MAG IAS Holdings v. Rainer Schm?ckle

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 17a0093p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MAG IAS HOLDINGS, INC.; MAG US HOLDINGS, ┐
LLC, │
Plaintiffs-Appellants, │
> No. 16-1550
│
v. │
│
│
RAINER SCHMÜCKLE, │
Defendant-Appellee. │
┘
Appeal from the United States District Court for
the Eastern District of Michigan at Ann Arbor.
No. 5:15-cv-14010—John Corbett O’Meara, District Judge.
Argued: December 6, 2016
Decided and Filed: April 21, 2017
Before: GIBBONS, SUTTON, and WHITE, Circuit Judges.
_________________
COUNSEL
ARGUED: William F Cavanaugh, Jr., PATTERSON, BELKNAP, WEBB & TYLER LLP,
New York, New York, for Appellants. David Newmann, HOGAN LOVELLS US LLP,
Philadelphia, Pennsylvania, for Appellee. ON BRIEF: William F Cavanaugh, Jr., Craig A.
Newman, PATTERSON, BELKNAP, WEBB & TYLER LLP, New York, New York, Marc L.
Newman, THE MILLER LAW FIRM, Rochester, Michigan, for Appellants. David Newmann,
Alexander B. Bowerman, HOGAN LOVELLS US LLP, Philadelphia, Pennsylvania, Catherine
E. Stetson, Sean Marotta, HOGAN LOVELLS US LLP, Washington, D.C., Philip J. Kessler,
HONIGMAN, MILLER, SCHWARTZ & COHN, Detroit, Michigan, for Appellee.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 2
_________________
OPINION
_________________
JULIA SMITH GIBBONS, Circuit Judge. MAG IAS Holdings, Inc. (MAG Holdings)
and MAG U.S. Holdings, LLC (MAG US, collectively plaintiffs) appeal the dismissal of their
diversity action against Rainer Schmückle for lack of personal jurisdiction. Because plaintiffs
have made a prima facie showing that the district court can exercise personal jurisdiction over
Schmückle, we reverse and remand the case for further proceedings consistent with this opinion.
I.
A.
During the relevant time period, the MAG Group was an affiliation of entities that
together formed a multinational manufacturing-technology company providing production plants
and machinery to make engine and chassis parts for the automotive industry. One of these
entities was MAG Holdings, a Delaware corporation. MAG Holdings owned a controlling stake
in MAG US, a Delaware limited-liability company. MAG US, in turn, owned one-hundred
percent of MAG Automotive LLC (MAG Automotive), a Delaware limited liability company
with its principal place of business in Sterling Heights, Michigan. Through a subsidiary, MAG
Holdings also owned a majority stake in MAG IAS GmbH (MAG Germany), a German
company. MAG Automotive and MAG Germany have since been sold to the Fair Friend Group,
a Taiwanese investment firm.
Moshe Meidar is MAG Holdings’s majority shareholder. He previously served as CEO
of the MAG Group. Even after stepping down as CEO, Meidar continued as president of MAG
Holdings and chairman of MAG US. In addition to Meidar, the MAG US leadership team
included Brian Prina (president) and Robert Dudek (secretary and treasurer). Prina and Dudek
also held positions at MAG Automotive: Prina was president, and Dudek was vice-president of
finance. Both Prina and Dudek lived in Michigan and worked at MAG Automotive’s Sterling
Heights facility.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 3
Rainer Schmückle is a German citizen living in Germany. From November 2014 until
his termination in June 2015, Schmückle served as CEO of the MAG Group and managing
director of MAG Germany pursuant to an employment contract.
B.
On August 19, 2015, MAG Holdings and MAG US sued Schmückle in Macomb County
Circuit Court for breach of fiduciary duty, professional negligence, waste of corporate assets,
unjust enrichment, and tortious interference under Michigan law. Plaintiffs allege that, as CEO
of the MAG Group, Schmückle “implemented an elaborate scheme” to engineer a “fire sale” of
MAG Group assets for his own personal financial benefit. DE 1-2, State Ct. Compl., Page ID
11–12. They claim that Schmückle’s conduct injured them and their Michigan-based subsidiary,
MAG Automotive.
Schmückle removed the case to the United States District Court for the Eastern District of
Michigan. He then filed motions to dismiss for failure to state a claim, lack of personal
jurisdiction, and forum non conveniens, along with a declaration disputing many of the
jurisdictional facts alleged in the complaint. In response, plaintiffs filed affidavits from Dudek
and Prina.
