Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. Wis.: Glue application systems distributor stuck in federal court, (Mar 18, 2015)

By Greg Hammond, J.D.

A distributor of glue application systems was not entitled to dismissal of claims that it violated the Wisconsin Fair Dealership Law and breached a distributorship agreement, based on lack of jurisdiction and improper venue grounds. The federal district court in Milwaukee, however, dismissed the company’s CEO for lack of personal jurisdiction, concluding that it did not have specific or general jurisdiction over the executive (Robatech Midwest, Inc. v. Leuthner, March 17, 2015, Stadtmueller, J.).

Background. Defendant Robatech USA, Inc., a Georgia corporation, is the primary distributor of Robatech glue application systems in the United States. The company, in part, distributes Robatech products to sub-distributors, such as Robatech Midwest, Inc.—the plaintiff in this case. Defendant Marcel Leuthner is the President and CEO of Robatech USA.

Robatech Midwest filed suit against Leuthner and Robatech USA, bringing claims for the violation of the Wisconsin Fair Dealership Law, injury to business, breach of contract, promissory estoppel, declaratory judgment, and breach of implied duty of good faith and fair dealing. Specifically, Robatech Midwest asserts that the defendants cabined the plaintiff’s sales area; facilitated sales by the plaintiff’s competitors; imposed a strict credit limit on plaintiff; increased Robatech USA prices; and denied plaintiff access to the annual seminars hosted by Robatech USA. The defendants filed separate motions to dismiss for lack of jurisdiction.

Proper venue. First, the court considered Robatech USA’s argument that the distributorship agreement required venue of the action in the Superior Court of Cobb County, Georgia. The issue, according to the court, was whether the “Applicable Law” provision in the agreement actually provides that venue resides in the superior court, to the exclusion of all other venues. The provision states, in relevant part, that, “Distributor waives any objection based on inconvenience of venue and any objection to venue or forum for such claim or cause of action, and hereby submits to jurisdiction and venue in the Superior Court of Cobb County, Georgia.”

The court concluded that this provision was permissive, rather than mandatory, and that venue was therefore appropriate in the federal district court. Specifically, it determined that the clause would require that the plaintiff submit to jurisdiction in the superior court “if” brought into court there, but that nothing actually required the plaintiff to bring its claims only in the superior court.

Personal jurisdiction. In his own motion to dismiss, Leuthner argued that he was not subject to personal jurisdiction in Wisconsin. The court agreed, finding first that it could not exercise specific jurisdiction over Leuthner. Specifically, it determined that Leuthner’s prior entries into Wisconsin did not appear to be related to the plaintiff’s claims; Leuthner’s alleged facilitation of sales to plaintiff’s customers and sale/shipment of products to competitors were unsubstantiated and not sufficiently related to Wisconsin; and Leuthner’s having contacted the plaintiff in Wisconsin was not enough to establish specific jurisdiction there. Further, the court could not exercise general jurisdiction over Leuthner because he was not domiciled in Wisconsin and his contacts with the state were not so continuous and systematic to render him at home in Wisconsin. He was therefore dismissed from the suit.

Failure to state claim. In Robatech USA’s separate motion to dismiss, the company alternatively argued that the injury to business, promissory estoppel, and breach of implied duty claims must be dismissed for failure to state a claim upon which relief can be granted. The court denied the motion without prejudice, finding that neither party adequately addressed the choice of law issues that animated the case. An issue remained in which state’s law, Wisconsin or Georgia, applied in this case. Consequently, the court provided the parties with an opportunity to consider and discuss the issue of which state’s law applies, leaving open the opportunity for plaintiff to amend its complaint and for the defendants to file further motions as appropriate.

The case number is 14-CV-1230-JPS.

Attorneys: Joseph D. Newbold (O'Neil Cannon Hollman DeJong & Laing SC) for Robatech Midwest, Inc. William V. Hearnburg, Jr. (Smith Gambrell & Russell LLP) for Robatech USA, Inc.

Companies: Robatech Midwest, Inc.; Robatech USA, Inc.

Cases: FranchisingDistribution WisconsinNews