138 A.3d 1160
Del. Super. Ct.2016Background
- Wiggins sued PAS (a Delaware LLC with principal place of business in Pennsylvania) for breach of contract and WPCL violations; later amended to add Klear (PAS CEO) alleging personal liability under Pennsylvania WPCL.
- Klear is a Pennsylvania resident, worked at PAS’s Pennsylvania office, signed Wiggins’s Employment Agreement as CEO, and was involved in HR decisions (hiring, salary, firing).
- Wiggins alleges Klear offered and promised a $20,000 raise, failed to pay it, then accused her of violating a non-solicitation covenant and terminated her.
- Wiggins seeks to subject Klear to Delaware personal jurisdiction under 6 Del. C. § 18-109 (Delaware LLC implied consent for managers) based on his managerial role.
- Klear moved to dismiss under Rule 12(b)(2), arguing § 18-109 and due process do not permit jurisdiction because the claims arise under Pennsylvania law and Klear lacks Delaware contacts.
- The Superior Court evaluated whether § 18-109 applies and whether minimum contacts/due process are satisfied, and also rejected Wiggins’s alternative waiver/consent theory based on PAS’s counterclaims.
Issues
| Issue | Wiggins's Argument | Klear's Argument | Held |
|---|---|---|---|
| Whether § 18-109 authorizes service on Klear as a PAS manager for WPCL claims | Klear was a high-ranking officer/manager whose HR decisions relate to PAS’s business and thus § 18-109 applies | § 18-109 does not reach nonresident managers for claims that are derivative of the LLC and arise under non-Delaware law | Court: § 18-109 not satisfied because claims do not focus on duties Klear owed to the LLC under Delaware law; Rosheim factors unmet |
| Whether Delaware law is inextricably bound up in the dispute (Rosheim prong) | Delaware has an interest because Klear served as CEO of a Delaware LLC and allegedly availed himself of Delaware status | The claims arise under Pennsylvania law; resolution does not require Delaware law or interpretation of LLC governance | Court: Not inextricably bound up in Delaware law; plaintiff offered no facts showing Delaware law implicated |
| Whether Klear has minimum contacts with Delaware to satisfy due process | Klear purposefully availed himself by forming or filing documents for PAS in Delaware and thus should anticipate suit here | Klear is a Pennsylvania resident who worked and acted in Pennsylvania; no evidence he purposefully availed himself of Delaware forum | Court: No minimum contacts; Wiggins failed to show purposeful availment or ties sufficient for jurisdiction; due process not satisfied |
| Whether Klear consented or waived personal jurisdiction by virtue of PAS filing counterclaims | As CEO, Klear caused PAS to file counterclaims and thus consented or waived objection | Filing of counterclaims by PAS is not attributable to Klear personally; no evidence Klear abandoned a defensive posture | Court: No waiver/consent shown; PAS’s filings cannot be imputed to Klear for jurisdictional consent |
Key Cases Cited
- Greenly v. Davis, 486 A.2d 669 (Del. 1984) (plaintiff bears burden to show basis for jurisdiction on motion to dismiss)
- Assist Stock Mgmt., L.L.C. v. Rosheim, 753 A.2d 974 (Del. Ch. 2000) (test for when § 18-109 may reach nonresident managers)
- Werner v. Miller Tech. Mgmt., L.P., 831 A.2d 318 (Del. Ch. 2003) (treatment of Rule 12(b)(2) and jurisdictional showing)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts standard for due process)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 294 (1980) (reasonableness and foreseeability in personal jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (fairness/factors after minimum contacts)
- Hanson v. Denckla, 357 U.S. 235 (1958) (defendant must have minimal contacts before being haled into distant forum)
- Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999) (distinction between authority over subject matter and parties for binding adjudications)