With respect to personal jurisdiction, plaintiffs claim that Schmückle “transacted business
within the State of Michigan” and that his “actions and activities led to consequences within the
State of Michigan.” Id. at 14. In their complaint and supporting affidavits, plaintiffs make a
number of allegations about Schmückle’s tenure at the MAG Group as it relates to his Michigan
contacts. Plaintiffs allege that when Schmückle was hired in November 2014, he was given a
mandate by the MAG Group’s board of directors to improve the company’s financial situation by
identifying and pursuing financing options. They allege that Schmückle’s compensation package
provided him an equity bonus upon the sale of MAG Group assets, but not for minority
investments or other financing arrangements, and that this led Schmückle to act in his own self-
interest instead of acting in the best interests of the company.
Plaintiffs assert that Schmückle was responsible for the “worldwide operations of the
MAG Group”—including MAG US and MAG Germany—and that he held himself out as the
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 4
“Global CEO” of the company. Id. at 16; DE 14, Dudek Aff., Page ID 247. They allege that
Prina and Dudek reported directly to Schmückle. Prina claims that he had “ongoing and
substantive” contact with Schmückle: that they communicated regularly by email and three to
four times a week by phone. DE 15, Prina Aff., Page ID 258.
Plaintiffs further allege a number of ways in which Schmückle was closely involved with,
and exercised control over, day-to-day operations at MAG US in Michigan. Specifically, they
allege that (1) he was involved in determining facility operations, budgets, work flow, and sales
priorities; (2) he charged MAG US a € 1.5 million annual administrative fee used to pay a
portion of his salary and expenses; (3) he reallocated work from the “consistently profitable”
Michigan facility to the “less-profitable” operations at MAG Germany and negatively affected
the profitability of MAG US in Michigan; and (4) he told MAG US leaders to prepare to transfer
$10 million to MAG Germany to cover an equity shortfall.
Schmückle allegedly visited Michigan twice during his eight-month tenure as CEO. In
December 2014, he spent three days in Michigan meeting with the management team, learning
about the Sterling Heights facility, and reviewing historical and projected performance. During
that trip, Schmückle allegedly instructed Dudek and his German counterpart to “transfer a
portion of the general administration and [R&D] expenses from the German operations to the
Michigan operations.” DE 14, Dudek Aff., Page ID 247. In February 2015, Schmückle
allegedly returned to Michigan to meet with executives from the Ford Motor Company, MAG
Automotive’s largest client.
Plaintiffs also claim that on June 3, 2015, Schmückle met with Prina, Dudek, Meidar, and
others in Frankfurt, Germany, to discuss proposals from outside investors. At that meeting,
Schmückle allegedly stated that unless the MAG Group assets were sold, he would force the
MAG Group into insolvency, despite warnings from Prina and Dudek that such action would
cause irreparable harm to MAG US and MAG Automotive in Michigan. Schmückle’s
employment was allegedly terminated the next day.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 5
Finally, beyond his involvement with the MAG Group, plaintiffs allege that Schmückle
maintains a residence in Portland, Oregon, and that he sits on the boards of at least three
companies based in the United States.
The district court, without holding an evidentiary hearing, granted Schmückle’s motion to
dismiss for lack of personal jurisdiction on the grounds that exercising personal jurisdiction over
Schmückle would not comport with due process. The court did not decide whether the complaint
failed to state a claim or whether the case should be dismissed on forum non conveniens grounds.
Plaintiffs filed a timely notice of appeal.
C.
On September 1, 2015, shortly after the Michigan suit was filed, Schmückle filed a
wrongful-termination claim against MAG Germany in the Ulm Regional Court in Germany.1
There, Schmückle alleged that his termination violated the German Civil Code and that he was
due additional salary and benefits payments. MAG Germany argued that terminating Schmückle
without notice was proper given “his permanent refusal to act for the benefit of the company and
to safeguard the asset interests of the company and its shareholders and business policies driven
by [his] own financial interest[.]” DE 22-3, Ex. 2 to Newmann Decl., Page ID 371. MAG
Germany clarified that it was not seeking damages from Schmückle, even though MAG
Holdings and MAG US were pursuing such relief in Michigan courts. The Ulm Regional Court
issued a judgment on July 15, 2016. The court found that Schmückle was not properly
terminated, ordered MAG Germany to make a series of compensatory payments, and otherwise
dismissed the suit. Based on the parties’ representations at oral argument, we understand that an
appeal in the German litigation is pending.
