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Rosen v. Halperns' Steak and Seafood Co.

United States District Court, D. South Carolina, Florence Division

January 4, 2019

HOWARD ROSEN, Plaintiff,



         This action arises from a dispute related to Plaintiff Howard Rosen's (“Plaintiff” or “Rosen”) employment with Halperns' Steak and Seafood Company, d/b/a Beech Haven Georgia Corp. (“Halperns' Steak and Seafood”).[1] Rosen is suing his former employer for state law breach of contract and breach of contract accompanied by fraudulent act claims, as well as for violations of the South Carolina Payment of Wages Act (“SCPWA”) and the Fair Labor Standards Act (the “FLSA”) based on an alleged unlawful deductions and the failure to pay overtime wages. Rosen amended his complaint to add a retaliation claim under the FLSA. Rosen also named Gordon Food Services, Inc. and Howard I. Halpern (“Halpern”), who is or was the Chief Executive Officer and Chief Financial Officer of Halperns' Steak and Seafood. This action was initially brought in state court but was removed to this Court on March 28, 2018.

         Currently pending before the Court is Halpern's motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. [ECF #7]. The parties have had the opportunity to extensively brief the issues raised in the motion, and this Court has thoroughly considered all pleadings and memoranda filed in this case, as well as the affidavits attached to the pleadings in this case. This matter is now before the Court for review and issuance of an Order.[2]

         Factual Background and Procedural History

         Rosen is a resident of Horry County, South Carolina. Defendant Halperns' Steak and Seafood, a Georgia corporation, is commercial supplier and distributor of perishable foods. Gordon Food Services, Inc. (“Gordon Food Services”) is a Michigan corporation and, according to the Complaint, acquired Halperns' Steak and Seafood in 2015. Halpern is the current Chairman of Halperns' Steak and Seafood and is or was the Chief Executive Officer and/or Chief Financial Officer of Halperns' Steak and Seafood.[3] Rosen alleges in the complaint that Halpern is a Georgia resident, while Halpern asserts in his declaration that is a Florida resident. According to Rosen, he has been employed since 2009 as a salesman for Halperns' Steak and Seafood, servicing a distribution area in Horry County. [ECF #1-1, ¶ 6]. Rosen alleges that beginning in early 2010, unbeknownst to him, Halperns' Steak and Seafood began deducting a weekly amount from his paycheck for the purpose of reimbursing the company for losses incurred in the regular course of its business. [ECF #1-1, ¶ 9]. He further alleges that in 2011, Defendants began deducting amounts out of his paycheck to cover “shortfalls” in Rosen's weekly sales. [ECF #1-1, ¶ 11]. In March of 2017, he entered into a three-year employment contract with Halperns' Steak and Seafood. [ECF #1-1, ¶ 8]. Around this time, Rosen alleges he called the Gordon Food Services ethics hotline to complain about the unlawful deductions from his paycheck. He alleges he also complained about the treatment he received from two other employees, Sandy Cornelius and Rick Cornelius. [ECF #1-1, ¶ 12]. After he lodged these complaints, Rosen alleges these two employees, along with another employee, Chad Renegar, continued to harass him and engage in retaliatory conduct toward him. [ECF #1-1, ¶¶ 12-13]. Rosen alleges Defendants did not remedy the unlawful withholding of wages, nor did they respond to the retaliatory conduct of these employees. [ECF #1-1, ¶¶ 14].

         Rosen's complaint alleges state law causes of action for breach of contract and breach of contract accompanied by a fraudulent act and violations of the South Carolina Payment of Wages Act (“SCPWA”) and the Fair Labor Standards Act (the “FLSA”) against all Defendants. Rosen alleges Halpern is subject to liability under the SCPWA and the FLSA because he is considered an “employer” as defined by those statutes, as well as case law interpreting these statutes. [ECF #1-1, ¶¶16, 24]. As aptly pointed out by Halpern, Rosen does not allege that he signed a contract of employment with Halpern or that Halpern was the signatory on his employment contract.

         Thereafter, Rosen amended his complaint to allege that he was terminated from employment by C.E.O. Ray Hicks and HR Manager Tim Fatum, after continuing to suffer further retaliation and harassment from Defendants. [ECF #23, ¶¶ 17]. He added a fifth cause of action against Defendants for retaliation under the FLSA. [ECF #23]. Rosen references the attachment of the employment contract to his amended complaint; however, the contract is not attached to the amended complaint or otherwise included within the pleadings.

         On April 25, 2018, Halpern filed a motion to dismiss for lack of jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). In support of this motion, Halpern filed a Declaration, stating that he has been a resident of Florida since 2016. [ECF #7-2, ¶ 3]. He further provides that he has visited South Carolina one time in the past ten years for a family function. [ECF #7-2, ¶ 6]. He does not own real estate in South Carolina, nor has he owned real estate in South Carolina in the last twenty-five years. [ECF #7-2, ¶ 7]. He does not maintain an office or workspace in South Carolina but instead conducts business in Atlanta. [ECF #7-2, ¶¶ 7-8]. Halpern states that he negotiated Mr. Rosen's employment contract via e-mail and phone while in Georgia. [ECF #7-2, ¶ 9].

