United States District Court, W.D. Kentucky, Louisville
CHARLES R. SIMPSON III, SENIOR JUDGE
matter is before the court on motion of the defendant, The
Sterling Group, LP (“Sterling”), to dismiss the
complaint for lack of personal jurisdiction, pursuant to
Fed.R.Civ.P. 12(b)(2). Additionally, Sterling urges that
certain of the plaintiffs' causes of action fail to state
a claim upon which relief can be granted. As we conclude that
personal jurisdiction over Sterling is lacking, we will not
delve into the sufficiency of the other particular claims.
Power, Inc. and Vogt Power International, Inc. (collectively,
“Babcock”) filed suit against Stephen T. Kapsalis
(the “Kapsalis suit”) in July of 2013. Babcock
amended its complaint to add Express Group Holdings, LLC as a
defendant in November, 2014. Express Group Holdings, LLC
(“Express”) filed a petition in bankruptcy under
Chapter 7 in the Northern District of Oklahoma on November 9,
2016. Babcock filed the above-captioned lawsuit (the
“Sterling suit”) against Sterling on December 9,
Sterling suit seeks to impose liability on Sterling by
alleging various affiliations between Sterling and
Kapsalis/Express. Particularly, the complaint states:
Personal jurisdiction over Sterling is proper based on this
Court's inherent power to enforce orders it has issued
even over non-parties…This Court also has personal
jurisdiction over Sterling because various acts or omissions
of Sterling giving rise to this Complaint occurred within
Kentucky and/or were directed at persons and/or property
within Kentucky that resulted in harm.
DN 1, Complaint, ¶ 7.
has filed a properly-supported motion to dismiss pursuant to
Fed.R.Civ.P. 12(b)(2). It has attached the sworn affidavits
of Charles Kevin Garland, a Partner in Sterling, and Bradley
Alan Staller, a Director with Sterling, who both aver that
they reside in Houston Texas, as do all of the Sterling
Partners. Sterling has no offices, employees or partners in
Kentucky, owns no real property in Kentucky, conducts no
business in Kentucky, and pays no taxes in Kentucky.
Additionally, they aver that Sterling does not regularly do
business or derive substantial revenue from goods used or
consumed or services rendered in Kentucky.
with regard to each affiant's affiliation with Express
and Kapsalis, the affidavits establish the following:
(1) In 2010, Sterling's affiliate, Sterling Group
Partners II, LP, and an Oklahoma limited liability company,
CCCG, LLC, formed Sterling-Express Holdco Corp.
(“Holdco”), a Delaware corporation which acquired
a controlling 55.1% equity interest in Express.
(2) After Holdco acquired its interest in Express, both
Garland and Staller became members of the board of directors
of Express. They were both tasked with working with the
Express management team to enhance Express' performance.
Both had frequent contact from their respective offices in
Houston and at Express' home office in Oklahoma. Garland
has never acted or had any business dealings on behalf of
Express while in Kentucky. Staller has been to Kentucky on
behalf of Express only one time, attending a settlement
conference in the Kapsalis case as Express'
(3) The hiring of Kapsalis came about through the work of a
Pennsylvania search firm, JM Search & Company, Inc., who
was retained to provide candidates for the CEO position at
Express. JM Search identified Kapsalis as a candidate.
Kapsalis was interviewed by Garland and Staller on January
21, 2013 and February 24, 2013 in Houston. All meetings were
conducted outside of business hours. Between January 21, 2013
and April 19, 2013 when the employment agreement was
executed, emails between Kapsalis and Garland and Staller
were sent to and received from Kapsalis personal email
address. The employment agreement hiring Kapsalis as CEO of
Express was signed by Garland in Houston on behalf of CCCG,
LLC, the hiring entity.
(4) After April 19, 2013, email communications were sent to
his address at Express.
(DNs 17-2; 23-3).
Kentucky law, “in the face of a properly supported
motion for dismissal, the plaintiff may not stand on his
pleadings but must, by affidavit or otherwise, set forth
specific facts showing that the court has jurisdiction.
[citation omitted].” Theunissen v. Matthews,
935 F.2d 1454, 1458 (6th Cir. 1991); V-Soft
Consulting Group, Inc. v. Logic Corporation, No.
3:16-cv-425-DJH. The plaintiff bears the burden of
establishing that jurisdiction exists. Theunissen,