II.
In deciding a motion to dismiss for lack of personal jurisdiction, the district court may
rely “upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may
1
Schmückle asks us to take judicial notice of this proceeding. Because both parties have discussed it in
briefing the jurisdictional question before us, we note the existence of German litigation for the limited purpose of
our current jurisdictional analysis. See Mike’s Train House, Inc. v. Lionel, L.L.C., 472 F.3d 398, 411–12 (6th Cir.
2006); United States v. Garland, 991 F.2d 328, 332–33 (6th Cir. 1993).
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 6
conduct an evidentiary hearing to resolve any apparent factual questions.” Theunissen v.
Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Serras v. First Tenn. Bank Nat’l Ass’n,
875 F.2d 1212, 1214 (6th Cir. 1989)). Although plaintiffs have the burden of establishing that a
district court can exercise jurisdiction over the defendant, that burden is “relatively slight”
where, as here, the district court rules without conducting an evidentiary hearing. Air Prods.
& Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (quotation omitted).
To defeat dismissal in this context, plaintiffs need make only a prima facie showing that personal
jurisdiction exists. Id. (citing Theunissen, 935 F.2d at 1458).
We review a dismissal for lack of personal jurisdiction de novo. Intera Corp. v.
Henderson, 428 F.3d 605, 614 (6th Cir. 2005). In reviewing the prima facie case, we consider
pleadings and affidavits “in a light most favorable to the plaintiff[s],” and do not weigh “the
controverting assertions of the party seeking dismissal.” Theunissen, 935 F.2d at 1459. When a
prima facie showing is made, remand is appropriate, but the defendant can continue to contest
personal jurisdiction by requesting an evidentiary hearing or moving for summary judgment
should the evidence suggest “a material variance from the facts” as presented by plaintiffs.
Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 893 (6th Cir. 2002).
III.
In determining whether limited personal jurisdiction exists over a given defendant, we
look to both the long-arm statute of the forum state and constitutional due-process requirements.2
Air Prods. & Controls, Inc., 503 F.3d at 550. The Michigan long-arm statute, however, “extends
to the limits imposed by federal constitutional due process requirements and thus, the two
questions become one.” AlixPartners, LLP v. Brewington, 836 F.3d 543, 549 (6th Cir. 2016)
(quoting Mich. Coalition of Radioactive Material Users, Inc. v. Grienpentrog, 954 F.2d 1174,
1176 (6th Cir. 1992)). The exercise of personal jurisdiction over Schmückle is consistent with
due process if Schmückle purposefully availed himself of the privilege of acting or causing a
consequence in Michigan, if the cause of action arose from his Michigan activities, and if his
actions, or the consequences he caused, have a sufficiently substantial connection with Michigan
2
Plaintiffs allege only limited personal jurisdiction. They do not claim that Schmückle is subject to general
personal jurisdiction in Michigan.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 7
so as to make the exercise of jurisdiction reasonable. Miller v. AXA Winterthur Ins. Co.,
694 F.3d 675, 680 (6th Cir. 2012) (citing S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374,
381 (6th Cir. 1968)). After considering plaintiffs’ complaint and affidavits in a light most
favorable to them, we conclude that they have made a prima facie showing that personal
jurisdiction exists.
A.
First, to determine purposeful availment, we ask whether Schmückle acted or caused a
consequence in Michigan such that he invoked the benefits and protections of Michigan law. S.
Mach. Co., 401 F.2d at 381. This ensures that Schmückle could have reasonably “anticipate[d]
being haled into court there,” see LAK, Inc. v. Deer Creek Enters., 885 F.2d 1293, 1300 (6th Cir.
1989) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)), and it
ensures that he is not brought into a Michigan court “solely as a result of ‘random,’ ‘fortuitous’
or ‘attenuated’ contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).
