Trerotola v. Cotter

601 A.2d 60, 1991 D.C. App. LEXIS 343, 1991 WL 274035

• Court: District of Columbia Court of Appeals
• Decided: December 20, 1991
• Docket: 90-211
• Status: Published

Opinions

FERREN, Associate Judge:

In this employment contract dispute a jury awarded plaintiff-appellee, John Joseph Cotter, $8,500 and interest against his former employer, defendant-appellant Eastern Conference of Teamsters, and its international director, defendant-appellant Joseph Trerotola. The jury found that appellants had breached a unilateral, implied-in-fact contract in refusing to pay Cotter a retirement gift. This appeal focuses on whether the trial court erred in refusing to dismiss the complaint for lack of personal jurisdiction. Concluding that the court did err in this respect, we reverse and remand with directions to dismiss for want of jurisdiction.¹

I.

The Eastern Conference of Teamsters employed Cotter from October 29, 1956, until July 31, 1977, most recently as the representative of its Automotive and Petroleum Trade Division. The Eastern Conference is a labor organization chartered by the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. It is comprised of local unions and joint councils in fifteen eastern states and the District of Columbia. From October 1956 until August 1971, the Eastern Conference was located in the District at 100 Indiana Avenue, N.W. In August, 1971, the Eastern Conference moved its offices to Bethesda, Maryland.

Cotter alleges that in 1973 Joseph Trero-tola, the international director of the Conference, implemented a custom and practice of granting each retiring employee of the Conference a bonus or “gift” of a week’s pay for each year of service, not to exceed three months’ pay, in addition to formal retirement benefits. Michael Miles, the Conference’s Comptroller and the administrator of its Retirement Plan, testified that the Conference had formulated the retirement gift plan to standardize the gift employees normally would receive upon leaving Conference employment. The employees commonly referred to this gift as “severance pay.” Between 1973 and the spring of 1977, ten employees retired from the Conference, and each received a retirement gift based on the specific formula. During this period, at least two employees left the Conference to work elsewhere, including one who — like Cotter — went to work for the International union. While neither received a retirement gift based on the formula, each was arguably in a different category from Cotter because neither— unlike Cotter — was eligible for Conference retirement benefits. Everyone who left Eastern between 1973 and 1977 and was eligible for retirement benefits received a retirement gift based on the formula.

In August 1977, Cotter left the Conference to become assistant to the President of the International Brotherhood of Teamsters, Frank Fitzsimmons. Miles told Cotter that Cotter could not receive formal retirement benefits under the Conference’s Retirement Plan (not to be confused with the formula retirement gift) until he retired from the International Teamsters. Cotter, therefore, did not file for retirement benefits when he left the Conference to join the International.

In September 1977, Cotter asked Treroto-la about his retirement gift; Trerotola replied that he would look into the matter and get back to him. Trerotola did not do so. About six weeks later, Cotter again asked Trerotola about a retirement gift. Trerotola replied: “I didn’t look into it. I’ll get back to you.” Again, Cotter heard nothing from him. In November 1977, Cotter again questioned Trerotola and was told that Trerotola had not looked into a retirement gift but would get back to him. Trer-otola never did so.

Cotter retired from the International in August 1985. Just before doing so, in July 1985, Cotter asked Trerotola about the retirement gift from the Conference. Trero-tola replied that two employees had left the Conference without receiving a retirement gift. Cotter pointed out, however, that those employees had left several years before implementation of the gift plan in 1973. Trerotola responded that he would talk to Miles about it. Some time later, Miles told Cotter that he was not involved in Cotter’s retirement gift dispute. Cotter immediately called Trerotola, who told him that because he had not retired directly from the Conference but, instead, had taken other employment, Cotter was not entitled to a retirement gift. Cotter then wrote Trerotola, asking for a ruling by the Eastern Conference Policy Committee. Trerotola denied his request. Finally, in a letter dated November 13, 1985, Trerotola told Cotter that the Conference would not give him a retirement gift.

Cotter filed suit against the Eastern Conference and Trerotola in Superior Court on September 25, 1986, alleging that they had breached the custom and practice of providing a retirement gift. On October 20, the Conference and Trerotola moved to dismiss for lack of personal jurisdiction. The trial court denied the motion without opinion on January 13, 1987. At Trerotola’s deposition, Cotter learned that despite advice from Miles to the contrary at the time, he could have received retirement benefits under the Conference’s Retirement Plan if he had requested them in 1977 when he left the Conference. With this discovery, Cotter filed suit in the United States District Court for the District of Maryland to recover benefits under the Conference’s Retirement Plan (as distinguished from the smaller retirement gift or severance pay at issue in this case). After a two day bench-trial, the District Court awarded Cotter $137,697. That judgment was affirmed. See Cotter v. Eastern Conference of Teamsters Retirement Plan, 898 F.2d 424 (4th Cir.1990).

