been aware of them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the promissory note's forum selection clause confers specific jurisdiction over SSPT for all claims | The clause is broad ("arising out of or relating to") and all claims have a logical/causal connection to the note | Clause covers only contract claims; non‑contract tort claims fall outside | Held: Clause is broad and unambiguous; it binds SSPT for all claims that relate to the note; dismissal denied |
| Whether Palazzo (individual) is bound by the forum clause | Palazzo is closely related/non‑signatory: he signed the note, negotiated, received benefit and knew of clause | Palazzo is domiciled in CA and not personally subject to clause absent clear showing | Held: Palazzo is bound as a closely related non‑signatory (foreseeability, participation, direct benefit); dismissal denied |
| Whether Robison is bound by the forum clause | Robison was an SSPT agent and communicated repeatedly with plaintiff about funds, so clause should bind him | Robison did not sign or participate in drafting the note; lacks showing of awareness of clause | Held: Robison is not shown to be bound by the clause; forum‑clause dismissal denied only as to other grounds |
| Whether co‑conspirator jurisdiction supports personal jurisdiction over Robison | Substantial acts in furtherance of conspiracy occurred in PA (closing/disbursement instructions sent from Bethlehem) and Robison was/should have been aware; his repeated false assurances furthered the scheme | Mere membership in conspiracy does not subject a non‑forum conspirator to jurisdiction absent substantial in‑forum acts or awareness | Held: Exercised co‑conspirator jurisdiction over Robison — plaintiff pleaded substantial in‑forum acts and Robison's awareness/participation; dismissal denied |
Key Cases Cited
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general vs. specific jurisdiction framework)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (forum selection clauses and consent to jurisdiction)
- John Wyeth & Bro. Ltd. v. Cigna Int’l Corp., 119 F.3d 1070 (3d Cir. 1997) (breadth of "relating to" language in forum clauses)
- In re McGraw‑Hill Global Educ. Holdings LLC, 909 F.3d 48 (3d Cir. 2018) (tests for binding non‑signatories to forum clauses; foreseeability requirement)
- Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93 (3d Cir. 2004) (prima facie burden for personal jurisdiction at motion‑to‑dismiss stage)
- Crescent Int’l, Inc. v. Avatar Communities, Inc., 857 F.2d 943 (3d Cir. 1988) (forum clauses covering related tort claims)
- Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (applying forum clauses to related torts)
- In re Remicade (Direct Purchaser) Antitrust Litig., 938 F.3d 515 (3d Cir. 2019) (illustrating broad scope of "relating to" language in dispute‑allocation clauses)
- Atlantic Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49 (2013) (forum‑selection clause effect on transfer analysis)
- Aluminum Bahrain B.S.C. v. Alcoa Inc., 866 F. Supp. 2d 525 (W.D. Pa. 2012) (co‑conspirator jurisdiction principles)
- Gen. Elec. Co. v. Deutz AG, 270 F.3d 144 (3d Cir. 2001) (plaintiff's burden on personal jurisdiction)