The Supreme Court has said that purposeful availment exists if the defendant created a
“substantial connection” with the forum state by engaging in “significant activities within [the]
State,” or by creating “continuing obligations” to residents in that state. Id. at 475–76 (internal
citation and quotation marks omitted). We have extended this to business relationships
“intended to be ongoing in nature.” See CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1265 (6th
Cir. 1996) (citing S. Mach. Co., 401 F.2d at 385). The Supreme Court has also clarified that
although “a defendant’s contacts with the forum State may be intertwined with his transactions
or interactions with the plaintiff or other parties,” a relationship with the plaintiff or a third party,
“standing alone, is an insufficient basis for jurisdiction.” Walden v. Fiore, 134 S. Ct. 1115, 1123
(2014). Instead, the focus is on “the defendant’s contacts with the forum State itself.” Id. at
1122; see Brewington, 836 F.3d at 551. Additionally, although the Court has said that physical
presence in the forum state is not required, Burger King, 471 U.S. at 476, physical entry by the
defendant “is certainly a relevant contact.” Walden, 134 S. Ct. at 1122.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 8
1.
As an initial matter, we are not persuaded by Schmückle’s argument that Walden
precludes a finding of jurisdiction in this case. In Walden, the Court considered whether a
federal court in Nevada had jurisdiction over a Georgia police officer who had filed a false
affidavit against two Nevada residents knowing that it would affect them in Nevada. 134 S. Ct.
at 1120. The Court found that the officer lacked minimum contacts because the officer’s conduct
occurred in Georgia and he “never traveled to, conducted activities within, contacted anyone in,
or sent anything or anyone to Nevada.” Id. at 1124–25. The officer’s only connection to Nevada
was by way of the plaintiffs he targeted there. Id. In holding that “mere injury to a forum
resident is not a sufficient connection to the forum,” id. at 1125, the Court distinguished its prior
decision in Calder v. Jones, 465 U.S. 783 (1984), where it had found personal jurisdiction in
California over an out-of-state defendant based on a libelous article published there, reasoning
that the tort had involved the California community beyond just the plaintiff. Walden, 134 S. Ct.
at 1125; Calder, 465 U.S. at 788–89.
We have had only one occasion to consider Walden’s impact. In doing so, we held that a
Brazilian insurance company, which operated only in Brazil, lacked minimum contacts with
Ohio where it was sued for breach of contract after refusing to indemnify a judgment against one
of its clients. Maxitrate Tratamento Termico E Controles v. Super Sys., Inc., 617 F. App’x 406,
407 (6th Cir. 2015). We refused to find purposeful availment on the sole basis that the Brazilian
insurer knew its refusal to indemnify would have effects in Ohio because doing so would have
allowed the plaintiffs to create jurisdiction on the basis of their contacts, not the defendant’s. Id.
at 409.
Schmückle argues that because he targeted his conduct only at plaintiffs and not at
Michigan itself, Walden forecloses a finding of purposeful availment. Plaintiffs argue that
“causing consequences” in Michigan is still sufficient to establish purposeful availment because
Walden limited, but did not clearly overrule, the Court’s prior decision in Calder. Neither party
is entirely correct. Walden simply holds that an out-of-state injury to a forum resident, standing
alone, cannot constitute purposeful availment. See Walden, 134 S. Ct. at 1123–24. The
implications of Schmückle’s position are untenable and represent an overly broad reading of
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 9
Walden. It would severely limit the availability of personal jurisdiction if every defendant could
simply frame his conduct as targeting only the plaintiffs and not the forum state. Schmückle
seems to recognize as much by admitting that his relationship with MAG operations in Michigan
“is a contact with Michigan.” CA6 R. 22, Appellee Br., at 17.
We need not define the exact scope of Walden and its effect on Calder in order to resolve
this case. It is enough to say that plaintiffs must do more than claim that Schmückle’s actions
affected them in Michigan and must show that Schmückle had some level of contact with the
state, and that Schmückle cannot avoid jurisdiction by framing all of his activities as contacts
with plaintiffs—who happen to be in Michigan—instead of contacts with Michigan itself.
Furthermore, Schmückle’s trips to Michigan and the fact that he held himself out as the MAG
Group’s global CEO are sufficient to distinguish this case from Walden.
2.
Plaintiffs argue that Schmückle purposefully availed himself of the benefits of doing
business in Michigan by: (1) being CEO of the MAG Group and holding himself out as having
“global authority” over MAG operations, including those in Michigan; (2) directing and
controlling MAG operations in Michigan; (3) traveling to Michigan on two occasions to meet
with executives and customers; (4) initiating calls and emails to the state each week to direct
MAG business; (5) transferring business from Michigan to Germany to prop up the German
operations at the expense of those in Michigan; (6) engaging Michigan-based executives in
strategic financing and sales negotiations; and (7) arranging for the Michigan operations to pay
part of his salary by instituting a € 1.5 million transfer payment from MAG Automotive to MAG
Germany. These allegations, taken together, are sufficient for plaintiffs to meet their “relatively
slight” burden at this stage of the proceedings. See Air Prods. & Controls, Inc., 503 F.3d at 549.