The present case was tried before a Superior Court jury on March 8-10, 1989, before Judge Graae. The jury deadlocked, five votes to one, for dismissal. A second jury heard the case on November 16-20, 1989. At this trial, Cotter was allowed to introduce in evidence the Maryland decision entitling him to retirement benefits upon leaving the Conference in 1977. The defendants moved for a directed verdict which the trial court denied. The jury awarded Cotter $8,500 with interest from July 31, 1977. On December 1, 1989, the defendants moved for judgment notwithstanding the verdict or a new trial, both of which the trial court denied on January 24, 1990. The Conference and Trerotola filed a timely appeal.

II.

The threshold — and dispositive— question is whether the Superior Court had personal jurisdiction over the Conference and Trerotola. Personal jurisdiction depends on: (1) “the presence of reasonable notice to the defendant that an action has been brought”; and (2) “a sufficient connection between the defendant and the forum state as to make it fair to require defense of the action in the forum.” Rose v. Silver, 394 A.2d 1368, 1370 (D.C.1978) (quoting Kulko v. Superior Court of California, 436 U.S. 84, 91, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978)), reh’g denied, 398 A.2d 787 (1979).

The trial court’s jurisdiction theoretically could be derived from D.C.Code §§ 13-334, -422, or -423 (1989). Cotter does not rely on § 13-334, which confers jurisdiction, after proper service of process in the District, upon any “foreign corporation which carries on a consistent pattern of regular business activity within the jurisdiction.” AMAF Int’l Corp. v. Ralston Purina Co., 428 A.2d 849, 850 (D.C.1981); see Price v. Griffin, 359 A.2d 582, 586 (D.C.1976) (“any continuing corporate presence in the forum state directed at advancing the corporation’s objectives is sufficient for the exercise of jurisdiction” under the “doing business” provision of § 13-334(a)). Cotter does not claim there was service of process in the District or that the Conference has sufficient activity in the District to sustain a claim of jurisdiction under § 13-334.

Nor does Cotter rely on § 13-422, as the Conference is not “domiciled in, organized under the laws of, or maintaining ... its principal place of business in the District of Columbia.” D.C.Code § 13-422. Miles stated, in an affidavit attached to appellants’ motion to dismiss for lack of personal jurisdiction, that the Conference “has its offices and place of business in Bethesda, Maryland,” and “maintains no offices or facilities in the District of Columbia.” There is nothing of record, nor has Cotter proffered, that the Conference was organized under the laws of the District. Jurisdiction, therefore, if at all, must come under § 13-423, the long-arm statute.

“A court may properly assert personal jurisdiction over a nonresident [1] where a statute authorizes service of process and [2] where such service is consistent with due process.” Smith v. Jenkins, 452 A.2d 333, 336 (D.C.1982); see Mouzavires v. Baxter, 434 A.2d 988, 990 (D.C.1981) (en banc), cert. denied, 455 U.S. 1006, 102 S.Ct. 1643, 71 L.Ed.2d 875 (1982). The long-arm statute, § 13-423, provides in relevant part:

(a) A District of Columbia court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a claim for relief arising from the person’s—

(1) transacting any business in the District of Columbia;

(b) When jurisdiction over a person is based solely upon this section, only a claim for relief arising from acts enumerated in this section may be asserted against him [or her].

We have noted that “[u]nder § 13-423(a)(1), less of a nexus between the defendant and the District of Columbia is required for a finding of jurisdiction than would be required under the ‘doing business’ test used to determine corporate presence” under § 13-334. Cohane v. Arpeja-California, Inc., 385 A.2d 153, 158 (D.C.), cert. denied, 439 U.S. 980, 99 S.Ct. 567, 58 L.Ed.2d 651 (1978). Appellant does not dispute that the Conference’s conduct satisfies § 13-423(a)(l); clearly the Conference has transacted “any business” in the District. During the time period when Cotter worked for the Conference, it represented local unions with approximately 13,000 members. Cotter himself made frequent trips to the District (as well as to other jurisdictions) to transact business for the Conference, including assistance to local unions in organizing and negotiating labor agreements and in handling labor grievances. The question, then, is whether, in the words of § 13-423(b), Cotter’s “claim for relief [arose] from acts enumerated in” any subsection of § 13-423 — in this case in § 13-423(a)(l). See Cohane, 385 A.2d at 158. Put another way, § 13-423(b) bars claims “unrelated to the acts forming the basis for personal jurisdiction.” Willis v. Willis, 211 U.S.App.D.C. 103, 106, 655 F.2d 1333, 1336 (1981); see Cohane, 385 A.2d at 158.