         In response, Rosen provided his own affidavit. Rosen recalls meeting with Halpern in South Carolina during a trade show that occurred over a weekend in January of 2010. [ECF #15-1, ¶ 5]. Rosen further states that while Halpern was in Charleston for a family function, Halpern met with another individual to discuss Halperns' Steak and Seafood business, specifically making a comment about Mr. Rosen. [ECF #15-1, ¶ 6]. He states Halpern contacts the regional sales manager by phone two to three times per month regarding business in South Carolina and that Halpern is involved in every aspect of the company's business. [ECF #15-1, ¶¶ 7-8]. Finally, Rosen states that his contract was negotiated and executed in South Carolina. [ECF #15-1, ¶ 8]. After reviewing Rosen's response to his motion to dismiss, Halpern provided a supplemental affidavit explaining that upon reflection, he did recall attending a food show where Rosen was likely present.[ECF #17-1, ¶ 4]. As to his trip to South Carolina for a family function, Halpern asserts the meeting pertained to a personal matter, rather than a business matter. [ECF #17-1, ¶ 3].

         Standard of Review and Applicable Law

         Halpern files his motion pursuant to Rules 12(b)(2) of the Federal Rules of Civil Procedure. Federal Rule of Civil Procedure 12(b)(2) governs motions to dismiss for “lack of personal jurisdiction.” A “federal district court has personal jurisdiction over a defendant if the state courts where the federal court is located would possess such jurisdiction.” ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 176 (4th Cir. 2002). When personal jurisdiction is properly challenged by motion under Federal Rule of Civil Procedure 12(b)(2), the burden is on the plaintiff to ultimately prove grounds for jurisdiction by a preponderance of the evidence. Mylan Labs, Inc., v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). If the district court decides a pretrial personal jurisdiction dismissal motion without an evidentiary hearing, a plaintiff need only prove a prima facie case of personal jurisdiction. Id. A court may consider all parties' pleadings, affidavits, and other supporting documents in deciding whether a plaintiff has established a prima facie case of personal jurisdiction. Id. at 62; Luberda ex rel. Luberda v. Purdue Frederick Corp., No. 4:13-CV-00897, 2014 WL 1315558, at *2 (D.S.C. March 28, 2014). However, once jurisdictional discovery or an evidentiary hearing is completed, the preponderance of the evidence burden applies. Nat'l Beverage Screen Printers, Inc. v. DALB, Inc., 1:16-cv-03850, 2018 WL 2718035, at *2 (D.S.C. June 7, 2018)(citing Informaxion Sols, Inc. v. Vantus Grp., 130 F.Supp.3d 994, 998 (D.S.C. 2015).

         In assessing whether personal jurisdiction exists, the court must consider the facts in a light most favorable to the plaintiff. Carefirst of Maryland, Inc., v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396-97 (4th Cir. 2003). The court must draw all “reasonable” inferences in favor of the plaintiff and look to the proof provided by all parties in considering a Rule 12(b)(2) motion. Mylan Labs, 2 F.3d at 60. Still, the court does not need to credit conclusory allegations or farfetched inferences. Sonoco Prods. Co. v. ACE INA Ins., 877 F.Supp.2d 398, 405 (D.S.C. 2012).

         Halpern is a non-resident defendant. Personal jurisdiction over an out-of-state defendant may be either general or specific. Halpern argues that Rosen cannot establish either general jurisdiction or specific jurisdiction in this case. Rosen even concedes that general personal jurisdiction is not likely in this case. [ECF #15, p. 3]. However, he argues that Halpern has subjected himself to specific jurisdiction of this Court by his activities with the forum state. Whether personal jurisdiction exists over a nonresident defendant involves a two-step analysis. The Court must first determine whether the South Carolina long arm statute applies; second, it must evaluate whether the non-resident's contacts in South Carolina are sufficient to satisfy due process. ESAB Group., Inc., v. Zurich Ins. PLC, 685 F.3d 376, 391 (4th Cir. 2012). A federal court may exercise personal jurisdiction over nonresident individuals in a manner prescribed by state law, so long as the application of that state's long-arm statute comports with due process. Mitrano v. Hawes, 377 F.3d 402, 406 (4th Cir. 2004). In South Carolina, the courts have held that the state's long arm statute is coextensive with the limits set by the due process clause, therefore the statutory inquiry merges with the constitutional inquiry. Carefirst of Maryland, Inc., v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396-97 (4th Cir. 2003).

         The Due Process Clause permits personal jurisdiction over a defendant when that defendant has certain minimum contacts with that forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Daimler AG v. Bauman, 571 U.S. 117, 126 (2014); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (explaining that if a court determines that a defendant has certain minimum contacts with the forum state, then the Court must consider whether the exercise of jurisdiction would comport with “fair play and substantial justice.” A defendant has sufficient minimum contacts with a forum state when the defendant's conduct with the state is such that he should “reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (U.S. 1980). A court may properly exercise specific jurisdiction when a defendant engages in some activity purposefully aimed toward the forum state, and the cause of action arises out of or is related to a defendant's activities within the forum state. See ...

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