Schmückle argues that his short tenure at the MAG Group precludes a finding that he
established an ongoing business relationship in Michigan. This position ignores our prior
holdings that the issue is not the quantity, but the quality of a defendant’s contacts with the
forum state. See Calphalon Corp. v. Rowlette, 228 F.3d 718, 722 (6th Cir. 2000); LAK, 885 F.2d
at 1301. Although he was with the MAG Group for fewer than eight months, Schmückle had
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 10
established a close working relationship with MAG entities and employees in Michigan. During
his two trips to Michigan, he was directly involved in planning for future operations in the state
and met with executives from MAG Automotive’s largest client, the Ford Motor Company. This
interaction with Ford establishes that Schmückle’s contacts with Michigan extended beyond the
fact that the MAG Group had located its operations there. In addition to his trips, he was in
regular contact with Michigan-based executives by phone and email.
It was also reasonable for Schmückle to have foreseen that his work with MAG
Automotive would subject him to the jurisdiction of Michigan courts. Schmückle is alleged to
have held himself out both to MAG employees and to clients as being responsible for MAG’s
Michigan operations. And it was during his visits to Michigan, and in his communications with
Michigan-based employees, that he allegedly engaged in conduct—devaluing MAG’s operations
in Michigan by requiring that work and money to be transferred to operations in Germany—that
injured plaintiffs. Finally, to the extent Schmückle did devalue MAG Group assets in Michigan
for his own personal benefit, he would have known that his conduct both targeted the state and
impacted the Michigan economy more broadly.
Schmückle is correct that the German venue and choice-of-law clauses in his
employment agreement provide some evidence of his intent not to be subject to suit in Michigan,
but, at this stage of the litigation, those provisions are not dispositive as to our minimum-contacts
inquiry.3 See Intera Corp., 428 F.3d at 617; Calphalon Corp., 228 F.3d at 723. Additionally,
those clauses must be balanced against Schmückle’s actions after signing the agreement that
support the notion that he did intend to conduct business in Michigan. Because the evidentiary
burden on plaintiffs is minimal at this stage, we find that the employment agreement, alone, is
not enough to defeat plaintiffs’ prima facie case.
Our holding that plaintiffs made a prima facie showing of purposeful availment is
consistent with our prior decisions. In Lanier v. American Board of Endodontics, we found
purposeful availment on the part of an out-of-state medical board that was seeking to expand its
membership in Michigan. 843 F.2d 901, 911 (6th Cir. 1988). We found that the board’s goal
3
However, they may be dispositive as to whether, as a matter of contract, Schmückle is entitled to litigate
in Germany. But we do not address that issue here.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 11
was to have “ongoing, far-reaching consequences in the Michigan dental services market.” Id.This is analogous to Schmückle who, as the MAG Group CEO, was assumedly responsible for
growing the footprint of the Michigan-based operations. See also CompuServe, 89 F.3d at 1265(finding intent to continue a business relationship in Ohio from the quality of defendant’s
“deliberate and repeated” contacts); Schneider v. Hardesty, 669 F.3d 693, 702–03 (6th Cir. 2012)
(holding that two letters sent to Ohio were sufficient to establish personal jurisdiction in Ohio
when false representations in the letters formed the basis for the action); Carrier Corp. v.
Outokumpu Oyj, 673 F.3d 430, 450 (6th Cir. 2012) (finding sufficient contacts between a foreign
defendant and the United States, in part, because the defendant’s employees conducted business
in the United States).
Schmückle points to Calphalon, 228 F.3d at 718, to argue that he lacked sufficient
contact with Michigan because he targeted MAG Automotive “which just-so-happened to be in
Michigan.” CA6 R. 22, Appellee Br., at 16–17. Calphalon involved a dispute between an Ohio-
based company, Calphalon, and its out-of-state distributor. 228 F.3d at 722. Calphalon argued
that the distributor had purposefully availed itself of doing business in Ohio based on its
association with Calphalon, even though the distributor’s actual work did not take place in Ohio.
Id. We refused to adopt that position, finding that the distributor’s visits to Ohio had occurred
simply because Calphalon was headquartered there, not because the distributor was seeking “to
further its business and create ‘continuous and substantial’ consequences there.” Id. at 723.