For proper jurisdiction, therefore, the long-arm statute requires that the claim raised have a discernible relationship to the “business” transacted in the District. Without such a relationship, asserted jurisdiction exceeds the limits of the due process clause of the Constitution. See id.; Smith, 452 A.2d at 336; see also International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). To justify personal jurisdiction, due process requires “certain minimum contacts” between the nonresident and the forum. World-wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). A nonresident’s “contacts with the forum must be ‘such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.’ ” Smith, 452 A.2d at 336 (quoting World-wide Volkswagen, 444 U.S. at 292, 100 S.Ct. at 564). The critical test is whether the nonresident’s “conduct and connection with the forum state are such that he [or she] should reasonably anticipate being haled into court there.” World-wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567, quoted in Smith, 452 A.2d at 336.²

We must therefore answer the question whether Cotter’s claim for a retirement gift based on an implied-in-fact contract can be said to have arisen out of the Conference’s activities in representing unions in the District. For proper jurisdiction, the Conference’s contacts with the District must have been “of such a quality and nature that they manifest[ed] a deliberate and voluntary” anticipation of litigation here over retirement gift (or severance pay) contracts. Mouzavires, 434 A.2d at 995. We do not believe they did. The Conference cannot reasonably be said to have anticipated being haled into a court in the District of Columbia to litigate a Maryland retirement “gift” contract as a result of sending Conference representatives to the District to work with unions there.

It is undisputed that the Eastern Conference headquarters were located in the District for most of the time Cotter was in its employ. It is also undisputed that after the Conference’s headquarters were relocated to Maryland in August 1971, Cotter continued to conduct Conference business in the District. The necessary due process focus, however, is on the acts and reasonable expectations of the Eastern Conference in establishing its relatively recent “custom and practice” of giving its employees an additional “gift upon retirement.” The implied-in-fact “gift” contract was entered into in Maryland in 1973. It is true that the “gift” would not have been available to Cotter but for his employment activities in this jurisdiction and elsewhere over the years that culminated in his retirement; but, the Eastern Conference formed the implied contract with certain retiring employees, including Cotter, in Maryland, based on the fact of retirement alone, altogether independent of any employee’s activities in any particular place, whether in the District or elsewhere.³ If an Eastern Conference employee became eligible to receive retirement benefits, then the Eastern Conference would unilaterally grant that retiring employee an additional severance gift. There was no “affirmative act” by appellees creating or relating to that gift which had consequences in the District that can be said to have brought the Eastern Conference “within [the District of Columbia to] establish[ ] minimum contacts” with respect to Cotter’s claim. Cohane, 385 A.2d at 158 (citing Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).

We cannot agree with our dissenting colleague that the facts in this case “bear more than a passing similarity,” post at 68, to the facts in Cohane establishing jurisdiction under the long-arm statute. In Co-hane, the plaintiffs claim (for sales commissions) against the nonresident defendant arose directly out of the defendant’s contractual activities with a legal situs in the District (defendant’s sale of goods to District residents). Here, however, Cotter’s claim does not arise out of appellees’ activities or obligations in the District; it arises out of the Eastern Conference’s contractual obligation to Cotter to give him a severance bonus because of retirement, wherever he may have worked.⁴ Nor is this a case where Cotter is suing nonresident defendants on a contract consummated, executed, and having direct consequences in the District such that we can say the Eastern Conference and Trerotola have invoked the benefits and protections of the District’s laws. See Mouzavires, 434 A.2d at 996-98 (relied upon by dissent, post at 69).

