Case 2: American Business Financial Services, Inc. v. First Union National Bank, __ A.2d __(Pa.Com.Pl. 2002), 2002 WL 433735 (Pa.Com.Pl) (Cross 8^th Ed. Supplemental Case 2-7)

American Business Financial Services, Inc. (ABFI), a Pennsylvania firm, is a publicly held, diversified financial services company, which sells and services loans secured by real estate to businesses and consumers. First Union National Bank, with its principal place of business in North Carolina, provides banking services. During the period 1997 through 2000, First Union participated in a $150 million warehouse line of credit to ABFI, pursuant to which First Union received substantial non-public information about ABFI. First Union agreed that the information and data from ABFI would be kept confidential and that the information would not be disclosed to any third party without the written consent of ABFI.

Alan Boyer, an employee of First Union, lives in North Carolina and has never been to Pennsylvania. In the course of his employment, Boyer learned of the confidential information given by ABFI to First Union. Boyer then attempted to manipulate the stock price of ABFI for personal gain by sending disparaging e-mails to ABFI’s independent auditors in Pennsylvania. Boyer also posted false and negative statements about ABFI and its management on a Yahoo bulletin board.

Samuel Shirey, also an employee of First Union, gained access to the same confidential information. Shirey used the internet to spread false and negative information about ABFI to injure its business reputation and depress the market value of ABFI’s stock and posted approximately fifty to sixty messages on the Yahoo Message Board, referring to ABFI and its management in a negative manner. Shirey, however, did not send e-mail messages to ABFI’s auditor or others in Pennsylvania.

ABFI filed a suit in the Pennsylvania Court of Common Pleas against Boyer, Shirey, First Union, and others, alleging wrongful interference with a contractual relationship, among other things. Boyer and Shirey filed motions to dismiss the complaint for lack of personal jurisdiction.

True or False..

1. The Pennsylvania trial court in which ABFI initiated its lawsuit against the Boyer, Shirey and First Union is a state court of limited jurisdiction and lacks subject matter jurisdiction over the parties’ dispute.
2. ABFI could have initiated its lawsuit against First Union and Boyer either in federal district court in Pennsylvania or North Carolina, or in a state court in North Carolina, all three of which would have jurisdiction over ABFI, First Union and Boyer, assuming ABFI’s damages exceed $75,000.
3. If First Union raises the question of jurisdiction in its preliminary response to ABFI’s lawsuit then the Court will likely decide that First Union voluntarily subjected itself to the jurisdiction of the Pennsylvania state courts.
4. The e-mail messages sent to the auditors in Pennsylvania along with the internet posting activities of Boyer disparaging the reputation of ABFI and its management to manipulate ABFI’s stock price are sufficient contacts under the Zippo standard to permit the Pennsylvania state court to exercise in personam jurisdiction over him.
5. The internet posting activities of Shirey in disparaging the reputation of ABFI are insufficient contacts under the Zippo standard to permit the Pennsylvania state court to exercise in personam jurisdiction over him.