Schmückle’s relationship with Michigan, however, was more substantial than that of the
Calphalon distributor’s with Ohio. Schmückle’s trips to Michigan and directives to Michigan-
based executives are alleged to have been in an attempt to control, grow, and sell the business.
Accordingly, we do not find Calphalon to preclude a finding of purposeful availment here.
B.
Next, we ask whether plaintiffs’ claims “arise from” Schmückle’s contacts with
Michigan. Air Prods. & Controls, Inc., 503 F.3d at 553. This requires that Schmückle’s
contacts be “related to the operative facts of the controversy.” Bird v. Parsons, 289 F.3d 865,
875 (6th Cir. 2002) (quoting CompuServe, Inc., 89 F.3d at 1267). We have said this is a “lenient
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 12
standard,” requiring only that the cause of action have a “substantial connection” to the
defendant’s activity in the state. Id.Plaintiffs argue that their claims are connected to Schmückle’s interactions with the
MAG Group’s Michigan-based operations. They point to their allegations that he transferred
work from Michigan to Germany, diminished the profitability of the Michigan operations,
charged MAG Automotive an administrative fee to subsidize the German operations, and
otherwise “squandered” Michigan-based corporate assets to create opportunities for his own
personal benefit.4 Schmückle contends that this conduct is “at most a sideshow to the primary
conduct that forms the basis” of the complaint. CA6 R. 22, Appellee Br., at 29–30. He argues
that the primary thrust of plaintiffs’ allegations is that he wasted MAG Group assets and
prevented a minority investment in the company, activity unrelated to his Michigan contacts.
Although Schmückle’s alleged refusal to accept a minority investment and his waste of
MAG Group assets are undoubtedly grounds for plaintiffs’ action against Schmückle, narrowing
the case in this manner ignores plaintiffs’ allegations that Schmückle, as CEO, took actions to
prop up MAG Germany at the expense of the Michigan-based operations. These alleged actions
by Schmückle were connected to his visits to Michigan and his directives to Prina and Dudek—
Michigan-based executives. Because Schmückle’s contacts with Michigan led to the alleged
harm suffered by MAG US and MAG Holdings, we conclude that plaintiffs’ claims “arise from”
Schmückle’s Michigan contacts under our “lenient standard.”
C.
Finally, we ask whether the exercise of personal jurisdiction over Schmückle is
reasonable. S. Mach. Co., 401 F.2d at 381. This ensures that the exercise of personal
jurisdiction is consistent with notions of “fair play and substantial justice.” Burger King,
471 U.S. at 476–77. When the first two prongs of our personal jurisdiction test are met, there is
an inference of reasonableness and “only the unusual case will not meet this third criteria.”
4
Plaintiffs also argue that Schmückle established an intercompany pricing scheme that raised costs in
Michigan that had the corresponding effect of making the Michigan-based portion of the business less competitive
and less profitable. Although plaintiffs introduced this claim in the Prina Affidavit, they never raised this issue
before the district court. Accordingly, we find that such an argument is waived on appeal. See Hayward v.
Cleveland Clinic Found., 759 F.3d 601, 614–15 (6th Cir. 2014).
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 13
Air Prods. & Controls, Inc., 503 F.3d at 554 (quoting Theunissen, 935 F.2d at 1461). We look to
the following factors in making a reasonableness determination: (1) the burden on the defendant;
(2) the forum state’s interest; and (3) the plaintiffs’ interest in obtaining relief. City of Monroe
Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 666 (6th Cir. 2005) (citing Asahi Metal
Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987)).
There is not enough at this point in the litigation for Schmückle to overcome an inference
of reasonableness. There will undoubtedly be some burden on Schmückle to defend a lawsuit in
the United States. And we recognize that requiring him to do so might disturb his expectations
under his employment agreement and create parallel proceedings to the German litigation against
MAG Germany.5 At the same time, Schmückle admits that he owns a vacation residence in
Oregon and that he traveled to the United States three times in five months while working for
MAG—the two business trips to Michigan, along with a personal trip in April 2015. This
suggests that the burden of defending a lawsuit in Michigan may not be as great as it would be
for other foreign defendants.
Additionally, Michigan has at least some interest in the litigation. Assuming, as we must,
that plaintiffs’ allegations are true, Schmückle caused injury to a business located in Michigan,
which also impacted Michigan-based employees like Prina and Dudek. Although Schmückle is
correct that neither MAG Holdings nor MAG US is organized under Michigan law, plaintiffs
allege that MAG US’s sole asset—MAG Automotive—was located there.