Judge Belson apparently concludes that, because Cotter engaged in transactions in the District for the Eastern Conference over the years, any retirement pay — including the gift here — must be allocable in part to those transactions since they comprised some of the work for which retirement benefits accrued. We believe this theoretical wedding of retirement benefits to particular transactions in this jurisdiction— assuming an accountant could make a defensible allocation under the particular gift formula — is simply too attenuated a methodology for concluding that a retirement gift after many years of service is traceable to particular, identifiable business transactions here justifying jurisdiction over “claim[s] for relief arising from acts enumerated in” the long-arm statute. D.C.Code § 13-423(b). Moreover, we cannot say that the Eastern Conference, by unilaterally choosing to provide certain employees with a supplementary retirement gift — a bonus — based solely on the fact of retirement, not on particular business activities, committed an affirmative act related to its “contractual activities” in the District. Post at 69 (quoting Mouzavires, 434 A.2d at 992) (emphasis in dissent).

We therefore conclude that this case is distinguishable from those in which we have held that plaintiff claims were based on defendant acts relating to the nonresident defendant’s District business. See, e.g., Cohane, 385 A.2d at 159 (claim for sales commissions, some of which based on District transactions, sufficiently related for jurisdiction); Smith, 452 A.2d at 337 (claim derived from partnership activities in District); see also Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty. Ltd., 647 F.2d 200, 207, 207 U.S.App.D.C. 375, 382 (1981) (claim for cancellation of wine registration trademark related to sale of wine in District). In sum, Cotter’s claim — breach of a contract to pay a severance “gift” upon retirement — does not have the required relationship to the Conference’s business activities in the District to meet the due process requirements for personal jurisdiction. Cf. Berwyn Fuel, Inc. v. Hogan, 399 A.2d 79, 80 (D.C.1979) (no link between fuel deliveries to District and Maryland traffic accident sufficient to subject Maryland corporation to District jurisdiction); Willis, 211 U.S.App.D.C. at 106, 655 F.2d at 1336 (defendant’s District real estate interests insufficient link for conversion and fraud claims); In re Mid-Atlantic Toyota Antitrust Litigation, 525 F.Supp. 1265, 1274 (D.D.C.1981) (antitrust claim unrelated to nonresident’s normal District business). If we were to find jurisdiction here, presumably Cotter or any other Conference employee could sue the Conference on similar grounds in a retirement gift dispute under the long-arm statute of any jurisdiction where the Conference has no presence other than traveling consultants for local unions. That would far exceed the bounds of due process. As we have said in a similar context:

since the claim must relate to the particular act or transaction forming the basis for personal jurisdiction, D.C.Code 1973, § 13-423(b), and the claim here did not, the judgment must be and is reversed because the court lacked jurisdiction.

Berwyn, 399 A.2d at 80.

Reversed and remanded with directions to dismiss.

1 . Appellants also argue that the action was untimely filed and that the evidence is insufficient to support a finding of breach of contract. Because we conclude the trial court lacked personal jurisdiction, we do not reach these issues.

2 . The plaintiff has the burden of proving the necessary jurisdictional facts. See, e.g., McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182, 56 S.Ct. 780, 781, 80 L.Ed. 1135 (1936); Security Bank, N.A. v. Tauber, 347 F.Supp. 511, 513 (D.D.C.1972).

3 . In his dissent, Judge Belson agrees that the Eastern Conference’s promise to confer a retirement gift was the result of an oral implied-in-fact contract. Post at 68. He argues nonetheless, that because the employment agreement was already in place, the Eastern Conference's subsequent unilateral promise was, "necessarily, an additional term of the existing employment contract established in the District to be performed in large part in the District.” Id. Judge Belson, however, can cite nothing from the record or the caselaw to support his premise that the oral, unilateral, implied-in-fact contract establishing a severance gift for the first time in 1973 was a contractual modification of the longstanding written, bilateral employment contract.

Cotter himself does not claim that he understood the Eastern Conference’s unilateral promise to be a new term of his employment contract. Cotter in fact alleged in his complaint that the severance gift was distinct from the formal retirement benefits he was entitled to receive under his employment contract (which were the subject of a separate lawsuit). In his complaint he stated that the implied-in-fact contract for the severance gift was a "custom and practice ... established whereby all full-time employees received as a retirement bonus three months of wages ("severance pay”) after they departed from full-time employment and commenced receiving retirement income_” (emphasis added). Indeed, one of the main factual issues for the jury to decide at trial was whether an implied-in-fact contract for the severance gift existed at all, not whether the original employment contract had been modified.

4 . Furthermore, unlike the case at hand, the nonresident defendant in Cohane did not deny that the plaintiffs claim arose, in part, out of the defendant’s contractual activities in the District. See Cohane, 385 A.2d at 159.