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Collins v. Phelan

June 29, 2006


The opinion of the court was delivered by: Dennis M. Cavanaugh, U.S.D.J.


This matter comes before the Court upon a motion by Ryan Phelan and Universal Promotions Group, Inc. ("Defendants"), to dismiss the Complaint filed by Shawn Collins, Melissa Ward, and Affiliate Summit Corporation ("Plaintiffs"), for lack of personal jurisdiction and improper venue, or in the alternative, to transfer venue to the United States District Court for the District of Nebraska. No oral argument was held pursuant to Rule 78 of the Federal Rule of Civil Procedure. For the following reasons, Defendant's motion to dismiss Plaintiffs' Complaint for lack of personal jurisdiction and for improper venue is denied and Defendant's motion to transfer venue is granted.

I. Background

Plaintiff Affiliate Summit Corporation ("ASC") has its principal place of business in Summit, New Jersey. (Compl. at ¶ 3). Two members of ASC's Board of Directors are Plaintiffs Shawn Collins ("Collins") and Melissa Ward ("Ward"). (Compl. at ¶ 38). Collins is a resident of New Jersey and Ward is a resident of Florida. (Compl. at ¶¶ 1-2). Defendant Phelan, the President and Chief Executive Officer of UPG, is a resident of Nebraska and Defendant UPG is a Nebraska corporation with its principal place of business in Omaha, Nebraska. (Affidavit of Ryan Phelan ("Phelan Affidavit") at ¶ 6, Compl. at ¶¶ 4-5).

In May 2003, Collins, Ward, and Phelan decided to form a business for the purpose of holding conferences designed to foster marketing and networking between companies in related industries. (Defendants' Brief in Support of its Motion to Dismiss or Transfer ("Def. Br.") at 6). The parties signed a Personal Equity Agreement stating Collins, Ward, and Phelan would operate ASC under the ownership of UPG. (Def. Br. at 7).

The first event organized and conducted by the parties was an affiliate marketing conference at Baruch College in New York City in November 2003. (Id.). At the event, the parties distributed gift bags to the attendees. (Def. Br. at 7-8). The gift bags contained products provided by sponsors of the event. (Def. Br. at 8). The products were shipped to and packaged at Collins' New Jersey home a few days before the event. (Id.) Approximately 200 people attended the November 2003 event. (Plaintiffs Brief in Opposition to Defendant's Motion to Dismiss or Transfer Venue ("Pl. Br.") at 3). Each attendee paid $75.00 to be admitted to the event. (Id.)

The second event, funded by profits gained from the first event, took place aboard a Carnival Cruise in June 2004. (Id.) The cruise ship departed from New York City, sailed to Nova Scotia, and returned to New York City. (Def. Br. at 8). A few days before the ship's departure, Phelan traveled from his home in Nebraska to Collins' home in New Jersey to help package the gift bags that would be distributed to the event's attendees. (Def. Br. at 8-9).

In September 2004, Collins and Ward sent Phelan an e-mail stating they no longer wished to work with Phelan and UPG. (Pl. Br. at 4). Shortly thereafter, Collins and Ward began planning a third event in Las Vegas without Phelan's assistance. (Id.). On May 31, 2005, upon learning of the Las Vegas event's success, Phelan contacted Collins and Ward and demanded to be "bought out" of his "ownership interest" in ASC. (Id.) Collins and Ward currently seek declaratory judgment stating Phelan and UPG have no ownership interest in ASC. (Compl. at ¶ 9).

II. Discussion

A. Standard for Personal Jurisdiction

New Jersey's long-arm statute permits a Federal District court to exercise personal jurisdiction over non-resident defendants to the extent permitted under the Due Process Clause of the Fourteenth Amendment of the United States Constitution. SeeNew Jersey Rules of Court, § 4:4-4; see also Avdel Corp. v. Mecure, 58 N.J. 264, 268, 277 A.2d 207 (1971) (New Jersey's long-arm jurisdiction extends "to the uttermost limits permitted by the United States Constitution.") In order for a state to exercise personal jurisdiction over a non-resident defendant, the plaintiff must establish that the defendant has "minimal contacts" with the state "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Provident Nat'l Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

As part of the personal jurisdiction inquiry, a court must determine whether it has general or specific jurisdiction over the defendant. M. Eagles Tool Warehouse, Inc. v. Fisher Tooling Co., 205 F. Supp. 2d 306, 312 n.8 (D.N.J. 2002). Even if the lawsuit does not arise out of or is not related to the defendant's contacts with the forum state, a court may still exercise general jurisdiction over the defendant if the defendant maintains sufficient continuous and systematic contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.15 (1985). For the purpose of determining whether general jurisdiction exists, New Jersey courts have stated that "the continuity of a defendant's activities is accorded more significance than the quantum of activities." Eason v. Linden Avionics, Inc., 706 F. Supp. 311, 323 (D.N.J. 1989).

In order for a court to exercise specific jurisdiction over the defendant, the defendant's contacts with the forum state must "arise out of, or relate to the cause of action." Burger King, 471 U.S. at 472-473. The court must determine that: "(1) [the] defendant purposely direct[ed] its activities at residents of the forum; (2) the claim arises out of or relates to those activities, and (3) jurisdiction is constitutionally reasonable and fair." LG Electronics, Inc. v. First Int'l Computer, 138 ...

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