Finally, plaintiffs certainly have an interest in pursuing their claims. Schmückle appears
to concede this point. It is unclear, however, whether there is a more appropriate forum for this
case such that exercising jurisdiction would be unreasonable. At oral argument, Schmückle was
unable to direct us to such a forum in the United States. Therefore, we are left asking whether
plaintiffs should be proceeding in the German courts. We are not prepared to decide such a
question on the existing record. First, the extent to which the German court could or did
consider arguments similar to those presented by plaintiffs in this case is unclear. Second, we
5
We note, however, that the extent of Schmückle’s current obligations in the German litigation are unclear
given the lack of a record—beyond the representations of counsel that an appeal is pending—as to the current state
of the litigation now that the Ulm Regional Court has entered judgment.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 14
believe that further factual development is necessary on the disputed question of where the
majority of witnesses are located and whether discovery material is primarily in English or
German. Thus, we are left with an unrebutted presumption that it is reasonable for a Michigan
court to exercise personal jurisdiction over Schmückle.
Such a holding is consistent with our case law. First, in Fortis Corporate Insurance v.
Viken Ship Management, 450 F.3d 214 (6th Cir. 2006), we applied a presumption of
reasonableness after plaintiffs established purposeful availment and a cause of action arising out
the forum-state contacts of two Norwegian defendants. Id. at 215, 223. We held that such a
presumption was not overcome when the parties were able to conduct discovery across borders,
most of the witnesses spoke English, and the forum state had a strong interest in the underlying
litigation. Id. at 223. Second, although Schmückle relies on our decision in Miller, 694 F.3d at
675, where we found it would be unreasonable to require a Swiss insurance company to litigate
in Michigan, that case is distinguishable. In Miller, we relied on the facts that the defendant had
no presence in Michigan, that Swiss law might have applied, that all of the relevant events
occurred in Switzerland, that all witnesses and evidence were in Switzerland, that trial materials
would have to be translated from German to English, and that there was a possibility that the
case would be transferred to Switzerland under the terms of a forum-selection clause. Id. at 681.
Although, at first glance, this appears to align closely with the facts of this case, there are three
crucial differences. First, the defendant in Miller had not purposefully availed itself of doing
business in Michigan, eliminating any presumption of reasonableness. Id. at 680. Second,
unlike the defendant in Miller, Schmückle visited Michigan twice. Third, unlike this case, it
does not appear that there was any dispute in Miller as to where the relevant events occurred and
where evidence and witnesses were located. Id. at 680–81.
Taking this all into account, we conclude that the current record does not overcome the
presumption that exercising personal jurisdiction over Schmückle in Michigan is reasonable. See
Air Prods. & Controls, Inc., 503 F.3d at 554. Further development of the record, however,
would certainly help to inform this analysis should Schmückle choose to further contest the issue
of personal jurisdiction on remand.
No. 16-1550 MAG IAS Holdings, et al. v. Schmückle Page 15
IV.
Alternatively, Schmückle asks us to dismiss the complaint on the basis of forum non
conveniens. This doctrine allows a court with otherwise valid jurisdiction to decline to exercise
such jurisdiction because of case-specific issues of fairness and convenience. See Estate of
Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 364 (6th
Cir. 2008) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249–50 (1981)). The district court
dismissed plaintiffs’ complaint without reaching this question. We have previously refused to
consider forum non conveniens questions yet to be addressed by a district court because fact-
finding and balancing are more easily accomplished in that court. See NCR Corp. v. Korala
Assocs., Ltd., 512 F.3d 807, 818 n.4 (6th Cir. 2008); Serras, 875 F.2d at 1218. Accordingly, we
decline to reach the issue here.6
V.
For the foregoing reasons, we reverse the district court and remand the case for further
proceedings consistent with this opinion.
6
We note, however, that the appropriate test for the district court to apply turns on whether plaintiffs are
bound by the forum-selection clause in Schmückle’s employment agreement. Compare Estate of Thomson,
545 F.3d at 364–65 (outlining the traditional forum non conveniens analysis), with Atl. Marine Constr. Co., Inc. v.
U.S. Dist. Court for the W. Dist. of Tex., 134 S. Ct. 568, 581 (2013) (noting that the “calculus changes” when parties
are bound by a valid forum-selection clause).