WA Supreme Court - Long Arm Applies to Foreign CEO in Employment Relationship
The one thing that takes some getting used to is the fact that all of these opinions now come out in PDF only. At least they are OCRd to I can still cut and past where necessary. Anyhow, Failla sought a job with fixture one, it was a sales gig that she could work out of her home. Fixtureone, on the other hand, it based out of Pennsylvania. They told her she might be a fit because Fixtureone didn’t really have people out in Washington. Short story, she was hired, and later promoted to VP of sales. They asked her to sign something saying everything would be done under Pennsylvania law, but that never happened, and it looks like the document got stuck in revisions. Fixtureone then closed shop, still owing Failla some back-due commission from her sales rep days, and told her they didn’t owe her those.
She sued for withholding of wage under Washington law. She served her former boss (who was the founder), but not the company itself.
So here’s where it gets sticky. Boss man says hey, you didn’t serve the company, and I personally have no contacts with Washington. The trial court said that argument was bunk, but the court of appeals said the argument was actually a good one.
Anyhow, the Washington Supreme Court took the view that Schutz’s actions as CEO of Fixtureone were sufficient to allow jurisdiction over Schutz personally:
We agree that a corporation's actions cannot be simply imputed to a corporate officer or employee for purposes of determining whether there are minimum contacts necessary to establish jurisdiction. But it is just as true that an officer or employee is not automatically shielded from personal jurisdiction just because his contacts occurred in the context of his employment. Calder v. Jones, 465 U.S. 783, 790 104 S. Ct 1482, 79 L. Ed. 2d 804 (1984). Instead, “[e]ach defendant’s contacts with the forum State must be assessed individually.” Id.; see also David v. Metro Prods., Inc.. 885 F.2d 515, 522 (9th Cir. 1989) (affirming states’ authority to assert personal jurisdiction over corporate officers based on contacts performed in that capacity). We determine personal jurisdiction on a case-by-case basis.
Shultz is the founder and CEO of FixtureOne. He was the individual who responded to Failla’s job inquiry, interviewed her, and hired her because of the potential benefits to FixtureOne of having a sales representative in Washington. During the two-year course of her employment, Schutz set her salary, issued her payroll checks, promoted her, gave her a raise, and calculated her commissions. He appeared to be the primary contact for Failla, and in fact, there is no evidence in the record that Failla had contact with anyone other than Schutz.
Like I said, this is where it gets a little sticky. On the one hand, yes, he personally did have the contacts with Washington. On the other hand, those contacts were on behalf of FixtureOne. So was it Schutz or FixtureOne who had the contacts with Washington? Does this now impute personal liability on a CEO for the actions of an employee? Its a muddling of the waters. To get a better understanding, we need to look to Calder v. Jones. In Calder the Supreme Court said the plaintiff could assert personal jurisdiction for liable over the editor due to the magazine’s contacts with the state. That, actually, seems a bit wider than what is going on here. Think about Calder in today’s age. A blogger who sends an article to a national blog could get pulled in for liable knowing that the blog he submitted to had a wide circulation. Not sure if that would hold up today.
Regardless, I do not disagree with the result, I simply think the court’s reasoning in getting there was a little bare bones at the federal level. The real issue here was the CEO being pulled in for the actions of the company.
What it comes down to is this: a Washington worker should be protected by Washington laws.